The confidence of consumers in the mid-term performance of the U.S. economy has declined, placing more pressure on retailers like Walmart and Target that have been struggling since the beginning of the fourth quarter of 2018.
Hope For 2019
This week, the Conference Board disclosed that the index of U.S. consumer confidence declined from 136.4 points to 128.1 points, within one month.
Lynn Franco, the director of economic indicators at the Conference Board, said that the economy has weakened due to a variety of factors including the trade war between the U.S. and China.
But, throughout the foreseeable future, the economist noted that the economy of the U.S. could continue to grow at a consistent pace.
Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term.
Walmart, Tiffany & Co., Target, and other major retailers in the U.S. fell by over 20 percent on average in the last quarter of this year. From its highest point on November 9, the stock price of Walmart, which has been the best performing retailer in the U.S., plunged from $105.5 to $85, by just under 20 percent.
Target, in contrast, suffered a 30 percent drop in its stock price, struggling to compete with Walmart.
Despite the poor performance of major retailers, Tim Quinlan, a Wells Fargo economist, said that retailers are expected to end 2018 on a good note and extend a positive sentiment across the first quarter of 2019 due to high sales during the Christmas season.
“At least through the end of the year, we expect that bright sentiment will translate into a solid finish for retailers and holiday sales,” Quinlan said.
With U.S. President Donald Trump’s confidence in the establishment of a comprehensive trade deal by the end of February, the consumer confidence could recover in the upcoming months and contribute to the rebound of U.S. retailers.
Not the Same Situation in the UK
In the UK, according to Springboard’s insights director Diane Wehrle, consumers have spent less than expected during the holiday season primarily due to the lack of progress shown by the government in achieving a better Brexit deal.
Some analysts have claimed that the increasing popularity of e-commerce platforms internationally has worsened the numbers of retailers and physical stores. But, this year, even e-commerce stores failed to achieve high sales.
“Footfall across the board is lower than last year. Some of it is down to online, but the increases in online haven’t been as great as they were. People are spending less than they were last year,” Wehrle noted.
U.S. retailers are expected to recover in valuation in the months to come and Walmart has already minimized the quarterly decline in its stock price to about 12 percent. However, UK retailers could continue to demonstrate a lack of demand from consumers across the first three months of 2019.
The Singapore crypto exchange Switcheo has announced over the holiday period that it now supports the Alchemist launched SDUSD stablecoin. The Dollar-pegged coin was created to hold the value of $1 and is locked to NEO.
SDUSD/NEO Pairing Debuts on Singapore Crypto Exchange
Switcheo announced via a press release that Alchemist’s smart contract based SDUSD coin will debut on the Singapore crypto exchange and will be the first fiat-pegged pairing with NEO. 1 SDUSD will be stabilized with $1 USD through the collateralization of NEO smart contracts
Switcheo’s support of the SDUSD/NEO pairing is available right away. He is an extract from the statement:
SDUSD will be open for deposits on 27 Dec, 11.30am SGT (UTC+8) and trading will commence on 27 Dec, 12.00pm SGT (UTC+8).
The Singapore based crypto exchange is regarded as the first decentralized exchange to utilize the NEO blockchain, which allows you to trade both Ethereum and NEO. The exchange is looking to create a DEX network that offers cross-chain swapping features across a myriad of blockchain networks. Their main goal is to offer a trading experience that merges a world-class experience with trust and transparency on a decentralized platform.
Alchemint Finally Launch SDUSD
Alchemint is known as a stabilization system for cryptocurrencies that utilizes NEO’s public chain. The launch of its dollar-pegged SDUSD token was planned for earlier in December. However, due to numerous delays, their stablecoin was finally released during the holiday period.
Alchemint uses DLT technology to offer a high-performance digital currency that allows users to mortgage digital assets and manage the collateral values by utilizing smart contracts. You can now mortgage your NEO against the SDUSD, although holders will be expected to pay a 2% annual fee as an issuing fee if you want to cash back your SDUSD.
Alchemint plans to offer a transparent stablecoin issuance system that is open and robust.
The announcement from the Switcheo Exchange is great news for the evolving Singapore crypto market that recently updated its ICO guidelines that are expected to increase interest in the local market and to raise capital for fledgling ICOs.
If you are looking to mortgage your NEO against the US Dollar, the Singapore based crypto exchange is leading the charge.
Hong Kong financial regulators are reluctant to back any crypto-related business at this moment in time while proper rules are being drafted to regulate initial public offerings (IPOs). The news might have a serious knock-on effect on the application of the Bitmain IPO and other related crypto projects in Hong Kong in the near future.
Hong Kong was until recently one of the most crypto-friendly destinations in Asia, but as regulatory bodies turn the screw across the continent, Hong Kong crypto businesses are now in limbo.
Bitmain IPO Not Approved by Regulators
The South China Morning Post has reported that Hong Kong stock market regulators are dragging their feet in approving an IPO by the planet’s largest assembler of crypto mining equipment company, Bitmain. The regulators are adamant on waiting for the proper framework to be implemented in regards to crypto-related businesses in Hong Kong, before approving any companies or IPOs, which includes the Bitmain IPO.
Sources close to the Hong Kong regulators anonymously told the South China Morning Post:
It is premature for any cryptocurrency trading platform – or business associated with the industry – to raise funds through an IPO in Hong Kong before the proper regulatory framework is in place.
Bitmain Technologies applied to the Hong Kong regulators, who advise the Listing Committee of the Hong Kong Stock Exchange (HKEX), to create a US$3 billion IPO, but it seems the Bitmain IPO is now in serious jeopardy.
The Bitmain IPO could now be bogged down in red tape for a while as the Hong Kong regulators’ ruling could take six months to unfold, and still end in rejection for the crypto mining giants.
Bad News for Bitmain
Asian destinations such as Singapore and Hong Kong were once a haven for crypto-related businesses, but as central banks and other regulatory powerhouses attempt to bog down the industry with a stricter framework, it could be one hurdle too many for the Bitmain IPO.
Bitmain was founded back in 2013 and has become the largest assembler of crypto mining equipment in the world over the past few years.
The Bitmain IPO could simply be the product of poor timing. Their application comes amidst a time of change for the Hong Kong crypto sector as new rules are currently being drafted to regulate the IPO market. However, as Bitmain makes over 90% of its profits from assembling crypto mining equipment, waiting for the approval of their IPO is not the end of the world for the company.
Credit card giant Visa Inc. is acquiring British payments firm Earthport for $250.6 million. Earthport — which provides cross-border payment services to banks and businesses — has been partners with Ripple, the blockchain-based payment network, since 2015.
Under the merger, Visa paid four times Earthport’s closing stock price on December 26, Reuters reported. Visa was interested in acquiring Earthport because it wants to expand its cross-border payments business, which spiked 10% in fiscal year 2018.
Distributed Ledger Streamlines Payments
Earthport streamlines cross-border money transactions using a single API (application program interface) to clear and settle funds locally with its banking partners. Earthport’s clients include Ripple, Bank of America, Hyperwallet, Transferwise, Payoneer, and Japan Post Bank.
In January 2016, Earthport launched the world’s first distributed ledger hub (DLH). Using DLH, Earthport clients can use the group’s distributed ledger technology through a simple and inexpensive single API — a first for the financial industry.
The API not only provides access to the Ripple ecosystem, but also offers access to the wide array of payment methods that Earthport offers in over 200 countries.
In November 2018, Ripple CEO Brad Garlinghouse said at least 100 SWIFT-connected banks have signed on with Ripple.
Garlinghouse said this undercuts SWIFT’s (Society for Worldwide Interbank Financial Telecommunication) contention that blockchain and cryptocurrencies won’t play a role in the banking sector.
“SWIFT said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.”
That’s the reason why Garlinghouse recently donated $50 million to 17 universities around the world to bolster the adoption of blockchain. Ripple made the donation in US dollars, not cryptocurrency, as CCN reported.
Ripple said interest in blockchain is soaring as people are starting to discover the game-changing potential of distributed ledger technology.
Brad Garlinghouse: XRP Could Surpass Bitcoin
Despite the current Crypto Winter, Brad Garlinghouse remains supremely optimistic about the future of Ripple, blockchain, and the cryptocurrency industry.
Garlinghouse pointed out that Ripple’s own cryptocurrency, XRP, remains the only digital currency to have successfully integrated the payments systems of big banks with its platform.
Garlinghouse — who predicts that XRP could eventually surpass bitcoin — has repeatedly said that XRP is independent of Ripple, and that XRP would continue to trade even if Ripple were to shut down.
It’s very clear XRP is not a security…If Ripple the company shut down, XRP trades on a hundred other exchanges around the world and XRP would continue to trade. Ripple is one important participant in the XRP ecosystem, but there are a whole bunch of participants.
A motion by the self-declared creator of Bitcoin and the chief scientist at blockchain firm nChain, Craig Wright, to have a multi-billion dollar lawsuit accusing him of stealing bitcoins belonging to an alleged business partner dismissed has been denied.
Wright Loses Bid to Dismiss Lawsuit over Alleged Bitcoin Theft
In a ruling delivered on Thursday by Beth Bloom in South Florida, the United States District judge dismissed two counts that had been brought forth by the plaintiff, Ari Kleiman, while maintaining that the defendant, Craig Wright, will answer seven counts before or on January 10 next year.
The case stems from a business partnership Wright had with Ari’s brother, the late Dave Kleiman. At one point, the suit was worth as much as $10 billion, though the crypto bear market has eaten much of that valuation.
The multi-talented Kleiman was a cryptographer, author, and computer forensics scientist and had co-founded a firm with Wright known as W&K Info Defense Research LLC for the purposes of mining bitcoin.
Craig Wright’s Multiple Roles
Per the articles of incorporation of W&K as noted in Judge Bloom’s ruling, Kleiman was the registered agent as well as the managing member of the firm while Wright’s various roles included “authorized representative, lead researcher, technical contact, legal agent and representative and Director/Australian Agent.”
After the death of Kleiman five years ago following a long battle with Methicillin-resistant Staphylococcus aureus (MRSA), Wright is alleged to have fraudulently transferred bitcoins owned by W&K to himself. According to the plaintiff, Kleiman’s estate is entitled to a minimum of 300,000 bitcoins plus forked assets such as Bitcoin Gold and Bitcoin Cash.
Initially, when the case was filed in February this year, Wright was alleged to have stolen as many as 1.1 million bitcoins which at the time were worth over US$10 billion. Depending on the ownership structure of W&K, the lawsuit at the time estimated that the estate was owed between 550,000 and 1,100,000 bitcoins.
In a bid to have the lawsuit dismissed Wright had raised various objections including “lack of standing, the failure to bring this action as a derivative suit, res judicata (claim preclusion due to the fact that a matter has already been judged), forum non conveniens (a legal doctrine allowing certain courts to dismiss a case in order for another more appropriate court to hear it), the expiration of the applicable statute of limitations, international abstention, lack of personal jurisdiction and the failure to state legally sufficient claims.”
Other than the financial implications of the case, the discovery process of the lawsuit might end up assisting in shedding light on one of the biggest mysteries in the bitcoin universe – the identity of Satoshi Nakamoto. Dave Kleiman has been cited as perhaps being the famed Bitcoin creator, and this was as recently as last month by an early developer of the cryptocurrency, Jeff Garzik.
Bitcoin price on Friday surged more than 7% against the US Dollar on a 24-hour adjusted timeframe.
The bitcoin-to-dollar rate noted sudden spikes at the beginning of the US session after spending the day inside a narrow trading range. The move occurred just near $3,600, the resistance of said narrow range, giving the market a minor breakout scenario in its own way.
The US Dollar fell broadly Friday as investors predicted Federal Reserve policy to be bearish for the greenback next year. The conclusion got derived from the Fed funds futures which showed that the odds that the central bank would raise interests by the end of Q4 2019 are less than 1%., showing a 32% decline.
It now looks that some part of dollar weakness is heading inside the bitcoin space because the digital assets are unable to provide any interim fundamental to explain the rally. Bitcoin is likely to retest $4,000 as its potential resistance while eyeing the pre-Christmas peak of $4,236 on Coinbase.
Technically, the price is seemingly coming to the end of a bear pennant formation, a brief pause of consolidation before bitcoin reasserts itself towards further downside action. The theory comes close to the current price action while complimenting the RSI momentum price indicator which, once again, is showing signs of aggressive reversals from 55-60 neutral range.
Bitcoin/Dollar Intraday Targets
The hourly chart has put Bitcoin already inside its oversold area, according to the RSI indicator. It has allowed us to begin the day with a short trade while keeping our parameters fixed between $3,903 as interim resistance and $3,824 as interim support.
That said, we are first entering a short towards $3,824 on a bounce back from $3,903. At the same time, we are maintaining our stop loss just $5 above the entry point to ensure we keep the risk low.
If bitcoin attempts a break above $3,903, then we will switch our strategy and open a long position towards $4,000, our psychological upside target. A stop loss just $5 below the entry point will meanwhile minimize our losses in case the bias reverses.
Coming to the $3,824-support, a bounce back would signal us to open a quick long towards $3,903 while placing a stop loss order at $3,819. In the event of a breakdown action, we will open a short position towards $3,571 with a stop loss just $10 above the entry point.
Back in September, biotech billionaire Phillip Frost and eight other individuals were charged by the SEC for a penny stock scheme deemed fraudulent. Frost was not at the core of the scheme, which involved buying up penny stocks and effectively pumping their value only to dump them at massive profits. Overall, before they were caught, they netted around $27 million.
The line is very fine when it comes to what is legal and what is not in trading. On the surface, the activities conducted by John O’Rourke, Phillip Frost, Robert Ladd, and Barry Honig could seem like legitimate speculative activities. According to the initial complaint against the men, however, they were guilty of more than just trading with foolish penny stock investors:
Honig allegedly orchestrated the acquisition of large quantities of the issuer’s stock at steep discounts, and after securing a substantial ownership interest in the companies, Honig and his associates engaged in illegal promotional activity and manipulative trading to artificially boost each issuer’s stock price and to give the stock the appearance of active trading volume.
Frost to Pay $5.5 Million to SEC In Settlement
In total, three companies were pumped and dumped. Frost is said to have participated in two of them. As part of an agreement reached Friday, he will not be admitting to any such malfeasance. The SEC, which is working with very limited staff as a result of the partial government shutdown, reached a settlement with Frost Friday in which he is not required to admit or deny any part of the SEC’s allegations. Instead, he will pay them off to the tune of $5.5 million and spend the rest of his life barred from involvement in most types of penny stocks, CNBC reports.
Honig and O’Rourke are the primary crypto connection in the scheme. Honig bought up to 9% of a biotech company called Bioptix before it pivoted to become Riot Blockchain. As the report says, he bought his large stake at a discount from the $9 listing price of the time. When the company pivoted to a blockchain-and-crypto investment firm, the price jumped up to almost $50. Honig told the Wall Street Journal with an unstated smirk: “When stock goes up, you take a profit. Every good investor does it.”
The price of Riot Blockchain today is $1.57 a share.
O’Rourke was the CEO of Bioptix and then Riot Blockchain, and his as well as the other 7 cases remain pending.
Frost’s involvement was in helping to pay for the illegal promotion of the two stocks he took part in as well as investing in ways that actually pumped the price. Pump-and-dump schemes are mostly illegal. Mr. Frost and his legal team apparently decided that it would be better not to let the court decide whether he was actually guilty. The agreement with the SEC will have to be approved by such a court.
An attack on the Electrum bitcoin wallet has so far netted hackers over 200 bitcoin worth around $750,000. The attack began on December 21, 2018. Though it has victimized some unsuspecting users, it can be avoided.
Electrum is a Bitcoin wallet which doesn’t require the user to download the full blockchain. Instead, servers remotely provide users with the blockchain and they access it through their wallet. It is one of the most popular Bitcoin wallet implementations and forks of it for both versions of Bitcoin Cash as well as Litecoin, Dogecoin, and Dash have been created over the years.
Malicious Servers Crucial To Scam Attack
Malicious servers were been added to the Electrum wallet network. When users attempted a bitcoin transaction which reached one of these illegitimate servers the user received a message within the wallet application instructing them to download and install an update. The message led unsuspecting uses to the hacker’s GitHub page.
The resulting download was actually malware disguised as a new version of the Electrum wallet. The installed malware then prompted users to enter their two-factor authentication codes. This allowed the attackers to then use the authentication codes and steal bitcoin by transferring funds to their own bitcoin address.
An Electrum developer posted details of the hack in the last 24 hours on Github sharing the following screenshot of the hackers first false message and link which they had managed to infiltrate into the Electrum user interface:
Electrum has since modified its software and released an update but, said SomberNight:
This is not a true fix, but the more proper fix of using error codes would entail upgrading the whole federated server ecosystem out there…
The Electrum Github repository detailing this issue also confirms that:
We did not publicly disclose this until now, as around the time of the 3.3.2 release, the attacker stopped; however they now started the attack again.
The latest malicious popup and link looked like this:
Reporting by ZDNet indicates Github admins have now removed the repository with the malicious wallet version.
That said, Electrum Wallet users should remain vigilant as the hackers have persevered and adjusted their efforts over the last week, so new attacks are likely.
There is an ongoing phishing attack against Electrum users. Our official website is https://t.co/aHiZIZH54e Do not download Electrum from any other source. More on the attack here: https://t.co/x5mPVspKfO
— Electrum (@ElectrumWallet) December 27, 2018
Electrum has warned its users to only download software from electrum.org and not Github tweeting:
Another red flag for users who unwittingly download the malware should be the request for two-factor authentication when starting the malware affected new wallet version. Two-factor authentication is only normally requested when making a transaction.
It’s not just Electrum wallet users that need to be vigilant, malware attacks on cryptocurrency users are increasing. Non-cryptocurrency users are at risk too, a McAfee report in the past few days also says that crypto mining malware incidences have risen 4,000% in 2018 alone.
The film “The Big Short” is about how Michael Burry’s Scion Capital and others famously uncovered the housing bubble and sought to profit from it.
Fir Tree Capital Management was part of this story as well, except they were on the other side of the table. They noticed the crash taking place in sub-prime mortgages and associated derivative products because they found them at abnormal discounts from panicking investors. While the story of Burry, Scion, and the rest is one of finding banks to essentially place one of the largest wagers of all time against mortgages the banks allegedly believed in and their overall value, the story of Fir Tree is of picking up discount bags and carefully selling them. They had also bet against some of the credit default swaps on offer, but not in the extremes that others had.
Betting On American Dream
The fundamental underpinning of their $2.6 billion (to date) success story is human nature. While the movie “The Big Short” shows people abandoning their properties instead of paying mortgages that made no sense, the reality is what you might expect: people don’t get into homes with the intention of not paying for them, by and large. Many of the stories depicted in the Big Short are those of people who had bought “investment” properties and, when the properties inevitably corrected in value, gave up on. The part of this story that the movie and its associated book did not focus closely enough on was the legally deficient methodology these loans were given under.
After ridding themselves of garbage mortgages, banks were still liable for their shady practices – and this is how Fir Tree has recouped up to half of its $2.6 billion in proceeds from the sub-prime mortgages it picked up dirt cheap during that period of time. According to the Wall Street Journal:
Clinton Biondo, one of Fir Tree’s managing partners, said the firm figured the securities selling for cents on the dollar were so cheap, it could still break even if most of the loans defaulted. […] By 2013 Fir Tree, at a cost of about $1 billion, had acquired second-lien bonds with a face value of roughly $9 billion, according to people familiar with the matter.
The rest of the money came exactly as Fir Tree expected it to: through homeowners paying their mortgages regardless of the “value” of their homes.
On paper, it may not make sense to continue paying a price that’s higher than what you could ever realize from a property. But if you bought such a place with the intention of housing your family for life, and not merely as a place to become some sort of slum lord, as depicted in the Big Short’s Florida scenes, then the cost of walking away is much greater than “lost value.” Home ownership is a right of passage in the American ethos. And even though it was relatively easy to secure a mortgage in the early 2000s, few would have been naive enough to believe that simply walking out on one would lead to better pastures down the road.
Fir Tree understood all of this then, and now they are reported to be finishing up the deals they started back then. They “favor” deals which may ultimately require a judge’s oversight.
Fir Tree’s Understated Success Model
Fir Tree is reported to currently manage around $8 billion in assets, and the firm is rather opaque in public facing information.
We in the blockchain world are used to loud venture capitalists and personalities. But Fir Tree’s top tiers don’t have much floating around the open internet about them, and even their pictures are hard to see.
In a rare move of publicity, they published an open letter earlier this year as regards a firm they are deeply invested in, Halcón Resources Corporation, a publicly traded outfit, and their demand that it make certain moves to secure a large cash reserve.
The way Fir Tree sees it, Halcón shares are undervalued at present time. Halcón should, therefore, sell assets that Fir Tree believes are a long-term waste of time and use some of the proceeds to repurchase outstanding stocks that are currently on discount.
Halcón is fortunate to have two terrific acreage positions in Pecos and Ward County. While Pecos provides extremely high quality Permian acreage, it’s not the Company’s crown jewel. Rather, the Company has two decades of higher ROIC inventory to drill in Ward County. The Company does not have excess capital or scale to drill both counties simultaneously. […] Pecos is more valuable in the hands of a larger producer who can use its operational scale and strong balance sheet to drill more efficiently. […] Having a significant net cash position (instead of net debt) will allow the Company to buy back a large portion of its market cap, and still have enough dry powder to continue its growth in Ward County.
The demands, as it were, come from Fir Tree’s stance as a collective manager of around 7.2% of Halcón’s overall stock. Given the fund’s performance on long-term positions like “underwater” mortgages, at time of purchase deemed to be garbage by the sellers, it would seem that HRC would be wise to heed their advice.
An Australian blockchain-based peer-to-peer electricity trading startup is on the receiving end of criticism for rewarding bounty hunters who used unscrupulous means to drive interest in its crypto token.
According to the Financial Review, Power Ledger has been criticized for allocating free tokens to bounty hunters who made exaggerated or false claims regarding the startup with a view of increasing the uptake of the Australian crypto firm’s tokens.
Some of the exaggerated or misleading claims included stating that the startup had drawn the interest of the renowned clean energy advocate and billionaire founder of Tesla, Elon Musk, who was keen on revolutionizing the retail electricity sector.
Currently, Power Ledger’s token, POWR, is trading around 20% below the issue price and has a market cap of over US$30 million.
‘Not our Fault’
Power Ledger has defended itself, arguing that it only used the bounty hunters because the startup wanted to create “grassroots support for the currency sale.” According to Power Ledger, 1.5 million tokens were set aside for the bounty hunters.
Per Dr. Jemma Green, the chairman and co-founder of Power Ledger, the startup had no way of supervising the behavior of the bounty hunters:
Rewards were offered to community members to share our project with their own networks. The means by which they did so were outside of our control, and we made it clear that our core supporters who believed in the project and the future of renewable energy were the main audience for this program.
The criticisms that have been leveled against Power Ledger have, however, not dissuaded the P2P energy-trading startup from its mission. Earlier this month, a trial for trading solar power in the Australian coastal city of Fremantle on a blockchain-based platform provided by Power Ledger kicked off successfully.
— Mega Crypto World (@megacryptoworld) December 8, 2018
This enabled about 40 households in the coastal city to determine both the buying and selling price of renewable electricity generated on their rooftops.
A ‘World First’
At the time, the Minister for Finance, Energy and Aboriginal Affairs in the government of Western Australia, Ben Wyatt, dubbed the trial a “world first:”
The trial represents an innovative solution to virtual energy trading that may have implications for energy utilities working to balance energy supply and demand all over the world. These households are believed to be the first in the world to be taking part in an active, billed, peer-to-peer trading trial that allows them to effectively buy and sell solar energy generated by their rooftop system across the grid.
Across the Pacific, Power Ledger also inked a deal with energy supplier American PowerNet last month and this saw the Australian crypto startup deploy its blockchain-based electricity trading platform, xGrid, at the headquarters of the U.S. utility in Pennsylvania.
Merely three months ago, at the start of the fourth quarter of this year, Amazon was valued at $1 trillion. Currently, as of December 28, Amazon is valued at $680 billion, down $320 billion from its quarterly high.
Losing 32 percent in a three-month span, the fourth quarter of 2018 is officially the company’s worst-performing quarter since the financial crisis a decade ago.
Factors Behind the Amazon Stock’s Struggle
Amazon’s drop in share price is not exclusive to the e-commerce giant. As the main stock indexes of the U.S. market tumbled into a bear market, major companies in the likes of Facebook, Apple, and Microsoft lost over 30 percent on average.
Apple, for instance, which still remains as the second biggest corporation in the U.S. behind Microsoft, lost 35 percent of its valuation since October 3, losing an additional four percent on the day.
But, over the past several weeks, Amazon has struggled to meet the expectations of investors. The growth rate of the firm’s cloud computing unit fell short from the projected rate and the overall revenue of the company, despite high sales during the Christmas season, was not as high as investors anticipated.
In India, a key market for the e-commerce company, Amazon has also encountered a regulatory roadblock that may disallow the firm from selling certain products like mobile phones in the local market.
Having already spent billions of dollars in establishing its presence in India through the acquisition of a supermarket chain, “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field,” the newly released rule by the Indian government read.
The rule was created to help bolster the local e-commerce sector by eliminating the leverage foreign companies have on the market.
Kunal Bahl, the CEO of Snapdeal, optimistically said that the restrictions will create a more competitive and even playing field for all merchants.
Marketplaces are meant for genuine, independent sellers. These changes will enable a level playing field for all sellers, helping them leverage the reach of e-commerce.
For Amazon and even for Walmart, which spent $16 billion on the acquisition of Flipkart, an e-commerce rival of Amazon, the newly imposed restrictions by the Indian government led to a steep drop in their share prices.
Key For Amazon’s Recovery
Like every other major technology stock in the U.S. market, Amazon suffered a steep sell-off over the past several months and as investors expect the stock market to continue declining across the first quarter of 2018, Amazon may see extended losses.
The key for Amazon and large corporations in the U.S. market for recovery is to focus on meeting the expectations of its investors through the prioritization of recovering their core revenue sources.
A bitcoin miner in Taiwan was arrested and charged for mining 100 million yuan (roughly $14.5 million) in crypto using NT$100 million (or $3.2 million) in stolen electricity.
The man, whose surname is Yang, is accused of operating 17 illegal cryptocurrency mining centers using fake storefronts across Taiwan.
The bootleg mines were located in the municipalities of Xinbei, Taoyuan, and Hsinchu, EBC News reported.
Alleged Thief Set Up 17 Bogus Stores
Here’s how the scam worked: Yang would rent a store in a building and set up a phony storefront to mimic an Internet cafe or a doll shop.
He then allegedly hired electricians to rewire the power supply in the buildings to divert the electricity to fuel his illicit mining operations. The electricity meters were manipulated so the power usage wouldn’t be charged back to Yang’s fake stores.
The criminal activity was uncovered after Taiwan’s state-owned electricity company, Taiwan Power, investigated a faulty power supply in one of Yang’s dummy doll shops.
“The group recruited electricians who managed to break into the sealed meters in order to add in private lines to use electricity for free before that usage reaches the meters,” said Wang Zhicheng, the deputy head of Taiwan’s Criminal Investigation Bureau.
Electricity theft for cryptocurrency mining is a recurring problem in China, where mining is quite popular despite the government’s repeated crackdowns on the virtual currency industry.
China Targets Crypto Miners Stealing Power
As CCN reported in April 2018, Chinese police in the port city of Tianjin confiscated 600 bitcoin mining computers in the largest case of power theft in recent years.
The alleged theft was discovered after the local power grid operator observed an abnormal surge in electricity consumption. An investigation later revealed that bitcoin miners had tampered with a junction box to short-circuit the meters in order to avoid being charged for their power usage.
Meanwhile, Chinese bitcoin mining giant Bitmain is reportedly laying off at least 50% of its workforce amid the prolonged bear market. Sources say Bitmain may also sell off its huge stockpiles of Litecoin and Bitcoin Cash tokens to finance its flailing operations.
The news has sent shock waves across the struggling cryptocurrency industry, which has been roiled by layoffs and massive price plunges.
Is Bitcoin Dead (Again)?
So does this recent barrage of bad news spell the end of bitcoin? Maybe so, maybe not.
Bitcoin has “died” 90 times in 2018. That’s slightly less than the 125 times it died in 2017 — when the bitcoin price approached a record high of almost $20,000.
Crypto evangelists like the Winklevoss twins are staying the course, saying bitcoin’s price — like life — is cyclical. It goes up, then down, then up again. Only noobs think an asset’s price chart has a linear trajectory, they say.
When asked about the Crypto Winter, Tyler Winklevoss quipped: “We’re totally at home in winter.”
Similarly, Jeff Sprecher — chairman of the New York Stock Exchange — said he has no doubt that bitcoin and cryptocurrencies are here to stay despite the current bear market.
“The unequivocal answer is yes [crypto will survive],” Sprecher said.
Christmas came late for the bears, but Santa didn’t fail to deliver. Nearly all of the top cryptocurrencies stumbled by multiple percentage points, everything from Bitcoin down to Zcash. Unsurprising, demand for stablecoins rose and they were trading at a slight premium.
Bitcoin Loses Over 4% Over 24 Hours
When the Bitcoin price is as high as it is, a single percentage point is worth more than $30, so even a shift of 2% is notable. At time of writing, Bitcoin was trading under $3600. Earlier in the week, it was thought that the godfather cryptocurrency might make it back over the $4,000 line, but things broke the opposite direction.
There is speculation afoot that tomorrow’s expiration of more than 25,000 worth of Bitcoin futures on Deribit is fueling the downturn.
Tomorrow is the largest expiry of the year for bitcoin options – the "Dec expiry". 25,500 bitcoin options will expire on Deribit ~ nearly $100mln of notional. 80% of options expiring are calls. Open interest below will mechanically drop by more than 50%. pic.twitter.com/wNmH3eOZBT
— skew (@skew_markets) December 27, 2018
As the above tweet points out, this will cut open future interest in half. People may be selling on the news in the belief that demand for Bitcoin might drop when these options mature, while sell pressure might also increase.
The rest of the cryptos trade against BTC in virtually every single market where they are traded, so a lowered value of BTC normally lowers their value unless or until something corrects the trend. The changes are not mathematically exact, however, and often positive trading in altcoin markets can lead to lessened losses.
Ripple Forfeits Over 6%
Ripple’s price has lost about a nickel over the past 24 hours. Confidence in the bank-friendly blockchain platform remains high across the board, with Ripple CEO Brad Garlinghouse recently making statementsto the effect that Ripple is overwhelmingly a decentralized platform.
Ethereum Drops 10%
In the case of Ethereum, the charting was almost precisely parallel Bitcoin, however:
Ethereum saw a drop from a 24-hour high of over $130. It had recently overtaken Bitcoin Cash in terms of price, but Bitcoin Cash bulls in more recent days have caught up with Ethereum and surpassed it yet again. The overall loss to Ethereum’s price is around 10% over the past 24 hours.
It still maintains a higher market capitalization than Bitcoin Cash, standing at time of writing at nearly $2.6 billion.
Bitcoin Cash Down More Than 12%
The 24-hour period started with Bitcoin Cash trading above $180, but by the end of it sellers would be lucky to get just over $150.
It’s unclear what drove the resurgent demand in Bitcoin Cash. One thing that is certainly clear is that the Bitcoin fork has yet to recover from the essential split in value it suffered when Bitcoin SV forked off and created a new blockchain.
Stellar Markets Chaotic, Losses Of At Least 5%
Stellar has been back and forth at the end of the 24-hour period, seeing a brief climb back to nearly 11.5 cents and then trending back downward.
The Ripple fork has never yet overcome its predecessor and always seems to trade around 1/3rd of its value. Significant improvements to its business relationships would be required to increase the value. Both tokens suffer the curse of massive supplies in the billions, meaning that small changes in their per-token valuations multiply into wider changes in the market capitalization overall.
Ripple had a market cap of twice Stellar’s at time of writing, around 40 billion to Stellar’s 19 billion. Neither is anything to scoff at, of course, being that they could fit several of the tokens just a little lower on the rankings several times over.
Bitcoin engineer-turned-instructor Jimmy Song has said that seven months after Joseph Lubin announced a public bet with him concerning the future of Ethereum,
the ConsenSys CEO is yet to put his money where his mouth is. It will be recalled that at Consensus 2018 in May, Lubin and Song announced an audacious wager onstage at the event for “any amount of bitcoin” on the premise that the availability of decentralized apps with real user traction will become widespread within five years.
Although the bet was publicised at the time with Lubin in support and Song on the opposing side, the terms and conditions of the wager were left to be ironed out subsequently. In a Twitter post on December 22 however, Song alleged that despite Lubin’s bullish words and consistently confident tone on the subject of building a new decentralised paradigm on Ethereum, he has yet to put any money behind his prediction, which according to him shows that Lubin is not to be taken serious.
Responding to a tweet posted by Lubin, Song wrote:
Don't believe a word this guy says. Remember, he predicted dApps would take over the world by 2023 and offered a bet to me on stage and 7 months later, has *still* not finalized the bet. Words are cheap @ethereumJoseph, why don't you put some money behind that mouth of yours? https://t.co/p5r6EyD6So
— Jimmy Song (송재준) (@jimmysong) December 22, 2018
Lubin’s Ethereum Wager
The much-discussed wager has been a bone of contention for months, with both parties never quite reaching a concrete agreement regarding the exact terms.
In an appearance on the Unchained Podcast in June, Song maintained that bitcoin will always be the prime and valuable cryptocurrency because it is “sound money.” According to him, Lubin would win the bet if five dApps have 10,000 daily active users and 100,000 monthly active users over a 6 month period. Lubin on the other hand, has been consistently non-committal regarding the exact terms he would be willing to agree to.
The reaction to Song’s twitter post varied greatly, with some arguing that Lubin’s extensive investment in the Ethereum dApp space via ConsenSys represents sufficient “skin in the game” as to render such a bet trivial and unimportant. Others pointed out that after several months of operations, ConsenSys is still yet to produce a single successful dApp based on the parameters laid out by Song. Still others argued that even if Ethereum dApps take off as Lubin hopes, that would not say much about Ethereum because dApp technology is still based on Bitcoin.
Song’s accusations come at a difficult time for ConsenSys which has been hit hard by depressed crypto market conditions. On Sunday, Lubin responded to the news of recent ConsenSys layoffs with a denial that the recent reorganisation is significant of any long term downturn in Ethereum’s fortunes.
Japan’s Financial Services Agency (JFSA), the country’s top financial regulator, has granted the Japan Virtual Currency Exchange Association (Jvcea) self-regulatory organization (SRO) status under the Payment Services Act.
The JFSA explained that it believes “the SRO can take actions flexibly to keep up with the fast-changing environment surrounding crypto-assets,” adding:
We think it necessary [for us] to work with the Jvcea closely so that the association can successfully perform self-regulatory functions through the establishment and application of self-regulatory rules and monitoring of their members.
The association is expected to cooperate with the JFSA to instruct and supervise its members to “operate their businesses appropriately.” It is also expected to work with them “to improve the safety of related systems through investigation and research on security” and disseminate “information externally to increase the awareness of exchange users,” the agency described.
Furthermore, the association is expected to “set out detailed wallet management processes from the system security point of view and the cross-sectoral rules in areas that are not covered by the laws/regulations, for example, margin trading, for the users’ protection,” Japan’s top financial regulator noted, elaborating:
We expect that through self-regulation, clearer and more detailed rules will be provided as to provisions that are not specified under the existing laws/regulations, as well as self-discipline in areas that are not covered by the laws and regulations.
Adhering to Self-Regulatory Rules
All of Japan’s 16 registered cryptocurrency exchanges are members of the Jvcea. Initially, only registered exchanges could join the association. However, after it was granted SRO status, the association opened up membership to other cryptocurrency operators. According to local media, deemed dealers, which are companies that have been allowed to operate while their applications are being reviewed by the JFSA, can also join the association.
The JFSA confirmed, “It is not a legal obligation for virtual currency exchange service providers to be a member” of a self-regulatory organization. “However, from the perspective of user protection, the JFSA monitors whether virtual currency exchange service providers conduct their businesses appropriately, taking self-regulatory rules into account.” In other words, crypto exchanges are expected to uphold self-regulatory standards even if they are not members of the Jvcea.
The agency further revealed that it “works closely with the association by exchanging views about various issues on a regular basis and sharing information on members, unregistered business providers and user complaints,” emphasizing:
In cooperation with the Jvcea, the JFSA has been monitoring virtual currency exchange service providers as to their compliance with self-regulation as well as the laws and regulations.
In terms of whether the JFSA will approve another self-regulatory organization, the agency noted that “There is no limit to the number of SROs under the laws/regulations.” The regulator added, “In the event that another SRO submits an application for approval, the JFSA will scrutinize it from the viewpoint of the applicant’s effectiveness in performing self-regulatory functions.”
S&P 500 Slumps Below Bitcoin Price on 30-Day Chart
Bitcoin underwent an impressive bullish correction after falling almost 85% from its all-time high near $20,000. The price at the beginning of December established an interim bottom level at $3,127 before jumping towards its monthly high near $4,237. That totaled its correction to almost 35.5%.
The S&P 500, on the other hand, was already undergoing a downside correction after establishing its 52-week high at 2,940.91. As December kicked in, the index noted ten back-to-back daily selling sessions during mid-term — causing a crash of almost 20% from the recent peak, its lowest since April 2017.
The S&P’s sister indexes, Dow Jones and Nasdaq, also plunged significantly within the same timeframe. The trio together came closer to record the worst monthly crash since October 2008, during the time of the financial crisis.
Overall, The S&P 500 slumped 19.8% by Tuesday from its September 20 record close. The Nasdaq and the Dow depreciated 23.3% and 18.8% from their record closes set August 29 and October 3, respectively.
The fundamentals of both Bitcoin and S&P are quite distinctive from each other. While Bitcoin is a standalone asset, which is traded mainly via retail and OTC markets, S&P is a market capitalization index of the US’s biggest public-traded corporations by market value. Each market was responding to its specific catalysts, without establishing any definitive correlation with the other.
The Massive Fall and Minor Rise of the Bitcoin Price
Bitcoin, for instance, corrected all this year after overreaching its upside targets without confirming real demand. Along with Ethereum, it was used as a method to raise funds to many young blockchain startups that eventually failed without making the product they intended to make. Some of them even turned out to be vaporware or outright scams. This and other factors finally increased the selling pressure on the Bitcoin market and caused a huge plunge.
The cryptocurrency only recently found a temporary bottom, which influenced speculators to accumulate the asset at lower prices. The crypto market is eyeing 2019 to be the year of BTC’s institutional adoption, which influences the traders within it to “buy the dips” and hold the digital currency unless their respective upside target is established.
S&P 500 Faces Continued Bearish Indicators
Unlike Bitcoin, the S&P 500 is reacting to macroeconomic factors, ranging from Fed interest rate hikes to global political scenarios rooting from the Trump administration. A recent tweet from US Treasury Secretary Steven Mnuchin on Tuesday revealed that he was in talks with the CEOs of the Untied States’ six biggest banks. It led to a pessimistic market sentiment over the liquidity among these institutions.
The ongoing US-China trade war is also heading into a blank despite the assurance from both Washington and Beijing. A vice presidential-level meeting between the two powerful economies, as reported on Sunday by the South China Morning Post, hinted positive outcomes. But it wasn’t enough to reinject optimism into the US stock market.
The S&P is expected to consolidate until the new year kicks in. Most of the traders and stockbrokers are away from their desks during the holiday season, which is likely to reduce the volume in these markets.
Despite being the two distinctive asset classes altogether, Bitcoin has proven to be better in terms of return of investment this month.
Bitcoin price on Wednesday traded inside a narrow session range as the market assessed the bearish correction of the previous day.
The Bitcoin/Dollar rate started the trading session with a jump towards $3,850 but rejected extended upside targets in a pullback action that stretched to as low as $3,686. Before the European session matured, the pair had already bounced back from the said support to pursue another attempt to break $3,850. As of now, it is hanging midway between the two levels, trading at $3,791.
The Bitcoin market is noticing a moderately high selling sentiment near $4,100-4,200 zone, which makes it difficult for the market to establish a sustainable bullish bias. Earlier in November, the price had faced similar difficulties while establishing a breakout target above $4,400. After that, the price had fallen towards $3,127-3,130 zone, which is now considered the interim bottom area.
The uptrend, however, is still intact. The Bitcoin/Dollar rate is fluctuating up and down inside the parameters defined by a rising wedge channel. The pair is now at the last of its legs before attempting a clear breakdown action towards the next nearest downside target. At the same time, the area could see the accumulation of long targets towards the channel resistance, which would bring it close to testing the 50-period moving average as well.
Meanwhile, the RSI momentum indicator is finding it difficult to break above 60 to establish a clear near-term bullish bias. It has now reversed again from the 55-58 neutral area.
Bitcoin/Dollar Intraday Targets
The slow action on Wednesday has restricted our trading parameters. Today, we have $3,850 acting as our interim resistance and $3,686 to the downside as interim support. Like always, our priority is to stick to our intrarange strategy which means opening a long order towards resistance whenever bitcoin bounces back from support and opening a short position towards support on every pull back action from resistance.
We will switch to our breakout strategy the moment we see bitcoin breaking above the resistance level, or breaking down the support level. That said, a break above $3,850 will have us put a long position towards $4,055, our primary upside target. As we place this order, we will also maintain a stop loss position just 1-pip below our entry level, to exit the market on a small loss should the bias reverse.
Looking to the south, a break below $3,686 would confirm a breakdown scenario and we will immediately open a short position towards the next downside target near $3,439. A stop loss just 1 pip above the entry point will meanwhile define our risk management strategy for the day.
According to a new paper published in a peer-reviewed scientific journal, researchers in China have made a groundbreaking discovery that could profoundly impact the face of the precious metals landscape — and provide bitcoin with an opportunity to shine.
Scientists Turn Copper into Substance ‘Almost Identical’ to Gold
Per SCMP, a team of scientists at the Dalian Institute of Chemical Physics at the Chinese Academy of Sciences in Liaoning have developed a method to turn cheap, plentiful copper into a substance that is “almost identical” to gold, accomplishing what alchemists have for hundreds of years believed could be a gateway to endless riches.
Lest anyone protest that this sounds like something out of the National Enquirer or one of the more fantastical medieval travel narratives, the study was published in the peer-reviewed journal Science Advances, and the methodology relies on chemical reactions rather than secret incantations.
To create the pseudo-gold, the scientists shot a payload of hot, electrically-charged argon gas at a target made out of copper. The ionized gas particles dislodged copper atoms from the target, and these atoms fell onto a collecting device where they cooled off into a pile of microscopic sand — each grain just a few nanometers in size.
The scientists then tested the properties of these copper particles by using them as a catalyst in a chemical reaction to turn coal into alcohol. Confirming their research, they found that the nanoparticles “achieved catalytic performance extremely similar to that of gold or silver,” Sun and the other researchers wrote, explaining that it can resist high temperatures, oxidization, and erosion much better than standard copper.
Will Bitcoin Replace Gold as Store of Value?
This scientific development raises the question of whether the gold standard of economic hedging could soon lose its luster, forcing gold bugs and other stock market bears to turn to alternative assets. Could this give bitcoin an opening to become a mainstream store of value?
Though proponents frequently cite bitcoin’s utility as a successor to the yellow metal, the answer remains no, at least for the foreseeable future.
Sun and the other researchers explained that, at least in its current incarnation, the process could not practically be used to create counterfeit gold coins or bars since its density remains the same as normal copper.
Nevertheless, anticipating future improvements in the methodology, ordinary retail investors who purchase precious metals for speculative purposes could be taken in by this pseudo-gold if significant quantities ever exit the industrial sector and are repurposed by counterfeiters. This would exacerbate a longstanding problem in precious metals investing, potentially weakening consumer trust in bullion as a store of value.
Moreover, even the production of this pseudo-gold for its intended purpose — industrial applications — could have a significant impact on the value of the true yellow metal. While the vast majority of gold demand is speculative, the material also plays an important role in the production of electronic devices, a fact that crypto skeptics often cite when objecting to the thesis that bitcoin is “digital gold.”
At the very least, the material’s replacement in industrial manufacturing should place equivalent downward pressure on the gold price, though it’s likely that psychological factors would further weaken investor confidence and steepen the asset’s decline.
Consequently, this and other new threats to gold demand, coupled with future improvements in cryptocurrency adoption and technological development, could over the long term provide a gateway toward bitcoin finally becoming a real store of value rather than just a moonshot purchase.
Bank of America (BoA) has filed another blockchain patent, documents with the USPTO reveal.
The American multinational investment bank stated that it would use blockchain, the underlying technology which powers the world’s leading cryptocurrency Bitcoin, to handle some portions of its cash handling devices. The patent, titled “Banking Systems Controlled by Data Bearing Records, mentioned blockchain around 58 times, indicating how the digital ledger technology would improve their traditional cash deposit and withdrawal protocol.
A cash handling device, in general, assists banks in dispensing, counting and tracking their cash flow to prevent thefts and minimizing management time for oversight of cash drawer. The Bank of America’s patent proposes to utilize a “blockchain distributed database” for the recordkeeping of cash transactions between two financial entities. As the document reads further, it describes the blockchain database as a go-to system for identifying deposit items received from the previous cash handling device.
It also credits its blockchain-integration for enabling other cash handling machines to approve withdrawals, and for understanding the cash transportation needs of other devices in the distributed network. The document added:
In some embodiments, sending the first transaction information encoded for the blockchain distributed database to the cash handling device support server may cause the cash handling device support server to generate and send one or more alerts based on identifying the one or more cash transportation needs of the cash handling device.
Blockchain in ATM Services
BoA expects that their blockchain cash handling system could be useful in improving the ways ATMs work.
An ATM operator may be responsible for restocking the automated teller machine rather than a particular financial institution,” the bank writes. “Blockchain technology may be used by automated teller machine to accelerate transaction speed and/or facilitate other types of transactions in addition to ATM transactions like cash withdrawals and deposits, such as gift registry transactions.
BoA also says their solution could assist ATMs in tracking transactions, one of the most popular aspects of the digital ledger technology in the crypto space.
The patent provides yet another evidence of banks’ continued interest in the blockchain technology. Bank of America, in particular, has filed for more than 53 patents that involve blockchain, closing in on IBM and Alibaba, other major corporations, with 89 and 90 blockchain patents in their baskets, according to IPR DAILY.
This week, the Dow Jones recorded a steep sell-off from 23,970 points to 21,846 points, amidst global economic instability and uncertainty.
Since achieving an all-time high at 26,828 points on October 3, the Dow Jones has fallen by 5,036 points to 21,792 points, by 18.77 percent.
In the traditional financial market, a 20 percent decline from an all-time high is generally considered a bear market. Having lost 2.91 percent of its valuation on December 24, if the Dow Jones drops by a mere 1.5 percent or 300 points, it will officially be considered to be in a bear market.
Why White House Failed in Relieving Pressure on Dow Jones and Stock Market
On Monday, on Christmas Eve, in an attempt to relieve pressure on the markets, the U.S. Secretary of the Treasury Steve Mnuchin said that he had reached out to the CEOs of the country’s six major banks to reaffirm that all of the institutions have lending capacity to support loans.
However, according to Quincy Krosby, a chief market strategist at Prudential Financial, the efforts of Mnuchin to ease U.S. markets have had a completely opposite effect. Investors in the public market began to demonstrate uncertainty toward the confidence of the government to help the stock market recover, seeing secretary Mnuchin’s initiative to be over-reaching.
We’ve gone through situations before where it’s absolutely normal for the secretary of Treasury to reach out to the private sector. But what’s bad is this made the papers, and says the government is very worried. It’s almost as if gravity is pulling this market toward a lower level before it bottoms out.
Two major factors are continuing to intensify the selling pressure on U.S. stock markets: the ongoing trade war between the U.S. and China and the Federal Reserve’s intent to maintain its interest rate high.
Payden & Rygel Investment Management principal Robin Creswell told the WSJ that investors are struggling to overlook the Fed’s actions and the inability of small to medium-size businesses to obtain loans at a low-interest rate is posing a negative impact on the short-term trend of U.S. markets.
“People are struggling to look past the immediate actions of the Fed. For those who can take a longer view and for those who are less focused on their day-to-day balance-sheet needs or their regulatory capital needs, the underlying position is not much changed,” Creswell said.
The U.S. President Donald Trump criticized the Federal Reserve once again on December 24, attributing the blame of the economy’s poor performance on the central bank. Both chief of staff Mick Mulvaney and Treasury Secretary Steve Mnuchin said earlier this week that the President does not have the authority to relieve Fed chairman Jerome Powell from his position.
China is Struggling But Not as Bad as the U.S.
Solely based on the performance of their respective stock markets, the Shanghai SSE index has outperformed both the S&P 500 and the Dow Jones in the past six months. At a loss of 13 percent, the Chinese stock market is still far from being at risk of entering a bear market.
However, the Nasdaq Composite has already entered a bear market with a 22 percent loss from its all-time high and the Dow Jones is expected to achieve a bear market status with a fall of less than 300 points.
When merchants started introducing bitcoin and similar digital currencies as one of their payment methods, they quickly encountered a significant problem: price volatility.
There were instances like a luxury item dealership, which used to accept bitcoins for their products but saw the value their Ferrari cars jump by almost 33% during a test run. The company, dubbed as The White Company, later joined the popular trend of launching a “stablecoin,” a hybrid of blockchain and fiat money, which promised to protect its balance sheets from subtle influences.
What is Stablecoin?
Rather than fluctuating on the whims of traders’ speculation, a stablecoin is a new blockchain-enabled breed that is characteristically pegged to stable real-world assets, from commodities to currencies. For instance, users can purchase one stablecoin for a dollar, and can also redeem it later for the same price, thus eliminating the notorious crypto price swings.
The stablecoin industry became popular in the wake of 2018’s crypto crash. The depression saw the market’s leading cryptocurrencies like Bitcoin and Ethereum losing 80-90% of their capitalization within a year. A majority of retail investors, who were holding these volatile crypto assets, decided to exchange them for stablecoins as a part of their risk management strategy. Once the volatility settled, traders were redeeming their stablecoins for digital currencies, as well as fiat currencies to exit the crypto market on minimized losses.
Stablecoins are not exciting as speculative assets, mainly because their backers supply only the portion that they can back against a stable real-world asset. They are highly attractive tools when it comes to retaining the qualities of blockchain-enabled payment networks for, say, remittance and hedging.
The institutional players have begun to realize the potential of stablecoins. As of November, the total investments made into the stablecoin space has touched $3 billion, per Stable Report, a crypto research group. It has led to the introduction of more than 120 stablecoin projects this year.
Winklevoss Twins, for instance, launched a stablecoin for their Gemini bitcoin exchange in September. Circle, a Goldman Sachs-backed crypto group, also partnered with a US bitcoin exchange Coinbase to launch a USD Coin.
Almost every new player in the stablecoin market is coming with their audit reports in hand, a record that verifies that the company that intends to issue its stablecoins has sufficient assets to back them. Some coin projects have even introduced features that allow them to freeze or delete coins to tackle money laundering acts.
Popular stablecoin project Tether, meanwhile, has garnered criticism for refusing to get its balance-sheets audited by an independent party. It has enabled a whole new competition to flourish in response, which includes more modern stablecoin projects like TrueUSD, Paxos, and Maker, in addition to Gemini Dollar and USD Coin (as discussed above).
As the regulatory watch improves and companies begin to take due diligence seriously, 2019 could prove to the year of stablecoins. Advocates believe that in the long term, almost all the traditional industries would want to integrate a stablecoin solution.
“Insurance, lending . . . these are some of the categories that could start to grow into the trillions,” Garrick Hileman, head of research at Blockchain crypto wallet company, told FT.
Social media giant Facebook has already announced that it would introduce a stablecoin to power p2p payments on its WhatsApp messenger.
Subscription-based news platform Popula has made history by providing the very first fully stored news article on a blockchain platform.
Earlier this week, Maria Bustillos, the editor of journalist-owned Popula, announced the placement of an article published on the website has now been stored on the distributed ledger.
According to the report, the article, which was initially published in Death + Taxes magazine, was stored in full on the Ethereum blockchain, and its hash was stored on the IPFS protocol. With these, it is expected that the article will stay on the blockchain forever. Or for as long as the Ethereum blockchain and IFPS protocol continue to exist.
The storage of the article was done with the aid of engineers from blockchain-based startup Civil, one of Popula’s earliest backers.
Bustillos, who said that the idea has been with her since 2012 when she first came into contact with blockchain tech, noted that the goal of the project was to ensure the proper preservation of the articles. With an understanding of the workings of the blockchain and its many advantages, she was able to conceive the idea, which has now materialized.
The journalist said that from her earliest days working with the blockchain, she always believed that the technology was capable of bringing about a genuinely decentralized world and produce records that were unchangeable and whose integrity couldn’t easily be corrupted.
However, she also admitted that she never really knew that this technology could be used as a medium for protecting the freedom of the press and the right that people have to free speech. Bustillos mentioned examples of libraries being destroyed in the past, noting that creative works stored on the blockchain would make it much harder to destroy or corrupt the records. Bustillos also confirmed that every article put on Popula will now be stored on the blockchain as well.
Wall Street is quietly moving out of the crypto market, Bloomberg reports. While the market has continued to be battered by news of fraud and imminent regulatory crackdowns, there was a time when it seemed like Wall Street had started to warm up to the rise of crypto assets.
Last year, when the crypto industry enjoyed what was probably the biggest bull run in its history, it seemed a lot of mainstream financial companies were also ready to join the bandwagon. Names like Goldman Sachs, Fidelity Investments and Barclays Bank Plc. were all affiliated with reports to open cryptocurrency divisions, and these speculations sent ripples around the financial industry.
Goldman Sachs’ Trading Desk Dreams
Goldman Sachs was one of the first Wall Street firms to show interest in Bitcoin futures, and rumors claimed that the firm was working on developing a seperate crypto trading desk. The investment bank partnered with Galaxy Digital and led a $57 million series B investment in custodian firm BitGo Holdings Inc., in a bid to offer custody services. Fast-forward to a year later, and Goldman is yet to offer crypto trading. The bank’s Bitcoin derivative product has not made much progress since it launched.
Citigroup Inc.- Digital Asset Receipts
New York-based Citigroup Inc. also reportedly developed a crypto-based product that could help asset management firms and hedge funds reduce the risk they get exposed to when they invest in crypto. The product, known as Digital Asset Receipt, was expected to provide crypto investors with an innovative means of keeping tabs on their investments and offer an additional layer of legitimacy and trust to the fledgling asset class.
Barclays Inc. and Its Crypto Trading Desk
Then we have London-based Barclays Inc. The British bank showed a massive interest in crypto during the boom, hiring energy traders Chris Tyrer and Matthieu Jobbe Duval to help lead its digital assets division. Both were hired to help look into avenues where the bank could make a foray into the crypto world and provide recommendations, especially as rumors swirled that it was considering developing a crypto trading desk of its own. Sadly, Tyrer ended up leaving earlier this year, while Duval remains with the firm. In addition to Tyrer quitting, Barclays also denied any rumors of the crypto trading desk.
So What Happened?
According to the report, there are two reasons for the quiet withdrawal of Wall Street in the market; the downturn in the market and a lack of a regulatory framework on cryptocurrencies. The first reason is relatively simple. 2018 has been a wild ride for the crypto market, with about $700 billion being wiped off. Crypto-based firms are feeling the brunt of this bear market, with news of retrenchments, companies folding up and manufacturers of mining rigs losing profits by the day. On regulation, it is believed that the continued lack of a specific regulatory framework on cryptocurrencies has continued to deter big names in the financial industry from taking the plunge into the sector.
Hopefully, 2019 will see a rejuvenation in the crypto industry, as well as the introduction of clearer crypto regulations.
Singaporean crypto exchange KuCoin has announced the delisting of 10 cryptocurrency projects under its Special Treatment Rule framework designed to ensure that only projects that meet and maintain certain criteria are listed on the platform. In an announcement posted on its official website on December 21, the exchange revealed that the affected digital assets will have deposit services halted at 20:00 (UTC+8) on December 21, 2018.
Following this, trading pairs for the delisted cryptocurrencies will be halted at 18:00 (UTC+8) on December 24, 2018. Users will still be able to effect withdrawals of the delisted assets until 18:00 (UTC+8) on March 21, 2019.
KuCoin Special Treatment Rule
The affected cryptocurrencies are as follows:
- Jibrel Network (JNT)
- WePower (WPR)
- Modum (MOD)
- EthLend (LEND)
- STK (STK)
- Asch (XAS)
- Bread (BRD)
- BitClave (CAT)
- Mobius (MOBI)
According to the announcement, the decision to delist the assets was made after completion of the latest phase of observation under the platform’s Special Treatment framework which exists to ensure that all listed cryptocurrencies meet certain minimum requirements regarding liquidity, roadmap adherence, market conduct, security and project solvency among other criteria.
An excerpt from KuCoin’s Special Treatment statement reads:
The Exchange may, during the observation period, decide to delist the ST Project if the Exchange believes the ST Project fails to take necessary actions to remedy the Negative Situation. Nevertheless, the Exchange reserves the right, in its sole discretion and without prior notice, to immediately delist the ST Project if the Exchange believes circumstances warrant so.
According to the statement, projects may be delisted if they are observed to have low liquidity for a certain period of time or if they cease operations for a period of three months. Issues that can also disqualify a project from continued listing include failure to inform the exchange of material changes, failure to cooperate with the exchange for regular routine inspection, security failings, deviations from project whitepapers, lack of progress communication on the project’s website, and incomplete, misleading or untrue information disclosure.
Other issues listed as deal breakers include project insolvency, involvement of project team members in questionable activities and investigations regarding illegal activities, wash trading, insider trading, market manipulation and any other situation that the platform deems risky for its customers or its reputation.
KuCoin successfully completed a $20 million Series A funding round led by IDG Capital, Matrix Partners and Neo Global Capital as it seeks to boost expansion efforts following its $3 million investment in Bitcoin Australia as it seeks to grow its footprint across the Asia-Pacific region.
It’s Christmas and the year is drawing to a close. It’s that time of the year where traders take stock of their investments and prepare for the future.
Oddly enough, 2018 seems to be ending on the same note as it started—with mixed feelings. However, while views on the average performance of the crypto market this year are unanimous, the outlooks on 2019 are more diverse. Some analysts believe 2019 will be an improvement of the preceding year, while others see the crypto market as being dead in the water already.
It would seem that Henri Arslanian, FinTech & Crypto Lead for Hong Kong & China at PricewaterhouseCoopers, belongs to the former school of thought.
Speaking in an interview with Bloomberg TV yesterday, December 24, 2018, Arslanian touched on various aspects of the crypto debate, including his expectations for 2019, the effect of the bear market on the plans of institutional players and the belief that the bear market brought balance to the industry. In general, his sentiment is one of optimism.
In 2018, we saw a lot of the big players entering the space. In 2019, I expect even more players to enter into the sector as well, especially in different ways. Some of them may decide to launch their solutions, others may look to partner with crypto firms, and others might look to invest in crypto companies.
Citing the importance of institutional entry into the crypto space, Arslanian said that it would be able to provide the kind of expertise and institutional backing that the industry needs. Also, concerning the perceived notion that that bear market has affected the plans of various institutional players from entering the crypto landscape, Arslanian ascribed their late entry to the lack of regulatory clarity that has plagued a lot of countries. However, as it is with the previous case, the FinTech expert is hopeful that things will get better in 2019.
“I think a lot of things are changing on a global level. For example, take a look at regulatory clarity in 218, a number of jurisdictions provided more regulatory clarity than we had before….. I expect more of this to happen in 2019, and that will give even more comfort to institutional investors and players as well,” Arslanian argued.
Arslanian’s words echo the sentiments of Changpeng Zhao, CEO of crypto exchange platform Binance, who revealed that his company is maintaining a bullish start to the year, and they aim to begin 2019 “with a bang.” Zhao had told “Bloomberg Daybreak: Middle East” hosts Tracy Alloway and Yousef Gamal El-Din that:
2018 has been a tough year in terms of pricing for the cryptocurrency. And we see a lot of projects not making it this year, so it’s a correction year. But technology will stay, and we wanna kick off 2019 with a bang… So I think the people in the industry are still very confident about the future. So there’s no worries about that.
Since December 15, within a ten-day span, the cryptocurrency market added $45 billion to its valuation as Bitcoin surpassed $4,200.
Many analysts are generally positive on the short-term price trend of Bitcoin heading towards the year’s end, confident that the dominant cryptocurrency has established a bottom.
Prospect of Bitcoin
Currently, Bitcoin and the vast majority of cryptocurrencies are undoubtedly in a bear market. From its all-time high, the Bitcoin price is still down 79 percent and other major crypto assets such as Ethereum (ETH) and Ripple (XRP) are down around 89 percent from their all-time highs.
7 days ago ETH was down 94% from all time highs. Now, after a 52% increase in 7 days, ETH is only down 91% from all time highs.
For investors to reasonably believe that cryptocurrencies are no longer in a bear market, digital assets would have to increase by over 20 to 30 percent against the USD.
Bitcoin, for instance, is currently valued at around $4,200 on fiat-to-cryptocurrency exchanges. While the asset has broken out of several resistance levels above $4,000, a breakout of $5,000 is important to confirm a proper bullish price movement, as analyst Willy Woo explained earlier this month.
“Be aware the above scenario is contingent on a bounce upwards to test low $5,000s. Currently, the short term price action is consolidating into a wedge with hidden accumulation (according to the OBV indicator), this suggest there is more probability of an up move from here,” Woo explained when the price of Bitcoin hovered at around $3,500.
$3,120, the lowest point Bitcoin reached in 2018, could have been its bottom, capped at an 84 percent decline from its all-time high. However, to confirm a full trend reversal, the asset would have to show strength throughout the first quarter of 2019, demonstrating several months of consolidation and accumulation.
It could be said that the crypto market has achieved a bottom, as Ethereum co-creator Joseph Lubin emphasized, but it is too early to conclude that the bear market of cryptocurrencies has come to an end.
Still, the strong corrective rally of major digital assets has relieved significant pressure from the cryptocurrency market, increasing the probability of a potential trend reversal and positive price movements over the Christmas season.
45 Percent Up
Since mid-December, the cryptocurrency market has recorded an increase in valuation from $100 billion to $145 billion, by 45 percent.
However, in a grand scheme of things, the cryptocurrency market has not even reached November levels, when the valuation of the market was hovering at $220 billion. The market would need to rebound by 51 percent to recover to $220 billion.
With several positive industry-related developments including the launch of the Bakkt Bitcoin futures market in January, investors in the market are anticipating a solid price movement throughout the first two months of 2019.
Bitcoin Private’s development team is in hot water after researchers for Coinmetrics.io uncovered what they believe to be a serious anomaly in the supply curve of the ZClassic/Bitcoin hybrid cryptocurrency. In careful detail, the researchers recently related how they uncovered that roughly 2 million coins were injected into developer wallets when the currency’s blockchain was being established.
They discovered this when they updated a Bitcoin Private full node and ran a simple request on it, one from the Bitcoin codebase:
In verifying these figures, we ran a BTCP node (version 1.0.12-1), and made a call to the RPC method gettxoutsetinfo […] At the time of writing, our full node reported an outstanding supply of 20.841M BTCP. This contradicted both CMC and the expected figures from the initial supply at fork time combined with the subsequent block rewards.
The researchers investigated several alternative possibilities other than a covert premine. One is that the code they used to get the figures might be broken, but obviously since it has not been altered since it was forked from Bitcoin, Bitcoin would be having similar false results. Another was that zkSNARKs might be broken, a ridiculous notion.
They also verified that they were getting their data from the longest (correct) chain and that their formula was correct – that is, the mining reward hadn’t been altered at some point.
None of these possibilities panned out, leaving only one probably conclusion: Bitcoin Private covertly pre-mined coins when it was establishing its blockchain, which was a complicated process of merging the unspent outputs (coins) on the Bitcoin blockchain into the Zcash codebase they mostly built on top of. Coinmetrics explained this as such:
While BTCP was a “merge fork” conjoining the ZClassic and Bitcoin states, the basis of the BTCP fork was the ZClassic ledger, not Bitcoin. At the agreed-upon snapshot block, Bitcoin’s state (the registry of unspent outputs) was imported into the parent ZClassic chain by mining thousands of blocks with transactions creating the Bitcoin unspent outputs, effectively forking it into BTCP at block 272,992. At the end of this import, an extra 62,500 BTCP were minted in accordance with the “Voluntary Miner Contribution Program”. Once this import was over, Bitcoin Private’s own history began.
Coinmetrics also adds that they uncovered 300,000 units have been sent to exchanges:
Three hundred thousand units of the covert premine were moved out of the shielded pool towards what appear to be exchanges.
Bitcoin Private had a high of over $86 back in March. Over the past 24 hours, however, it lost 23% of its per-token price, bringing it down to $1.87.
Where The 2 Million BTCP Figure Comes From
It’s crucially important to understand, in plain terms, what’s going on here, especially if you are a BTCP investor or had considered the coin as a store of value in the future.
Essentially, what Coinmetrics have gone a long way to prove is that during the process of “importing” Bitcoin into Zclassic, a fork of Zcash, which is the essential nature of BTCP, around 102 early Bitcoin blocks contained false outputs which wound up in the hands of the BTCP developers. The expected blocks that were supposed to be imported would have contained 10,000 transactions each, as a means of getting the coins on the chain faster. However, the 102 in question had 10,400, and every one of the 400 extra transactions was worth 50 BTCP.
So in the import period we have 102 extra-large blocks, each with 400 unexpected outputs in addition to the 10,000 outputs expected. Each of those additional outputs contained 50 BTC. This gives us 102 * 400 * 50 = 2,040,000 BTCP.
In a somewhat clever move, the BTCP team appears to have given themselves plausible deniability by utilizing Zcash shielded addresses for the transfers. Before the BTC import onto Bitcoin Private, there were only 17,000 or so ZCL (ZClassic) in shielded addresses. However, the researchers uncovered a total of 1.8M BTCP in shielded addresses, leading to their conclusion.
Bitcoin Private has yet to officially respond, but they promise that a response is forthcoming:
We are aware of the recent "premine" allegations and are looking into it. We will let the community know more once we have all the details.
— Bitcoin Private [BTCP] (@bitcoinprivate) December 24, 2018
Readers will be updated if any significant developments come from the BTCP.
Bitcoin mining giant Bitmain is going to sack almost half of its staffers by the end of this week, sources from the Chinese media reported.
The Beijing company today laid off a team which was working on the development of Bitcoin Cash client. The news broke to the wire when Samson Mow, Blockstream Chief Strategy Officer, and former BTCC Chief Operational Officer, tweeted about it. Mow claimed:
Bitmain has quietly laid off their entire Copernicus team. Only 1-week notice. Some had just joined the company. Layoffs just in time for Christmas.
Rumors gained more credibility as people, claiming to the ex-employees of Bitmain, started sharing their exit stories on LinkedIn. Dovey Wan, managing director at Danhua Capital, brought the matter to notice via her series of tweets.
there’s post on Chinese Linkedin (usually very high accuracy, posted by employees themselves) saying Bitmain will start a layoff the coming week … 😳😳😳
A separate rumor said the plan is for more than 50% of its headcount ???! pic.twitter.com/b0ZSBuPX4d
— Dovey Wan 🦖 (@DoveyWan) December 23, 2018
Sanyan Finance, a Chinese media outlet, also reached out to Bitmain employees for further confirmation. While they confirmed that the human resource team at Bitmain was speaking to employees about “something,” they refused to add anything more to their claims that could prove that these employees are certainly getting canned.
Before the layoff rumor took off, Bitmain had already suspended its operations in the State of Israel. As a local daily reported, Bitmaintech Israel, a development center Bitmain had founded just two years back, fired its entire team, including vice president Gadi Glikberg, citing losses incurred during the latest crypto crash.
“The crypto market has undergone a shakeup in the past few months, which has forced Bitmain to examine its various activities around the globe and refocus its business by the current situation,” Glikberg confirmed.
In November, the cryptocurrency market cap lost $70 billion worth of investments after Bitcoin Cash fork threatened the stability of the entire crypto space. Bitmain, which supported one of the Bitcoin Cash camps led by Roger Ver in its quest to attain lead over the other, reportedly suffered millions of dollars worth of losses while diverting Bitcoin’s surplus hash power to its ally. The extent of their overall damages, including depreciation incurred during a year-long crypto bear market and by the drop in mining equipment sales, could have led Bitmain to go on a firing spree.
Although it is currently not known whether or not it is a global layoff, Beijing layoffs are already active, reported 36kr.
Bitmain had almost 2,000 employees working across its mining and blockchain development verticals. It is expected to drop to 300 by the time the reported sacking concludes.
Although it has been a sketchy year for crypto in terms of price fluctuations, the number of cryptocurrency ATM machines in the world has doubled in 2018 to over 4,000. Crypto prices might be up and down quicker than a manic depressive, but wider adoption gets closer and closer.
The figures come from data published by the crypto analytics firm Data Light and show a massive upward trend in the installation of cryptocurrency ATM machines this year.
This is how the world adopts a new kind of ATMs – the ones that sell crypto. pic.twitter.com/qD1tIFNYsp
— DataLight (@DataLightMe) December 19, 2018
The Rise of Crypto ATMs
One of the most startling figures to come from the Data Light statistics is that six cryptocurrency ATM machines were installed per day on average in 2018. One of the main ingredients of wider crypto integration and adoption is the availability of crypto for the masses, and that is exactly what the increase in ATMs shows.
Some of the most interesting data in the stats are that out of the 4,051 cryptocurrency ATM machines now in the world, nearly all of them offer Bitcoin, while Litecoin is available at 2,421 and Ethereum is available at almost half the machines. Dash is also available across 729 machines, which is very impressive.
Other cryptos such as Zcash (67), Dogecoin (79) and Monero (128) also came in with impressive figures proving that greater crypto adoption doesn’t revolve solely around the top two or three cryptocurrencies.
Looking at the graph, the vast majority of the ATMs were installed in the first few months of the year when Bitcoin prices were still relatively high after the monumental price hike back in December 2017.
Other Interesting ATM Machine Stats in 2018
Another great source to check out crypto ATM stats is on the Coin ATM Radar site. On their crypto ATM map, they have listed a total of 4,085 cryptocurrency ATM machines in the world across 76 countries.
The map shows there are 1,258 Bitcoin ATM machines in the US and over 1,000 that support Bitcoin Cash. The combined total in North America adds up to 3,157 machines according to the website.
The United Kingdom has over 200 machines while Central Europe comes in at 750. South America is also no slouch in the crypto ATM stakes, coming in with 65 machines. Australia is slightly lagging behind South America with a total of 54 machines.
The vast increase in cryptocurrency ATM machines in 2018 proves that more people than ever before are starting to see crypto in similar terms to fiat currency, which is a great look for the industry.
Ethereum co-founder Joseph Lubin says the future of the crypto industry is so bright he has to wear shades, and called a bottom to the current bear market.
“Peeking into 2019, if you could see the landscape through my eyes, you’d have to wear shades,” Lubin gushed in a lengthy tweetstorm (see below).
Lubin — the CEO of blockchain startup ConsenSys — recently laid off 60% of his workforce to cut costs, but insists that 2019 looks very promising.
“I am calling the cryptobottom of 2018,” he tweeted. “This bottom is marked by an epic amount of fear, uncertainty, and doubt from our friends in the 4th and crypto-5th estates.”
Joseph Lubin: I’m ‘Very Excited’ About 2019
As CCN reported, ConsenSy underwent a dramatic restructuring to streamline its business after doubling its workforce to almost 1,200 employees.
Under the reorganization, the sprawling Brooklyn-based startup eliminated underperforming projects and placed a renewed emphasis on creating “tangible value” (i.e., profitable ventures).
Lubin — whose crypto net worth tops $1 billion — personally financed the expansion, but was forced to cut back amid the unexpected market crash.
Lubin said he has seen a lot of FUD due to the prolonged downturn, but warned that people on the outside looking in shouldn’t draw conclusions about ConsenSys based on its current woes.
Lubin also chided detractors who are gleefully wallowing in schadenfreude over the current dismal state of the industry, and said ConsenSys continues to prepare for a watershed 2019.
“We have been on the receiving end of an epic amount of conjecture and preemptive paranoia — filled with damning rhetoric about situations journalists and bloggers don’t have real data for,” he tweeted.
The sky is not falling. From my perspective, the future looks very bright. I remain excited about scalability solutions that are available now.
‘Yours In Ethereal Serenity’
As he looks ahead to 2019, Lubin said exciting things are lurking around the corner as the token economy continues to mature and gain mainstream acceptance.
“We will see many exciting consumer utility tokens and tokenized security launches in the new year,” he vowed.
Lubin then sent warm holiday greetings to both supporters and haters alike and signed off with the salutation, “Yours in Ethereal Serenity.”
Best of the season to all of our supporters and detractors out there. Good time to acknowledge that ultimately we are all in this together.
What I've witnessed among the chattering class the past few weeks in response to @ConsenSys 2.0 is a rather typical tune: the alarmed, the eulogistic, and the gleeful.
— Joseph Lubin (@ethereumJoseph) December 21, 2018
ConsenSys remains healthy and is engaging in a rebalancing of priorities and activities which started about nine months ago.
— Joseph Lubin (@ethereumJoseph) December 21, 2018
We continue to invest in external projects, and continue to hire for internal projects that remain core to our forward looking business. We actually hired around fifteen people in the last week or so, and have job descriptions that we are currently hiring for.
— Joseph Lubin (@ethereumJoseph) December 21, 2018
The sky is not falling. From my perspective the future looks very bright. I remain excited about scalability solutions that are available now…
— Joseph Lubin (@ethereumJoseph) December 21, 2018
Best of the season to all of our supporters and detractors out there. Good time to acknowledge that ultimately we are all in this together. Wishing you all a great 2019.
— Joseph Lubin (@ethereumJoseph) December 21, 2018
Lubin’s tweet was met with skepticism by blockchain developer Jimmy Song, who warned, “Don’t believe a word this guy says.”
Song claimed Lubin had not followed through on a bet the two were supposed to make several months earlier.
Don't believe a word this guy says. Remember, he predicted dApps would take over the world by 2023 and offered a bet to me on stage and 7 months later, has *still* not finalized the bet. Words are cheap @ethereumJoseph, why don't you put some money behind that mouth of yours? https://t.co/p5r6EyD6So
— Jimmy Song (송재준) (@jimmysong) December 22, 2018
Meanwhile, Ethereum co-founder Vitalik Buterin chimed in with his support for Lubin by sarcastically dismissing all the critics who proclaimed that “ConsenSys is dead” even though it employs 600 people.
Expand up to 1100 people, shrink to 600, keeping the 6/11ths that are most productive: OMG consensys is dead!
Expand up to 600 with no shrinking, announce every step of the expansion: wow, the company is prospering!
— Vitalik Non-giver of Ether (@VitalikButerin) December 21, 2018
Buterin mocked the “smugness” of naysayers who enthusiastically dismiss industry pioneers as naive and unrealistic. “The problem is that smugness just feels good,” he noted.
Oh yeah? So does proving your haters wrong — so buckle up your seat belts everyone.
In many cases I don't think it's even because they're bitcoin maximalists or anti-crypto in general or whatever; the problem is that smugness just feels good.
— Vitalik Non-giver of Ether (@VitalikButerin) December 21, 2018
Begging in the Bitcoin world is nothing new. Go to any gambling site or even some exchange troll boxes, and you will find people asking for Bitcoin. Look at any Tweet by a major Bitcoin personality, and you will find people asking for Bitcoin. Go to any forum, Reddit related to cryptocurrency, or anything else of that nature, and you will find the same.
This reporter has occasionally seen such people who consistently beg for cryptos referred to as “begshits” or “trolls.” The negative connotation is not without merit. After all, there are plenty of ways to get crypto without buying it or even really working for it.
Twitter Person Spams User for Free BTC Over 15,000 Tweets
Hey its the top of the hour time to beg mrbeastyt for a bitcoin. Pls give me a bitcoin pic.twitter.com/6Tfu92bup3
— Give Me Bitcoin (@PlsGiveBitcoin) December 22, 2018
This Twitter account, which is likely powered by a script of some sort, has spammed “BeastGangPaulers” for crypto consistently, at least once an hour, often twice per hour, for the entirety of this year. As a result, he has nearly 16,000 tweets dedicated to the purpose. They all read the same:
Hey its the top of the hour time to beg mrbeastyt for a bitcoin. Pls give me a bitcoin or Its 30 minutes past the hour time to beg mrbeastyt for a bitcoin.
Presumably the user in question, YouTube gaming star Mr. Beast, who has more than 12 million subscribers on the video sharing platform and over half a million Twitter followers, has blocked the beggar, who does not tag him in the tweets. This is understandable, of course: being notified 15,000 times that someone wants you to give them a Bitcoin for free is not a pleasant user experience.
It seems perhaps the motive for the Twitter trolling account was born of a contest that MrBeast ran last year, which this other YouTuber says he won:
The address that @PlsGiveBitcoin would like a Bitcoin donated to has never received a single satoshi as of time of writing. Perhaps he’s hoping that in the spirit of Christmas, users might change this, as his Tweets show up if you search Bitcoin on Twitter (which is how this reporter came upon the scoop.)
Decentralized Video Sharing Sites Emerging
For his part, @MrBeastYT doesn’t seem to have ever acknowledged the request. According to his YouTube feed, however, he continues to give money away regularly, with videos like this:
YouTube continues to be the platform du jour for everyday people to go from video game addicts to live streaming sensations, and the like.
Perhaps in the future a decentralized version will emerge which builds in some equitable money-making scheme. An effort in this direction is called D.Tube, which is built on Steem.
Crypto trading platform Bitfinex has announced the opening of a margin trading service for the USDT/USD trading pair. According to the platform, the aim of the new service is to improve its stablecoin offering so as to remain consistent with market evolution and user demand. With immediate effect, traders will be able to carry out leveraged trades for the trading pair, which means that they will be able to borrow money from the platform to exchange USD and USDT.
After this activation, Bitfinex also plans to enable margin trading for more stablecoin trading pairs. According to the announcement, there are plans to include other major stablecoin pairs when enough liquidity is reached, in line with its stated commitment to providing a “coin agnostic platform”.
Following the initial announcement, Bitfinex further revealed on its official Twitter account that it led has enabled margin trading for BCH/ABC (BAB) and BCH/SV (BSV) pairs, which generated a considerable amount of interest in the replies.
Further to our previous announcement, we have also now opened margin trading for BCH ABC (BAB) and BCH SV (BSV) pairs
— Bitfinex (@bitfinex) December 21, 2018
Bitfinex And Tether: A Complicated Relationship
An excerpt from yesterday’s announcement reads:
Today, adding margin trading on USDT/USD pair will not only allow for more efficient price discovery, but in an important move for risk management, unlock the ability to hedge the exposure taken on stablecoins. Along with a dedicated lending market, USDT will be available as collateral for margin positions.
Bitfinex recently launched new stablecoin pairs (USDT/USD and EURT/EUR) and adopted what is described as a “neutral” stance following years of sole reliance on the now-controversial USDT. With this and the enabling of margin trading for USDT, Bitfinex is hoping to position itself as a full-feature spot trading platform which equips its users with variant order types they can take advantage of.
The apparent ditching of its sole reliance on Tether has no gone without controversy however, as this came after several competing exchanges took similar moves, with many opting for Paxos Standard (PAX) in addition to USDC and DAI – all of which have now been listed by Bitfinex. Gemini Exchange, owned by Cameron and Tyler Winklevoss even made a point of launching its own USD-pegged cryptocurrency GUSD with the unspoken promise of being the “anti-Tether”, with fully audited account and regulated operations.
A recent Bloomberg investigative report into Tether raised more questions than it answered, with the revelation that the company behind the stablecoin may have had the cash reserves it claimed earlier this year, but the current status and location of the cash reserves are unknown.
Over the past two months, despite the expectations of increased sales during the Christmas season, major retailers such as Target and Walmart have continued to record large losses.
Since November 9, the share price of Walmart has dropped from $105 to $87, by more than 17 percent, a steep loss for the largest retailer in the US market valued at $253 billion.
Other retailers like Target and Costco have recorded losses in the range of 20 percent to 30 percent, with Target suffering a 30.3 percent loss from $87.6 to $61 within a two-month span.
Worse Than Walmart For UK Retailers
According to a report released by FT, analysts are anticipating a massive sell-off in January and potential full-blown bankruptcies.
The report comes in a time in which the Office for National Statistics has shown a 1.4 percent monthly increase in sales for UK retailers with two days before Christmas.
However, while sales figures are high, Richard Lim, the chief executive of Retail Economics, said that the profit margins of retailers tend to drop during holiday seasons with large discounts.
Lim stated that the increase in sales are keeping retailers afloat in both the US and UK stock markets, but in January, both major and small retailers will experience the impact of Christmas discounts and perks provided to consumers.
“Pre-Christmas discounting is damaging for margins and I think we will see the effect of that in January,” Lim said.
Mike Ashley, the head of Sports Direct, went as far to say that retailers were “smashed to pieces” in the pre-Christmas season, informing investors about a likely market carnage in the first quarter of 2019 following a brutal Christmas season for most retailers.
Amidst the intensifying trade war between the US and China that has caused major stock markets in the likes of South Korea, Japan, China, and the US to struggle, and the uncertainty surrounding Britain’s plans to leave the European Union, one retail executive said that consumers have become more cautious in spending.
The executive, who asked to remain anonymous, said:
People see the headlines about no deal, and [Bank of England governor] Mark Carney talking about house prices falling 30 per cent, and they start to think: ‘do I really want to be loading up my credit card right now?’
Overall Bad Time For Investors
Throughout the fourth quarter of 2018, analysts have said that retailers are expected to demonstrate a steep decline in value due to the threats posed by Amazon, Alibaba, and the e-commerce sector on traditional retail.
However, the bloodbath in the US stock market has also taken a toll on e-commerce platforms and retailers. Since September, Amazon has lost 31.15 percent of its market cap as its share price plunged from $2,000 to $1,377.
With the Dow Jones below 23,000 points and several prominent analysts seeing a potential decline below 20,000 points, the US market is at risk of entering a bear market.
A bear market is generally considered as a 20 percent decline from an asset or a market’s all-time high. As of December, the Dow Jones is down 18 percent from its ATH reached on October 3.
Flash is a lesser-known Scrypt-based cryptocurrency which has a growing presence in Venezuela and Africa. It is not designed to be a proof-of-work system, although it uses mining to verify transactions and secure the network, but instead focuses on transactions which can settle in a matter of seconds. Their mobile wallet recently integrated a “human ATM” peer-to-peer trading functionality which could be a hit in jurisdictions where fiat money is hard to trust. Places like Venezuela, for example.
As a cryptocurrency design, it may face traction issues due to its technical design – the mining competitions in Litecoin and Bitcoin are part of the spectacle. In Flash, a small number of miners secure the network and process transactions for very little profit. This notwithstanding, Flash has a mobile application that can hold multiple crpytocurrencies – Bitcoin, Litecoin, Dash, and Ethereum (as well as Flash). Notably, Flash is also available in Coinomi , a popular mobile wallet which supports many cryptos.
Flash primarily focuses on merchant and peer-to-peer user adoption in regions where other methods are either unavailable or unreliable. Venezuela has become the hallmark example of a crypto use case, but there are other regions where digital currencies can serve to allow merchants the ability to accept more than just cash with little overhead and far lower fees than credit card processing may incur. Flash marketing director James Hinton says that as many as 800 merchants in Africa will be adopting Flash in the coming months, which inherently means they’ll also be accepting Bitcoin, Dash, Litecoin, and Ethereum.
Creating a mobile Flash wallet account grants you access to the web version of the wallet, which has over 20 ERC-20 tokens in addition to the regular cryptos.
A fully functional multi-currency wallet is likely to gain some installs in the app stores, but now they’ve added something that is likely to germinate interest across borders: a peer-to-peer trading feature they’re calling the “Human ATM.”
On-Chain Peer-to-Peer Marketplace
The human ATM feature is unique as mobile wallets go. It allows the user to load up a map of people offering in-person trades. Trades can be settled in person and then funds can be released on the app. Like LocalBitcoins, there is a rating and review system and, of course, the author must stress that it’s always best to meet in a public place and follow basic best practices.
For Venezuela, what this will ultimately do is allow anyone to become a walking Bitcoin ATM, even if they transact in person primarily in Flash due to the exchange rate differences. Flash is supported by the Einstein Exchange in Canada, which enables users to connect their bank accounts and associated payment methods (like debit and credit cards) for external transfers. Some smaller exchanges also support Flash the cryptocurrency.
Flash itself has over 600,000 active addresses worldwide. In the two weeks that this story was worked on, they had dozens of installations in Africa and Venezuela. A partnership with Seychelles-based Crowdforce is promising:
‘CrowdForce integrates flashcoin to bring micropayments to Africa.’
READ MORE HERE: https://t.co/j6iaNshxKf
— CrowdForce (@mycrowdforce) December 20, 2018
CrowdForce’s PayForce network includes 8,000 vendors, all of whom will now be accepting cryptocurrency through Flash. This includes Flashcoin.
To this reporter, the Flash cryptocurrency is much less important than what its mobile wallet has the potential to do. People like peer-to-peer, there’s no two ways about it, and the success of eBay as a global marketplace or the almost immediate success of Facebook’s marketplace features (which were preceded by DIY “swap shops”) are evidence that when people can deal with other people directly, they often choose to do so.
Coinbase for the Unbanked
For the unbanked of the world, the Human ATM aspect is incredibly important, especially as merchants in disadvantaged regions adopt it. In the same way that Coinbase and its minor competitors make it easy for people with the full backing of the traditional financial system behind them to access the crypto economy, the Flash wallet can enable the unbanked of the world to do the same, potentially with far lower fees.
A typical interaction will likely go like this: a field worker walks in with their cash wages and, having no trust in banks or other institutions if such even exist, places an order with the merchant to buy a certain amount of crypto in order to save it. They can then spend that crypto there and other merchants, but more importantly, they can spend it online. Or they can simply have a way to enter the crypto economy, from which they can get their money into stablecoins and thus eventually into the western banking system if they so desire.
Human ATM transactions don’t take place in some off-chain wallet, either. If you sell one crypto for another on the application, you pay the network fees in the one you’re selling, and the buyer pays the network fees in the one he or she is using to pay you with. This means there’s no need for a staff to ensure that transactions are properly done, because all transactions happen with the security and transparency of the blockchain.
Downsides of In-Person Trading
So, what are the drawbacks? Like any peer-to-peer interaction, there’s definitive risk of being defrauded. As an attempt to help with this, online trades are also possible with the app. No Flashcoin is required to conduct trades.
Nevertheless, easy methods of peer-to-peer trading which support multiple currencies are to date rare and incredibly necessary for the worldwide individual adoption of cryptos, and the Flash team are pioneering the cause.
Installing and using the Flash mobile app gives the user a parallel account on their web wallet, which has 66 major ERC-20 tokens in addition to the things offered on the mobile app.
PayPal, a leading payments processor valued at over $97 billion, charges merchants high percentage-based fees on top of a flat based fee of 2.9 percent. The high transaction fee of PayPal has led merchants to explore alternatives like crypto to minimize expenses.
For most normal users on PayPal, a transaction from one user to another in the same country is charged a base fee of 2.9 percent. But, if the transaction is sent to a user in a different country, conversion rates apply, often taking the fee from 2.9 percent to over 5 percent.
For merchants, the fee can exceed the range of 8 to 10 percent depending on the country a merchant or a user is based in.
8% Fee, Locking Funds For 3 Months
On a cryptocurrency-related subreddit (/r/cryptocurrency), one Switzerland-based merchant shared a screenshot of a transaction covering a payment received from a buyer with seller protection.
For a purchase of one deck of crypto playing cards worth 14.9 francs (CHF) which is equivalent to $15, PayPal charged a transaction fee of 1.21 franc, an 8.12 percent fee.
The payment seems small due to the low price of the product, but if the merchant sells 1,000 of the crypto playing cards and generates $15,000, an 8.12 percent fee on the revenue is $1,218.
Merchants often have to deal with a wide range of costs and for those dealing with physical products, merchants have to cover manufacturing costs and taxes among other expenses. An 8.12 percent fee before any other expense is deducted from the revenue places a significant burden on a merchant.
On most payments platforms, a system called seller protection also locks certain payments received by merchants from time to time for three months, disallowing merchants from withdrawing the money sent by buyers for a set period of time in case the buyer wants a refund.
Such a policy causes a major problem for merchants, especially for small businesses which are scaling, that need to address urgent payments and cover expenses with the revenue generated through e-commerce platforms and facilitated by PayPal.
The Swiss merchant said that six payments are currently stuck for another three months without a specific reason provided by PayPal.
The merchant wrote:
But now I wished I never used PayPal, got a lot of money stuck for another 3 months (6 total) and they give me no reason at all. After being a customer of theirs for 6 years one day they decided nope were gonna hold your money, ban you from our service.
Can Crypto Service as an Alternative?
Despite the increase in the value of Bitcoin and major crypto assets over the past nine years, the cryptocurrency sector has not seen an improvement in merchant adoption at the same rate as other areas of the space.
Prior to the bull run of cryptocurrencies in late 2017, it was difficult for cryptocurrency companies to convince merchants to adopt digital assets due to the lack of mainstream awareness of the asset class.
As the infrastructure around digital assets strengthens and companies like ICE and Bakkt continue to build services around it, more merchants could begin to integrate cryptocurrencies as an alternative to payment processors.
Already, the Switzerland-based merchant has integrated a cryptocurrency payments processor into an e-commerce website to experiment with digital assets.
Note: this article is not intended as an endorsement or any sort of positive leaning sentiment toward the FOTON ICO. The author has no opinion of the ICO. The article is purely about the results of the survey the purveyors conducted earlier this month.
According to a survey conducted by FOTON, an ICO-funded blockchain banking product that will not materialize until March based on funding efforts, 3% of American Internet users across age groups are ready to use a blockchain banking product or app today.
The survey was presented to 5,000 American Internet users earlier in December. Its results were made available this week.
A much greater percentage of these, 34%, would be willing to use blockchain banking solutions if they felt they were currently ready – which they do not.
A full 63% were explicitly opposed to the idea of using blockchain banking at the time of the survey. That’s more than twice the amount who would consider better products and 20x the number of people (150) who were ready to dive in.
FOTON’s incentive in conducting the survey is gathering information on the market they intend to enter with their banking solution, which, again, is still in the early stages of ICO funding at time of writing. With no minimum viable product to alter, they can be wide open and receptive to user feedback. As such, they developed such insights as this:
The willingness of large banks to implement and lead various pilots. These would not only validate the technology but also the return on investment and additional value created.
While both Ripple and R3 have partnered with several large banking institutions, and banks like BBVA have pioneered the intersection between their industry and the blockchain, more than 3,000 of 5,000 surveyed individuals don’t see any real benefits in decentralized ledger technologies.
Blockchain became a bonafide buzzword through 2016 and 2017, but the bear market of 2018 has led to a reduced interest in the industry overall. Nevertheless, the technology isn’t going anywhere, and as the report from FOTON points out:
90% of North American & European banks are exploring the blockchain.
Two years ago, IBM believed that 65% of banks would be using blockchain technology in 2019. This is unlikely to come to pass. Some estimates put the value of all blockchains in the trillions by 2030. None of these predictions are likely to come true as long as users have an inherent distrust of the technology. As such, potentially the real winners in the next few years of crypto will be those who develop the product that increases retail user demand, thus pushing banks and investment firms even further into the space.
Artificial Intelligence (AI) network SingularityNET has unveiled a developer portal that will “enable developers to discover, learn and adopt” the first decentralized artificial intelligence network in the world.
We just launched the SingularityNET Developer Portal! With the roll-out of the SingularityNET Developer Portal, we hope to significantly expand our technical reach and reaffirm our commitment to building a vibrant ecosystem of developers. Learn more: https://t.co/1RWA9MpOXM pic.twitter.com/OSz1rxbLqQ
— SingularityNET (@singularity_net) December 19, 2018
On the portal guides, tutorials and other detailed resources on how to make use of the SingularityNET platform will be provided. This is expected to allow just about anyone to create, share and monetize artificial intelligence services at scale. Developers will also be able to offer feedback on the new resource.
Committed to democratizing AI, the SingularityNET Developer Portal will accommodate a wide array of programming languages. This will include C++, Java, Python, Go, Ruby, C#, Node.js, Android Java, Objective-C, PHP and Haskell.
All Corners of the World
According to the CEO and chief scientist of SingularityNET, Dr. Ben Goertzel, developers will be key in helping democratize and decentralize artificial intelligence as the sector is currently dominated by a few firms in the West. Per Goertzel, the safest and the most productive approach is to ensure that AI development is as’ globally inclusive and participatory as possible’.
With this in mind the decentralized AI firm has ensured that its developer presence is spread across the major continents, as a statement revealed:
To that end, SingularityNET has developers working on AI in 10 countries: Belgium, Ethiopia, New Zealand, Romania, the U.S., Brazil, China, Russia, Bulgaria, and the Netherlands. Additional developer workshops are scheduled for 2019 and new developers are invited to take advantage of the new Developer Portal.
Inaugural Developer Workshop
Recently, SingularityNET held its inaugural developer workshop in Helsinki, Finland managing to attract more than 250 developers. The inaugural workshop covered topics such as integrating artificial intelligence agents into the platform architecture of SingularityNET as well as deep neural networks and the OpenCog cognitive architecture with a view of constructing specific artificial intelligence agents doing visual question answering.
The launch of the SingularityNET Developer Portal comes less than two months since the government of Malta selected the decentralized AI firm to contribute in drafting the island country’s National Artificial Intelligence strategy. In this regard, one of the first responsibilities SingularityNET was involved in was creating a Robot Citizenship Test for Malta. At the time, SingularityNET expressed hope that the test would serve as a blueprint for other countries:
The citizenship test would serve as a basis for benevolent robots amongst us, allowing them to pass the test and be considered for citizenship with the possibility of being refused entry. The research and development of the Robot Citizenship Test will eventually lead the way for other countries seeking to develop an AI strategy of their own.
SingularityNET’s CEO, Dr. Ben Goertzel, recently appeared on the Joe Rogan Experience and gave an in-depth discussion of AI and his company’s goals.
The SEC-registered investment advisor Wealthfront has recently announced that it now supports Coinbase wallets and accounts.
Wealthfront users will now be able to use the financial planning tool to track their cryptocurrencies.
Wealthfront has created this feature as it’s one of the “most requested” by their clientele who are looking to expand into the emerging and innovative cryptocurrency sector.
Wealthfront Supporting Coinbase Wallets
Wealthfront made the announcement via a blog post on Thursday to excitedly inform their users that it now supports Coinbase account integration.
The new feature is available to those who already have an account with Wealthfront and also to those who are currently utilizing their free financial planning services. Both sets of Wealthfront users will be able to track their cryptocurrency assuming they have already entered their Coinbase account details.
In the official announcement on the blog post, Wealthfront laid out their vision and how they expect this link to Coinbase accounts to pan out:
We want to help you optimize and automate your finances to ensure you reach your unique financial goals. To achieve that vision, we need to incorporate a comprehensive and constantly updated view of your finances. That’s why enhancements, like our new integration with Coinbase, are so important.
Fully Automated Financial Planning Solution
Wealthfront also went on to talk about the advantages of using an automated financial planning solution and how it will improve and evolve as “more data becomes available” with API. When talking about the API options, Wealthfront said
Access to your Coinbase account information is just the latest example. Over time you can count on us to incorporate far more data, from your accounts and third-party providers (like our recent announcement with Intuit’s TurboTax), to deliver even better financial advice.
Wealthfront told MarketWatch earlier this week that they are already planning to offer checking and savings accounts in the first few months of 2019 and are currently in the beta testing phase.
Coinbase is also making noise at the moment and seems to have lots of fingers in lots of pies. Not only is the major crypto exchange linking with Wealthfront, but are also now offering their treading platform across six more European nations, increasing the scope of their platform to 33 countries worldwide.
With the integration of Coinbase accounts and this newly proposed account checking and savings feature, Wealthfront is taking steps to become a fully automated firm that can not only receive direct payments but can also be used to pay bills and making investments.
Ohio’s recent decision to allow businesses to pay taxes using bitcoin has fueled criticism that the move is a gimmicky “PR stunt” that’s impractical and unsustainable.
Skeptics say bitcoin’s volatile price fluctuations and the lack of mass merchant adoption makes crypto an unsuitable method of payment, the Detroit Free Press reported.
“The Ohio announcement is mainly a PR stunt,” said Kevin Werbach, a professor at the Wharton School of the University of Pennsylvania.
There is not a particular advantage in paying your taxes with bitcoin today. The state just wants to signal that it’s ‘cryptocurrency-friendly.’
Werbach taught a class last semester at Wharton called “Blockchain, Cryptocurrency, and Distributed Ledger Technology.”
Werbach joins a growing list of business-school professors who believe that top MBA programs should offer coursework in cryptocurrencies and blockchain because crypto is here to stay.
‘Extreme Volatility’ Makes Bitcoin Unattractive
However, for now, some say that paying taxes using bitcoin isn’t practical.
Andrew Wu, an assistant professor at the University of Michigan’s Ross School of Business, said bitcoin’s break-neck volatility makes it an “unattractive” payment mechanism.
Accordingly, he does not believe that bitcoin will gain mainstream adoption as a way to pay for goods and services. However, Wu said blockchain is a game-changing innovation that will reshape entire industries.
Meanwhile, Ohio car dealer Bernie Moreno paid his business taxes using bitcoin in November 2018, and thinks the trend will gain traction in the near future.
“Digital currency and blockchain are really the next-tech revolution,” said Moreno, who recently sold three cars to entrepreneurs who paid for their purchases in bitcoin. Two of the vehicles he sold were Porsches, and the other was an Astin Martin.
Ohio is the first state in the United States to accept crypto to pay business taxes. The state government partnered with crypto payment processor BitPay to manage the payment in crypto and conversion to dollars.
The idea is the brainchild of Ohio’s Republican state treasurer, Josh Mandel, who says bitcoin is “a legitimate form of currency.”
UK Parliament Member Pushes Crypto Adoption
Across the pond in the United Kingdom, a member of the British Parliament pointed to Ohio as an impetus for why UK residents should pay their local taxes using bitcoin.
Eddie Hughes, a conservative MP (member of Parliament), said this would be an excellent first step toward mainstream adoption of crypto.
“You’re either ahead of the curve or you’re behind the curve,” Hughes said. “We are at a crossroads and we’re about to determine our future – one in which taking the lead in this field could prove very beneficial.”
It’s the festive season again; that time of the year where love is celebrated through the acts of giving. However, for some people, the concept of presenting gifts might be a little too complex to understand. These people don’t believe in sending gifts to their loved ones, they rather send money or gift cards that can be used to make purchases online. This has become incredibly easy in the past few years.
If you receive money as a gift at Christmas, what’s your favourite way to get it?
— Bank of England (@bankofengland) December 17, 2018
Earlier this week, the Bank of England (BoE) published a poll on Twitter, asking its followers on their preferred means of receiving money gifts at Christmas. The poll reads:
If you receive money as a gift this Christmas, what’s your favorite way to get it?
There were a number of options that users could choose from in the poll including Cash, Bank transfer, Gift voucher, Digital currency. At press time, digital currency is leading the poll with 70%.
Although it seems like a simple way to get a conversation going, this tweet could also have a lot of hidden meaning to it. UK’s financial regulators are yet to develop a definitive stand on cryptocurrencies, leading to speculation that the tweet is a clandestine way through which the BoE is looking to measure public interest in cryptocurrencies, which is quite logical now that the market downturn has stripped the major digital currencies off their value.
While the BoE sits on the fence, its leadership has been making significant moves to regulate the sector and integrate blockchain into its system. Mark Carney, Governor of the BoE, noted in a panel that even though, plans aren’t imminent, and cryptocurrencies don’t currently perform the role of money in the British economy, he remains open to the prospect of a Central Bank-issued digital currency. The statement of the Governor might not be a glowing endorsement, but it is a far cry from his previous dismissal of Bitcoin, where he stated that it has failed as both a primary currency and as a store of value.
The bank also executed an overhaul of its settlement system, allowing both traditional private systems and those based on the distributed ledger to interface with the bank’s network. Carney had noted at the time:
“RTGS is being re-built so that new private payment systems, including those using a distributed ledger, can simply plug into our system. Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets, and corporate banking and retail services.”
Bitcoin’s mining difficulty has dropped more than 7 percent over the past 24 hours as the fallout of the prolonged market rout continues.
Despite a recent recovery that has taken bitcoin above $4,000, many miners are still finding it difficult to remain profitable or break even. Any cryptocurrency miners in China are dumping their mining rigs or re-purposing them for non-blockchain uses like video rendering and cloud computing.
More recently, several cryptocurrency mining operations across Europe and Asia are shutting down because of the bear market, including Bladetech, a startup behind what was to be the largest crypto mining facility in the UK.
Difficulty Adjustment and Implications
In the light of the bitcoin blockchain’s reduced hashrate caused by withdrawing miners, the network is designed to automatically adjust the difficulty level in order to avoid a situation where there is a huge transaction confirmation backlog and high confirmation fees. The 7 percent drop in difficulty is likely to be the start of a similar difficulty readjustment pattern as bitcoin below $6,000 increasingly becomes a prolonged reality.
As showed in the above chart, Bitcoin’s difficulty fell from about 5.8TH/second to about 5TH/second on December 19. In contrast Bitcoin Cash and Bitcoin SV have remained stable at about 1TH/second.
The implication of this is that while interest in mining bitcoin is declining, this has not impacted positively on interest in mining Bitcoin Cash and Bitcoin SV. In other words, miners leaving bitcoin are not merely switching to other cryptographically similar cryptocurrencies, but are exiting the cryptocurrency mining space altogether. This is not likely to create any disruption in the normal functioning of bitcoin in the short term because the dynamic difficulty adjustment system will ensure that there is enough hashpower to service the network.
The real danger however lies in the fact that the existing situation can in itself become an obstacle to mass cryptocurrency adoption in the long term if low prices persist. The wider cryptocurrency market has a well-documented history of tracking bitcoin’s moves closely, which means that a perceived reduction of interest in mining bitcoin will eventually lead to an exodus of miners from cryptocurrency altogether which could at least theoretically jeopardise the security of cryptocurrencies.
At the moment, it remains too early to say that this is happening, and a significant upward price movement could change the situation almost overnight.
Nike posted its quarterly earnings report today, delivering a measure of relief to investors concerned after a somewhat turbulent year for the athletic wear company.
After hours trading showed a quick bump and grind in the share price, ending after hours trading (which ends at 8PM ET) on a high note of $67.53, after a daily low of $66.53. Overall the closeout trading was only just under $7 over the 52-week low of $60.13. Today’s results are probably still not impressive to those who bought at the beginning of the week, when the price was still above $70 per share.
Closing on an upward swing could either bring on selling from regular market traders or it could continue the momentum tomorrow.
Nike’s earnings report speaks to the concerns that many have had regarding fierce competition brought on by rivals like Adidas and Under Armour, both of which have similar concerns to Nike as regard the ongoing flirtations with a trade war and protectionist policies in Washington.
Nike has decided to combat the confluence of malevolent factors by getting back to its roots – sales, sales, sales. The report quotes CFO Andy Campion as saying:
Amidst an increasingly dynamic macro environment, what is certain is that NIKE’s execution of the Consumer Direct Offense is driving consistently strong grow th across our diverse, global portfolio. As we continue to invest in digital transformation, we are driving consumer-centric disruption in our industry and unlocking new opportunities for growth.
US-China Relations A Huge Factor In Nike Investor Confidence
Note that Campion uses the word “dynamic” where “toxic” would have worked just as well. Relations with China continue to deteriorate with the DOJ today announcing the arrest of hackers accused of stealing American intellectual property.
Zhu Hua & Zhang Shilong, two members of a hacking group operating in China known as the APT 10 Group, are #wanted by the FBI for conspiracy to commit computer intrusion, conspiracy to commit wire fraud, & aggravated identity theft. Contact the FBI w/ info. https://t.co/VAnzlNfR4F pic.twitter.com/7MxcrA8jKi
— FBI (@FBI) December 20, 2018
Other actions relating to China and Chinese entities are ongoing and daily. Both sides seem to be pulling out all the stops. All of which puts increasing pressure on companies like Nike, who do the majority of their manufacturing in China. It also increases the likelihood that they will have an even more interestingthird quarter.
From time to time the results of the period from 4:30PM to 8PM or so is not indicative of the following day’s performance. On December 3rd, for example, after hours trading drove Nike to 78.10 but the following day saw it hit a low of more than a dollar away from that. After hours trading on December 4thsaw it lose another few dollars, evening out around $74 before it began the process of getting to where it is now.
If that pattern repeats itself and the news of a sound earnings report with figuratively decent earnings doesn’t impress investors – who may feel the negativity of potential tariffs on Chinese imports could impact Nike’s business too extremely – then Nike could be looking at a new 52-week low within the next week.
Bakkt‘s Bitcoin (USD) Daily Futures Contract, the physically-settled daily futures contract, is quite close to getting the green light from the authorities, according to reports on the Wall Street Journal (WSJ). The exchange has been working with the Commodity Futures Trading Commission (CFTC) to ensure its business plan is compliant with the agency’s regulatory framework. A couple of areas that stood out are the exemptions for the exchange to keep customer’s bitcoins, cybersecurity issues that could crop up and the financial liability, in the event of a hack. Once the CFTC decides to approve the project, the public has 30 days to weigh in with comments.
Bakkt was developed by Intercontinental Exchange, the parent company of the New York Stock Exchange (NYSE), as a regulated trading platform for cryptocurrencies, where retail and institutional investors can invest in products that are compliant with regulators in the U.S. Bakkt’s first product is a futures contract that is poised to increase the liquidity of Bitcoin.
The Contract was expected to launch on December 12, before it was rescheduled for January 24, 2019. At the time, Bakkt CEO Kelly Loeffler had cited the interest and the “work required to get all the pieces in place” as reasons for the delay.
ICE Futures U.S., Inc. will list the new Bakkt Bitcoin (USD) Daily Futures Contract for trading on trade date Thursday, January 24, 2019, subject to regulatory approval. The new listing timeframe will provide additional time for the customer and clearing member onboarding prior to the start of trading and warehousing of the new contract.
Seen as a game changer for the crypto sector, Bakkt’s futures are expected to provide the platform for increased participation from Wall Street. Bakkt will physically deliver Bitcoin to investors of the futures contract on Bakkt, which will impact the supply and price of bitcoin.
Recognized crypto trader Alex Krüger went as far as saying that, when it launches, Bakkt’s futures, will lead a bull run for Bitcoin to the first quarter of 2019. While the approval of Bakkt’s contract would lead to growth for the market, the disapproval of VanEck’s bitcoin exchange-traded fund could crash prices.
“Possible outlook for BTC: First, the bull run on BAAKT & renewed ETF approval narrative early 2019. Second, ETF denied Feb/27, massive crash, goodbye 6k, hello 4k, cleanse all weak hands Lastly, having 2020 narrative and re-adjustments lead to a sustained bull run for the rest of 2019 & 2020.”
While Krüger is optimistic about the impact of Bakkt, others like securities attorney Jake Chervinsky believes the market could be overestimating the potential of Bakkt’s futures.
“In the minds of many, Bakkt’s launch has become a full-fledged narrative for when & how the bear market will end. It plays the same role as bitcoin ETFs as a trusted vehicle to bring that sweet institutional money into the space, but without all the trouble of SEC approval,” Chervinsky said.
However, while Bakkt seems to have everything under control regarding the launch of its futures contract (Phase 1), his primary worry is on the adoption of cryptocurrencies by major merchants like Starbucks and Microsoft (Phase 2), which “Bakkt hasn’t said what it is or when it’s coming.”For Loeffler, regulation comes first before merchant adoption. She told the WSJ:
Once digital assets have more trust and regulation, people will be more comfortable using digital assets as currency.
Apple Inc.’s stock flashed a bearish “death cross” for the first time in three years — suggesting that a major selloff could be around the corner. Meanwhile, the bitcoin price climbed more than 10% on December 20 ahead of a possible “Santa rally,” as Coinbase president Asiff Hirji suggested.
The comparison is apt because the cryptocurrency market and tech stocks tend to move in tandem. In fact, the recent downturn in the tech sector was partially blamed for the bitcoin bear market.
“As growth stocks, tech, and FAANG come under pressure, it’s going to hurt bitcoin,” Fundstrat co-founder Tom Lee said in November. “The downturn in FAANG is hurting those owning bitcoin.”
Today, Apple stock plunged to a 10-month low amid reports that a German court had ordered it to stop selling some of its older iPhones because they infringed a Qualcomm patent, MarketWatch reported.
Adding to Apple’s woes was a new projection by Rosenblatt Securities that Apple may slash “another 4 million iPhones” from its production plans due to slowing demand.
Bitcoin Outperformed Apple During Bear Market
Apple has now became the fifth and final FAANG stock to produce a death cross, which is a chart pattern indicating that a major selloff looms on the horizon. FAANG is an acronym for the five best-performing tech stocks in the stock market: Facebook, Apple, Amazon, Netflix and Alphabet’s Google.
The death cross — which is considered a fairly accurate predictor of bear markets — appears when a stock’s short-term moving average crosses below its long-term moving average.
By all accounts, the bearish FAANG performance should spell near-term doom for the crypto market, but will it? Maybe not, if the past few months are any indicator.
Despite the crypto bear market, bitcoin has outperformed Apple since January 2018, even though Apple and the tech sector hit record highs during an unprecedented bull run in the US stock market.
If this is how bitcoin performs during a down market, what’s going to happen when the bulls take over — as many market insiders predict will happen in 2019?
Jeremy Allaire, the co-founder and CEO of Circle, says bitcoin will surge over the next three years as institutional investors hop aboard the crypto bandwagon and mainstream adoption grows.
Regardless of its daily price movements, Allaire said bitcoin has a “very significant role” to play as a scarce, non-sovereign store of value.
Moreover, Allaire says the tokenization of financial assets is a growing trend that will gain traction in the near future — and that will ensure that crypto survives and thrives.
“We have a phrase: the Tokenization of Everything,” he said. “We think cryptographic tokens are going to represent every form of financial asset in the world. There will be millions of them in years.”
Retired US Congressman Ron Paul — a bitcoin skeptic turned proponent — reiterated his calls to abolish the Federal Reserve shortly after it raised the baseline interest rate a quarter of a percentage point, to a range of 2.25% to 2.5%.
This is the fourth time that the Fed — the central banking system of the United States — raised interest rates in 2018. The move sparked renewed fears of a US recession that could potentially trigger a global recession in 2019.
Ron Paul said the Federal Reserve should let the free market dictate interest rates instead of artificially manipulating them.
Paul: ‘The Fed Distorts the Economy’
“The Fed has NO IDEA what rates should be,” Paul tweeted. “The Fed manipulates prices, distorts the economy, and makes decisions by looking at the ‘data’ of a distorted economy.”
Central planning produces a world of economic delusions. America needs to get back to reality. End The Fed!
The Fed has NO IDEA what rates should be.
The Fed manipulates prices, distorts the economy, and makes decisions by looking at the "data" of a distorted economy.
Central planning produces a world of economic delusions.
America needs to get back to reality.
End The Fed! pic.twitter.com/achfl4uIQ8
— Ron Paul (@RonPaul) December 19, 2018
This is not the first time that Ron Paul — the father of current US Senator Rand Paul — has called to abolish the Federal Reserve.
As CCN reported in October 2018, Ron Paul trashed the Fed for manipulating interest rates, saying such artificial machinations could actually cause a recession. This, in turn, could bring about the death of fiat currency, he said.
“It is likely that the next Fed-created recession will come sooner rather than later,” Paul said. “This could be the major catastrophe that leads to the end of fiat currency.”
Paul said the only way to avoid a Fed-created recession is to let people use alternative currencies like bitcoin and to exempt cryptocurrencies from taxes.
Paul said central banks constantly increase and decrease the money supply to control the economy by manipulating interest rates.
He said the Federal Reserve‘s cyclical manipulation of interest rates creates an artificial cycle of economic booms and busts.
This can create an illusion of prosperity. Eventually, reality catches up to the Federal Reserve-created fantasies.
When that happens, there is a recession or worse, leading the Fed to start the whole boom-and-bust cycle over again.
Like many in the crypto community, Ron Paul is a libertarian who opposes government intervention in the free market. The virtual currency community generally prefers the crypto ecosystem’s decentralized and unregulated market.
Paul said an economy that is not manipulated is better for society. “Not only should we audit the Federal Reserve, we should get rid of it!” he said.
Former Crypto Skeptic Now Embraces Bitcoin
Until very recently, Ron Paul was a staunch advocate of the gold standard who was critical of bitcoin.
“Bitcoin is very exciting…but [bitcoin investors] don’t have a long-term perspective,” Paul said in December 2017. “What’s it going to be like in 10 years? Nobody knows. But we have a pretty good idea of where gold will be, in a general sense.”
Paul has since changed his outlook on crypto, and now says he believes that bitcoin and a gold-backed currency can co-exist in a free society.
For the first time since Oct 2017, the Dow Jones has fallen below 23,000 points and the U.S. stock marke tis now flirting with a bear market.
Already, according to Sam Stovall, the chief investment strategist at CFRA Research, equity markets are approaching a capitulation phase. While there still isn’t enough data to conclusively state that U.S. markets have entered a bear market, analysts generally believe the Dow Jones and Nasdaq are close to reaching bear market levels in the short-term.
“Equity markets are quickly approaching the capitulation phase after having broken below critical support,” Stovall said.
All Eyes on Interest Rate as Stock Market Falls
Analysts have started to question the strength and the ability of the U.S. market to undergo steep sell-offs that could trigger a long-lasting bear market.
The Federal Reserve’s rate hike, which has made it more expensive for businesses to borrow money and fuel the recovery of the economy, is expected to test the robustness of U.S. markets in the upcoming months.
Echoing the sentiment of CFRA Research executive Sam Stovall, Citi chief global equity strategist Robert Buckland said that equity markets are slowing down and that the stock market is in steep decline.
However, Buckland emphasized that he does not believe it is the Fed’s job to alter its interest rate to rescue the U.S. stock market. The Citi executive explained:
Equity markets are starting to think about the likelihood of a slowdown. But, it’s not Powell’s job to make the stock market go up. It’s his job to run monetary policy on a mandate of growth and inflation, and the macroeconomic data is pretty robust.
Buckland further added that investors in the market are throwing a “tantrum” after a cycle of easy money and one of the largest bull markets in recent history.
From January to December of 2017, the Dow Jones increased from 19,762 points to 24,719 points, by over 25 percent on a yearly basis. He suggested that a correction was due following such a large bull run that occurred last year.
“Underlying volatility has moved higher in the last six months. I suspect the market has become addicted to cheap money in this cycle and it’s throwing a tantrum as that’s getting taken away,” noted Buckland.
Road to Recovery
The downtrend of the U.S. stock market has extended to retailers, manufacturers, and virtually every major industry in the country.
While the stock price of tech stocks like Amazon and Apple has fallen by around 30 percent on average, retailers and car manufacturers in the likes of Target, Tiffany, and Ford recorded losses in the range of 30 to 35 percent.
Overseas markets such as Australia, South Korea, and China are also seeing their economies weaken at a fairly rapid rate, with commercial banks struggling in Australia and the unemployment gradually rising in South Korea.
The SSE Composite, which tracks all of the stocks listed on the Shanghai Stock Exchange, has dropped by 28.5 percent since January, directly impacted by the ongoing trade war between the U.S. and China.
Having acquired Earn.com in April, Coinbase has launched the first product out of that relationship. Dubbed “Coinbase Earn,” a resource page where crypto lovers can learn more about cryptocurrencies trading on Coinbase and get rewarded with tokens. The announcement, which was published on its blog, marks the 10th day of its 12 Days of Consecutive Announcement, where the U.S. based exchange promises to make a major announcement within 12 days.
Studies have shown that cryptocurrency holders and others who haven’t invested in digital assets are lacking in knowledge about the assets they purchase. For most people, they go through the route of what’s in vogue or follow recommendations on social media groups like Telegram.
The idea is for users to understand more about an asset’s utility and its underlying technology, while getting a bit of the asset to try out.
Coinbase Incentivizes Learning With Cryptocurrency
Coinbase Earn, which is in private beta, would pull a large crowd based on the incentives. To manage the traffic, while still getting a feel of what the market wants, Coinbase is launching the new product in an invite-only mode for now and with a single cryptocurrency, ZRX, a trading protocol for creating decentralized exchanges.
The exchange has sent invitations to a selected group of crypto lovers, who can visit the Coinbase Earn ZRX page to complete educational tasks in exchange for a small amount of the cryptocurrency.
Even if you didn’t get an invite, you can still view the lessons and learn more about the digital currency. The digital asset platform also believes Coinbase Earn would provide new access for users to obtain cryptocurrency.
The announcement reads:
Traditionally, the two ways people have obtained cryptocurrency are through mining or buying. Mining cryptocurrency typically requires technical knowledge and high upfront costs, while buying cryptocurrency can require disposable income to exchange for cryptocurrencies.
Currently, there are three beginner level short video lessons for users to complete, that shouldn’t take more than 6 minutes in total, according to the Coinbase Earn website.
Coinbase also launched Coinbase Convert, earlier this week. Convert is a feature that allows the exchange’s retail traders to make crypto to crypto conversions, which it claims is cheaper and faster than selling a digital asset to buy another.
There will be a total of 18.4 million Monero’s XMR coins in circulation by May 31, 2022. And the project has already mined more than 90% of it.
Per data available at MoneroBlocks.info, a Monero blockchain explorer, the privacy-enabled cryptocurrency have emitted close 16.6 million XMR. As the emission forms parity with the total supply, the Monero project will switch to a new supply program, dubbed as tail emission. The project’s earlier announcements indicate that miners will obtain a consistent mining reward of 0.6 XMR per block that would likely maintain the overall security and integrity of Monero blockchain.
“Miners need an incentive to mine. Because of the dynamic blocksize, competition between miners will cause fees to decrease,” Moneropedia explained.
If mining is not profitable due to a high cost and low reward, miners lose their incentive and will stop mining, reducing the security of the network.
Similar to Bitcoin’s working model, Monero also reduces the supply of its XMR tokens that are thrown into circulation through mining. As of now, the project offers the reward of 3.41 XMR per block, and it is programmed to go lower with each block mined until it reaches 0.6 XMR.
A Replacement Cryptocurrency?
Monero’s tail emission plan somewhat attempts to challenge the token supply mechanism of bitcoin, the world’s leading digital currency by adoption and market capitalization. Bitcoin network will mine a total of 21 million coins in its lifetime. By 2040, it would have drilled 99.8% of all bitcoins, while the remaining 0.2% will spread out across the next 100 years
So, the only way bitcoin miners will be earning any incentives is by on-chain transaction fees or through dominant assurance contracts. Bitcoin network is already practicing an off-chain solution in Lightning Network, where users don’t pay commissions to miners for settling every bitcoin transaction. If the practice continues to exist as a long-term solution to bitcoin’s scalability, then miners would be least interested in confirming transactions on its main chain. It’s called the Tragedy of the Commons.
In the absence of miners, the bitcoin blockchain would be less secure than it is today. After all, it is the miners that have kept it cheat-proof all this time.
Monero, on the other hand, will keep its supply consistent to incentivize miners all its lifetime. The foresightedness hints that the privacy cryptocurrency is preparing itself for a long game, perhaps to be among the few cryptocurrencies that would replace bitcoin if it fails to innovate.
That said, the demand for XMR should be higher to suit its deflationary model. Time will tell more, of course.
Bitcoin price is surging above the psychological resistance of $4,100 in an extended buying action.
The Bitcoin/Dollar rate rose to $4100 on Coinbase between 9-10 am UTC – a level that was breached to the downside during the December 3 trading session. The pair, around the same time, was trading at a prime rate of $4197 on BitFinex. The overall rebound is promising to reinstate bullish faith in the market that just witnessed a crash to a yearly low near $3100. The price since has surged an impressive 29% while the bitcoin market capitalization has also jumped to its two-week high of circa $70 billion.
There is no fundamental evidence that backs the ongoing upside momentum. Nevertheless, the more it goes up, the better it has the probability to confirm the area around $3127 as the new bottom. Interestingly, the jump coincided with a major macroeconomic event in the US. The Federal Reserve on Wednesday increased the interest rate as expected, sending shivers across the US stock market that plunged hugely. Bitcoin remained unaffected by the unnerving mainstream price action, and maintained its bullish call, nevertheless.
On technical merits, the Bitcoin/Dollar rate is doing what it is supposed to do: recovering from its oversold territory after staying there for a relatively larger time. As predicted in our previous analysis, we are looking at the formation of an inverse head and shoulder and there is a likelihood of many long positions to call exit at this level. Nevertheless, those with more bullish expectations for bitcoin must be clearly eyeing $4414 – the resistance level from November 29 trading session- as their primary upside target, followed by a go at the 50-period moving average.
The prevailing bearish sentiment still lingers over the bitcoin market, given we are inside a bearish flag formation, an indicator that suggests the continuation of selling after moderate rebound actions.
Altcoins are up too
The bitcoin surge is also closely followed by the altcoin market, with Bitcoin Cash leading the session high with an impressive 40% jump, followed by Bitcoin SV and Ethereum that have surged 7% each. Ripple, EOS and Stellar have achieved new highs with a circa 5% jump.
The difficulties involved in securing insurance against cryptocurrency hacks and thefts is deterring institutional investors from putting their money in the nascent asset class, according to cryptocurrency exchanges and traders in Asia.
Per Reuters, digital assets have suffered reputational damage following a series of hacks and thefts at cryptocurrency exchanges in the past few years and this has turned off large fund managers.
But while the situation could be turned around if the sector got buy-in from insurers, obtaining coverage has proved difficult according to Henri Arslanian, the fintech and crypto leader for Asia at accounting giant PricewaterhouseCoopers:
Most institutionally minded crypto firms want to buy proper insurance, and in many cases, getting adequate insurance coverage is a regulatory or legal requirement. However, getting such coverage is almost impossible despite their best efforts.
Besides coverage being necessary to attract institutional investors, it might also become a requirement for licensing cryptocurrency exchanges in some jurisdictions. In its quest to regulate cryptocurrency exchanges, the Securities and Futures Commission of Hong Kong has for instance indicated that one condition that could be imposed on regulated exchanges would be to have most of the digital assets covered by insurers.
The accusations leveled by players in the cryptocurrency sector against insurers in Asia have, however, been rebuffed with some insurance firms stating that they offer covers to the industry. Obtaining these covers, though, is not a walk in the park, according to Thomas Cain, the regional director of commercial risk solutions at the Asian unit of the globe’s biggest insurance broker by revenue, Aon:
“It is not difficult to insure companies that hold large amounts of crypto assets, but given the newness of the asset class and the publicity some of the crypto breaches have received, applicants need to make an effort to distinguish themselves.”
One of the cryptocurrency firms that Aon recently sourced insurance for was Gemini.The insurance coverage was provided to the cryptocurrencies held in the custodial service of the digital asset platform founded by Cameron and Tyler Winklevoss.
At the time, the digital asset platform indicated that crypto investors were interested in getting the ‘same levels of insured protection they’re used to being afforded by traditional financial institutions’.
Over three months ago cryptocurrency custody firm Kingdom Trust, which at the time held digital assets worth approximately US$12 billion in its custody, obtained coverage via the Lloyd’s of London marketplace. While the specific insurer was not revealed, the digital asset custody firm which boasts of over 100,000 clients indicated that the move would enhance the confidence of its institutional investors.
This week, the valuation of the crypto market increased by $29 billion from $100 billion to $129 billion.
Within a five-day span, led by the sudden increase in the Bitcoin price, the crypto market experienced a surge in its valuation by nearly 30 percent.
Following the initial rally of Bitcoin (BTC) to $4,000, many technical analysts expressed concerns toward the sustainability of the recently found momentum of the crypto market, as Bitcoin started to retrace.
Can Crypto Market Sustain Momentum?
A cryptocurrency trader with the online alias “The Crypto Dog” said after the initial corrective rally of Bitcoin that the price trend of the asset has become poor with an immediate pullback to $3,700.
The trader said that if the dominant cryptocurrency struggles to rebound from $3,635 and resistance levels below it, the corrective rally of the crypto market on December 19 may reverse in the short-term.
“I’m astounded with how terrible BTC looks after just two hours. It could not have become more rekt in a shorter amount of time,” noted the trader.
Hsaka, a cryptocurrency technical analyst, said that Bitcoin already dropped to its initial resistance zone and is at risk of falling to the $3,500 region in the days to come.
The analyst said:
I was out of all my longs yesterday once we hit the target, missed out on today’s move. Bitcoin flipped the resistance zone as support and commenced another leg up, sweeping the 3840 stops. Looks to me like we’ll retrace back to the initial resistance zone.
To recover from one of the largest sell-offs in recent years, the cryptocurrency market has to demonstrate stability and a gradual increase in value.
A sudden spike in the price of major cryptocurrencies increases the vulnerability of the market to a big drop in value, especially if it is not supported by sufficient volume and trading activity.
As of December 20, the daily trading volume of Bitcoin remains at around $6.6 billion, which is relatively high considering the volume the asset demonstrated throughout the past several weeks.
But, for an asset that recorded an 18 percent surge in price within a four-day span, its volume still remains weak.
If the recent corrective rally is followed up with a consolidation period and a stable few weeks that can provide some basis for the market to climb on top of, a mid-term rally remains a possibility. If the asset class continues to demonstrate such a high level of volatility, then volatility on the downside can also be expected.
Low Volume Assets Already Falling
Stellar (XLM), Cardano (ADA), and other cryptocurrencies with a daily trading volume below $100 million have already started to fall against both the U.S. dollar and Bitcoin.
Depending on the level of volatility showed by major digital assets throughout this week, the market could prevent a downtrend from occurring in the short-term or drop to major resistance levels. The crypto market has shown strength at $100 billion and this week’s corrective rally likely materialized as oversold conditions triggered an abrupt recovery.
The year 2018 hasn’t particularly been the best year for cryptocurrencies, as the bear market had eroded value in almost every digital asset out there.
However, while cryptocurrencies aren’t having the best of times, blockchain technology has managed to stay relevant, with organizations and governments coming out with ways through which they can use blockchain as a tool for growth and advancement. One particular sector that has witnessed a tremendous use of the nascent technology has been the travel industry, where even airports have adopted the use of cryptocurrencies as a means of payment.
Cutting out the Middlemen
As it is with any industry, the presence of middlemen has always been one of the major issues with the transport industry. Since these their parties provide the customers with relations and communications with hotels, airlines, and other travel service providers, they also lead to an increase in transaction costs.
Third parties like TripAdvisor end up charging for the services that they provide, and this can add up to your already huge fees.
With the use of blockchain technology, a consumer could perform their travel and hotel bookings through the execution of a smart contract, thereby eliminating the need for middlemen like Expedia and Hotels.com. In like manner, the hotel or airline will be able to trust that the payment from their customers will get to them seamlessly, within a short period. Travel intermediaries are notorious for payment initialization issues, which often lead to a disruption of the customer’s itinerary.
Take LockTrip for example. The company provides a platform for people to locate and relate with hotels, airlines, etc. Primarily, it offers proper communication between the end vendors, while also ensuring that intermediaries- who hardly create any value- are in nowhere the picture.
LockTrip CEO Nikola Alexandrov told Forbes in an interview that his startup has been able to do even well, despite the effects of the bear market.
Our project has outperformed the market with +200% during the bearish market. Our prices are so cheap; we are not allowed to advertise them in Trivago.
Improved Payment Security
One of the most glaring areas where the transport and travel industry can benefit from the integration of blockchain technology is in ensuring the security of payments made online. Although there has been much improvement in the digital payment space move the past decade (thanks to the work of fintech firms and innovative online vendors), the transport industry still loses billions of dollars on an annual basis due to fraudulent transactions and scams. A report showed that the airline industry loses $1 billion monthly to credit card payment fraud.
This brings the need for innovative technology to help ensure customer security and protection. The blockchain, thanks to its decentralized nature, is unable to go offline, and this means that information which is stored on here can never be tampered with, even in the event of an attack. Also, transactions carried out on a decentralized ledger are secure and traceable. This will make it much easier to ensure that storage and retention of valuable information.
Proper Identity Verification
The transport industry has always been reliant on the use of effective identification services, and this is another area where the distributed ledger technology excels. Blockchain can provide travelers with digital identities; a feat which can significantly improve the efficiency of airports all over the world and provide for a much more enjoyable user experience.
With blockchain technology, checkout lines and queues at airports will be drastically reduced, and we can also see a world where documents like driver’s licenses and passports can be replaced with facial scans and other digital and biometric information. This would curb identity theft and improve the general reputation of the transport industry.
Tokenized assets are here to stay. The current race is about who can get regulated products to the market first and then who can successfully gain user adoption. While several projects have purported to tokenize real estate assets, blockimmo is the first to do it within the bounds of existing regulations in two jurisdictions.
The blockimmo platform launched recently with two test properties, but they intend to have actual real estate listed in the beginning of 2019.
The way blockimmo works is a real estate seller lists the property on the platform, along with an issuance of tokens which will represent shares of the property. Investors are then able to invest however much they like and watch the crowdsale progress. Various terms and limits can be placed on the sale. Once the sale is complete, each person who invested receives representative tokens in their wallet, tokens which are associated with a real-world holding by an investment firm in Lichtenstein.
We’ve heard this before. Several projects are working on similar goals, with regulations and government approval being the primary stumbling blocks. One that comes to mind is LA Token. TrustToken aims to do similar things in the future, as well.
Not Available in the US
The question of enforceability arises when there can be literally dozens of owners of a single property and the tokens can be swapped between wallets at will. To deal with this, blockimmo is limiting its operations to places where it is sure it can be fully regulated: Switzerland and Lichtenstein. They intend to expand to other parts of Europe as properties are successfully listed and the platform grows.
The properties that are sold on the platform, in a legal sense, are held by a Lichenstein firm, each with its own sub-fund. This is how the properties are secured in an IRL sense.
Switzerland is a great place to start a project like blockimmo because of the organization of its existing land registry. Founder Bastiaan Don said of this:
The properties we tokenise are already designated with the precise E-GRID number directly in the blockchain. This is already a known quantity in Switzerland and they are already entered as such in their own, centralised land register. Synchronising the systems would be a first step towards a land register on the Blockchain.
The big news last week for blockimmo was that FINMA, the Swiss financial regulatory body, had approved both their business model and their security token offering. This means they’re totally free to pursue their goals, and don’t have to worry about later running into problems with regulators. Swiss laws still apply to properties that are listed and exist within Switzerland, and there are various restrictions on foreigners investing in Swiss real estate.
FINMA announced this week that blockchain companies would be able to successfully operate in Switzerland with only minimal changes to its regulations.
The project has brought in a legal firm called MME to help it with legal issues that may arise, and also has the backing of family-run bank, Bank Frick, whose Director of Funds & Products, Raphael Haldner, said of the project:
The implementation of projects like blockimmo demonstrates the expertise of Bank Frick in the field of digital business models and products, as well our innovative drive.
Two example properties are live at blockimmo.ch so the public can see how the platform is intended to work. Real listings are expected to be happening as early as next month.
American based financial service Western Union is finally ready for cryptocurrencies. In a video interview with Reuters Plus, Western Union President Odilon Almeida said the company has been evaluating the use of cryptocurrency. They are also exploring how they can improve their service delivery using blockchain technology. Western Union is interested in adopting cryptocurrencies as an option for users to exchange for fiat currencies. However, Almeida said the move would only see the light of day if it connects with a global audience.
Almeida also touched on some of the limitations of cryptocurrencies and why they haven’t achieved mainstream adoption. He listed volatility, governance, and compliance, as the three stumbling blocks against its growth. Stablecoins are actively working toward solving the problem of volatility in crypto markets. Almeida said:
Western Union is ready today to adopt any kind of currency. We already operate with 130 currencies. If we one day feel like it’s the right strategy to introduce cryptocurrencies to our platform, technology-wise it’s just one more currency. I think cryptocurrency may become one more option of currency, or assets, around the globe to be exchanged between people and businesses. If that happens, we will be ready to launch.
Recall that Western Union ran a blockchain trial with Ripple in June 2018, where company CEO Hikmet Ersek argued that the global money transfer juggernaut didn’t get any cost savings from the trial that could make a case for integrating Ripple into its system for cross-border payments.
“We are always criticized that Western Union is not cost-efficient, blah blah blah, but we did not see that part of the efficiency yet during our tests. The practical matter is it’s still too expensive,” Ersek told Fortune, in an interview.
Ripple’s senior vice president of product Asheesh Birla said it was impossible for Western Union to see any cost savings benefits after making ten transactions using XRP.
If they were to move volume at scale, then maybe you would see something, but with 10, it’s not surprising that they do not see cost savings. They do millions of transactions a month, and I’m not surprised that with ten transactions it didn’t have earth-shattering results.
Almeida said he remains optimistic about the prospects of leveraging Ripple for cross-border payments, even though the tests have been on-going for a while
“Our pilot with Ripple goes into the same space. It’s about learning. We are looking at blockchain technology and really seeing if it can make us more efficient,” he explained in the video.
Blockchain platform TRON announced today its plans to establish a $100 million fund known as “TRON Arcade.” The fund is the fast-rising network’s newest effort to drive higher adoption of its platform and to finally unlock the gaming sector, which is worth billions, for blockchain technology. Until this point, the blockchain-based gaming field has experienced mixed results in terms of market penetration. Several projects have emerged, each of which seek to disrupt the nearly $138 billion industry, although adoption and retention have posed major challenges for early entrants.
Unlike the first-movers in the blockchain gaming arena, TRON’s gaming endeavor is being launched from a platform that already counts on an established community along with a robust technological infrastructure. These factors could boost TRON’s ability to attract new communities to blockchain. Even so, the company enters murky waters that have until now been unfriendly to the concept of gaming. TRON will have to prove its commitment to the challenge, and show that it can sign companies that will push the sector forward.
Expanding the Gaming Footprint
The gaming industry has become one of the fastest-growing sectors in tech, and though blockchain has followed the same trajectory, it has yet to crack the gaming puzzle. Blockchain’s technology, while revolutionary, has been unable to break free of the shackles its technical constraints place on it. Scalability, speed, and the cost of maintaining larger games on leading platforms like Ethereum’s have resulted in failed efforts, forcing companies to abandon blockchain initiatives in droves.
CEO Justin Sun believes that TRON’s infrastructure could readily address these issues, noting that “Product-wise we have super-fast blockchain technology with almost free cost.” Pursuant to this point, TRON recently surpassed 1.3 million transactions per second, breaking Ethereum’s record. However, the company will have to demonstrate that its network can handle not just peaks of that magnitude, but rather a steady flow of millions of transactions (something others have promised but failed to deliver).
Aside from the technical barriers, blockchain has also failed to attract the number of developers truly needed to drive adoption toward critical mass. While some projects have experienced success, emboldened further by some significant partnerships announced across the sector, big wins for blockchain-based deliverables remain limited. TRON’s approach eschews the profit perspective, judging much more to be at stake. As Sun observes, “Gaming has been always the leading use case for any merging technology, as it was for mobile, and we think same applies to blockchain where we’ve already seen some proven business cases.”
Driving Developer Adoption
TRON is not the first to recognize the sector’s potential. Blockchain-based VR ecosystem Decentralandannounced a similar fund earlier this year. The company pledged $5 million to support gaming projects built directly on its platform, offering a real incentive to start working full-time on blockchain gaming innovation. TRON Arcade overshadows the former’s efforts in terms of scale and scope but follows in the same spirit of disruption. The platform already hosts a working content distribution system and infrastructure capable of supporting the scores of transactions that accompany the modern gaming landscape. Moreover, TRON has announced that it already has agreements with 10 companies to kick off the project.
For developers, TRON also represents a unique value proposition—instant access to a market that has already surpassed 600,000 users. Having cultivated an audience, TRON is aiming to help projects that struggled with the costs of maintaining low-traffic games on other networks.
Banking on Gaming’s Potential
Even in its uncertain state, gaming on blockchain already has proponents thanks to promising projects and recognized games. Nevertheless, the sector must still prove it can respond to the challenges that have hindered wider acceptance and accessibility. For TRON, delivering these solutions could conceivably help unlock the platform’s potential. Speaking of his vision for blockchain gaming, Sun adds that “TRON is dedicated to bring blockchain technology to mass market. To do that, we are focusing on the consumer internet vertical, so as to introduce more people to blockchain technology.”
Much like the rest of blockchain, the rules on gaming have yet to be written. With the inception of the TRON Arcade fund, TRON is seeking to dominate the conversation by helping redefine the gaming market’s future. Even so, this is not the first time a major player has made a gamble on blockchain gaming, and it would not be the last time it proved unsuccessful.
It is still too early to determine which platform will ultimately be victorious in this pursuit, especially when considering several failed starts have repeatedly impeded blockchain gaming’s reach. Should TRON prove its model works as intended, it could very well present a more accessible on ramp for greater mainstream blockchain adoption and eventually drive longer-term sustainability.
Opera has announced the release of its new blockchain-ready browser with a built-in Ethereum wallet on the Android platform.
According to the statement released earlier today, the updated app which comes with Web 3 support is now available to users for download on the Google Play Store. Opera says that the new app aims to provide Android users with an opportunity to experience Web 3 easily, as well as a means of accelerating the transition of cryptocurrencies from speculative investments to actual everyday use in transactions.
With the launch of the updated Android app, the company believes that it now provides a platform where users can painlessly use cryptocurrencies online and access Web 3 services, which has proved difficult in the past. The choice of Ethereum is largely down to its large existing community of dApp developers. Opera believes that by offering support to the Ethereum Web3 API, interactions with dApps will become easier for users. The company also revealed that it has plans to extend the wallet to support more cryptocurrencies and networks in the future.
Speaking about the new release, ConsenSys founder and Ethereum co-founder Joseph Lubin said:
It’s a significant step for one of the world’s leading browsers to add an Ethereum-based crypto wallet and Dapp explorer, and speaks to Opera’s innovative roots and commitment to embracing next generation technology. We see this as an important moment in improving Dapp accessibility, opening Web3 to mainstream audiences, and encouraging developers to build on Ethereum.
The emerging new generation web technology known as Web 3 is an umbrella term for a set of emerging technologies at the intersection of cryptocurrency, blockchains and distributed systems. Together, they extend the capabilities of the web from its current use to vastly more significant applications that at any point.
Opera is confident that today’s web will be the interface to the future’s decentralised web.
In league with Web 3, the crypto wallet browser will demonstrate an ability to renew and extend its role as an information accessing tool, and to manage users’ online transactions and digital identities in a way that enhances security and gives them more control.
This launch comes as the latest in a series of developments aimed at integrating cryptocurrency functionality across Opera’s browser platforms.
Earlier in the year, the company announced the integration of Ethereum wallets on its desktop browser. The new Opera Android browser is currently available in the Play Store.
Iran is in the middle of a bit of an economic crisis right now. Due to hiccups caused by the sanctions that were imposed by the United States government a while back,
the government of Iran has had its hands full with merely keeping its economy afloat. Due to this, it would appear that the citizens are taking matters into their own hands. Having started using cryptocurrency for transactions with the rest of the world, they have now turned to Bitcoin mining as a means of making ends meet, according to a report on the Atlantic Council.
The U.S. imposed sanctions affected the Iranian economy in more ways than one. Perhaps the biggest negative that came out among other effects of the sanctions saw Iran-based commercial banks kicked out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. A direct implication of this move is the exclusion of the Iranian Central Bank from the rest the world, making it impossible for retail banks to process transactions or conduct any form of business with financial institutions in other countries.
Since the sanctions were imposed, Iranians abroad have been somewhat stranded. As a means of ensuring that they are still able to transact and earn a living, a lot of Iranians have turned to cryptocurrency mining.
The sustainability of this new strategy has also been called into question, considering the dire state of the crypto market right now. The bear market has affected crypto markets all over the world, with the slump in prices making it less profitable to mine cryptos.
Energy Subsidies Credited for Profitable Iranian Mining
Despite the bear market, Iranians have found a way to mine digital assets and make some income out of it.
A perfect example is the story of Ali Hosseini and Pedram Ghesemi. The cousins bought an Antminer S9, a crypto mining rig, for $526 some months back, at a time when Bitcoin went for $6,500. This month saw the price crash to as low as $3,200, but it has recovered a bit to $3,758.58, at press time.
The cousins claim that they pay very low for electricity in Iran to power their crypto mining, so they are still able to stay afloat. This is thanks to the large subsidies for energy in Iran; a fact that has directly been responsible for a massive influx of crypto miners to Iran.
Despite the absence of any form of a regulatory framework, cryptocurrency mining remains legal in Iran. Following the enforcement of the U.S. sanctions, finding outside liquidity for crypto trading could become difficult for Iranian investors, as large crypto exchange Binance warned Iranian investors to withdraw their funds from the platform, as it seeks to comply with the sanctions from Washington.
Dash has recorded yet another adoption milestone driven by special circumstances in Venezuela, with the sale of more than 66,000 KRIP mobile
phones that are designed with special cryptocurrency enhancements optimised for the Dash ecosystem. According to the company, from launch in August 2018 to present, the vast majority of the devices have been sold in Venezuela, making it by far the world’s biggest market for the cryptocurrency-enabled phones.
It will be recalled that in August, Dash signed a deal with Kripto Mobile Corporation (KRIP), a South American company that manufactures mobile phones that come pre-equipped with the Dash ecosystem, Dash wallets and the Bitrefill app. According to Dash CEO Ryan Taylor, the deal was expected to bring the Dash ecosystem to more than 10,000 new Venezuelan users every month – a target that has been significantly exceeded with the sale of 53,000 phones in a little over three months.
Dash/Kripto Mobile Partnership Bears Fruits
Information provided to CCN shows that of the 66,000 KRIP K1 phones sold wholesale and shipped under the terms of the Dash partnership, more than 53,000 have been sent to Venezuela alone as consumers and retailers in the country increasingly look to cryptocurrency adoption as the solution to dealing with non-availability of hard currency and hyperinflation which has rendered the Bolivar all but worthless.
Giving the partnership another dimension, Dash and Kripto Mobile have also partnered with DiscoverDash.com, a global Dash merchant directory to develop a mobile app version of the website which has been included in all existing and future KRIP smartphones. The implication of this is that in addition to having access tot he Dash ecosystem, users will also be able to locate and browse through merchants that accept Dash in their locality.
Commenting on the news coming out of Venezuela, Dash Core Group Global Head of Business Development Bradley Zastrow said:
Our focus since the launch of our KRIP phones in August has been to make this incredible Dash ecosystem as complete and inclusive as possible. That we have already sold and shipped over 66,000 phones in only two and a half months clearly shows we are achieving those goals. Now, with Dash Text and the DiscoverDash.com app, we’re expanding our partnership and enhancing the user experience, making it easier than ever before for the Venezuela community to use and transact in Dash in their everyday lives.
After Venezuela, Dash Targets Latin America
Dash has made no secret of its intention to use Venezuela as a staging point to expand adoption across the region, and to this end Dash Text is explicitly identified as a key part of its Latin America strategy. In November, Dash Text provides an SMS-based cryptocurrency transaction service for Venezuelan users, cutting out the need for smartphones or high speed internet connections in a country with just 41 percent smartphone penetration.
All KRIP K1 phones come with a suite of Dash ecosystem apps designed to make a 360-degree Dash transaction experience possible. These apps include Dash wallet for custody, Bitrefill for spending Dash and Uphold for buying Dash. According to information provided by Zastrow, this strategy is proving successful with some strong results recorded since launch in August.
Zastrow revealed that first time Dash wallet downloads in September and October increased by 23 percent over the corresponding figures for July and August. He also revealed that there has been increased volume driven to Bitrefill and Uphold, along with a new retention increase after 15 days.
In his reaction to the news, KRIP Venezuela Marketing Manager Andrea Coll said:
The results to date have been exceptional, and we’re thrilled to now build on that success by expanding to now include Dash Text and DiscoverDash.com. These phones provide users around Latin America with an affordable way to acquire and use cryptocurrency for everyday transactions, like buying groceries or sharing money with family. Dash’s InstantSend feature and low transaction costs makes using cryptocurrency easy and efficient for users, and will help build momentum for cryptocurrency as a viable and stable alternative method of payment.
MyCrypto.com, an open-source tool for generating cryptocurrency wallets, is currently running a campaign to raise awareness of crypto security best practices. Every day in December, they’ve published a new security tip.
Those who share the tips on social media are entered into a drawing for a variety of prizes, including hardware wallets and other crypto related gear. The tips range from things like “google yourself” to instructions on how to secure a Github repository.
A new security tip is released each day of December, and every entrant can enter five times per day.
A total of 15 winners will be chosen, according to their announcement, and the prize packages are as follows:
- One Hardware Wallet (Ledger Nano S or Trezor Model T or KeepKey)
- A mystery pack of shirts from all #MyCryptoWinter partners
- TheBitcoinPodcast’s new book “Can You Describe Bitcoin/Ethereum/Blockchain in 10 words or less?”
- A mystery pack of stickers from partners
- A mystery pack of shirts from MyCrypto partners
- A mystery pack of stickers from MyCrypto partners
They note that other prizes will be announced as the month goes on. There are 12 days left to enter, for a total of up to 60 entries per person.
MyCypto’s Taylor Monahan what gave her the idea for this initiative, and she told us:
At MyCrypto we have to be very privacy-minded, and we want to do our best to help our users and the community learn how to be privacy-minded as well. With the natural business slow-down during the month of December (and the literal crypto winter), we thought that developing a calendar with actionable security tips each day might be a fun way to lift spirits, keep people entertained throughout the month, and help folks learn more about security. Plus, winning prizes is nice!
Unless you’re Spencer Bogart, most people would agree that 2018 has been a dismal year for crypto–even if they don’t say it on their Twitter feeds. If you want to sum up the year in four words, you could try using these: ICOs and Ethereum are dead.
Forums, Telegram groups, Slack chats, there’s no shortage of predictions for Ethereum’s collapse, ICOs futures, FUD, and personal nagging fears about ending up in a dumpster. But, beyond the gossip and speculation, what do the industry insiders have to say?
Bitcoin Price Has Been Manipulated
OKEx Head of Operations Andy Cheung believes that institutions have been controlling the market and that once the price hovers around the $3,000 mark, that’s when it will rebound as the big gun investors get on board. He says:
I personally believe people are pushing it down because we want more traditional and institutional people to enter the market. It was too high, people were like “what the hell?” Right now it’s a very good price, so traditional people can actually come into the crypto space and then we’ll slowly go up. $3,000 is really cheap to buy right now and then I believe it will go up.
ICOs and Ethereum Are Dead
Co-founder of Decred Jake Yocom-Piatt doesn’t mince his words and he had a few more things to say about 2018 than the price of bitcoin.
As an autonomous digital currency focused on community input and sustainable funding for development, perhaps he’s a little biased. Not only did 2018 kill off ICOs but he sustains that Ethereum is gasping for its last breaths of air as well.
In 2018, we saw the ICO model die, Ethereum flame out, dApps and tokens go to zero, and ERC-20 projects generate insanely creative business models just to avoid regulation in a brazen grab for cash. Observing these failures reinforced our belief that the blockchain-driven future isn’t a quick fix. It will take decades, patience, and longevity to build and gain mass adoption.
Institutional Investment and Stablecoins in 2019
You may be bored of hearing about institutional investment. But while CME and CBOE didn’t bring the expected wads of cash from Wall Street that was initially expected, projects like Bakkt and Fidelity look to be offering something different.
Physically settled futures contracts will at least mean that speculative traders have to buy bitcoin to bet on its price. And with companies like Microsoft and Starbucks supposedly on board, maybe it will change the game.
Akbar Thobhani, as CEO of SFOX, a crypto prime dealer that’s building an institutional crypto asset management platform, clearly, getting the big players on board is in his interests. He says:
2018 was marked by significant infrastructure developments and institutional buy-in. Despite the recent bear market conditions, this trend will continue next year. I believe that as prices recover, we’ll see at least one $50 million or over ICO that is registered with the SEC or otherwise operates with their blessing.
We may even see a player like Fidelity including cryptocurrencies as a 401(k) investment offering. Additionally, whereas most stablecoin efforts were concentrated in the U.S. in 2018, in 2019 more and more countries will adopt their own stablecoins — and accordingly, stablecoin volume will become collectively greater than the trading volume of a top five crypto.
The Bursting Bubble Was a Blessing in Disguise
Cameron Chell, Chairman of ICOx Innovations that creates crypto products for established companies to grow their business through blockchain believes the bear market of 2018 was actually a good thing. Despite the falling prices, plenty of household names started getting interested in blockchain tech and will continue to do so.
Respected brands like IBM, Walmart, and Kodak partnered with some of the best minds in blockchain to bring transparency to supply chain and intellectual property protection, to name a few industries. Meanwhile, institutional heavyweights like Goldman Sachs and Fidelity opened dedicated crypto desks — signaling that, speculation aside, crypto and blockchain are a long-term play, and everyone is paying attention. The crypto speculation bubble that popped in 2018 was a blessing in disguise. It caused the craze to fade into the background, which will pave the way for real-world blockchain applications to come to the fore in 2019.
The Year of Reverse ICOs
Tamir Koch, President of eMusic, the first major music platform to fully embrace blockchain through the eMusic Blockchain Project for music distribution and payments says that reverse ICOs will dominate the landscape for the year ahead. Raising bucketloads of startup cash will no longer be as easy as presenting a white paper and an idea.
Despite the market downturn, 2018 was the year where mainstream adoption of crypto began to gain steam. I believe 2019 will be a major step forward, with a huge player coming out and embracing crypto, such as a payment company accepting crypto, pushing adoption by the public into the mainstream. 2019 will also be the year of the reverse ICO. Gone are the days of companies with just a white paper and a dream.
Bitcoin Will Never Die
Finally, ShapeShift Co-Founder and COO Jon silences the critics and all the naysayers ringing the death knell for bitcoin. Rather than selling hopium to the masses, he recognizes that the past year hasn’t been a good one, but that there’s plenty of fight left in Bitcoin yet.
I won’t sugarcoat the current crypto market slump. We’ve seen investors become more reserved, and currencies, although no longer in free fall, struggling to regain relative value. However, the claim that Bitcoin is dead is a laughable one. We’ve heard this proclaimed in the past, and undoubtedly we’ll hear it again and again in the future. We know that that isn’t true, and 2018 has been a year of growth and fast-paced technological innovation for companies across the industry. Yes, the bear market matters, but it’s a period of time with a beginning and an end, part of a cycle that repeats itself over the years.
At ShapeShift, we’re focusing on what comes next. For 2019, I’m particularly excited to see the Lightning Network, Ethereum, and other protocols continue to work on scaling. These are exciting to watch and have been making significant developments.
So there you have it. Unlike last year when analysts were battling it out to make bold predictions about when crypto was going to the moon, some experts are saying that ICOs and Ethereum are dead. There’s also a lot more focus on protocol than price.
Yet all opinions seem to lead to pretty much the same road: the blockchain revolution will take little longer than we thought but we’re still moving in the right direction (unless you’re HODLing Ethereum).
To use the closing words of Yocom-Piatt:
Just like during the dot-com bubble, endurance matters. Those that survived the dot-com crash stood tall over those who ran out of gas. It was those projects that came to dominate the space.
Since December 17, within less than three days, the Bitcoin price has surged from $3,181 to $3,776 against the U.S. dollar, by more than 18 percent.
On cryptocurrency-to-fiat exchanges like Coinbase and Bitstamp, Bitcoin (BTC) has slightly corrected to $3,700 but the breakout of the dominant cryptocurrency above the $3,700 mark has led analysts to consider the possibility of the asset testing major resistance levels in the $3,800 to $4,200 range.
Since December 17, within less than three days, the Bitcoin price has surged from $3,181 to $3,776 against the U.S. dollar, by more than 18 percent.
On cryptocurrency-to-fiat exchanges like Coinbase and Bitstamp, Bitcoin (BTC) has slightly corrected to $3,700 but the breakout of the dominant cryptocurrency above the $3,700 mark has led analysts to consider the possibility of the asset testing major resistance levels in the $3,800 to $4,200 range.
Where is Bitcoin Heading to Next?
On Monday, when the Bitcoin price was hovering at around $3,500, a cryptocurrency trader with the online alias “The Crypto Dog” said that BTC could either drop below the $3,400 mark if it loses momentum or potentially rise to $3,800.
The analyst said:
BTC consolidation below resistance. If we lose strength I look at $3,400 for support. Below there I am concerned. A break out and I’m eyeing $3,800.
Since then, Bitcoin has shown strong signs of breaking out of the $3,800 resistance level, which it has not been able to test since the first week of December.
Bitcoin likely experienced a substantial increase in price over the last week due to severely oversold conditions. From November 28, the value of BTC has continuously fallen against the USD, experiencing a steep sell-off without high sell pressure.
As the market started to show extremely oversold conditions, many major crypto assets started to initiate a corrective rally, eventually pushing the entire market to surge in valuation.
Traders that shorted Bitcoin from the top, at around $19,500, have also started to cash out their positions estimating the mid-term bottom of BTC to be in the $3,000 to $4,000 range.
Speaking to Bloomberg, Mark Dow, a trader who called the top of BTC, said:
“I’m done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time. They just saw it was going up and wanted a piece of it.”
What Price Surge of Other Crypto Assets Show
Analysts have generally attributed the intensified decline in the value of Ethereum (ETH), Bitcoin Cash (BCH), and other major crypto assets to the lack of fundamentals. Ethereum has not been able to show a high level of user activity in decentralized applications (dApps) while Bitcoin Cash struggled to gain merchant adoption.
The surge in the price of ETH, BCH, and other protocols like EOS show that traders are more comfortable in entering high-risk positions and confident in the short-term trend of the market.
Whether both major cryptocurrencies and small ERC20 tokens can maintain their momentum throughout the weeks to come and sustain the price range achieved in the past few days remain uncertain. But, the recent corrective rally allowed the crypto market to obtain some breathing room and avoid a large drop below the $100 billion valuation mark.
The Australian Taxation Office (ATO) has reissued a warning to traders to ensure they declare their cryptocurrency profits when reporting their annual revenues. The ATO has warned Aussie crypto traders numerous times in the past but the issue is now reaching fever pitch.
Cryptocurrency regulatory requirements across Western nations tend to be quite lax when compared to their Asian counterparts, but times are changing, especially in Australia.
Aussie Tax Office Wants their Cut of Cryptocurrency Profits
The ATO have warned Aussie crypto traders and exchanges that they must declare their cryptocurrency profits as the tax regulators are looking to enforce greater transparency. Reading between the lines, it means they want their cut and are hell-bent on getting it.
Digital asset exchanges across Australia must now verify the identity of their users and will need to report any transactions over $10,000 that are deemed ‘suspicious’. Although the ATO have cited this is linked to Aussie anti-money laundering and anti-terrorism finance laws, many crypto users will see this differently.
A spokesperson for the ATO recently made a statement reported in the Australian Financial Review that said:
While there is no specific label on the capital gains schedule or income tax return to identify how many people have invested in cryptocurrency we are still looking at lodgment activity this year to determine any significant impact of cryptocurrencies.
Are the ATO Reacting to Increased Tax Questions?
Although to the laymen it would appear that the ATO is simply trying to enforce greater transparency so they can get their taste of the action, they are apparently just reacting to an increase of queries in regards to the tax obligations on those making cryptocurrency profits by saying:
We have observed through our ATO community channel and advice areas an increase in questions relating to tax obligations of cryptocurrency activity, which we see as a positive in people wanting to do the right thing in meeting their obligations.
It’s all about people doing the right thing. Of course!
If you are an Aussie crypto trader and you want to ensure you meet the ATO’s taxation laws on cryptocurrency profits, you will have to keep records and dates of your crypto transactions. You will have to show the amount in Aussie dollars and name the purpose of your transactions and other parties involved in the trade.
Although many will cite that such transparency is essential if crypto is to evolve, most crypto supports will believe this goes against the whole ethos of cryptocurrency.
The markets were euphoric. The community was cheer-leading the imminent launch of Bitcoin futures first on the CBOE and then on the CME. Bitcoin reached its all time high.
They saw this as an indication that institutional investors were just around the corner and that Bitcoin was about to “moon.” Fast forward to today and the feeling is quite the opposite: hodlers are left scratching their heads and licking their wounds.
So, what happened?
While there were a number of factors that drove Bitcoin into one of its worst bear markets to date, one cannot ignore the potential negative impact that these futures had on the market.
In this article, I will take a look at how futures contracts could have been used to skew the markets and why contract delivery is such an important distinction for a futures contract. But first, let’s start with a bit of futures theory.
Cash vs. Physical Delivery
When it comes to futures contracts, there are two main types that exist on the financial markets currently. These are cash settled futures and those that involve physical delivery of the underlying asset.
When you enter into a cash future, you are merely placing a “side bet” on the price of an underlying asset. You will post a certain amount of collateral for the futures contract which will be adjusted based on the profit / loss of the contract going forward.
On the expiry of the contract, the exchange will settle the futures trade purely with cash. There will be no exchange of any of the underlying asset. This is mostly used in cases where the underlying asset is hard or impracticable to deliver.
Cash futures are often used in the Equities futures markets when the traders are taking positions on an equity index such as the S&P500. In this case, it is much simpler to just settle the trade with cash.
This is in stark contrast to the physically settled futures contracts where the counter-parties are agreeing to exchange the asset at the end of the contract. The long party will take delivery of the asset from the short party on the expiry of the contract.
The delivery location and terms will be stipulated in the contract and the exchange will enforce the underlying rules. This is mainly used in the commodities markets as well as the forex markets.
So why is deliverability of the contract important for the underlying market?
Cash Future Manipulation
Given that a cash settled future involves no transaction on the underlying asset itself, there are no parameters that are set as to how the futures contracts will be used. The only variables that are stipulated in the contract are the expiry price and time.
This basically means that anyone with a large enough position in the underlying asset can impact on the price in the futures market by buying and selling in the physical market.
How do we know that this can happen?
It is a well-known market manipulation tactic that is called “banging the close”. There has been research done on the potential for this manipulation. There is also precedent of it being used in the past by some firms.
Hedge funds with large positions in the underlying asset could create activity in the price prior to future expiry dates. They will try to use their position as well as other tactics such as negative marketing campaigns to drive the price down. You can read more about some of the tactics that were used on Herbalife shares in the past.
Of course, this is very risky in the transparent and very public equities markets. People can see in the order books who is trading what and when. Regulators such as the SEC and CFTC have actively pursued market manipulation cases.
But what about in the unregulated and opaque cryptocurrency markets?
BTC Futures Manipulation
Even before the launch of the CBOE and CME futures there were many investors who were looking for a method to short Bitcoin. The introduction of an exchange listed futures contract was an open invitation.
Moreover, given that these futures were cash settled, hedge funds and crypto whales saw a lucrative opportunity for dubious tactics. This was even postulated prior to the launch by the Wall Street Journalas they talked about the risk of manipulation.
Indeed, it seemed quite suspicious that the price of Bitcoin reached its all-time highs just prior to the CME launch. It is entirely feasible that large investors were accumulating physical Bitcoin thereby increasing the Spot price and, subsequently, the future price.
Banging the “open” so to speak.
As the contracts opened up for trade, those same individuals started accumulating short positions in the cash futures market. They locked in futures expiry prices of close to $20,000 for contracts ending in January.
Then, they start banging down the price on the way to the close.
Those who had accumulated their Bitcoin holdings in the run up the futures open could now start selling them in the spot market. They locked in higher price levels on these physical holdings while tanking the price and profiteering in cash on the futures market.
Cash in, buy again. Rinse, repeat.
The CBOE and CME were aware of these risks and hence they decided to use exchanges that did full KYC as the reference point for the futures prices. For example, the CME referenced a collection of 5 reputable exchanges including Coinbase, Bitstamp and Kraken. The CBOE referenced the Gemini Exchange.
However, there is no way to contain a large and opaque global market. Most of the Bitcoin trading volume was being done on offshore exchanges where there were less thorough KYC practices. If global prices start falling, so will those on the reference exchanges.
In theory, it sounds plausible. But did it actually happen?
Correlation or Causation?
If one were to take a look at the Bitcoin peak and then fall, it seems to perfectly map the introduction of the contracts. While there was not an explosion in futures open interest when the CBOE contracts went live, volume steadily picked up when the CME futures started trading.
We need look no further than the comments by the Federal reserve bank of San Francisco. They feel confident enough in their assertions that the futures markets had a significant impact on the Bitcoin markets. The piece states that:
“The new investment opportunity led to a fall in demand in the spot bitcoin market and therefore a drop in price. With falling prices, pessimists started to make money on their bets, fueling further short selling and further downward pressure on prices.”
So, while they are not laying out a case for any sort of coordinated manipulation, they are explaining the exact dynamic that would take place if it were happening.
One can also observe the large uptick in the volatility of the spot market on the expiry dates of the futures markets. As noted by Tom Lee of Fundstrat Global Advisors, this shows that traders could have been actively trading the physical market to impact on the cash futures market.
So while this is not decisive evidence of manipulation, it does paint a dire picture for the listing of Nasdaq cash futures and the impact that this could have to further drive unnecessary volatility.
So what can be done about this?
Bitcoin is an asset that is incredibly easy to transfer. It is easier to transfer than shares, commodities and even fiat currency.
Hence, it seems to be an ideal candidate for physically delivered Bitcoin futures. The counter-parties to the derivative contract will enter a futures contract as it was intended. They will agree to physically buy or sell the asset on expiry.
This will also mean that the individual who is shorting (selling) the Bitcoin in the future will have to place the Bitcoin into storage to physically send it to the buyer on the expiry of the contract. They cannot use that Bitcoin separately to create buying pressure in the physical market.
More transparency, more certainty, less volatility. Physically delivered Bitcoin futures could actually contribute to a reduction of volatility as businesses and investors secure guaranteed future prices for their eventual transaction.
So, when can we expect to see physically settled contracts?
You will no doubt have heard of the exciting products and technology that is being developed by Bakkt. This is a digital currency initiative that is being backed by ICE (Intercontinental Exchange).
One of the most important things that they will be launching is their physically delivered Bakkt Bitcoin (USD) Daily Futures Contract. These call for delivery of one bitcoin held in a Bakkt Warehouse.
This means that counterparties will store their physical Bitcoin at Bakkt which will be held in fully transparent manner prior to the expiry. The future seller cannot use that Bitcoin in any capacity in the physical market before termination of the contract.
These contracts will allow for block trades and will take advantage of ICE’s proven financial market infrastructure and technology.
The Bakkt Bitcoin futures are set to launch on the 24th of January next year. It will be interesting to see whether these products will be able to tame any of the volatility that the cash futures helped spurn.
It has no doubt been a tough year for cryptocurrency markets. The community was hailing any sort of potential institutional adoption without consideration to the impact that it could have on the markets.
Cash futures were one of those products.
The markets are comprised of some really smart hedge funds, crypto whales and algorithmic traders. They knew the exact dynamics that cash futures could bring to the still nascent Bitcoin markets.
Whether they actively took advantage of this to enrich themselves, no one can really tell. What is clear though is that cash futures didn’t bring the avalanche of institutional adoption many were hoping for.
So, as we usher in the new year, let’s focus our attention on the types of financial products that actually bring value to the ecosystem and aid adoption.
An Internet Court launched in Eastern Chinese City Hangzhou will now use blockchain to fight plagiarism for online writers, local Chinese news outlet China.org.cn reported. China launched its first internet court in the city of Hangzhou to deal with internet related cases, save time and reduce overhead costs of getting justice out of the system.
At the time of the launch, the court was expected to accept court filings and cases electronically and given the mandate to rule online cases via live stream. Plaintiffs may verify their identity with a government-issued ID or through their Alipay account.
The Hangzhou Internet Court operates as an incubator for the governance of the internet space in China to settle “diversified Internet disputes, and a ‘first mover’ for the transformation of Internet trials.”
Hangzhou has a large percentage of online writers in China. The Binjiang District of the city has a “writers’ village,” which is home to over a hundred popular online writers. These writers have had issues with piracy over the years, and it has become increasingly challenging for them to prove their ownership of any piece of work. The report stated that while these writers used to resort to downloaded content and screenshots as proof of ownership, these pieces of ‘proof’ can easily be forged, making them ineffective as evidence.
Court To Use Blockchain Evidence in Copyright Infringement Cases
The expense of legal services and notary fees also make it difficult for writers to pursue justice against those who infringe on their copyright, the report argued. However, the Hangzhou Internet Court believes that it is nearly impossible to tamper with evidence that is logged on a distributed ledger or blockchain, “due to its decentralized and open distributed ledger technology.”
Wang Jiangqiao, who works as a judge at the court, was of the opinion that blockchain is beneficial to writers due to its tamper-proof nature, which gives it the ability to “track “authorship, time of creation, content, and evidence of infringement.”
A few weeks ago, the Hangzhou Internet Court became the first court in China to recognize blockchain technology as a means of storing evidence. The decision stemmed from a case in which the plaintiff, a company based in Hangzhou, sued the defendant, a Shenzhen-based tech firm, or making publications of the plaintiff’s copyrighted material on its official website.
The plaintiff captured the webpage of the defendant as well as the source code, and uploaded them to the Bitcoin blockchain. After investigations were concluded, the Hangzhou Internet Court maintained that this form of electronic data would henceforth serve as a form of evidence in copyright infringement cases.
China has used the blockchain in other areas of law enforcement in recent times.
In June, Galveston County (Texas) discovered that it had paid over $525,000 to someone it didn’t owe money to, a scam artist posing as a representative of a firm doing work for the county. The author contends this would be nearly impossible in a system of smart contracts described herein.
The scammer used social engineering to talk his way into a small fortune. According to the most recent reporting, the funds have never been recovered, prompting a local judge to call for the resignation of the two parties he feels most responsible.
Note: the author’s opinions are his own and do not reflect the views of its other staff.
Chron.com’s Nick Powell writes:
While the stolen funds are a tiny fraction of Galveston County’s $149 million budget, similar cyber attacks have raised the alarm in other Texas localities, including in Harris County, where $888,000 was nearly stolen by a person posing as an accountant with a Hurricane Harvey contractor. The city of El Paso was also robbed of $3 million in 2016 from a phony vendor.
Human error beats all in the rock, paper, scissors of life. Police entrusted with law and order frequently misapply it. People forget their passwords or lose their two-factor authentication devices. And occasionally clerks part ways with hundreds of thousands of dollars of their constituency’s money.
If only there were a technology that could prevent such nonsense. Something secure, with built-in authentication and protocols to prevent both fraud and default. If only – ah, wait. There is such a thing. The very technology we cover most frequently here: blockchains and smart contracts.
How A Smart Contract Could Have Prevented The Fraud In Galveston County
One thing ought to be made clear here: the situation of a municipality paying and offering contracts does not necessarily present a use case for a fully decentralized blockchain. Nor does it exactly refute the need of one, but hear the author out.
Instead, let’s talk about a distributed, permissioned ledger. Not only because it’s easier for local mandarins to stomach if they know they have the ability to override mistakes, but also because ultimately the immutable rules of cryptographic smart contracts have to be cognizant of the ebb and flow of laws and regulations.
This is to say, a real value in such a smart contract would be its ability to provide reversibility, something cryptonaughts have often lamented about the existing financial system but which in this case did not work out for Galveston County.
This idea might be unpopular, so why not elaborate some?
First of all, reversibility would be far less necessary in a system where users are required to authenticate themselves in order to receive payment, not simply convince a few clerks that they were the real McCoy. Secondly, contractors would be incentivized to protect their authentication credentials, because if the system were properly designed, the funds would only be allocated to such contracts once. Meaning that if by some means an attacker compromised the credentials of the contractor and eventually got away with the money, it’s coming out of the contractor’s payment, not the taxpayer’s pockets.
Transparency and AML-Friendly Stablecoins To The Rescue
But smart contracts provide other important benefits for municipal contracting systems.
For one, the strict implementation of milestones would become possible. A contractor is paid based on progress, an agreed-upon amount at a time. This would open competition and save taxpayers money. Some contractors are more efficient than others. Those who can bid shorter times and lower prices across the board will win, while those who actually perform will win future bids. A separate bid on each milestone of a project can be made.
Of course, the most important part of this for the public would be that the important details of the transactions would become publicly available. Deadlines on specific aspects of projects, who is doing the work, and how much it is costing the taxpayer would create a degree of accountability not available in the opaque systems of present day. There is a chance it would make civic participation interesting to more citizens, as they can now gather facts without nearly the effort.
As to the actual payment mechanism, well, that’s the trickiest part. The author doesn’t advocate that suddenly contractors must be paid in Bitcoin, but perhaps stablecoins could be considered as the tokens that would be locked in the smart contracts, with the payer footing the cost of transaction fees and compensating for tax liabilities incurred. The system would have to project enough savings overall to be viable.
But one thing that would be less likely, if even possible, in a system where code backed by laws was the final arbiter: the theft of many thousands of dollars with a few phone calls and falsified documents. A much greater effort would be required to conduct such theft, and ultimately if stablecoins were used, the realization of such proceeds would be far harder to achieve than with regular old fiat cash.
Robinhood launched its 3% interest “checking and savings”accounts last week. With 3% well over the average rate offered by conventional banks and some key differentials in the insurance that protects investors in Robinhood’s new products, U.S banking organizations are speaking out.
The new accounts from the trading platform, at first glance, appear to be like conventional savings accounts, with higher returns. However, savings accounts are normally protected by the Federal Deposit Insurance Corporation (FDIC). Robinhood’s accounts are instead protected by the Securities Investor Protection Corporation (SIPC).
Chris Cole, the senior regulatory counsel for the Independent Community Bankers of America (ICBA), told American Banker yesterday that Robinhood’s use of the terms banking, checking, and saving could be “deceptive.” Cole added:
This is supposed to be a brokerage account, but they’re running around making it look like a banking account.
Unlike FDIC coverage, SIPC coverage only guarantees an account holders balance to the value of their funds on the day of any insolvency. Cole said Robinhood:
Does not sufficiently explain the difference between SIPC protection and FDIC insurance.
Concerns Raised with Regulators
Stephen Harbeck, CEO of the SIPC, has already raised his concerns, telling news outlets he simply had not been consulted, and that he has already filed a complaint with the U.S Securities and Exchange Commission (SEC) over the matter. Harbeck told CNBC:
We want to make sure that investors know there’s some risk there.
Robinhood has yet to respond to the concerns raised. Its website FAQ’s for the new products outlined:
Your cash and securities in Robinhood are protected up to a total of $500,000 by the SIPC, $250,000 of which can be in cash, the rest in securities…Similar to FDIC insurance, SIPC protects cash in your account if the financial firm fails.
Sarah Grano, a spokesperson for the American Bankers Association, appears to also be taking note of this and told American Banker in an email that:
We appreciate any effort by regulators to clarify when deposits are fully insured and when they are not, and the need to respond quickly to misrepresentations.
An attorney, Brian Hester, said Robinhood is at risk of being classed as an “unlicensed banking business” if the new savings products are not viewed as “incidental” to its securities trading business by regulators. Hester explained:
Many state laws will have an exception for a registered broker-dealer to engage in banking activities, but only if it’s incidental to their brokerage business.
Robinhood is a broker-dealer and not a registered conventional bank. As such it hasn’t had to demonstrate the liquidity and risk management processes that regulated banks have to. It also does not have access to FDIC protection for its customers.
This combined with offering a rate far exceeding the average of 0.08% for checking accounts and 0.1% for U.S savings accounts is likely to continue to cause uproar amongst banks, associations, and likely regulators. Any resulting action by the U.S SEC or the SIPC could impact both the new products and Robinhood’s existing trading business.
Sr., the “CEO” of the AriseBank ICO scheme which saw him lining his pockets and paying personal expenses out of raised funds in the extreme.
Yesterday afternoon, the SEC announced that it had reached a settlement with Rice as regards its part of his legal troubles. A total of just over $2.5 million will be paid out by Rice and his COO, Stanley Ford. This figure includes almost $185,000 in penalties as well as over $68,000 in pre-judgement interest.
The SEC’s press release described the actions of Rice in typical government fashion, without much description or fanfare, saying they were guilty of defrauding people “by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors.” The director of the SEC’s Fort Worth Regional Office, Shamoil Shipchandler, had a bit more to add:
Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its kind decentralized bank offering its own cryptocurrency for customer products and services.
Banned From ICOs and Public Companies For Life
Regardless of the outcome of the criminal case that was brought against Rice in November, he is forever barred from serving in an officer or director capacity at any public company, putting an upper limit on whatever sort of career he might have thought of having outside of criminal activity. Both him and Ford are barred from this as well as “participating in a digital currency offering.” The term is vague enough to imply that they’re not even allowed to buy ICOs. As part of the settlement, the SEC wants them totally out of the game.
For some, this last bit might seem like a case of government overreach. But the fact is that many ICOs engage their community to help them both raise funds and spread the word. Someone with Rice’s particular set of skills could potentially do harm just by having access to a referral code. What is interesting about this case for cryptonaughts is the role the SEC is playing in legitimately protecting people from bad actors, flexing their considerable muscle in ways that take admitted thieves and scammers out of the picture.
As a variety of privately funded financial products, ICOs and cryptocurrencies in generally don’t have nearly the authority or ability necessary to effectively limit scam activity. That the government is actively working to punish fraudsters is a newer paradigm in the history of cryptocurrency and speaks to its increasing legitimacy and mainstream nature.
Rice still has an ongoing criminal case, wherein the US District Attorney in Dallas sent the FBI to arrest him and charged him with fraud a couple weeks back. The outcome of that case could see him do some prison time before he is ever able to begin repaying all the fines and costs he’s incurred in the AriseBank fiasco.
A DuPage County, Illinois judge has ruled that a woman charged with paying $10,000 in bitcoin for a Dark Web hitman to have her former lover’s wife killed must continue wearing a GPS monitoring device as the case goes on. 32 year-old Tina Jones of Des Plaines, Illinois has been arraigned on four counts of solicitation of murder for hire, two counts of solicitation of murder and attempted first-degree murder after authorities were alerted about a contract denominated in bitcoin which was placed on the unnamed woman’s life.
Earlier in the year, she was given the GPS monitor as part of her bail conditions – a condition which her lawyer says is now financially unbearable because of the $10 per day fee associated with it. To date he says, Jones has paid more than $2,390 since she was granted bail on April 23. If convicted on the Class X felonies, she faces up to 40 years in prison without the possibility of parole.
In the application, Jones’ lawyer said:
Ms. Jones would otherwise request that all other conditions of bond remain in effect, including that she be required to stay within the state of Georgia unless traveling to Illinois for court, and then she may only stay within Illinois for 24 hours. This court can be fairly assured of Ms. Jones continued compliance because of the support of her family (who travel with her to every court appearance), her performance while on release thus far, and other factors to be discussed with this court.
The judge however turned down the request, stating instead that the clerk’s office should deduct the GPS monitoring fee from the $25,000 bail she posted for the duration of the bail program.
The case against Jones started out as an investigation by CBS program “48 hours” into a purported illegal service platform on the internet called ‘The Cosa Nostra International Network.’ While the platform itself turned out to be little more than a scam website harvesting cryptocurrency from inexperienced wannabe criminal masterminds, the investigating team noticed a contract on the website for the murder of a clinical social worker in Naperville.
The police were alerted immediately and Jones was arrested shortly thereafter on suspicion of solicitation of murder. According to police, Jones who is scheduled to appear in court on February 13 provided the purported hitman with a clear blueprint for eliminating her love rival including her lover’s work schedule and instructions to make the murder look like an accident.
In April, Jones was granted bail and allowed to live with her parents in Georgia.
A year ago today, Bitcoin peaked at $19,511.
Former International Monetary Fund economist and Pharo Senior Risk Trader Mark Dow made an unpopular bet not long thereafter: Bitcoin would not sustain its growth and the price would slip from there. He entered a short position and rode his intuition all the way to the bank, finally closing the position today. A big part of his intuition was the launch of Bitcoin futures trading.
Dow wrote a sort of guide on shorting Bitcoin around the time he’d opened his position. Not quite a week after the peak, he wrote:
First, bitcoin is volatile. It’s annualized volatility is over 100%, implying daily moves up or down of over 6%. Second, bitcoin exchanges are open 24/7, but bitcoin futures follow regular Globex hours. Third, the exchanges have integrity risk (e.g. Mt Gox) and the futures have 20% collars. These last two factors increase gap/discontinuous pricing risk for those who trade the futures, even though I suspect these factors represent more risk for long positions in bitcoin futures than for short ones.
— Dow (@mark_dow) December 18, 2018
He told Bloomberg that he’s already taken profits twice this year on the position, but now he has finally decided to close it altogether. He didn’t comment on whether this is because he sees an upswing coming. He said:
I’m done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time.
Dow frequently refers to Bitcoin as “faith-based.” He said to Bloomberg that the reason for last year’s bubble was largely people “believ[ing] the narrative” and that a failure on the part of many traders to actually understand the underlying technology lead to a “more violent” bubble.
Novogratz Believes Bitcoin Will Be $3,000-6,000
Erstwhile, Mike Novogratz feels that a gradual demand pressure is building in Bitcoin, telling Bloomberg that there was a “monster correction” which is “over.”
His conviction level remains “high.” He pointed to the dot com bubble, saying that both the Bitcoin bubble and the Dot Com bubble were based on “something real.” He made the point that the Internet has changed the world in many ways.
Analysis shows that BTC/USD will either break out and head on another bull run soon or careen off the edge, given the Doji pattern presented in recent charts.
In a slew of additions and developments, and not unexpectedly, Coinbase has added four more Ethereum tokens. Dai (DAI), Golem (GNT), Maker (MKR), and Zilliqa (ZIL) will be added to the Coinbase Professional platform but with some regional restrictions.
GNT and DAI will be available in the US, but not New York, in the UK, the EU, Canada, Singapore, and Australia. MKR and ZIL will be added to Coinbase Pro in the UK, EU, Canada, Singapore, and Australia only. As per previous Coinbase announcements, these jurisdictions could be extended at a later date and a roll out for the main coinbase.com platform and mobile applications could also be added later.
DAI, MKR, and ZIL are ERC20 coins and GNT is Ethereum-based but not officially an ERC20. Coinbase qualifies this as part of its promise to continue to add new ERC20 tokens to its trading platform.
Smart Contract Functionality Not Yet Available
The associated smart contract functionality of each of the new tokens will not be available “immediately” through Coinbase Pro, says the press release and:
As a result, users who want to engage in MKR governance, use their GNT tokens to submit rendering tasks to the Golem beta network, utilize functionality like Compound, or exit DAI positions in the event of global settlement will need to move their assets from Coinbase Pro to a local wallet.
Inbound transfers of the four tokens will be accepted to the platform “at some point” after 11.45am Pacific time (PT) on December 18. Upwards of 12 hours afterward trading of the coins will be enabled once liquidity has been established and will begin with a USDC pair. Tweets for each coin and stage will be issued via the Coinbase Pro Twitter account.
Inbound transfers for DAI, GNT, MKR, and ZIL are now available in the regions where trading is supported. Traders cannot yet place orders and no orders will be filled. Order books will be in transfer-only mode for a minimum of 12 hours. https://t.co/Ov3BtA1BWE
— Coinbase Pro (@CoinbasePro) December 18, 2018
Community response has been mixed with many on Twitter asking for Ripple (XRP) and Stellar (XLM) to be added next and another Twitter user saying:
Please don’t add $waves would like the rise to continue. thanks.
The WAVES coin is currently experiencing a massive, considering the current market, and sustained price hike with a 35% increase still showing for the last 24 hours.
Coinbase is considering other tokens, ERC20 and otherwise, on a case by case basis. It added Civic (CVC), district0x (DNT), Loom Network (LOOM), and Decentraland (MANA) on December 7, 2018, and is reportedly exploring support for Ripple’s XRP.
A report based on the analysis conducted by a blockchain working group that was appointed earlier this year has been adopted by the collective head of state and government of Switzerland, the Federal Council.
Among other things the report has concluded that the legal framework of Switzerland can handle new technologies such as blockchain with only selective adjustments being made and not fundamental ones.
The Federal Council currently sees no fundamental issues regarding financial market law that specifically concern blockchain/DLT-based applications and would require fundamental adjustments. Swiss financial market law is generally technology-neutral and able to deal with new technologies.
The individual areas which need targeted adjustments according to Switzerland’s governing body include banking law, civil law, insolvency law, and anti-money laundering law. In civil law, the Federal Council has recommended that the legal certainty involving the transfer of rights via digital registers be increased.
With regards to financial market infrastructure law, the Federal Council has called for a new and flexible authorization category specifically focusing on blockchain-based financial market infrastructures to be devised. The governing body of Switzerland stated various reasons for this including the specific challenges that blockchain-based business models face:
…such challenges exist namely in the areas of trading tokens via central trading platforms and in the application of financial market law to decentralised financial market “infrastructures” … Hence, it seems more expedient to address the challenges in financial market infrastructure law that are specific to blockchain/DLT applications by means of specific amendments (instead of a regulatory carve-out).
Switzerland’s governing body also proposed adjustments in insolvency law calling for clarification with regards to the segregation of cryptocurrencies and other digital assets in the case of bankruptcy saying it ‘considers it necessary to provide for unambiguous rules regarding the segregation of crypto-based assets from the bankrupt’s estate by analogy to the owner’s right to segregation under current law.’
According to the Federal Council, there is lack of clarity especially in cases where crypto-based assets are deposited with third parties and whether in such a case a debtor has the power to dispose of such assets if the third parties have asserted their rights.
Other areas where the Federal Council has proposed changes include the anti-money laundering law where the body has proposed that decentralized trading platforms be more explicitly subjected to the country’s Anti-Money Laundering Act.
In making the report, the Federal Council has indicated that its goal is to ‘create the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies’.
Decentralized trading platforms took a hit earlier this year when Zachary Coburn of EtherDelta was charged with offering unregistered securities. The exchange was by and large considered decentralized because all trades took place on the Ethereum mainnet and any token on the Ethereum network could be traded. The essential elements of decentralization were there in that the trades didn’t incur the risk of entrusting funds to anyone else. However, the focal point of EthereDelta itself was enough for the federal government to consider it a centralized entity offering unregistered securities.
Are Decentralized Exchanges the Future?
This element of understanding may never go away. The crypto exchanges of today are not what we think of when we think of decentralization. The overwhelming majority of exchanges do not simply allow one to connect their wallet as EtherDelta did. Instead, one must send funds and entrust them to the exchange, creating a constant element of risk. Indeed, the best and most active exchanges of today are centralized.
As Wanchain’s Johann Eid writes:
If you look at the current cryptocurrency ecosystem, a considerable chunk of digital assets is currently locked up in centralized exchanges. In order to trade between different protocol assets (e.g. BTC/ETH, BTC/XRP) users are forced to give up custody of their funds to “trusted third parties.” […] These are the same processes traditional financial system have been using to operate for years. The crypto economy claims to decentralize the world and give back the power to the users. However, our space itself still relies on centralized parties almost as much as the traditional systems it claims to disrupt.
Loopring is an effort to enable entrepreneurs to change the situation. Itself open source and decentralized, it is intended to stimulate the growth of decentralized exchanges.
The protocol offers developers and exchange makers the ability to build a seamless swapping platform, and previous to its integration on Wanchain, it was already live on Ethereum, NEO, and Qtum. The LRC tokens that currently exist in the Ethereum ecosystem – 230 million in total – can be “wrapped” and moved over to Wanchain, and now developers that would prefer to use the Wanchain platform for Loopring development have that option.
Loopring Now Has Decentralized Access to Bitcoin Liquidity
The advantages of Wanchain over Ethereum are not to be understated: Wanchain offers built-in access to both Ethereum and Bitcoin, enabling cross-chain transfers between them, as we discussed here. Wanchain’s token costs significantly less to acquire at present time than Ethereum and its transaction fees are therefore lower. Erstwhile it is actively creating demand in the form of attracting new projects and partnerships.
Loopring’s Matthew Finestone wrote:
Historically, one of the best reasons to NOT use decentralized exchanges — even if you wanted to avoid the custodial risk of centralized exchanges — has been because you couldn’t use DEXs to trade across different blockchain’s assets. When you’re trading IOUs on a central server (CEX), different chains do not matter. Equipping DEXs with the same flexibility is a must. […] Now, any Ethereum-based dApp, DEX, or protocol can access Wanchain-wrapped BTC token, allowing for meaningful increases in liquidity. Wanchain-wrapping is also performed on the ERC20s (LRC and DAI) to facilitate the cross-functionality. Wanchain-wrapping LRC creates W-LRC, which removes the need to issue new Loopring tokens on future chains Wanchain supports.
Loopring has the backing of more than a dozen VCs including Obsidian Capital. It currently offers a number of white-label products that can be built into exchanges. One important aspect that this announcement immediately presents is that the existing DEX offering, Loopr, when run on Wanchain, can have both the stability of the Dai and other Ethereum-based stablecoins as well as the liquidity of Bitcoin markets — all in a decentralized fashion.
Ultimately, if done correctly, such platforms could put downward pressure on the fees that centralized exchanges like Binance charge, in that it could be much less expensive, and infinitely more secure, to trade on such platforms, in the future.
Before there were carriages, there were roads. Similarly, before there will be a truly decentralized digital economy, there must be decentralized digital infrastructure. Today we’ve covered one effort, but we expect many more.
Aelf is a project which could ultimately change the way we view blockchain infrastructure. CCN spoke to Zhuling Chen, MIT graduate and co-founder of Aelf, who sincerely wants to create a developer and consumer friendly blockchain operating system with high reliability.
A privately offered ICO has funded its development thus far in order to remain regulatory neutral, but tokens can be purchased on various exchanges for those looking to either invest early or explore development opportunities.
Its primary difference from NEO or Ethereum is an alternative way of designing a blockchain. Rather than have everything confirmed in the main blockchain as is done with Ethereum, Aelf proposes a multi-chain architecture, wherein private and public sidechains can run their own nodes or rely on Aelf nodes for transaction processing. The reason for this is that Aelf wants to have high availability and incredibly high transaction-per-second capacity.
We want to be a very powerful smart contract platform from a public blockchain point of view. What we fundamentally believe is that if we have thousands of applications in the future, they should not be put on one blockchain, because that just gets messy and it’s just and none of the applications have the guarantee of their performance. That’s why for Aelf, the first thing we did is to establish a multi-chain structure.
Operating on Aelf will give key advantages to tokenized projects which have blockchain needs. Chen said the company is looking into offering “nodes as a service,” so that companies which cannot scale fast enough in terms of infrastructure will be able to simple rent nodes to process their sidechain transactions. Cross-chain communication to other applications is envisioned as well. Perhaps the most exciting prospect of Aelf and blockchains in general for some forms of development, like gaming, is the potential for shared userbase – identities can be portable between sidechains in similar fashion to the Google Play store’s authentication for Android games.
Aelf will be a mix of public and private blockchains. Companies can launch blockchains which they completely control, and take advantage of the standardized technology and use services offered by the Aelf mainnet, such as potentially an identity verification service.
Not Everything Needs a Blockchain
Lately people in the industry have begun to realize that you can’t just blockchain all the things. There are plenty of reasons to use a blockchain, but there are also plenty of reasons not to do so. Chen understands this, and believes there are some key use cases where the blockchain works, and some where it doesn’t. To him, the primary indicator of blockchain necessity is the value of the information being replicated, stored, or moved.
Definitely blockchain is not for everything. In fact, sometimes blockchain could be more expensive to run compared to a centralized system. I tend to think a centralized system is better for information flow. So you can replicate information at any speed you like, regardless if the information is valuable or not. But blockchain, on the other hand, only needs to take the valuable stuff. That’s why we’re looking at virtually high valuable information that should be put on the blockchain, which allows multiple parties to work in a more efficient and trustless environment.
The Future of Blockchain Depends on dApps
The dApps are what will determine the future of the blockchain, in all cases. Perhaps the killer dApp theory is overwrought with rosey depictions of a blockchain future, but certainly the overall necessity of blockchain services relies on the demands of a market which is increasingly mobile and increasingly open to alternative technologies and even currencies.
The recent launch of the FINNEY smart phone, and most importantly the operating system beneath it, will hopefully usher in a resurgent era for the blockchain. A mobile environment which can reliably handle cryptocurrency in a secure manner is perhaps all that’s really missing. While the $999 price point of the FINNEY itself is perhaps a barrier to entry, a wide array of phones is possible through the open nature of the operating system itself. Aelf dApps, Ethereum dApps, NEO dApps – they can all live side by side in such an environment, in time.
Chen believes the success of the Aelf network will come in one or two really amazing dApps, and his company is actively looking for projects which might fit the bill, though there has been no news on what specifically this might look like. The project is still young and in testnet phase, but they are working hard as evidenced by their activity on Github.
Ultimately the user experience should be that they actually don’t feel any differences whether they’re using Aelf or using some other services, just based on the app, right? So we do hope that there will be like a more universal wallet that does like the conversions and storage for them automatically, so they don’t have to use Metamask or equivalent or manage it themselves. I feel that Kyber is sort of doing that already, allowing token-to-token swaps.
Importantly, Aelf currently allow smart contracts to be written in C#, one of the most popular programming languages in the world and a necessary skill for developing in a Microsoft Windows environment, but later intend for them to be available in other languages as well, such as Python. “We share the same view as NEO in regards to mass adoption,” Chen says, referring to the whitepaper’s note that Aelf will support multiple languages.
Aelf’s mainnet is targeting to be ready for March, 2019.
It seems that Malta is about to get a bank that will finally begin servicing crypto and blockchain companies as well as high net worth individuals, who until recently, have been shunned by traditional banks on the so-called ‘Blockchain Island’.
OK Group’s investment arm, OK Blockchain Capital Limited, announced that it is the anchor investor in RnF Finance Limited, a Maltese based company applying with the Malta Financial Services Authority for authorization to act as a credit institution.
The CEO and founder of RnF, Roderick Psaila, has been in banking for 28 years and has started a number of banks in Malta over the past 10 years. Until recently, he was also the CEO of AgriBank – a Malta licensed credit institution.
Speaking exclusively , Psaila commented that when operative, the Bank planned to bring back proper banking services to clients.
The Bank shall engage into four main business streams: Offer banking services to corporates; Lending; Private Banking and Wealth Management. We are targeting big corporates and private clients and the mentality would be that no industries are vetoed beforehand but each application will be treated on a case by case basis.
This mantra should provide crypto exchanges and companies issuing security tokens an opportunity to be serviced like other companies, assuming that their due diligence procedures are sufficient, Psaila added.
The Bank intends to invest heavily in blockchain technology and artificial intelligence particularly during the first years of operations. This would enable the Bank to onboard clients in an efficient manner while making sure that a risk-based compliance assessment is carried out.
Ms. Tian Ying, Founding Partner of OK Blockchain Capital Limited, remarked, “We are delighted to partner with Roderick and his team of bankers in this exciting project in Malta, and are excited to be involved in this new banking venture on Blockchain Island.”
Mr. Tim Byun, Chief Risk Officer & Head of Government Relations of OK Group, remarked, “Malta has been a first mover to comprehensively regulate the blockchain industry, and we are excited to be involved in this new banking venture with RnF Finance Limited. Malta’s sound regulatory framework and support for new industries will cultivate many more opportunities on Blockchain Island.”
RnF is all set to start banking operations by mid next year, subject to regulatory approval.
Following months of investigation into the 1MDB scandal in Malaysia, the country’s attorney general Tommy Thomas has filed criminal charges against Goldman Sachs International and two of its Asian subsidiaries alongside former Goldman Partner Tim Leissner, alleged scam mastermind Jho Low and former 1MDB counsel Jasmine Loo. The Wall Street Journal reports that Malaysian authorities earlier today released a statement confirming the prosecution for omitting material information and publishing untrue statements, which are offenses under Malaysia’s securities laws.
Attorney General’s Statement and Goldman Sachs Response
In the statement, the attorney general revealed that the offenses in question were in relation to documents for international bond sale offering in 2012 and 2013 by Malaysia’s state-run investment ehicle 1Malaysia Development Bhd., also known as 1MDB. According to the prosecution, of $6.5 billion worth of bonds that were arranged by Goldman Sachs in that period, about $2,7 billion was embezzled, with the bank making profits of over $600 million in the process.
Since that time, 1MDB has become a political and legal black hole, bringing down the government of former prime minister Najib Razak and becoming the focus of a vast international investigation led by the United States Justice Department alongside authorities across Southeast Asia and Europe. Goldman Sachs is front and centre of the investigation, with former executive Roger Ng currently fighting extradition to the U.S.to face charges by the Justice Department.
An excerpt from the statement reads:
Malaysia considers the allegations in the charges against the accused to be grave violations of our securities laws, and to reflect their severity, prosecutors will seek criminal fines against the accused well in excess of the $2.7 billion misappropriated from the bonds proceeds and $600 million in fees received by Goldman Sachs, and custodial sentences against each of the individual accused: the maximum term of imprisonment being 10 years.
Leissner on his part has already pleaded guilty in a separate case brought against him by the U.S. Justice Department last month on charges of embezzling public money and bribing public officials in Malaysia and Abu Dhabi. While he awaits sentencing fixed for next year, Low and Loo have been charged in absentia with money laundering and a host of other charges, but their whereabouts are unknown for the time being.
Responding to the charges in a statement quoted by the Wall Street Journal, Goldman Sachs said:
We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case. The firm continues to cooperate with all authorities investigating these matters.
At a time when some are calling for aggressive regulation of cryptocurrencies, this case illustrates the potential that exists for blockchain technology and cryptocurrency systems to create a positive disruption within the existing banking paradigm which permits or even encourages theft and inefficiency through opaque processes and practices.
The complete transparency offered by cryptocurrencies makes it very unlikely that a single sticky-fingered public official would realistically get away with diverting the better part of a billion dollars, aided and abetted by private bankers whose only real interest is in their fees – $600 million in this case. The use of smart contracts for example, in carrying out large, high-level financial operations like 1MDB would make them substantially more efficient and much less prone to corrupt siphoning of public funds as in this case.
According to a recent post from Z-Cash’s official blog, more services are now offering the use of shielded or private addresses now as a result of the Sapling upgrade. The upgrade was touted as significantly improving the speed and efficiency of Z-Cash and enabling it to require less resources. The goal of the Zcash project is that all people inevitably prefer to use shielded or private addresses, as they wrote, “this is just the beginning for Zcash’s mission toward a shielded ecosystem.”
Shielded addresses are different from transparent addresses, which anyone can see the activity of. In private cryptocurrencies, the information about the specific details of a transaction is not readily apparent for the public, contrary to Bitcoin and other first generation cryptocurrencies which enabled anyone to view the comings and goings of currencies in an unlimited fashion.
According to the post by Z-Cash’s Paige Peterson, mining pools and other services have begun to support shielded addresses for withdrawals, as well as exchanges. Despite her post, the overwhelming majority of Zcash transactions over the past 30 days were publicly viewable, with no significant uptick in shielded transaction activity, according to Blockspur, which tracks Zcash and Zcash Classic network data.
The increased adoption of shielded addresses is due to the underlying advancements of Zcash cryptographers. They have developed and implemented significant changes to the zero-knowledge proving mechanism in Sapling. Years of research and cryptographic design work have produced these improvements which build upon existing schemes and invent new ones.
Zcash Overall Network Activity Dwarfed by Many Cryptos
Regardless of the improved nature of the Sapling upgrade, the overall network activity in Zcash is remarkably low by comparison to many, many other cryptocurrencies out there.
Litecoin currently averages more than 20,000 transactions per day.
Monero has an average of over 5,000 transactions per day.
Ripple transactions have dropped off, but its low point is in the tens of thousands of transactions per day.
Transaction count is a vital indicator as to the health of a blockchain network. We don’t even bother to mention the high transaction activity of Bitcoin, which consistently sees thousands of transactions in each block, or Ethereum, which sees many more, as they are known to be healthy and active blockchains.
Featured image from Shutterstock. Zcash logo from Wikimedia Commons. Transaction chats for XMR, LTC, and XRP from Bitinfocharts.
After ongoing stock market volatility, blamed on technology stocks, interest rate hikes and trade disputes, the bears are calling a possible crash. Meanwhile, as money flows out of the conventional markets, cryptocurrencies are green and gaining. Cryptocurrency market capitalization is now up over $9 billion.
For the stock markets, the Dow has fallen 508 points and 2.1%, the S&P 500 is also down 2.1% and at its lowest point this year, and the Nasdaq, though up slightly today is down across 2018. All three markets have fallen 8% in December.
This time healthcare products rather than technology stocks might be the blame for the Dow’s fall. Johnson and Johnson’s stocks fell dramatically over reports of asbestos in the iconic brand’s baby powder. UnitedHealth stocks also fell after part of the Obamacare Affordable Care Act was ruled unconstitutional. Goldman Sach’s is in the spotlight too, after being accused by the Malaysian government of misleading investors over bond sales underwritten by the Wall Street Giant.
The overriding reasons for the fall are also still much broader and do still point back to the threat of interest rate hikes by the U.S Federal Reserve this week as well as trade and diplomacy issues with China striking again.
A Major Buy Signal – For Crypto?
One “relentless” bear, former congressman Ron Paul, is warning of an epic market collapse. He says a downturn could be “worse than 1929” but if liquidity is allowed it doesn’t have to be a long one. Paul told CNBC:
“Once this volatility shows that we’re not going to resume the bull market, then people are going to rush for the exits.”
Indeed, it appears today stock market investors are doing just that. Maybe they are buying elsewhere…
An American Association of Individual Investor’s survey puts “bullish” market sentiments at their lowest since mid-2016. Yet ever bullish Fundstrat’s Tom Lee believes the bearish sentiment indicates the market is ready for buyers:
“We believe sentiment has reached an extreme bearish level that historically is a major contrarian buy signal.”
After writing that in his note to clients earlier today it seems investors are buying, but not stocks. Money is flowing back into cryptocurrencies. At the time of writing the overall market capitalization is at $113.9 billion and still rising. Bitcoin (BTC) is still up over 8% and has broken the $3,500 threshold. Ripple’s XRP is up 14% and EOS now a massive 26%. We reported on its 21% rise earlier today.
Bitcoin (BTC) is still struggling to find the bottom of a bear market on the anniversary of its $20,000 all-time record price high.
At press time, the world’s largest cryptocurrency by market capitalization was trading at $3,230 on Bitstamp – down 83.5 percent from the record high of $20,000 reached on Dec. 17, 2017.
BTC is also down 76 percent on a year-to-date basis (from its opening price of $13,880 on Jan. 1) and is on track to end its three-year winning streak.
The picture, however, was remarkably different in the fourth quarter of the last year. The cryptocurrency picked up a strong bid on Nov. 1, 2017, on speculation that the imminent listing of bitcoin futures products on major US exchanges would open the floodgates for institutional money. Back then, BTC was trading above $6,000.
Notably, the “fear of missing out” (FOMO) established a self-feeding cycle of more investors joining the party, leading to an even bigger rise in price. By Dec. 17, BTC was trading at $20,000 and was seen rising to dizzy heights this year.
Such was the frenzy that Ari Paul, current CIO of Blocktower Capital, purchased 12-month call options with a strike price of $50,000 for $1 million. Call options give holders the right to buy the underlying cryptocurrency at an agreed price on or before a particular date.
Paul was essentially betting that BTC would rise to $50,000 by Dec. 28, 2018. The bubble, however, burst in the first quarter of this year and prices have been generally falling ever since. As a result, that now-worthless call option is set to expire next Friday.
A tough year
BTC’s slide from $20,000 to $3,200 could be categorized in the following phases:
Sell the fact: BTC closed last year at $13,880 – down 44 percent from the $20,000 high seen on Dec. 17 – possibly due to profit taking on long positions initiated in the run-up to the futures listings. Most experts called it a “sell the fact” scenario and dismissed it as nothing more than a healthy correction.
Bubble shrinks: The effects of regulatory clampdowns in China and South Korea weighed heavily over bitcoin’s price early in Q1. Both nations were the biggest sources of demand for cryptocurrencies before the restrictions. Prices subsequently fell to $6,000 on Feb. 6 and closed near $7,000 on Mar. 31.
Bear breather: BTC spent a better part of the second quarter and the entire third quarter defending the psychological level of $6,000. Notably, the key support level held ground in the third quarter, despite the decision by the US Securities and Exchange Commission’s (SEC) to reject BTC exchange-traded funds (ETFs). As a result, experts, including the likes of billionaire investor Novogratz, were convinced that BTC had bottomed out around $6,000.
Losses resume: BTC’s inability to produce a notable price bounce despite the repeated defense of $6,000 proved costly. Prices nosedived below the critical 21-month exponential moving average (EMA) support on Nov. 14, signaling a resumption of the sell-off from the record high of $20,000.
What lies ahead?
BTC hit a 15-month low of $3,122 over the weekend and is showing little signs of life below the 21-month EMA. The short-duration, technical charts, however, are signaling scope for a minor price bounce.
The above chart shows BTC’s journey from the record highs a year ago to recent 15-month lows near $3,100. The outlook as per the monthly chart would turn bullish, if and when BTC crosses the former support-turned-resistance of the 21-month EMA, currently at $5,719.
Daily chart and BTC/USD Longs on Bitfinex
BTC’s daily chart shows a “sideways” breach of the falling wedge resistance, meaning the breakout is not convincing. As a result, a more credible evidence of a bullish reversal is needed, possibly in the form a high-volume break above $3,633 (high of the 3-day inverted hammer candle).
That could yield a stronger corrective rally to levels above $4,000.
BTC/USD long positions on Bitfinex rose to 35,773 BTC earlier today – a level last seen on July 23. More importantly, the longs have risen by 33 percent in the last six days. That could be an indication that bargain hunters are paying heed to extreme oversold conditions reported by the 14-week relative strength index (RSI).
BTC, therefore, could witness a corrective bounce ahead of the year’s end.
- A drop to the psychological level of $3,000 remains on cards as long as BTC is trading below the crucial resistance at $3,633.
- A break above $3,633 would validate the falling wedge breakout seen in the daily chart and allow a rally to $4,000. A violation there would expose next resistance lined up at $4,410 (Nov. 29 high).
Disclosure: The author holds no cryptocurrency assets at the time of writing.
KIBIS offers everyone an opportunity to manage their financial affairs via self-service kiosks that are at their disposal 24 hours a day.
The widespread adoption of self-service kiosks began about 20 years ago, when technological advancements really picked up pace. The self-service industry is enjoying strong growth, with kiosks being one of the most successful segments. They significantly cut queue times in banks and post offices, minimize the risk of human error, and reduce administration and processing fees. Customers often choose kiosks as their preferred payment option when it comes to mobile phone accounts, utility bills, or money transfers.
On the other hand, 2018 statistics from the World Savings Banks Institute show that about 2 billion people across the globe remain without a bank account and have to rely on cash or prepaid cards, which offer rather limited financial services and solutions. They neither allow cross-border remittances nor provide a one-stop shop for users, yet they come with high maintenance costs. Furthermore, even people with bank accounts would often prefer more flexibility in managing their financial affairs and maintaining control over their payments. They would appreciate being able to perform secure and fast transactions at their convenience.
In order to address these issues and provide consumers with more efficient and cost-effective services, kiosk supplier and operator KIBIS aims to deploy a revolutionary blockchain technology. The team behind the project believes its solution might upend the existing self-payment infrastructure and make financial services available to millions of people worldwide round the clock.
KIBIS hopes to achieve this via its global network of blockchain-powered self-service kiosks. The plan is to install up to 18,000 terminals around the world, placing them in the most accessible and convenient places, for example, shopping centers and squares.
Apart from traditional transactions, this multifunctional project will offer a wide array of services. Users will be able to perform routine actions such as:
- pay regular utility bills;
- credit mobile phone accounts;
- pay for TV-subscription services;
- pre-book airplane tickets and check flight information;
- make donations to charitable organizations;
- buy prepaid gaming vouchers;
- pay for iTunes and Google Play services or buy gift cards.
Besides, KIBIS kiosks will be fitted with advanced crypto mining equipment and have access to low-cost electricity. This will provide the project with an independent revenue stream.
This decentralized payment ecosystem will be powered by a native ERC20 token of the same name. It will facilitate all transactions on the self-service kiosks. The total KIBIS supply is 2.52 billion, with only 700 million (28%) earmarked for sale and distribution in the initial coin offering (ICO).
The exchange rate for 1 KIBIS is set at $0.5 for the pre-ICO and $0.6 for the main sale. The project team launched the pre-ICO phase on December 10, while the public sale round is scheduled to open on December 25. The ICO will last for 45 days or until the hard cap of $400 million is reached, whichever happens first. All unsold tokens will be burned.
According to a report by the South China Morning Post, a 24-year-old man is said to have tossed bank notes from the top of a skyscraper in Hong Kong, triggering agitation from passersby below.
The man, who was identified as Wong Ching Kit (with aliases such as “Mr. Coin” and “Coin Master”) is the owner of Coin’s Group and Epoch Cryptocurrency, a Facebook page that provides promotions for cryptocurrencies and miners. Kit is said to be a crypto enthusiast who made a large percentage of his fortune in last year’s cryptocurrency boom.
A Facebook Live Video which captured the occurrence showed the crowd rushing to catch HK$100 ($13) notes as they rained down from a building in the Fuk Wa neighborhood, one of the countries most impoverished areas. Kit is said to have been raising awareness for an upcoming event, choosing to take a somewhat unconventional approach to market.
While he was tossing the bills from the top of the building, the video recorded Kit telling bystanders:
“Today, December 15, is FCC’s big day in announcing the trading race. I hope everyone here will pay attention to this important event… [I] don’t know whether any of you will believe money can fall from the sky.”
Although it still remains unclear who- or what- he referred to as the FCC in his declaration, a Facebook video was released shortly after the stunt where he declared that he was similar to the fictional character Robin Hood, telling anyone who cares to listen that he was “robbing the rich to give to the poor.”. The “Coin Master” also claimed that he felt it was his responsibility to teach the world about Bitcoin.
His “charitable” action triggered a mass reaction, as passersby began to scamper in a bid to catch the bills that were falling from the air.
The police claimed that he was arrested on charges of “disorderly conduct in a public place,” and they have also urged members of the public who were beneficiaries of his lawlessness to return the bills to where they got them. Luk Wai-hung, a local attorney, argued that while his motives for raising advertisement were understandable, his approach was the reason why he was arrested.
He said, “How did he do his promotion? He wanted to create chaos to do it.” He also added that the maximum penalty for his offense is a 12-month prison term and a fine of HK$5,000. Innocent bystanders at the location attested to the total amount of money that was thrown away could be millions, although the police reported that they were only able to recover HK$5,000 (the equivalent of $639) from the streets.
The government of Switzerland wants to accommodate the blockchain sector within its existing financial laws.
The country’s Federal Council issued a report on Friday, providing a legal framework for distributed ledger technology (DLT), or blockchain,, stating that Switzerland’s existing rules are well suited to dealing with such new technologies, but there is still a need for some amendments.
Firstly, the council has proposed an amendment to the country’s securities law to increase the legal certainty of crypto tokens. “Since an entry in a decentralised register accessible to interested parties can create publicity similar to the ownership of a security, it seems justified to attach similar legal effects to this entry,” the highest executive authority of the Swiss Confederation explained.
The council also wants to segregate crypto assets from the insolvent debtors’ total estate in bankruptcy proceedings. However, because under the country’s existing Debt Enforcement and Bankruptcy Act (DEBA) it is not clear whether these assets can be segregated, the council said there is a “great need for legal certainty” for the parties involved and thus a corresponding change is proposed in the DEBA act.
Further, the government body has proposed the creation of a new “authorization category” for infrastructure providers in the blockchain sector, and will make amendments to its Financial Market Infrastructure Act accordingly. Currently, the council has not yet proposed any specific changes, as the central definitions of the terms “securities” and “derivatives” in financial market regulations are also relevant for blockchain-based business models, it said.
Regarding the country’s Anti-Money Laundering Act, the council said the legislation is currently adequate enough to also cover activities related to cryptocurrencies and initial coin offerings (ICOs). “The general principles of the Anti-Money Laundering Act also apply to crypto-based assets.” it said, adding that there is no need for a “fundamental revision” at present.
The Swiss government has been working on blockchain regulations since 2016, when the country’s Federal Department of Finance outlined its plans to regulate fintech. Later in early 2017, the council itself was seeking consultations on regulatory changes for the domestic financial industry to account for fintech including blockchain.
Most recently, Switzerland’s Financial Market Supervisory Authority (FINMA) introduced a new fintech license with “relaxed” requirements that is applicable to blockchain and cryptocurrency-based firms.
A blockchain startup that raised operational funds in Ethereum has come in the middle of what is known as the “crypto winter.”
Status, as the project is called, recently announced that it has laid off 25% of its workforce citing economic scarcity. In a recently published blog post, the startup blamed this year’s extended bearish correction in the crypto market for their decision. It explained that over 1/3 of their total raised funds were in ether tokens, the Ethereum project’s native token, whose value plunged by over 80% since its all-time high.
$2.64 Million Loss Expected
Status, at the time of its ICO, had raised a whopping $100 million in cryptocurrencies to create an open-source, Ethereum-based messaging platform and mobile browser. The startup was able to convert some part of its funds to fiat to take care of its operational costs, but the remaining crypto balance got stuck in 2018’s bear cycle. It could have cost a minimum $2.64 million worth of losses, according to a general guesstimate.
Jarrad Hope, the co-founder of Status, said that his firm is unsure about when the market will recover, stating that the currency bear sentiment has stayed the longest compared to the previous ones.
“So, we are going to stretch our fiat as it stands today to provide six months of security over our operating costs. To do that we have to strip down the organization. Currently, 25% of our roles are non-essential to those goals and our long-term growth projects, and regretfully we’re forced to ask the contributors occupying them to leave today.”
The remaining workforce in Status, meanwhile, would face cuts in their wages unless the crypto market recovers.
Divan, one of the alleged contributors to Status’ core development, confirmed receiving a layoff mail from the company.
“How can you build community, if you throw out core contributors with words “we don’t need you?”,” he said in response to Hope’s notice.
The plunge in the cryptocurrency market has been weighing on other blockchain projects as well. ETCDEV, the development team behind the Ethereum Classic project, shut down their entire operations owing to economic scarcity. Joseph Lubin’s Consensys, one of the world’s leading crypto development startups, also reduced its workforce by 13% in what they called a “reorganization.”
“We are a part of this trend,” Igor Artamonov, founder of ETCDEV, said.
“There are a few things that happened at the same time. I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market there’s a change.”
Late last week, the Financial Services Agency (FSA), the top financial regulator in Japan, published a draft report which outlined the new framework for addressing cryptocurrencies and Initial Con Offerings (ICOs) in the country. The report was released following with the 11th study group meeting of the agency, and it contained a cumulation of recommendations from the previous ten sessions.
As a regulator, the FSA has to submit bills and stay accountable to the Japanese parliament, however, the agency is also responsible for supervising financial activities in the country, with companies seeking to issue investment vehicles and assets being required to register and get proper accreditation from the agency. This report, which has been the subject of numerous rumors, is seen by many as a definitive stance by the Japanese government on cryptocurrencies, a move yet to be made by most developed countries till date.
In the report, the FSA acknowledged the fact that technological innovation is continuously changing, and it has come to see the importance of collaboration with other authorized regulatory bodies.
“Because of this, we urge contributors to sign up for the qualified [self-regulatory] affiliation,” the document reads.
This way, the agency is expected to help improve techniques following the country’s laws. Back in October, the Japan Digital Foreign Money Trade Affiliation was accredited by the FSA with the aim of effecting self-regulatory laws in a legal framework. With this accreditation, the industry body was given the means to develop guidelines for domestic cryptocurrency exchanges, including measures to ensure that money laundering and insider trading are curbed.
As expected, the regulator placed restrictions on privacy coin listings, margin trading and transactions in derivatives.
On the issue of ICO regulation, the FSA explained that specific tokens might be subject to regulation depending on how they are structured. ICOs would be under the purview of the Financial Instruments and Exchange Act.
The report also addressed the existence of “deemed dealers,” companies which have gotten the leeway to operate cryptocurrency exchanges while reviewing their applications. It points out that while a lot of these dealers have been advertising their platforms and urging people to sign up, many their customers are still unaware that they aren’t registered.
Concerning deemed dealers, the report proposed some regulatory measures. First, it established that they should not be able to expand their portfolio of coins until they get proper registration. Also, they won’t be able to get new customers or promote their services as well. They must also be made to notify their existing users of their situation viz-a-viz registration.
Reports in local media show that there is little to no any opposition to the proposed measures, and this means that the content of the draft is expected to form the new regulations of the agency. Earlier in August, new FSA Commissioner Toshihide Endo had told Reuters in an interview that the agency had no plans to shut down the cryptocurrency sector.
“We would like to see it grow under appropriate regulation,” he had added, at the time.
Did you know there have been 13 million cryptojacking incidents in 2018? Russian cyber-security firm Kaspersky Lab has released data that cryptojacking cases have gone through the roof rising 400% this year alone.
Crypto-crime has been one of the most publicized issues in the financial world this year as the popularity of digital currencies has reached an all-time high over the past 12 months.
Malicious Cryptojacking Problems in 2018
Although many crypto-fanatics might well say that the major issue the industry has faced this year lays with the wild fluctuations of crypto prices, Kaspersky Lab would beg to differ.
The Russian cybersecurity and anti-virus firm Kaspersky Lab is based in Moscow and has been the source of lots of meaty information this year in regards to crypto-crimes, and most notably, the upsurge in cryptojacking. The company has revealed that cases of cryptojacking have reached a gargantuan 13 million in 2018, which is up 400% on last year’s total of 3.5 million.
Cryptojacking is a term used to describe malicious activity in regards to cryptocurrency mining. Cryptojackers hijack the computers of crypto users and divert the funds to their own wallets. One of the most alarming stats is that the attacks in the Middle East and Africa have risen fourfold on this time last year.
Using Malware to Jack Crypto
Carjacking used to be the jacking avenue of choice for criminals, but the world is changing and so is theft. Cryptojackers are utilizing malware scripts to access people’s computers to mine cryptocurrencies. Monero (XMR) is one of the main digital currencies that is currently being targeted and jacked by crypto-criminals.
The malware runs quietly on a user’s PC so they don’t even know it’s happening. After a while, the script can play havoc on a PC’s CPU power making the system run slowly, and sometimes even damaging the computer and overloading the processor.
We reported earlier this June that Kaspersky Lab was concerned that cybercriminals were moving from ransomware to cryptojacking, which was one of the main reasons why ransomware attacks had drastically dropped.
As the value of cryptocurrencies had risen at the back-end of 2017 and still remained relatively high for the first 8-months fo the year, cybercriminals began focusing more on cryptojacking and crypto-related crime.
The alarming figures that 13 million cryptojacking incidents have taken place in 2018 is a massive cause for concern and needs to be dealt with in rapid succession. Kaspersky Lab has once again done a great job informing the industry in regards to the problems we now face.
Asia is currently one of the most regulated continents on the planet in terms of cryptocurrency laws. Hong Kong is the latest Asian nation that is set to tighten crypto laws on traders and exchanges.
The Hong Kong Securities and Exchanges Commission (SFC) is looking to tighten the current cryptocurrency laws as concerns over crypto-crime and money laundering heighten across Southeast Asia.
Tightening Less-Stringent Cryptocurrency Laws
Hong Kong’s current stance on cryptocurrency is one of the least stringent in the region, which is a stark contrast to the more hardline approach taken by mainland China. As Hong Kong is one of the world’s leading financial epicenters, the SFC is set to reevaluate cryptocurrency laws, especially in terms of regulating the Initial Coin Offering (ICO) sector.
Crypto-related commercial activities in China are pretty much banned, so some people might think that this move is long overdue. According to the SFC, if an investment fund has 10% or more of digital assets they will now need to obtain a license. And even then the companies will only be able to sell their products to professional investors.
The SFC want to set up a voluntary scheme where exchanges will be able to test their digital assets in what is being deemed a “temporary regulatory sandbox” and will then be able to decide whether they need to seek a license.
Writing is on the Wall fo Hong Kong
The Hong Kong SFC have been warning the industry for many months about their plans to impose tighter cryptocurrency laws. Earlier this year in February, the SFC warned seven cryptocurrency exchanges in the wake of complaints made by investors.
It is hardly surprising that Hong Kong is looking to tighten cryptocurrency laws as many major economies across the world are currently reevaluating their stance on crypto regulations.
There are many pros and cons in tighter regulatory measures on the Hong Kong crypto industry. Although many consider it essential to safeguard investors and keep a lid on the industry, others believe that the new cryptocurrency laws could be costly and work against crypto firms in Hong Kong.
Daiwa Institute of Research professional Daisuke Yasaku believes it might be a bad thing for Hong Kong when saying:
“The cost of regulations will be high. The requirements of the SFC initiative may prove too burdensome for some operators.”
The price of wider crypto adoption will always be high, but that is the price we pay sometimes to ensure the industry and investors are protected. Will the tightening of cryptocurrency laws in Hong Kong be a good or bad thing for the local industry? Only time will tell.
On December 15, the crypto market was at risk of dropping below the $100 billion mark in total valuation for the first time since Aug 1, 2017.
Since then, the market has slightly recovered as its valuation increased from $100 billion to $104 billion. But, many traders and cryptocurrency technical analysts remain cautious toward the short-term trend of the asset class.
Not a Good Period For Crypto
Since early December, the majority of major cryptocurrencies and small market cap tokens have consistently shown extreme volatility in a low price range, demonstrating no signs of a trend reversal or a proper bottom.
As the Bitcoin price dropped to a new yearly low at $3,122 on Saturday, a fairly high number of investors were quick to call a bottom and begin accumulating the asset.
Hsaka, a cryptocurrency technical analyst, said that the price trend of Bitcoin is in no way positive and that no trend reversal can be confirmed until it breaks out of several resistance levels below $4,000.
“The numbers next to the line are the spread b/w the open and close for that day. There is nothing bullish about this chart until BTC reclaims $3,300. Your obsession to knife catch a ‘bottom’ is directly proportional to your account erosion,” the analyst said.
Digital asset trader DonAlt echoed a similar sentiment about Ethereum (ETH) as well, the third most valuable cryptocurrency in the global market behind Ripple (XRP), stating that bears will likely look for a place to enter a short position in the $80 to $90 range.
The trader said:
“If ETH makes it out of that horizontal and diagonal resistance combination, I’ll be turning into a dip buyer. For big ETH bears, this is the place to look for shorts. If this resistance fails I think we’ll go quite far. I’ll just observe and see how it does.”
Until major digital assets undergo a consolidation period of several months at a similar rate as August to October earlier this year during which Bitcoin showed the lowest level of volatility in recent years, it will be risky to call a bottom and begin accumulating.
The daily volume of Bitcoin has nearly halved from $6.5 billion, within a three-week span. The decline in the volume of the dominant cryptocurrency in a period of high volatility suggests that most digital assets are falling in price without significant sell-pressure from bears and sellers.
The volume of Bitcoin has to recover and the market has to start portraying some resistance in the tight range of $3,000 to $3,500 before a bottom can be established.
Currently, many traders and technical analysts remain cautious toward the short-term trend of Bitcoin, Ethereum, and other major crypto assets.
Is the Market Set For More Bloodbath?
Outside of crypto, investors in the traditional finance sector are struggling to deal with the instability in the global financial market due to the volatility of the U.S. and Chinese stock markets.
At least for several months, it is unlikely that a new wave of investors will enter crypto from the traditional financial sector, giving the market some breathing room.
This week, following the scheduled leave of John F. Kelly, United States President Donald Trump has chosen the pro-Bitcoin Mick Mulvaney to serve as the acting White House Chief of Staff beginning 2019.
According to the Washington Post columnist Matt O’Brien, Mulvaney has been vocal about his support of Bitcoin (BTC) and in a speech covered by Mother Jones praised the decentralized nature of Bitcoin as a consensus currency.
In 2016, Mulvaney reportedly said that the Federal Reserve “effectively devalued the dollar” and emphasized that the exercise of such control is not possible with a cryptocurrency like Bitcoin that is “not manipulable by any government.”
Is it Good For Bitcoin?
Having a high profile official and an influential member of the Trump administration is certainly positive for the long-term growth of the asset class.
While the neutral stance of Mulvaney towards the cryptocurrency sector could affect the mindset of regulators and lawmakers in the U.S. to a certain extent, it realistically cannot have a short-term impact on the roadmap implemented by commissions like the U.S. Securities and Exchange Commission (SEC) or the Commodities and Futures Trading Commission (CFTC).
The presence of pro-Bitcoin and crypto officials in the U.S. government, however, could encourage other government officials to evaluate cryptocurrencies in a neutral way and analyze the benefits that the decentralized financial systems can bring.
In Sept. 2017, the central bank of Finland, for instance, released a research discussion that explicitly described the inefficiency of regulating blockchain protocols. The research concluded that Bitcoin is not and cannot be regulated because the protocol operates under strict rules implemented by the community sustained by miners, developers, and node operators.
The paper read:
“Bitcoin is not regulated. It cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts. Bitcoin’s design as an economic system is revolutionary and therefore would merit an economist’s attention and scrutiny even if it had not been functional. Its apparent functionality and usefulness should further encourage economists to study this marvelous structure.”
As seen in the paper of the central bank of Finland, it is possible for a central bank or a government to analyze the structure of Bitcoin in a neutral manner and create practical regulatory frameworks around it without restricting the growth of companies in the industry.
Over the past several months, the SEC in the U.S. and other authorities in the global market have been primarily working on the integration of strict Know Your Customer (KYC) policies to eliminate money laundering in the cryptocurrency market.
The existence of a high ranking government official in the U.S. government that understands the purpose of digital currencies could have a long-lasting effect on the cryptocurrency industry and could encourage others to evaluate the asset class under a different light.
However, as the New York Post reported on Dec. 16, Mulvaney once described President Trump as “a terrible human being,” triggering political analysts to question how long the new chief of staff can remain in office.
Cameron and Tyler Winklevoss, early bitcoin investors and founders of the Gemini crypto exchange, don’t seem to be deterred by the current market slump. In fact, speaking to Bloomberg recently, Tyler Winklevoss said, “We’re totally at home in winter.”
The twins confirmed they are pushing ahead with their firm’s plans, including a new mobile application, the Gemini Mobile App, which released this week on Google Play and the Apple App Store for all users.
The new app allows buying and selling of Gemini-listed cryptocurrencies, displays market prices and portfolio value, and allows users to send and receive cryptocurrency funds. It also has price alerts, recurring buy orders, and basket order functionality. The basket order feature, called “Buy The Cryptoverse™,” lets users buy an index of coins, weighted by market capitalization, in a single order.
Cameron Winklevoss, also Gemini President, said in the press release:
“Cryptocurrency never sleeps so it’s important for us to make it easy for our customers to engage with it wherever they are and whenever they want.”
The twins told Bloomberg that they are used to “skepticism” over cryptocurrencies, but they don’t appear concerned about launching the new mobile application in the middle of “crypto-winter.” Cameron explained:
“It gives us time to build internally, and refine and kind of catch our breath.”
They also revealed that getting users for the application is a priority for 2019, perhaps marking a change from what seems to have been a more institutional investor-focused strategy to date for Gemini. Cameron said:
“The reality of the situation is that we have a diverse customer base. And the retail story is just beginning.”
Expanding into Asia will also be a focus for 2019, with Gemini hoping to compete with the likes of BitMEX and Huobi in the region. The “Winklevii” also stressed they have a “slow and steady” approach for one simple reason: “We think it’s a space that’s here to stay.”
The industry expects a good degree optimism from those as invested, and such early proponents, as the Winklevoss twins.
After launching the Gemini exchange and despite the SEC rejection of the Gemini bitcoin-based ETF application, the pair has been busy building a fully-regulated platform. Gemini uses Nasdaq market surveillance technology to prevent manipulation, offers custody services, and gained the approval and governance of the New York Department of Financial Services. It became the first licensed Zcash exchange in May 2018 and launched its Gemini dollar (GUSD) this September.
The Romanian bitcoin exchange executive has been arrested on suspicion of money laundering and other crimes and is currently fighting extradition to the United States.
Earlier this week, CoinFlux posted to Medium.com to inform followers that they are unable to access parts of their platform including those which would allow them to deliver information in the usual way.
“Another unpleasant consequence of the investigation is the fact that our access to some parts of our platform has been restricted, thus we are unable to send this announcement through the usual communication channels: e-mail and website. Our expectation is that we will gain control back, within the next days.”
They said at the time that they were working to regain access to exchange funds so they could determine what the next course of action would be. Currently, they remain legally disallowed from doing any sort of cryptocurrency exchanges.
Exchange Returning All Funds, Might be Shutting Down
Saturday, the exchange posted another update. In this update ,they said that they are working with the financial institution who manages all of their bank accounts, MisterTango, to have all funds returned to clients.
The wording of the update is unclear, in that it says:
“We’ve sent MisterTango (the Financial Institution hosting our frozen bank account) a list of people who have money blocked in CoinFlux wallets, as well as the exact associated balances, and the instruction to transfer those funds back into the clients’ bank account.”
As any reader knows, crypto balances are not held by banks.
Thus, the post does not seem to address crypto funds held in the exchange’s wallets, but fiat. They have not yet issued an announcement about how and when they intend to return client crypto balances. As we said, in the Thursday post they mentioned that they were unable to use their platform for legal reasons.
The case against Vlad Nistor centers on activities of Romanian scammers in 2014 and 2015. He is alleged to have actively helped scammers via Telegram in disposing of their ill-begotten gains. This would involve the conversion of knowingly stolen funds for cryptocurrencies. The crypto gains from then to now would be substantial, 2015 being a downturn year for Bitcoin.
The number of affected individuals in this situation is likely low, as the volume is so minor that places like CoinMarketCap.com, which lists hundreds of small exchanges, does not even report CoinFlux volume.
Coinbase Vice President Dan Romero has given reasons behind the platform’s recent announcement that it is exploring support for dozens of new cryptocurrency assets, arguably in contrast to its long-cautious approach to supporting individual crypto tokens.
Speaking recently to Linda Shin on an episode of the Unchained podcast, he delved into the factors that predicated the unusual move, coming against a background of the platform’s historically conservative nature when it comes to adding new assets.
In response to a suggestion that Coinbase may be loosening its approach to add coins that are more experimental or less proven than the big names like Bitcoin, Litecoin, Bitcoin Cash, Ether, and so on, Romero stated that Coinbase is, in fact, revising its approach based on customer feedback and current developments in the regulatory space. According to him, the recent shift in strategy is particularly driven by customers who have overwhelmingly requested the addition of new cryptocurrencies to the platform.
Coinbase Adopts Customer-Driven Crypto Strategy
Explaining the reasoning behind Coinbase’s new strategic direction, Romero said:
“I think our plan now is to list as many cryptocurrencies possible within a compliant, legal constraints and also having information and quality signals easily available for customers so that they can kind of determine if a cryptocurrency makes sense for them.”
In reference to cryptocurrency’s ongoing pivot into a utility phase, Romero explained that in the event that customers decide to change their crypto holdings on Coinbase and it cannot offer them that service due to non-support for their cryptocurrency, they will only end up exchanging the assets on less secure platforms, which serves neither them nor Coinbase.
This he said, raises the need for Coinbase to recognise that that “the ability to switch cryptocurrencies is the core piece of functionality in the ecosystem.” Thus, he revealed, Coinbase now intends to list as many assets as they can legally do in as many jurisdictions as well.
Despite the SEC’s position on registering securities which creates a risk of listing a token that later turns out to be an unregistered security, Romero expressed confidence in the company’s legal and security procedures working in tandem with in-house checks and balances to ensure that this does not take place.
According to him, the company’s Digital Asset Framework has enabled Coinbase to develop an efficient process to ensure the quality bar and re-affirm the brand’s identity of “trusted and easy to use.” Among the fail-safes deployed in registering a new asset is the use of vetos by every team before an asset is added to the platform.
The stablecoin is still an evolving concept, and there have been multiple approaches to it. Dai has algorithmic methods to keep it tied to the US Dollar, while the multitude of stablecoins – USDT, PAX, GUSD, TUSD, and USDC — all simply offer a 1:1 exchange ratio. The recently-rebranded Ampleforth offers an elastic supply so that the holder always gets the same value out of their investment, while they may have a different number of tokens depending on the market value of the token.
Digix takes a different approach, tying the value of its DGX token to 1 gram of gold. A small outfit run out of Singapore, Digix Global says that it will redeem tokens for physical bars of gold that they store in their vault. Redemption must take place in person, primarily for security but also due to the high cost of internationally shipping gold safely. We spoke to Kai C. Chng, the co-founder of Digix, about how it works.
First things first, even if the exchange itself were to flounder and never take off, Digix has developed an interesting method for tracking its gold bars on the exchange. Chng told us that every bar is scrupulously scanned into the system, its receipt information stored, and it is then associated with the token issued for sale. That is, essentially when you trade or hold DGX tokens, you are actually holding certificates of ownership to gold. There is a minimum redemption requirement, but such tokens can play a key part in trader strategy nevertheless.
“We have what we call a demurrage fee, it’s almost equivalent to storage, insurance, coded in the smart contract of each bar.”
Thus, this is how the exchange makes money – by storing tokens and their associated bars with Digix, a small amount of the token is eroded to pay for the gold’s storage.
At a given time, the exchange transparently lists its wares. Users are free to inquire if they have further questions about storage and tracking. The DGX token is currently listed on a number of reputable exchanges including Ethfinex. The majority of its trades seem to happen on the decentralized markets.
At the time of the interview they only had about 1400 grams on hand, but the CEO said they would be acquiring another 5,000 units from their supplier, London Bullion Market Association. By time of writing they had acquired these and sold a number of them, their supply being just over 4,600.
For those interested in trying out Digix, there is a sale going on with the exchange. They are selling under the cost that it costs them to acquire the gold until the end of the year, in an effort to stimulate user activity. Chng explained that in a normal situation, the exchange and transaction fees eat up around .05% of the value of the gold, putting a premium on the token versus actual gold bars at spot price. But until the end of 2018, Digix will be eating these fees. “We’re sort of just absorbing the fees right now,” said Chng.
The operation may seem small when compared to exchanges that transact in digital gold like Bitcoin, but it was founded and funded with private equity and has what amounts to a sound business model, if nothing else. Chng said that three people have come to Singapore and made redemptions, one of them in the thousands of units, and he felt that at least one of these people were just testing to see if the process really worked as advertised. They were not disappointed.
The Hydro Foundation has announced its decision to fork the 0x (ZRX) protocol. In a statement signed by CEO Tian Li, who is also the CEO of Ethereum DEX platform DDEX, the company revealed that even though 0x has contributed greatly to the growth of DDEX into one of the largest decentralized exchange (DEX) platforms on Ethereum, the strategic focus of the project has become bogged down by a series of wide-ranging endeavours, while the basic processes underlying the DEX are still plagued by rudimentary problems like low liquidity and order collision.
“Although we are using the term ‘fork’ to give proper credit, we rewrote a large portion of the codebase. We plan to ship a new order schema, an engine capable of true matching, robust market orders, and a fundamentally different liquidity sharing model. The ZRX token will be removed as well, because fee-based tokens create unnecessary friction.”
Focus on Liquidity
Created with an emphasis on liquidity, the new 0x fork will be called “Hydro.” According to Li, as soon as security frameworks and audits are completed, DDEX will switch from the 0x protocol to Hydro. The merit of the project will be determined by the protocol’s delivery. If it fails, he said, DDEX will be “outclassed and quickly become irrelevant” in line with the company’s strict ethos of providing utility that the market wants.
The Hydro protocol is not completely strange to DDEX. It was originally designed as a network layer protocol for high-performance decentralized exchanges and marketplaces, with built-in incentives for coordination. Originally deployed as a thin liquidity incentive layer on top of 0x, the aptly named protocol will place liquidity front and center of its vision for how a DEX protocol should operate as well as significantly expand the scope of the 0x project.
At the time of filing this report, there was no official response to the news of the upcoming fork from the 0x project, which on its part recently announced the 0x Ecosystem Acceleration Program. The program is designed to accelerate the growth of the 0x Ecosystem by expanding the number and diversity of projects being built on the 0x protocol.
According to the information from the 0x project, this will be accomplished by offering access to funding, technical support, and business expertise to budding teams. The support for their development will occur in helping early-stage teams kick off their projects, investing in tooling and programs to support all businesses building on the 0x protocol, and promoting technological innovation through selected research grants.
Bitcoin Bomb Threats, Romanian Fraud Arrests, Bitcoin Cash Continues to Plummet, Coinbase Integrates Paypal and More: This Week in Crypto
Several Notches Above Ransomware
An extortion scheme which sought to terrorize people into paying over BTC made global headlines over the course of the week. The threats happened worldwide, at a minimum being reported in the US, New Zealand, and Australia. The bomb threats demanded $20,000 in BTC in exchange for the terrorists to “give the command to my person to get away.” At least one address used in such schemes has to date received absolutely nothing, and there are no reports of anyone actually being injured as a result of failure to pay the ransom.
So I actually just got a bomb threat in my work email today ordering me to send the person $20,000 via bitcoin or they will blow up my place of work…. 2018 is wild pic.twitter.com/sn0vVLwe6v
— Ryan William Grant (@TheeRyanGrant) December 13, 2018
In related news, a “sextortion” scheme has been ongoing, seducing people into forcefully installing ransomware on their devices, ultimately forcing them to pay BTC or lose access to their data.
Romanian Bitcoin Exchange CoinFlux Sees Its CEO Arrested, Wanted for Extradition to the US
Broke the story of Vlad Nistor in the English speaking world. Nistor is the CEO and founder of a Romanian Bitcoin exchange called CoinFlux and is accused of having helped Romanian phishing scam artists – who actually traveled to the US as part of their scams in 2014 and 2015 – wash the proceeds of their scams in cryptocurrency when the exchange was just getting started up.
AriseBank CEO Settles SEC Charges
On the subject of scammers, Jared Rice, Sr., the CEO of the ICO-backed AriseBank scam has settled all charges with the SEC, amounting to well over $2 million fines and restitution. His criminal case is still pending.
Bitcoin Cash Bears In A Frenzy
For the first time ever this week, Bitcoin Cash saw a lower valuation than Ethereum. Ethereum itself is struggling on several fronts, the market being perhaps the least important to long-term bulls in the token platform. Actual dApp usage on the platform is incredibly low overall. We also reported this week how Tron, an alternative smart contract platform with a base token valued well under $1, saw more than a million transactions per day in its own dApps, indicating a growing demand for the token and its applications.
Bitcoin Cash ABC, the fork that retained the BCH ticker across exchanges, continues to plummet in value with no end in sight. Erstwhile, the other side of the fork, Bitcoin SV, seems to stay just behind BCH in price, the two being valued at $82 and $77 respectively on Saturday night. The continuing lack of confidence in Bitcoin Cash as a whole might be related to such things as lawsuits alleging overt centralization in addition to the general frigid atmosphere surrounding cryptos amid regulatory moves and prosecutions.
Coinbase Integrates Paypal
Coinbase users no longer need a traditional bank account to withdraw proceeds from Coinbase trades. They can withdraw to a Paypal account as of Friday. According to writer Samantha Cheng:
Before, you needed an ACH (automated clearing house) or federal wire account to withdraw funds from your Coinbase account. And it could take up to two business days for the transaction to clear.
The only thing missing now is PayPal deposits, which are still not available, meaning that customers must use at a minimum a Debit or Credit Card to fund their account. The unbanked stay unbanked if they use Coinbase, at least for now.
Porsche Uses Blockchain to Arrange $170 Million Loan
Porsche wanted a loan to conduct a targeted acquisition, and according to Melanie Kramer, they recently used BBVA’s blockchain products to do so:
Acquisition term loans are provided for a specific purpose and period. In this case, Porsche Holding Salzburg, a subsidiary of Volkswagen AG, is seeking to expand its retail distribution network in Europe and Asia.
The pilot also makes Porsche, still the largest automotive distributor in Europe, the first non-Spanish borrower to use BBVA DLT to negotiate and close a corporate loan.
BBVA has conducted other loans using its blockchain infrastructure in the recent past.
African Militants Use ERC-20 Token As Official Currency
A group of Camaroon separatists who are working to establish what they called “Ambazonia,” have created AmbaCoin, an ERC-20 token that they tout as their official currency.
As is the case with the Petro, it is currently unclear how the natural resources and projected earnings that give it value will be quantified and calculated, and it is also unclear how the said resources will be harnessed given that the Cameroonian military still maintains control of Southern Cameroon.
At time of writing, they were still selling the tokens for 25 cents US each to raise funds.
Coinbase — the largest US-based cryptocurrency exchange — partnered with payments platform PayPal to enable instant, free crypto-to-cash withdrawals for US customers.
This means customers can now move the crypto balances in their Coinbase accounts to their PayPal accounts immediately, at no charge.
“These withdrawals are not only fast; they’re free and incur no fees,” project manager Allen Osgood wrote on Coinbase’s blog. “Now, moving your cryptocurrency to cash is easier and more affordable than ever.”
Facilitating an ‘Open Financial System’
Before, you needed an ACH (automated clearing house) or federal wire account to withdraw funds from your Coinbase account. And it could take up to two business days for the transaction to clear.
With the new Coinbase/PayPal service, you can now move your funds instantly, for free.
Here’s the two-step process:
- Sign in to Coinbase and link your PayPal account to your Coinbase account.
- Select your PayPal account as a payment option when withdrawing your cash balance to move your funds instantly.
Allen Osgood said Coinbase launched the service in response to customer demands for an “open financial system.”
“We believe that means more than just owning cryptocurrency ,” he explained. ” It means having the flexibility to use it how and when you want. This integration is a big step forward in realizing that vision, allowing you to smoothly and instantly transfer your funds to cash.”
While the service is currently only available in the United States, Coinbase plans to roll it out in more countries in 2019.
Coinbase and Circle Are Making Moves In DC
While bitcoin enthusiasts know Coinbase primarily as a cryptocurrency exchange and brokerage giant, the company is quietly making moves behind the scenes to promote mainstream crypto adoption.
In September 2018, a pro-crypto lobbying group was launched in Washington, D.C. by three of the biggest cryptocurrency companies in the United States:
- Digital Currency Group.
“We have been very active with Congress, with policymakers. There’s a lot of engagement,” said Jeremy Allaire, the co-founder of Circle, a crypto unicorn with a $3 billion valuation.
The move signals that the virtual currency industry is taking concrete steps to promote mainstream adoption by becoming power players in the US capital. Lobbying isn’t sexy or hip, but that’s how things get in politics — so it’s pretty effective.
A week after the lobbying group launched, three bills were introduced in the US Congress designed to support the development of crypto and blockchain, the technology behind bitcoin.
The three bills were:
- Resolution Supporting Digital Currencies and Blockchain Technology.
- Blockchain Regulatory Certainty Act.
- Safe Harbor for Taxpayers with Forked Assets Act
Republican Congressman Tom Emmer — who is co-chairman of the Congressional Blockchain Caucus — urged the United States to prioritize the development of blockchain and create an environment that will enable the private sector to lead on innovation.
“This is an exciting time for blockchain technology and cryptocurrencies,” said Congressman Emmer. “Legislators should be embracing emerging technologies and providing a clear regulatory system that allows them to flourish in the United States.”
Hundreds of government buildings, schools and businesses in the United States and Canada were on Thursday targets of extortionists who threatened to detonate explosives unless they were paid thousands of dollars in bitcoin.
In most of the emailed bomb threats, the sender claimed that they had an associate who had planted an explosive device at the premises of the recipient and this would go off if a payment of US$20,000 in bitcoin was not made, according to ABC News.
“…20,000 dollars is the price for your life. Tansfer (sic) it to me in BTC and I warrant that I will withdraw my recruited person and explosive will not explode. But do not try to deceive me – my warranty will become valid only after 3 confirmations in blockchain network,” one of the emailed bomb threats said.
Most law enforcement agencies dismissed the threats saying they were not credible. This included the New York Police Department which tweeted that after searches had been conducted in numerous locations that had received the threats, no explosive devices were discovered:
“At this time, it appears that these threats are meant to cause disruption and/or obtain money. We’ll respond to each call regarding these emails to conduct a search but we wanted to share this information so the credibility of these threats can be assessed as likely NOT CREDIBLE.”
However, the counterterrorism department of the NYPD disclosed that monitoring of the bomb threats was ongoing:
We are currently monitoring multiple bomb threats that have been sent electronically to various locations throughout the city.
These threats are also being reported to other locations nationwide & are NOT considered credible at this time. pic.twitter.com/GowGG4oZ9l
— NYPDCounterterrorism (@NYPDCT) December 13, 2018
But before being determined to lack credibility, the bomb threats had resulted in evacuations in some institutions, facilities and extensive sweeps of buildings. In Toronto, Canada, the King subway station had to be cleared after the bomb threat was received. The University of Washington in Seattle also conducted building sweeps before releasing information across the campus that the U.S. Federal Bureau of Investigation (FBI) had deemed the threat not to be credible. Some schools across the United States also resorted to closing early while others were placed in lockdown or evacuated.
Other places that were evacuated included a county courthouse in Olympia, Washington; a city hall in Aurora, Illinois and news outlets such as Utah’s Park Record newspaper and North Carolina’s News & Observer.
It could not be immediately established who sent the hoax bomb threats or their country of origin though some media outlets noted that they ‘were written in a choppy style reminiscent of the Nigerian prince email scam’. On the other hand, an email to a middle school in St. Louis, Missouri bore an internet protocol address which was traced to Moscow, Russia. However, this was not deemed conclusive evidence of the origin as the sender could have laid a false trail to scuttle investigators.
Bitcoin tumbled to a 15-month low today. Ethereum has all-but petered out. Heavyweights like ConsenSys are laying off staff, and many ICO startups are running out of cash before launching their products. You have to admit, things don’t look particularly good from any angle.
But while crypto investors are getting used to bracing before they open their eyes in the morning, the team at Luno remains quietly confident. The company that claims to make buying crypto from your mobile easy will continue on its mission of “upgrading the world to a better financial system.” And they’re hiring 40 new employees at their offices around the globe to help them do it.
In an announcement on the company’s social media, they said:
“New year. New career. New you. We’re hiring in our offices all over the globe. Learn more about our different positions in Engineering, Customer Success, and Design.
New year. New career. New you. We're hiring in our offices all over the globe 🚀 Learn more about our different positions in Engineering, Customer Success, and Design. https://t.co/ekylzRwdqU
— Luno (@lunomoney) December 13, 2018
The news did not go unnoticed. Major crypto personality Barry Silbert from Digital Currency Group (one of Luno’s main investors) retweeted the post exclaiming:
“What crypto winter? Luno has over 40 jobs they’re looking to fill.”
Luno has over 40 open jobs they’re looking to fill. What crypto winter?!? https://t.co/h5KMZf2QrE
— Barry Silbert (@barrysilbert) December 13, 2018
I asked VP of Countries and Marketing at Luno, James Lanigan, what’s behind their decision to take on more employees at a time when crypto companies are cutting back. He said:
“We are looking to lead the evolution of financial systems worldwide, something that we do not expect to happen in a short-term period. Instead, we fully anticipate it to be a process which requires much longer-term thinking.”
He explained that to build a team with the necessary skills and ability takes a number of years–and that the company fully expects to grow at a faster rate in 2019, despite the bearish market.
“More and more people are beginning to understand and see the value in owning crypto, and we want to be at the forefront of that educational process.”
Want a new career in 2019? Why not launch into crypto? There may be not much hopium left in this space, but if you like a good dosage of volatile with your eggs in the morning this could be the place for you.
Emotions were high during bitcoin’s block size debate (each side believing bitcoin would be damaged by the other’s triumph), and they’re high again in this year’s bear market. People are once again listening to the fortune tellers, who shape their crypto outlook on market sentiment, and while there are many that signal allegiance to the cause, some are just here for the quick rewards, both social and monetary.
It disappoints me to see the toxicity in this small cryptocurrency community, but it doesn’t surprise me.
Specifically on Crypto Twitter, it’s the environment itself that rewards the group-think we’re seeing. Previously independent thinkers are rewarded for conforming and are punished for their dissent. While it’s easier to resist threats in groups, it’s harder to create and progress without being open-minded. We see similar patterns in politics and even in debates about nutrition.
All said, I must say that it is my experience that the Twitter toxicity does not transfer to offline interactions. I have met many bitcoiners from both sides of the block, and I can’t recall one time I felt any toxicity in person. In fact, the opposite is the truth, it’s always a treat. I would mention names, but I don’t want to blow their tough-guy covers.
To quote Ian Mackaye of Fugazi, the tough guys are all “ice cream-eating motherfuckers.” I mean that in the fondest of ways.
Instead of checking the daily graphs, it would better serve most crypto-enthusiasts to revel in cypherpunk writings such as Tim May’s Crypto Anarchist Manifesto and Wei Dai’s b-money paper. Both are great reminders of why we’re here in the first place. (If you’re going to look at a graph, make it the BTC:USD logarithmic graph. It has the best chance of predicting the future.)
Bitcoin is activism, not a get rich quick scheme or a startup platform. The point of bitcoin is to regulate bad laws and to democratize bad policies by way of circumventing harmful enforcement.
Any system, software or hardware, blockchain-based or otherwise, that contributes to these goals is worth paying attention to.
Equally, any software or hardware projects that fail in this manner are only of interest to me once they amend their fragility. In this regard, decentralized exchanges and ICOs are worthless in their current form, but DEX or ICO v2.0 or v3.0 may end up being decentralized and powerful tools for preventing oppression in all of its forms.
Go Gig (and Boring)
In 2012, my brother Josh and I printed up bitcoin postcards to give out at regional Students for Liberty events all over the East Coast. At the time, it was mostly the Libertarians embracing the infant technology and this was our activism.
For the International Students for Liberty Conference in early 2013, we decided to do something a bit wilder, we wanted to show these youngsters how bitcoin works. We built a little orange box that accepted cash notes and sent out bitcoin transactions. Not only was it a huge hit at the conference, it reached social media and we started getting interest from media and potential buyers.
This was our chance to take our passion for bitcoin to the next level. We founded Lamassu and started manufacturing bitcoin ATMs, a machine we like to now call “cryptomats.”
Fast forward almost six years and we’re still going strong, still advocating bitcoin and there’s a booming industry making machines that help people buy and sell bitcoin. From the get-go, our business has always been more about activism than pure short-term profit. The business decisions we make are a mix of what we need to do to succeed and how to stay in line with our techno-libertarian ideals of privacy and decentralization.
Our main goal has always been to introduce as many people to cryptocurrencies as possible. And so our software is free, open source and unlicensed. We don’t charge cryptomat operators any fees for machine usage, and they host their own servers. End-users who use the machines never have their coins stored for them by operators, but are required to actually use bitcoin to get it.
As a whole, the cryptomat industry is quite unlike others in the cryptocurrency ecosystem. There’s been very little drama of late.
We’ve seen healthy, steady growth. And the field is made of quality companies, such as our main competitors Genesis and General Bytes, that have endured radical bear and bull markets. All these are very important for the ecosystem, yet perhaps a bit mundane in terms of the news cycle. No ICOs, no mass hacks and the companies involved have at best millions worth of revenue, not billions.
But at the same time, I feel it’s the kind of boring the cryptoverse needs. Hundreds of thousands of ordinary people around the world are using cryptomats every month to get small amounts of bitcoin or other cryptocurrencies directly to their wallets. No banks, no third party custody, no waiting.
It’s still the easiest way for a first time user to get crypto, and the more cryptomats there are in the world, the more useful and reliable they become. Inch by inch, row by row.
BUIDLers on the Roof
The hardest part for bitcoin was getting to $0.10.
The exponential growth since has become the norm and would take something extraordinary to derail. As such, we have to think about what happens when a growing population of the world starts owning bitcoin. Will the next financial crisis be the one that pushes bitcoin to the mainstream? What if this actually does happen, but there’s still no good user interface to protect people from losing, misusing and failing to protect their funds? Will they end up trusting people to help them?
For me, this is still the biggest question in crypto. I don’t doubt the success of bitcoin and other key cryptocurrencies, but I’m concerned things will get messy when the central banks run out of tricks.
At Lamassu, we have been keeping our heads down, working to improve our corner of the still unsolved UI problem of crypto. We’ve been aggressively hiring coders and customer support staff and expanding our manufacturing facilities.
We have fierce competition, but it’s one of mutual respect. I know our competitors are doing it for the same reasons we are, a deep rooted ideology with bitcoin at its core, to free money and markets from powerful middlemen.
The whole point of bitcoin is for people to help themselves, but it’s our jobs as proponents to make that easy. The sooner people can actually use, store, and secure their own coins, the safer they’ll be when the bank runs hit. Lest we build skyscrapers of blockchains, with no elevators in which to ascend them.
The young stablecoin is making the rounds as it starts grabbing market share from its competition.
Tether (USDT), the single most traded stablecoin pegged to the USD, is now facing competition as Bitcoin’s price gets ever more volatile. New stablecoins have appeared and made their mark over the last few months, nibbling away at its market cap.
One of these coins, known as the Paxos Standard (PAX) token, flew to new heights in the last three months, reaching a total of $5 billion in its trading volume over that period and accumulating $157,058,532 along the way in market capitalization at press time, according to a press statement that Cryptovest received via email.
Pegged to the US dollar just like Tether, PAX managed to gather almost 10% of the current USDT market cap.
According to statements from the developer, $136 million in PAX have been redeemed over the period in which it’s been traded.
“We have seen tremendous adoption around the globe as people increasingly value and understand our unique position as a regulated stablecoin. Paxos Standard now has the liquidity of crypto assets while matching the dollar in value. We aim to continue to offer the most reliable, transparent, and redeemable stablecoin and support frictionless commerce worldwide,” said Paxos CEO Chad Cascarilla.
Paxos ensures its supply of dollars comes from an FDIC-insured bank account it owns, having so far provided attestation reports monthly since September 28th.
Its rapid climb may have been helped by PAX’s listing in the top 20 exchanges and OTC desks in October, making it one of the most rapidly-adopted stablecoins available.
Paxos’ attestations come from Withum, a business-to-business financial auditing services firm that opened its doors in 1974 and works with companies from a variety of industries.
It’s worth noting that attestations differ from audits, the latter of which is a completely independent opinion from a firm on whether the numbers and accounts provided by the auditee conform to financial reporting frameworks.
The fact that Paxos publishes attestations isn’t something that singles it out; TrueUSD and Tether do the same. Tether relies on Cohen & Cohen while TrueUSD (via TrustToken) relies on Cohen & Company.
The main difference between Tether and Paxos is that the latter does not have any strong apparent ties to any exchange, whereas the former has a solid connection to Bitfinex. PAX is also issued by a trust that has been approved to do so by the New York State Department of Financial Services.
Whether PAX manages to dethrone Tether or not depends heavily on the choices the trust behind the coin makes as it continues to push new boundaries in cryptocurrency exchange circles.
Romanian-based crypto exchange CoinFlux has had its bank accounts frozen days after its CEO was arrested in Bucharest.
CoinFlux, the popular cryptocurrency exchange from Romania, has had its bank accounts frozen days after its CEO, Vlad Nistor, was arrested by local law enforcement officials. In a blog post on Medium, the company also claimed it is unable to communicate with clients through its website or email.
“Due to a recently started, unexpected investigation, we are in the unpleasant situation of temporarily stopping any digital currency exchanges,” said the company in their release. “Unfortunately, our company’s bank accounts have been frozen, a situation which affects the CoinFlux wallets as well. We are doing all possible efforts, along with our legal advisers, to make sure everyone who had money deposited in CoinFlux wallets gets it back.”
The founder and CEO of the company, Vlad Nistor, was detained in the city of Cluj on Tuesday on behalf of the US government and presumably extradited the same day. The 29-year-old founder of CoinFlux will reportedly be charged with two criminal cases, allegations of fraud, computer fraud, organized crime, and money laundering. According to Romanian sources, Nistor is the son of one of the founders of Banca Transilvania, the second-largest financial institution in the eastern European country.
Following the unfortunate development for the company, clients of CoinFlux were left expecting an official statement for almost 24 hours. On Wednesday, CoinFlux finally released a short statement on Twitter, informing customers that it had been forced to ‘temporarily stop any digital currency exchanges.’
CoinFlux is an online currency trading platform that works on a currency exchange model. For trading, customers need a bank account and an electronic wallet in which to store their coins. In the case of bitcoin purchases, for example, customers convert CoinFlux from their own bank account a sum of money and receive, instead, the equivalent in bitcoin, directly into the electronic wallet. When selling digital coins, the process is reversed. Coinflux boasts advantages such as price, trading speed, customer service and the intuitive structure of the platform.
CoinFlux was founded in 2015 by Nistor, who was previously the Portfolio Manager of Retirement Funds pillar II and BCR Pensions, where he managed assets over 500 million euros. The company offers services to European crypto traders, with a focus on Romanian investors. The platform offers trades in Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Ethereum Classic (ETC), among others. Shortly before their CEO was detained, CoinFlux was advertising promotional low prices to celebrate their third year anniversary.
Despite the bad news, CoinFlux hopes it will return to normalcy as soon as possible. “Our expectation is that we will gain control back, within the next days,” said the company in a blog post. “We are aware that this is a worrisome situation for the people who have placed their trust in our service, and we assure each and every one of them that we will do everything that’s up to us to fix this unfair situation.”