This week, a number of banks shed light on their respective crypto-related projects, following the recent expansion of JPMorgan Chase into the field.
IBM was the big mover. A joint announcement by IBM and Stellar (XMR) said that as many as six global banks might issue their own stablecoins on IBM’s blockchain-powered payments network, dubbed “Blockchain World Wire” (BWW).
The question now is whether this marks a turning point for cryptocurrency’s use, or if it merely continues the experiments that have marked the early stages of digital money. While quite a few financial institutions seem ready to go blockchain and create tokens in a bid to streamline cross-border payments, some still choose to set the technology aside.
Citigroup, the corporation behind one of the world’s top-20 banks by asset value, revealed earlier this week that it was abandoning its “Citicoin” project to focus on more conventional remittance methods like SWIFT. The bank’s reasoning seemed focused on preserving the current forms of inter-bank transfers as a proven and universal method.
Nathaniel Popper, author of the book “Digital Gold, a History of Bitcoin,” tweeted back then:
“The JPM Coin makes it possible to move dollars between JPMorgan bank accounts instantly. That raises the question: Why was it not already possible to move dollars between two JPMorgan bank accounts instantly?”
Given that the JPM Coin is only available for private use within the inner circle of the banks’ clients, one should be hesitant to even call it a cryptocurrency, according to at least one expert.
Hartej Sawhney, a blockchain expert and co-founder of Hosho, a startup protecting investments and providing multiple smart contract services, told Cointelegraph in an email:
“Recently, banks and media have had a field day misusing the word cryptocurrency. There is no such thing as a ‘cryptocurrency’ without open consensus or permissionless participation. Announcing a new ‘coin’ was simply a marketing play for J.P. Morgan. Bitcoin for example, is open source, permissionless, strictly limited in quantity, and has no account fees.”
Not only is the JPM Coin permissioned and available only to institutional customers who have been cleared via JPMorgan Chase’s Know Your Customer (KYC) precautions, Sawhney added, it is also pegged 1:1 to fiat currencies held by the bank. That is fundamentally different from what cryptocurrencies constitute, he argued:
“Anyone can use a cryptocurrency, and anyone can participate in its consensus system without seeking permission from anyone else.”
Michael Dowling, CEO and founder of FairX, a financial services company involved with banking and digital assets, and former chief technology officer at IBM’s blockchain arm, also distinguishes bank-issued coins from conventional, “pure-play” cryptocurrencies akin to Bitcoin (BTC), XRP and XMR. Bank-backed tokens are “cryptocurrency implementations of fiat currency,” which are commonly referred to as “stablecoins.” He told Cointelegraph:
“A lot of people are obsessed with this ‘token’ thing, but at the end of the day a bank is a really fancy ledgering company with amazing security; the key to bank’s successful use of blockchain tech, in a practical way, is to shift some of the authentication of a user from the centralized bank to the user’s own device, proven by a cryptographic ledger. That’s really what this bank-issued coin is really all about — it’s still the same USD ledger, its authentication for who is allowed to change the ledger has shifted from username/password at the bank to pub-pri key cryptography in a distributed fashion.”
Downey then summarized his statement: “I do NOT believe regulated institutions will announce their own pure-play cryptocurrencies, but I am absolutely certain they will announce their own deposits on ledger.”
Interestingly, while JPMorgan Chase’s move was largely reported as a first for a United States bank (and any major lender), New York-based Signature Bank rolled out a similar feature earlier in December 2018. Dubbed the Signet Platform, the private blockchain allows the banks’ clients to move their money “in 30 seconds,” just like the JPM Coin — and it is also pegged to the U.S. dollar. It comes as no surprise that Signature’s coin was largely overlooked, given how the bank compares to JPMorgan Chase size-wise: The former has just $45 billion in assets, while the latter wields more than $2 trillion.
When announcing the feature, Signature Bank co-founder and CEO Joseph J. DePaolo seemed particularly bullish on the use of private blockchains for financial institutions. He told Forbes:
“We have to do this, otherwise we’re not going to exist. […] If you’re not involved in blockchain, in five years, you won’t be around as a bank.”
DePaolo’s viewpoint seems to echo the findings of Citigroup’s “Bank of the Future” report, which suggests that fintech companies that are actively disrupting the banking market with new technologies are driving out its longstanding participants — or at least compelling them to give up a large portion of their margins, a traditionally important source of income for banks. Specifically, the paper estimates that by 2025, major North American banks could lose 34 percent of profit from mainstream areas such as payments, investments and personal lending.
Primarily, banks tend to pick up blockchain for instantaneous cross-border payments. The technology shows a lot of potential within that field. Blockchain reportedly allows performing international remittance “in near real-time,” according to the IBM website, while normally they take three to five working days to complete within the existing infrastructure. Moreover, transaction costs can be saved as third-party intermediaries get removed from the process (according to research from McKinsey, the average cost for a bank to execute a cross-border payment through correspondent banking costs $25 to $35).
The two largest blockchain projects aiming to streamline cross-border remittance for global banks are hosted by Ripple and IBM Blockchain. Ripple has at least two blockchain-powered payment tools for those purposes, called xRapid and xCurrent (the main difference between them is that xRapid uses XRP, the company’s native token, while the latter works with fiat currencies). IBM, in turn, oversees its Blockchain World Wire (BWW) payment network operating on the Stellar (XMR) blockchain, which completed its beta in September 2018.
At this point, both Ripple and IBM Blockchain seem to be a force to be reckoned with: RippleNet reportedly has more than 200 clients, while BWW, which has been around for considerably less time, is currently used by 54 banks, as Jesse Lund, global vice president of IBM Blockchain, told Cointelegraph. Both of them are networks that are open to a wider amount of financial institutions, while some banks — like the aforementioned JPMorgan Chase — want to deploy their own private ledgers.
Notably, unlike Ripple, IBM’s BWW supports different digital assets within its blockchain, including bank-issued coins: Just recently, Cheddar reported that six international banks — such as Brazil’s Banco Bradesco, South Korea’s Bank Busan and the Philippines’ Rizal Commercial Banking Corporation — have signed letters of intent to issue their own stablecoins backed by their national fiat currencies on IBM’s network. “These are expected to add Euro, Indonesian Rupiah, Philippine Peso, Korean Won and Brazilian Real stable coins to the network,” Lund told Cointelegraph in an email, adding:
“Ultimately, we hope to see a global financial network that represents a real-time facility for moving money from anywhere to anywhere — where foreign exchange is just an inherent part of the process that happens automatically through the use of an expanding digital asset ecosystem.
“World Wire can use fiat currency, lumens or stable coins. This is a completely new kind of payments infrastructure than traditionally used, and it differs from SWIFT and other approaches.”
Downey also highlighted this feature as a major advantage for the network:
“While IBM’s service does use a pure-play crypto as a settlement asset as an option, I believe the legitimate institutions will use fiat-stablecoins issued by banks as settlement assets instead. That stabs Ripple in the heart — why use XRP if I can use….an acknowledged and accepted currency?”
Cointelegraph has reached out to Ripple to get a further comment for this article, but they failed to prepare a statement before press time.
Ripple’s CEO, Brad Garlinghouse, has criticized the concept of bank-issued digital coins (which he calls “bank coins”) and specifically the JPM Coin in the past, citing its centralized structure, among other things. He has also argued that the JPM Coin lacks the interoperability that would make it a significant innovation:
“This guy from Morgan Stanley was interviewing me last week, and I asked him, so is Morgan Stanley going to use the JPM Coin? Probably not. Will Citi use it? […] Will PNC? And the answer is no. So we’re going to have all these different coins, and we’re back to where we are: there’s a lack of interoperability.”
Downey agrees with that statement. “It [the JPM Coin] MUST be interoperable between banking institutions for it to work properly,” he told Cointelegraph. “Otherwise, we’re just swapping bank currencies.”
Stablecoins — with their ability to overcome crypto’s infamous volatility — have become widespread during the bear market, especially among more compliance-oriented players.
Projects like USD Coin (USDC), launched by payments company Circle in conjunction with Coinbase, the Winklevoss twins-backed Gemini dollar, Paxos and Facebook’s secretive project are among the most notable examples.
Recently, Jeremy Allaire, co-founder and CEO of Circle, has argued that, as the sector continues to see new market participants, stablecoins using an open-standards approach will prevail, while also welcoming Facebook’s still-to-be-confirmed plans:
“That’s [Facebook’s reported plans are] very, very positive in our view overall. The approach that we’ve taken is to create a consortium model. When we think about a standard for how fiat money works on the internet, it’s really critical that it’s an open standard that many companies can implement, that has an self-governance mechanism around it that can evolve both a technical standard as well as a membership framework.”
Essentially, Allair argued that creating “an HTTP for money on the internet” that could support global participation from multiple actors is “ultimately going to be much more successful than a single company issuing a cryptocurrency themselves.”
However, Downey told Cointelegraph that stablecoins that are not issued by banking institutions might have a significant disadvantage over the public ones run by startups:
“Only banks can ‘take deposits,’ which have a specific meaning with specific legal protections around the assets held on deposit in case of bankruptcy. Some, such as Gemini, have set up ‘trusts’ to park the cash, but it requires costly monthly attestations that come, frankly, for free as a bank. In addition, the Gemenis, the Circles, etc. all seem to be releasing their coins for the purpose of de-risking within their platforms. Very short term thinking, and no one is going to do real business (with real volumes with real value) using that setup. That’s what banks are for.”
Notably, Ron Karpovich, global head of e-commerce solutions at JPMorgan Chase, has recently raised a similar point in an interview with CNBC’s Squawk Box.
In response to a question as to how the top U.S. bank is ready to compete with new actors that can employ blockchain and cryptocurrencies to offer the same services as the industry’s veterans, but with cheaper fees, Karpovich said:
“Ultimately behind the scenes, they [crypto innovators] are going to have to use a bank to move funds. There’s more partnership instead of competition in that space. […] When it comes to margins and capabilities — payments is never something that grows in margin, nobody wants to pay for a payment. That’s one of the hardest parts of this process: you have limited resources in the capability to sell, so you need highly efficient and large players.”
Citigroup, unlike other mainstream institutions that couldn’t resist mentioning the word “blockchain” in their press releases at the time when it was popular to do so, has kept its cryptocurrency operation underground. It first surfaced back in July 2015, when International Business Times interviewed Ken Moore, head of Citi Innovation Labs. Moore told the publication that they were studying distributed ledger technology (DLT) for “the last few years.” Moreover, he added, the lab had constructed three separate blockchains and a cryptocurrency for test purposes:
“They [the three blockchains] are all within the labs just now so there is no real money passing through these systems yet, they are at a pre-production level to be clear. […] We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a ‘Citicoin’, for want of a better term. It’s in the labs, but it’s to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it.”
Moore also specified that “most of our efforts have been focused on payments; trade probably being a second runner.”
Now, when JPMorgan Chase has just rolled out its own cryptocurrency to speed up its in-house transactions, Citigroup announced it was putting its crypto project on hold. Specifically, Gulru Atak, global head of innovation for treasury and trade solutions, said in one report that they were reviewing methods for cross-border payments, but with a shorter-term effect. Citigroup is not abandoning blockchain, she said. But, for now, it is looked at as merely an adjunct to SWIFT.
Indeed, SWIFT is a 46-year-old interbank messaging service and a co-operative owned by about 11,000 member banks in more than 200 countries. Its network handles as much as $5 trillion worth of transactions per day worldwide, as per U.S. Department of Treasury data, which allegedly includes more than half of all high-value, cross-border payments, making SWIFT a top player when it comes to sending money from country A to country B.
“Citi’s experience was just like JPM’s, with one big difference,” Downey told Cointelegraph:
“Both were prototypes, and both focused on internal transfers. JPM has been investing in blockchain tech for years now, and I think they needed to start justifying those investments, and that’s why they announced — with much fanfare — a prototype that works….only within JPM. Citi’s approach is to focus on faster payments through SWIFT. I don’t believe it was a ‘this solution can’t work,’ it was more of a ‘we choose to focus on different solutions while other players focus on cash on chain’.”
SWIFT is aware of blockchain and its advances within the cross-border payments industry. At some point, the banking juggernaut even ran a proof-of-concept (PoC) of blockchain to see if it could pick up the technology for itself, but was left somewhat disappointed with the results. In March 2018, the co-operative declared that blockchain was not ready for mainstream use as “further progress is needed before it will be ready to support production-grade applications in large-scale, mission-critical global infrastructures,” although the tests went “extremely well.”
That seems to be the main consensus for traditional banking players that have chosen to stay away from blockchain: The technology has a lot of potential but is not mature enough to be picked up for industrial-scale use. The list of such lenders includes the Bank of Canada (BoC), the Spanish bank BBVA and the Bank of England, among others.
Sawhney told Cointelegraph that, whatever the outcome of the competition among blockchain-powered platforms and SWIFT is, the nearly 50-year-old conventional system is now being forced to update. Indeed, apart from testing blockchain, in February 2017, the banking network launched its Global Payments Innovation (GPI) service. While GPI promised “faster, same day use of funds,” it is technically a messaging system, and despite supporting real-time, end-to-end tracking, it is not blockchain-based.
“The battle is on for near-instant transactions, complete transparency and thorough transaction tracking, low clearing costs, and compatibility with any currency or asset type,” Sawhney said. “It has just begun, we are still a long way from getting a firm answer on which solution will dominate the future of the global payments industry.”
Passive Investing Boom Poses Catastrophic Risk to Dow Recovery
The trend for passive investing has reached new heights. According to a CNBC report, money continues to pump into ETFs tracking bundled assets – e.g., major indexes like the Dow Jones or S&P 500) – which now make up almost 50% of the entire stock market. Even the bond markets aren’t safe from the passive crowd. While everything looks rosy, there is a sinister threat lurking in the wings.
Active investors are struggling for assets, and their fees are less and less competitive. Who needs a hedge fund manager taking 2%+ fees when you can buy the Dow and sit there and watch it go up? Even the market correction we saw at the end of 2018 didn’t require any actual trading since the dip has all but been erased. The bounce once again confirmed to passive bulls that the long-term uptrend is intact.
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“Stock pickers” are a dying breed. Passive funds have simultaneously offered better returns and smaller draw-down. So where is the danger? Well, the danger is the “obviousness” of the trade.
If it’s easy to invest, then the uber-bulls rise to the top. You simply take more risk than anyone else as investors see your returns outperforming other managers. This allows you to cut fees as your portfolio grows. This has left some hedge funds managing multi-billion or even trillion-dollar portfolios.
It is the rush to the exit where things could get messy. Here is an excerpt from a Harvard study relating to the danger of asset-concentration:
“Passive funds offer little differentiation of portfolios and manager talent, so large funds can take advantage of economies of scale to charge low fees and attract disproportionate shares of investors’ cash.”
Harvard’s report has another fascinating tidbit, using a cyber-security event as an example of a fire-sale which could have a catastrophic effect on market stability.
“Greater concentration increases the risk that a significant idiosyncratic event—such as a cyber-security breach—at a very large firm could spark massive redemptions from its funds and lead to destabilizing fire sales.”
Correlation is another occasion where financial stability may be at risk. If you were to add a stock to the S&P 500, it is now bought and sold with all the other companies simultaneously. The same is true for the Dow Jones or any crowded index. Hence, the protection from an apparently diversified portfolio of stocks diminishes. Rising correlation is increasingly seen across all asset classes, and not just in stock markets. This makes it much more difficult to find safety in a down market. The decade-old bull has put caution way down the priority list.
It’s immensely sensible to consider that the increasingly crowded passive investing space is becoming too much of a no brainer. In the 1970s and 1980s, trend followers were king, but spiky markets and an influx of professional traders reduced their edge. The free market has a way of making people look really smart – and then really dumb when they get greedy.
JPMorgan and the gang love to say how lessons have been learned from the last crisis, but crashes don’t come from the direction everyone is looking. They blindside you.
Financial trader and speculator living in the Hills in Los Angeles. J.D but very much not a lawyer. Favorite trading books are anything written by Jack Schwager.
$2 Billion Lyft IPO is a Must-Buy, But Don’t Ignore These Risks
Less than two weeks ahead of its highly-anticipated $2 billion initial public offering, US ridesharing giant Lyft already has Wall Street bulls pounding the table. D.A. Davidson analyst Tom White has initiated coverage of Lyft with a “buy” rating and is expecting big growth numbers ahead.
Lyft filed its S-1 form on March 1 and began its roadshow for potential IPO investors this week. The company expects to sell $2 billion worth of shares at a price of between $62 and $68 per share and begin trading on March 29.
White estimates the firm’s market capitalization at around $21.9 billion. He says Lyft represents a unique opportunity for investors to have their first crack at a public ridesharing company. Ridesharing apps have been one of the fastest-growing businesses in the US, led by market leader Uber.
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“Our buy rating reflects LYFT’s impressive recent U.S. market share gains and momentum, the continued growth/expansion of the broader ridesharing market, and the stock’s reasonable EV/Sales multiple,” White says.
White says the ridesharing business is following a similar trajectory of disruption as other on-demand businesses such as entertainment and computing. As populations continue to get more concentrated in large cities, he says the “Transportation-as-s-Service” (TaaS) model will become even more popular.
Uber is by far the market leader with an estimated valuation of around $100 billion. However, Lyft has been gaining market share. The firm has aggressively marketed itself as an alternative to Uber by emphasizing its focus on social responsibility and corporate values. Uber has suffered from multiple scandals involving sexual harassment, drug use, and a toxic corporate culture.
White estimates Lyft’s share of the US ridesharing market has nearly doubled from just 22 percent to 39 percent in the past two years alone.
Looking ahead, White says Lyft’s explosive growth should continue, creating a unique opportunity for investors. D.A. Davidson projects 56 percent revenue growth in 2019 and another 30 percent revenue growth in 2020.
In addition to Lyft’s expansion, White says the ridesharing market itself is growing rapidly. Americans currently spend an estimated $1.2 trillion annually on personal transportation. Over the long-term, ridesharing companies will gain more access to this massive market as personal vehicle ownership declines. In the meantime, he says ridesharing growth will create a $105 billion opportunity for Lyft and its competitors by 2029.
In Lyft’s IPO roadshow video to potential investors, executives pitch the company while riding scooters, hopping buses, standing on subway platforms and, yes, taking Lyft rides. Also, this is how they introduce their actual financials: pic.twitter.com/pZDzKgurjP
— Seth Fiegerman (@sfiegerman) March 18, 2019
White even says Lyft has a wildcard opportunity in autonomous driving, but it may need a bit of outside assistance.
“We question LYFT’s competitiveness when it comes to scaling its own autonomous driving system (primarily due to relative lack of scale and a late start,) but believe LYFT’s ‘platform’ play for other autonomous driving players can help afford LYFT some time to either perfect/scale its own technology or secure a long-term partner,” he says.
While Lyft’s IPO offers investors some compelling upside, there are certainly risks involved. Lyft’s S-1 revealed the company had a net income loss of $900 million in 2018. White says that loss will increase to $1.19 billion in 2019 as Lyft invests heavily in growing its business. IPO Investors need to be confident Lyft can turn a meaningful profit in the long-term.
“There is some evidence that TaaS is already reducing personal car usage/ownership, but for ridesharing to represent a compelling alternative to personal car ownership for most Americans in large cities, we believe prices still need to fall ~30%-40% from current levels,” White says.
There are also concerns about whether or not Lyft can keep up with Uber and others in AV technology. White is also concerned about what types of regulations could come down from Washington as the ridesharing market grows.
Finally, high-profile technology IPOs like Lyft and Uber don’t have a great track record on Wall Street. Eight of the 10 largest technology IPOs in history had their share prices fall between 25 percent and 71 percent in the year following their first day of trading.
Wayne Duggan specializes in the psychological challenges of investing and often reports breaking market news and analyst commentary on popular stocks and other investments.Duggan is a regular contributor to U.S. News & World Report and is a staff writer at Benzinga, where he has written more than 6,000 articles. In addition, he frequently contributes market analysis to InvestorPlace. Duggan has also written investing education content for the Lightspeed Active Trading blog and contributed news and analysis to Seeking Alpha, and Motley Fool. His stories have been featured by MSN, Yahoo Finance, Fox Business, CNBC, Nasdaq.com and other outlets.Duggan is the author of the book “Beating Wall Street With Common Sense,” in which he discusses his personal, practical strategies for investing.Duggan is a graduate of the Massachusetts Institute of Technology and lives in Tampa, Florida.
“Hey are you set up with lightning? To send and receive lightning payments?”
The day I held the Lightning Torch was the day I learned how the lightning network works.
Living in Venezuela, the experimental payments network had somehow skipped my Twitter feed until I received the following message from renowned crypto advisor Jill Carlson.
She had the Torch and she wanted me to join.
I quickly came up to speed on the new game, and why it was attracting an increasing number of bitcoin users. (You can read here how it’s grown from a simple Twitter experiment to a payment that has now reached participants in over 50 countries.)
The Lightning Network Torch – better known by the Twitter hashtag #LNTorch – is a symbolic transaction, meant to teach how this new form of payment lets you send bitcoin faster and without paying fees on the blockchain every time.
Being a non-technological person, this didn’t promise to be fun at all. I accepted anyways. (I was also lucky enough to have Carlson as a technical guide through the process.)
Holding the Torch, however, is the easy part.
To receive the payment, I first needed to download a wallet that worked with Lightning Network (my regular bitcoin wallet wouldn’t do).
In my case, I chose BlueWallet. This allowed me to accept an invoice for the next amount to be paid in the chain (eg. 3,390,000 satoshis), respond to the tweet of the person announcing that holds the torch and wait to be chosen.
The next part wasn’t so simple. Something to take into account is that funding a Lightning wallet can take hours.
While the payment itself is very quick, it took Jill two hours to send the funds to my lightning wallet and another six hours for me to transfer them to the next person. This is due to the very small fees that are charged for each transaction using the Lightning Network.
The payment works when two users create a payment channel on the bitcoin network, and once the channel is created (which can take a while), the network routes the payment from one node to another. This makes the transactions instant on the lightning network layer, but it takes a long while to get there.
While transactions fees are supposed to be practically nonexistent, in reality, various users have complained about losing money while sending transactions using BlueWallet, one of the most commonly used wallets with lightning network integrated.
And in order to hold the torch and pass it on, one must, of course, give away some money. A very low fraction of 0.0001 BTC that will be added to the trust chain. In my case, I was advised to have enough money in the BlueWallet to pay unexpected fees. I was to receive 0.0392 BTC and pay 0.0393 BTC to the next holder.
Even though I didn’t lose money, I came close to it since the application insisted that I lacked enough funds. The lightning fees are supposed to be below 100 satoshis, and I had an extra 300,000 satoshis available to make the payment.
When asked about this error, the BlueWallet team’s response was that the service still has bugs and that users must remember that it’s still in its beta phase.
For someone who has never used the Lightning Network before, this was a quite contrasting experience with more established bitcoin wallets, and definitely more stressful.
The worst part was the uncertainty of whether the funds had been sent properly or if I had “dropped” the torch!
Luckily, this didn’t happen.
Not only did the payment go smoothly, but Jill and I were able to send a message about how bitcoin as a technology that can transcend borders.
I felt a sense of responsibility.
This was a platform to shine a light on Venezuela’s situation indeed. That’s why I passed the torch to the project BitBros, a team from Caracas that survived the blackout with an active node using a 12V motorcycle battery.
Since then, the game has helped to spread awareness of projects like @btcven, a Venezuelan initiative that has received help for their fundraising through the Lightning Torch.
As a result, we’re all listed alongside Andreas Antonopoulos, Erik Voorhees and Meltem Demirors on an official website set up by Lightning Torch creator @Hodlnaut that tracks how the payment has been passed.
For now, the count keeps growing. The Lightning Torch has reached to 250 participants in 53 countries, going from 0.0001 BTC to 0.0395 BTC at press time.
But the torch won’t burn forever, as it’s creator assured. “There are only 33 spots left before we reach the limit of 4.29 million satoshi. I expect it to happen within a couple of weeks,” HODLnaut told CoinDesk.
Now that my turn has passed, the overall experience left me with a sense of belonging with the bitcoin community. It was an inspiration to keep learning more about the blockchain world.
Thanks again, Jill and all those building lightning.
Image via TakeTheTorch.com
Bitcoin Price Could Crash by 50% in 2019: Veteran Crypto Traders
Throughout the past week, the bitcoin price has increased from $3,901 to $4,048, by nearly 4 percent against the U.S. dollar.
The relatively strong short-term performance of bitcoin led alternative cryptocurrencies to engage in large upside price movements, allowing the valuation of the crypto market to rise by about $7 billion.
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However, while traders, technical analysts, and strategists generally remain positive on the mid-term price trend of bitcoin, some traders foresee the dominant cryptocurrency retesting key support levels in the mid-$3,000 region.
Since December 2018, bitcoin tested the $4,200 resistance level twice and cleanly broke out of the $4,000 mark on three occasions.
Following the two attempts to reach $4,200, the bitcoin price pulled back to the $3,700 to $3,900 range, unable to sustain momentum possibly due to a lack of capital inflow and volume in the cryptocurrency exchange market.
As such, some traders believe that if bitcoin is not able to demonstrate a promising rally above the $4,200 to $4,600 range in the near-term, there exists a high probability that the asset drops back to its support levels at $3,500 and above.
Mayne, a recognized cryptocurrency trader, said:
“If the bulls don’t step in soon here I’m gonna have to short $BTC earlier than expected. I don’t suspect the yearly open holds this time either.”
Give the inability of bitcoin to surpass $4,200, one trader boldly predicted that the asset could establish a new 12-month low below the $3,122 mark, possibly at $2,000.
“Selling BTC in the $4,000 region and up if need be. Trade duration: weeks to months. Target: $2.000. Noobs buy at $4,000 so they can panic dump their bags at $3,000. The market is a device for transferring money from the impatient to the patient. Always has been and always will be,” the trader said.
Whether bitcoin moves to the upside or breaks down to the low $3,000 region, traders see a high level of volatility incoming due to the noticeable increase in the volume of the cryptocurrency exchange market.
Depending on the price trend of bitcoin in the upcoming few days, several traders have said that bitcoin could either continue to gradually climb to the $5,000 region or retest recent lows.
“Volume MA (on bottom) is at historic bounce levels on the 1W. Volatility incoming. Confident in continuation to the upside, although positioned to be fine in event of price dump. Always prepare for best and worst case. One bear thought I have, is a lack of sell climax thus far,” an analyst known as Crypto Thies wrote.
But, some analysts also foresee bitcoin testing the last phase of the 15-month bear market and found striking similarities between the price trend of bitcoin in 2015 and 2019.
Inhale it. $BTC
— ₿lackbeard (@crypto_blkbeard) March 20, 2019
Although many traders remain cautiously optimistic in the price trend of major crypto assets including bitcoin, the cryptocurrency industry is demonstrating signs of growth and expansion.
On Wednesday, Binance, the world’s largest cryptocurrency exchange by daily trading volume, enabled users in Australia to purchase bitcoin at more than 1,300 physical storefronts, an initiative that could increase the accessibility of cryptocurrencies to a fast-growing blockchain market.
Hong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.
With blockchain companies everywhere aiming to empower their platforms’ users, it can be difficult to stand out from the crowd. Skycoin is hoping to do just that with its Skywire application, and the Skycoin development team have now unveiled the developer version, with the announcement made just days ago in Shanghai. This gives developers the capability to download, install, build and run the Skywire mainnet via the command line interface. Skywire’s creators have also stated that during the next few weeks full documentation for the developer release will be made available.
Skywire is Skycoin’s flagship product and, according to its creators, is a ‘decentralized community-driven mesh network’ that allows users to actually own and control the network’s infrastructure themselves. The stated goal of Skywire is to provide access to fast, secure and reliable internet for all.
Skycoin describes itself as a ‘third-generation blockchain company’ and ‘the most advanced blockchain application platform in the world’. The company has its finger in many pies, boasting its own chain, consensus algorithm (Obelisk), programming language and hardware. Skycoin was born in 2011 from a merger of three separate projects that each aimed to improve on Bitcoin’s design and implementation. The Skycoin team identified several major design issues with Bitcoin that they felt were hampering the wider global acceptance of cryptocurrency as a secure, censorship-proof payment system. Skywire was created to address these issues.
Skycoin has recently completed roughly ten months’ intensive testing of the developer version of its Skywire mainnet using a global network of almost 10,000 nodes. Now available to the public, it went live on March 4th, 2019. According to company publicity material, Skywire’s mainnet has been completely rewritten from scratch. Its primary focus is as a platform to facilitate the development of the next generation of decentralized apps (dapps). The complete range of existing apps have been rewritten and optimized to take full advantage of the mainnet. These include a distributed secure chat app, SSH, and a multi-hop tunneling proxy app. Many more are in the pipeline. Skywire’s creators claim this mainnet developer build is just the first of many releases, with Skycoin rolling out a series of new versions and features over the next few months.
The following features are under development:
Skycoin claim the initial release of the Skywire mainnet represents ‘a huge milestone for Skycoin and for the future of the Internet.’ The company is touting its platform as a solid and secure distributed network immune to censorship. If Skycoin continues to evolve its innovative products – increasing its presence as it does so – it may be able to make good on its claims and take centre stage in what is a crowded and competitive sector.
This is a submitted sponsored story. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the content below.
United States-based crowdfunding platform SeriesOne has partnered with security token protocol platform Polymath, according to a press release published on March 19. The new partnership intends to create a digital securities offering ecosystem via the SeriesOne platform.
According to the press release, the partnership between SeriesOne and Polymath will let token issuers create and manage regulatory-compliant security tokens from the initial offering stage to trading on a secondary exchange.
SeriesOne CEO Michael Mildenberger expressed confidence that Polymath’s security token protocol, ST-20, is set to improve the process of raising capital on the platform.
Polymath’s ST-20 protocol is a token standard that is designed specifically for issuing and managing security tokens. ST-20 represents an extension of the Ethereum (ETH) blockchain-based ERC-20 protocol. Unlike ERC-20, however, ST-20 “embeds regulatory requirements into the tokens themselves, restricting trading to verified participants only.”
Polymath explains that its ST-20 standard is a solution to the problem of regulatory compliance when dealing with securities, since the protocol enables restrictions for policies such as Know Your Customer (KYC) and Anti-money laundering (AML). According to Polymath, ST-20 tokens are backward compatible with ERC-20, providing interoperability with most existing blockchain infrastructure.
The partnership was revealed just as SeriesOne officially announced that it is partnering with major South Korean crypto exchange Bithumb to build a digital securities exchange. The partnership was first reported in November of last year.
North Korean Dissidents are Using Crypto to Overthrow Kim Jong-un
An organized dissident revolutionary group calling itself Cheollima Civil Defense is actively working to overthrow Kim Jong-un and the government of North Korea. The group has announced that they will be selling visas to the new country beginning Sunday, and supporters can pay with the Ethereum cryptocurrency.
The price is one ether for the first 1,000 visas, which will be issued via the blockchain. Two hundred thousand passes will be granted using the blockchain. The official site doesn’t say what the per-visa cost will be once 1,000 have been issued. The South China Morning Post, which first reported on the venture, incorrectly stated that 1 ETH would buy 1,000 Visas.
Cheollima also calls itself “Jayu Joseon,” which means Free Joseon.
If the price remains constant, the group is trying to raise around $27 million. The group’s website says that the visas may be traded and sold. You are allowed to purchase as many as you like. They say that if you want to build a business or some other commercial activity in the future free country, you’ll have to contact them for a more advanced visa.
The visa will give you access to “Free Joseon,” the state Cheollima will found in place of North Korea, for 45 days at a time. It is issued using ERC-721, a variant of the widely-used ERC-20 standard. ERC-721 significantly improves the usefulness of Ethereum for non-fungible (unique) tokens, although entry documents to a prospective nation-state are perhaps their first “real-world” use case to date.
The visas are called “G-Visas.” The “G” stands for “Genesis.” The contract address is 0x9044c1f34f29d19558c11662cb2de79f858347d9. Seven visas have already been issued, but you cannot officially buy them until Sunday.
The group is responsible for multiple actions against the North Korean state so far. In one case, they took credit for defacing the North Korean embassy in Malaysia.
Recently, they are believed to have stormed the hermit kingdom’s Spanish embassy – using fake weapons – and extracted computers and cell phones. Experts believe these items contain important intel.
They are also responsible for rescuing the son of Kim Jong-nam. Half-brother to Kim Jong-un, Jong-nam was famously assassinated by North Korean agents in Kuala Lumpur. The group worried that Jong-nam’s son, Kim Han-sol, would be next. They spirited him away from Macau, and he appeared in a video disseminated to the media, expressing gratitude to Cheollima Civil Defense.
Freedom-loving Etherians and Bitcoiners are welcome to contribute over the minimum of one Ethereum token per visa. The Bitcoin address associated with the group is 134ytYQnZVAEVV6YZVfx1NBUGc9GY45FBm. It has received over 14 BTC to date. The Ethereum address for donations is 0xe60e1888a6c1b6350ff44c0c388781bf169c2979. It hasn’t received anything.
The extremely unusual nature of the visas will make them highly valuable if the overthrow of the Kim regime is successful. You do not have to provide any proof of ownership beyond holding the token.
The politics of the group are unclear. Clearly, they favor libertarian ideals, willing to risk their lives in pursuit of a free North Korea. They haven’t commented on subjects such as reunification with the South.
To date, Cheollima has only spoken of knocking over Kim Jong-un and establishing a free country in place of the prison state. If they create a liberal democracy in place of the existing communist regime, their proximity to China, ample natural resources, and relatively undeveloped countryside could make Free Joseon a global hub of commerce.
The group is greatly concerned about having their identity revealed. They posted a note to their website recently which reads, in part:
“The identification of even a single member could lead to the identities of others. Several of us have already escaped their attempts on our lives and that of our families. Many of our compatriots and their relatives have not been as fortunate. And any left surviving in concentration camps would surely face execution if the identities of their family members were dissidents were made known.”
A free North Korea would change the global political landscape. Will the Ethereum blockchain help make it happen? Time will tell. Buying the G-Visa is placing a bet, at this point. It will have indeterminate value if the group is successful. It will have no value if they fail.
A startup offering a new twist on token airdrops has raised $2 million from a group of notable investors, CoinDesk has learned.
The investment in governance startup Commonwealth was led by 1confirmation, Canaan Partners and former Polychain partner Ryan Zurrer.
Commonwealth’s new distribution approach, called a “lockdrop,” looks to maintain the high levels of interest that airdrops inspire, while adding a hurdle meant to attract the right investors.
As Commonwealth co-founder Dillon Chen explained to CoinDesk in an email:
“Early active community members matter a lot. They create norms.”
Founded in 1987, Canaan made successful investments in Web 2.0 breakouts including Match.com, LendingClub and Kabam. Prior to this blockchain announcement, gaming startup Forte and scaling project Skale Labs were Canaan’s only other crypto-related investments.
With Commonwealth, these investors are betting that innovations in governance will differentiate blockchain investments going forward. People care more about something if they pay for it. But if they have to pay too much, one could also exclude potentially valuable community members.
To attain that influx of community interest, but dissuade those that just want crypto candy, Commonwealth came up with a new spin on the airdrop called a “lockdrop” for its EDG token, a governance and utility token for its first product, Edgeware.
“Ethereum holders can participate in the lockdrop, they will be helping to provide security on a new network, kind of like a sidechain,” Chen told CoinDesk.
Edgeware will be a network built to serve as the smart contract layer for Polkadot, a project of the ethereum startup Parity. Best known as the project that lost over $150 million worth of ether, Polkadot intends to bring interoperability to the world’s blockchains.
Edgeware will make it possible to bring smart-contract functionality to that network while running alongside it (on what Polkadot refers to as a parachain).
“I’m backing Edgeware because I’m really excited about crypto-governance,” Zurrer, currently the director of the Web3 Foundation, told CoinDesk in an email.
The genesis block of Edgeware will create 5 billion EDG tokens, 90 percent of which will be distributed to participants in the lockdrop. After that, new tokens will be emitted at a fixed rate with each block.
To get EDG, users will need to hold ether. The amount of EDG they get will depend on how much they have and how long they decide to hold it.
“The lockdrop represents a novel way for people to get involved at very low opportunity cost,” Zurrer told CoinDesk. “Since you get your ETH back at the end of your lock-up, you can obtain EDG and experiment in this new community without sacrificing your plans for your Ether.”
Users have four options: they can lock up for three months, six months or a year. They can also just signal the chain from their wallet, but that’s by far the least lucrative.
So, a user with one ETH that locks for three months will get one share, six months gets 1.1 shares and a year gets 1.4. Signaling the smart contract only earns 0.6 shares and there’s a delay – the signal option won’t be paid out for a year after network launch, whereas all those who actually locked will get EDG as soon as Edgeware goes live.
An example: Let’s imagine that instead of 5 billion tokens there will be 500. And let’s imagine only four people take part, each choosing a different option with 10 ETH each. That would mean one had six shares, another had 10, another had 11 and the last had 14.
So, in this example, at network launch, the person who locked for three months would get 121.95 EDG. The person who locked for six months would get 134.146 EDG. The person who went for a year would get 170.73 EDG. A year after launch, the person who had only signaled would get 73.17 EDG.
But if instead of four people there were 40, with the same amount of ETH each and the same distribution, then each person would get only a tenth of the EDG as that shown in the example above.
It’s impossible to know at this point how many people will participate and how many will join at which level, but the point here is to give interested ETH holders a hurdle to their free tokens – but not too much of a hurdle.
“We think asking people to do the lockdrop can get us those early active community members,” Commonwealth’s Chen wrote.
The lockdrop will open on June 1 and potential participants will have until June 15 to choose their level of participation. Chen tells us that the blockchain should go live right after the contract closes, meaning that those in the lockdrop won’t need to wait to claim their new tokens.
“This will be very interesting, and I’m sure more novel mechanisms will emerge from this project that are beneficial to the whole industry,” Zurrer wrote.
Edgeware is also ready-made for crypto’s inevitable controversies.
Once live, it will come with a native voting mechanism so that no one will need to build a solution when a major controversy arises (as the ethereum community had to do after the DAO was hacked).
“It solves the problem of an insecure vote,” Chen wrote.
Following launch, Commonwealth looks forward to several new projects built around Edgeware, including creating an encrypted email platform that sends between various blockchain addresses, an anonymous voting system, becoming a Polkadot parachain and facilitating decentralized autonomous organizations.
“We think Edgeware is complementary to both Ethereum and Polkadot,” Chen wrote, adding:
“The goal is to serve a more progressive segment of developers through WebAssembly contracts and instant finality. “
Photo of 1confirmation founder Nick Tomaino at Token Summit II via CoinDesk archives
Short the Dow for 2019’s Coming Recession, Says Top Hedge Fund
The Dow Jones is set for an epic collapse, plunging the US into a recession as early as this year, according to Crescat Capital.
The hedge fund, which consistently outperforms the market, is loading up on short positions on global stocks and shifting assets into gold in anticipation of a stock market meltdown.
It comes less than a day after Nobel Prize winner Robert Shiller said a recession is likely in the next 18 months. The bears are circling, and the stock market is on thin ice. As CCN recently reported, US stocks are highly over-priced and due for a monster correction. The Dow is in a bubble. The only question is when will it burst?
Speaking to Bloomberg, Crescat points to a number of factors for its bearish position. Chief of which is the sheer volume of corporate insiders offloading their stock.
Executives are now selling their own company stock at a rate of 5:1 compared to buyers. That’s the highest level in two years with 2,600 executives selling shares in February. Insider selling often indicates a rally is running out of steam.
The hedge fund also points to poor economic data and the high inversion on the Treasury yield curve. Not to mention the China-US trade war which may end with a disappointing outcome for traders.
The recessionary indicators are numerous:
📉The near-inversion in the Treasury yield curve
🏡Weaker housing activity
💸Soft consumer spending
⬇️The swoon in stocks at the end of last yearhttps://t.co/FG7EmH8hZH
— Bloomberg Opinion (@bopinion) March 18, 2019
If Crescat’s prediction is correct, how does it explain the 19% surge in the S&P 500 this year? It’s a “bear market rally,” one Crescat analyst claims.
It echoes analysis from Danielle DiMartino Booth who called the latest Dow surge a “head fake.”
“History is replete with examples of major recoveries following big sell-offs, many of which turn out to be head fakes otherwise known as bear market rallies.”
In other words, don’t be tricked by the latest surge. Crescat’s analysis suggests the ten-year bull market is already over. December’s huge correction marked the start of a bear market and the current uptrend is just a short-term rally. As Crescat explains:
“Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work.”
— David da Silva (@davidinvesting) March 19, 2019
Crescat paints a gloomy picture of the future, predicting a recession within months, not years. Speaking about forecasts of a recession in 2020 or 2021, Crescat analyst Tavi Costa said:
“We think it’s a lot closer than that and we have a number of macro timing indicators that we look at.”
Nobel Prize winner and economics professor at Yale, Robert Shiller, also forecasts a recession in the near future. Speaking to CNBC, he said there was a “greater than average” chance of recession before the end of 2020.
Crescat capital said its strategy of shorting stocks and buying gold is the “trade of the century.”
The hedge fund is a niche firm with around $50 million in assets under management (AUM). But you can’t argue with its performance. The fund’s 12 percent annualized returns outpace the S&P 500, and its Global Macro Fund saw 41 percent returns last year alone. Summing up the strategy, Crescat said:
“There is so much more ahead to profit from the short side of the market. The bear-market rally is running out of steam!”
Ben is a journalist with a decade of experience covering financial markets. His writing has appeared in The Huffington Post and he worked at Block Explorer, the world’s longest-running source of Blockchain data.