Category Archives: Crypto

TechCrunch: Over 1000 Crypto Projects Are Considered ‘Dead’ Now

More than a thousand of crypto projects are “already dead” as of June 30, 2018, according to a recent TechCrunch report. The news outlet has based its claim on data from two websites: Coinopsy and DeadCoins.

Coinopsy provides daily reviews of various cryptocurrencies, including ones that are already “dead.” It defines a “dead” token as exhibiting at least one of the following:

“abandoned, scammed, website dead, no nodes, wallet issues, no social updates, low volume or developers have walked away from the project.”

According to Coinopsy’s list, there are 247 “dead” coins as of press time. These include the notorious Bitconnect that was shut down in January 2018 and is described by the website as “the most successful ponzi-scheme in crypto so far.”

DeadCoins similarly has a 830-item long list of “dead” cryptocurrencies. Among them is the recent Titanium Blockchain Infrastructure Services initial coin offering (ICO) that was shut dow by the U.S. Securities and Exchange Commission (SEC) for fraudulent practices.

According to the SEC’s press release, Titanium has raised $21 million from investors from the U.S. and other countries. In its statement, the SEC warned investors about ICOs as an extremely risky type of investment:

“Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments.”

As Cointelegraph reported Friday, the volume of ICOs has reached $13.7 billion in 2018 so far, which is already twice as much as the market amounted to in the entire 2017. According to TechCrunch, scam and dead ICOs raised $1 billion in 2017.

On June 21, Nasdaq CEO Adena Friedman warned that ICOs pose “serious risks” for retail investors, claiming that projects that raise money this way have “almost no oversight.”

Earlier in June, crypto evangelist John McAfee said that he will stop promoting ICOs due to alleged threats from the SEC.

Source: ZeroHedge

 

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PBoC Filings Reveal Big Picture for Planned Digital Currency

https://media.coindesk.com/uploads/2018/06/yuan-bundles-860x430.jpgChinese yuan image via Shutterstock

The Digital Currency Research Lab at the People’s Bank of China has filed more than 40 patent applications so far – all as part of an aim to create a digital currency combining the core features of cryptocurrency and the existing monetary system.

A national digital fiat currency, say what?

Data from China’s State Intellectual Property Office (SIPO) revealed two new patent applications on Friday, pushing the total number submitted by the lab to 41 over the 12 months since its launch.

Each of the 41 patent applications focuses on a certain aspect of a digital currency system, and, when combined, would create a technology that issues a digital currency, as well as provides a wallet that stores and transacts the asset in an “end-to-end” fashion.

For instance, the most recently revealed patent application explains how the envisioned digital wallet would allow users to check any transactions made through the service, while earlier documents offered details on how the wallet can facilitate transactions.

The ultimate goal, according to PBoC’s patents, is to “break the silo between blockchain-based cryptocurrency and the existing monetary system” so that the digital currency can sport cryptocurrency-like features, while being widely used in the existing financial structure.

Last week’s patents further explain that the envisioned wallet would not be limited, like a typical cryptocurrency wallet, to merely storing the private key to a certain asset. Nor would it be like another mobile payment service that only reflects a number on an application’s front-end interface without users actually holding the assets in a peer-to-peer manner.

Instead, the patents indicates the wallet would store a digital currency issued by the central bank or any authorized central entity that is encrypted like a cryptocurrency with private keys, offers multi-signature security and is held by users in a decentralized way.

The research lab said in  one of the documents that it believes it is building a mechanism that makes a crypto-featured digital currency more applicable in the financial world.

The hybrid approach is also in line with opinions shared by the PBoC’s vice governor Fan Yifei and Yao Qian, the head of the research lab, who have both argued for a balance between the two polars of centralization and decentralization.

Overall, the patent applications filed so far signal the continuous efforts made by China’s central bank to develop its own central bank digital currency, as well as to potentially widen the application’s role among other central institutions.

The lab notably commented in a patent application released in November 2017:

“The virtual currencies issued by private entities are fundamental flaws given their volatility, low public trust, and limited useable scope. … Therefore, it’s inevitable for the central bank to launch its own digital currency to upscale the existing circulation of the fiat currency.”

Read one of the most recent patent applications below:

PBoC Digital Currency Research Lab by CoinDesk on Scribd

Source: By Wolfie Zaho | CoinDesk

The Bitcoin Valuation Delusion

Summary

Some people seem to believe that Bitcoin might be worthless, we discuss their arguments.

If there was value in Bitcoin, how would we know?

Shared delusions, are they useful?

The case for Bitcoin having no value at all

(Hans Hauge) If you’ve read anything I’ve written so far, you know that I’m long Bitcoin (BTC-USD). However, that doesn’t mean I’ve turned a blind eye to the crowd that says it’s all an illusion, that Bitcoin is intrinsically worthless.

Let’s take a look at who is making these arguments, and what they’re saying.

Jamie Dimon – J.P. Morgan Chase CEO

In September of 2017, Jamie Dimon said:

It’s worse than tulips bulbs, it won’t end well.

And:

There will be no real non controlled currency in the world. There’s no government that’s going to put up with it for long.

So, if I understand correctly, Mr. Dimon’s argument is that every government in the world will soon block all cryptocurrencies. Therefore, Bitcoin is doomed.

Warren Buffet and Charlie Munger of Berkshire Hathaway

In May, 2018, Warren Buffet said that Bitcoin was:

probably rat poison squared.

And Charlie Munger said:

To me, it’s just dementia. It’s like somebody else is trading turds and you decide you can’t be left out.

If I understand correctly, Mr. Buffet believes that Bitcoin is super tasty but very poisonous, like a Big Mac times itself, and Charlie Munger is trying to say that the Bitcoin market is pure FOMO, or the Fear of Missing Out. Therefore, Bitcoin is doomed.

Putting these ideas to the test

I hope you are a data driven person like me. I believe there’s no better way to have a clear understanding when people’s tempers are raging than to just look at data and slowly and carefully think about what makes sense.

Let’s start with Jamie Dimon’s argument that all governments in the world will ban Bitcoin. How does this argument stack up? Let’s look at what’s going on in the three largest economies in the world.

All governments to ban Bitcoin?

When governments move too quickly to ban new technology, the country they represent ends up getting left behind. Coinbase for example, has 20 million users and has traded over 150 billion dollars of cryptocurrencies to date. This kind of economic activity is creating jobs and driving innovation.

Will governments regulate cryptocurrency exchanges? Of course, and they already are.

Will every government in the world ban cryptocurrency outright? I’m not convinced it’s going to happen, especially with what we’re seeing in the US and Japan so far.

Final thoughts on J.P. Morgan

Mr. Dimon’s comments would make more sense if they were, I don’t know, maybe trying to patent Bitcoin’s technology and make their own version. But, that would be kind of unethical, don’t you think? I guess it’s not really surprising since J.P. Morgan (JPM) has been fined more than 29 billion dollars for abusing the market since the year 2000. But, Bitcoin is the fraud?

Bitcoin value is based on nothing but FOMO?

I think people forget that Bitcoin is not some magical beast that lives in isolation. It’s a network with many stakeholders and it represents something different to each group. Bitcoin has created an ecosystem that includes Bitcoin Miners, Software Engineers, Exchanges, Cloud infrastructure like Blockchian as a Service, Merchants, Users, and of course, the speculators and the scammers.

Let’s look at some data.

FOMO or subject of scholarly research?

If Bitcoin was just FOMO, then surely academic interest in the subject would be small, and certainly not growing over time. What’s the big deal after all?

Year Number of Scholarly Articles Mentioning “Bitcoin”
2012 1,040
2013 2,030
2014 4,080
2015 4,640
2016 5,860
2017 9,990

Data Source: Google Scholar

FOMO or a life raft for those living in oppressive regimes?

If Bitcoin was just speculation, surely the countries with the highest search volume for the term “Bitcoin” would be wealthy countries where people are throwing money around, rather than in troubled places where a censorship resistant currency might be of use. As you can see, with the exception Finland in 2012, the interest is overwhelming coming from troubled geographic areas.

Year Number one Country by Search Volume for the term “Bitcoin”
2012 Finland
2013 Estonia
2014 Estonia
2015 Ghana
2016 Nigeria
2017 South Africa

Data Source: Google Trends

FOMO or a source of jobs and innovation?

If Bitcoin was just FOMO, surely it wouldn’t be creating jobs, and certainly it wouldn’t be one of the fastest growing fields in technology.

https://static.seekingalpha.com/uploads/2018/6/13/49499619-15289486497264006.pngImage Source: Burning Glass

FOMO or the new obsession of Venture Capitalists?

If Bitcoin was just FOMO, then why are VC firms investing more in blockchain startups each year? Maybe some of them are caught up in the craze, but just look at the chart below.

https://static.seekingalpha.com/uploads/2018/6/14/49499619-1528949078002327.png
Image Source: Statista

A shared delusion?

To say that Bitcoin has no value is to say that academics (students and professors), governments, venture capitalists, software engineers, hiring managers, and people living in the most troubled areas of the world are completely off their rockers because they dare to challenge our assumptions about what value is and the ways in which it might be transferred.

Is Bitcoin a shared delusion? Sure, but so are lines of latitude and longitude, global time standards, our existing money system, right and wrong, cultural norms, beauty, art and hope. The more important question is, does this shared delusion give us something back? Do we gain something by believing in it?

For me, the answer is clear. I think Bitcoin is one of the most powerful forces for the rights of the individual. I think Bitcoin can at once weaken the oppressors of the downtrodden and create opportunity for the bold.

Conclusion

It may challenge our assumptions that money might come from the crowd, rather than from on high. But, maybe this time it’s up to us to save ourselves? Ask yourself what it might mean to live in a world where currencies exist that reach the entire globe and yet don’t require the backing of a military. I don’t know for sure what it means, but I’ve decided to follow this path and find out for myself, rather than relying on the old guard to hand down truth to me.

Source: Hans Hauge | Seeking Alpha

***

Can Bitcoin Become A Flight-To-Quality Asset?

2018 might be the year we find out.

There’s an old saying on Wall Street that when times are good, you should focus on the return on your capital, but when times are bad, you should only care about the return of your capital. A flight to quality asset then is anything that tends to go up in times of turmoil because investors perceive it as a safe place to park their money.

Upon first glance, Bitcoin is a terrible candidate for such a role. It’s volatile, hard to understand, and difficult to access given how it exists outside of the traditional banking system.

So why would anyone consider it desirable during a crisis? Because it exists outside of the traditional banking system.

One of the first parabolic up-moves for the cryptocoin began with a banking crisis in Cypress. Back in 2013, while still reeling from the aftermath of the financial crisis, the tiny Mediterranean country found its banking system teetering, and reached out to the bigger European powers for help.

But instead of offering them a bailout, the EU came back with something more along the lines of a bail-in, as it demanded that Cypriot banks confiscate a portion of their customers deposits to shore up their balance sheets. To add insult to injury, they also imposed capital controls that prevented people from moving their money to a safer jurisdiction.

As you can see on the chart below, a decentralized form of money like Bitcoin, despite its drawbacks, can suddenly look very appealing when the centralized system starts to falter.

https://www.zerohedge.com/sites/default/files/inline-images/1_07h2st-34dnwwYOFR5XC3Q.png?itok=JhN9K9GQ

Crypto skeptics who tell us that digital money should not be worth anything often forget that fiat money like the Euro is also in of itself worthless. It’s only valuable when someone else is willing to trade a good or service for it. But you can’t get anything in exchange for money that the government is taking or locking up, which is why the Cypriot crisis brought a lot of attention to the then relatively unknown Bitcoin.

Government officials don’t like cryptocurrency because they transfer the sovereignty of money from their control to a decentralized consensus mechanism, a transfer that they view as a downgrade in the quality of money. If our existing system of money and banking was always stable, they would have a point.

But every time there is a crisis, it reminds the public that the folks in charge are not as smart as they think they are. When those same leaders respond to the crisis with draconian capital controls (or selective bailouts for their once and future employers on Wall Street) they remind the public that they aren’t as fair as they think they are, either. Bitcoin might be volatile and hard to understand, but it’s always fair, because math does not discriminate, nor does it change the rules when people start to panic.

So why bring this issue up now? Because there is financial trouble brewing in certain corners of the global financial system, and if things continue to deteriorate, this year might serve as an important test of the crypto economy.

Iran and Venezuela are in the midst of the kinds of hyper inflationary currency death spirals that bring societies to their knees. In Argentina, the peso has fallen to an all-time low against the dollar as inflation and interest rates spike. Turkey is having problems of its own, and China continues to do everything it can to prevent its citizens from liberating their own money.

Some of this weakness was to be expected, because the Federal Reserve is now removing the liquidity it has provided for the past decade. But there’s a bigger issue in play, as the perennial economic mismanagement of developing nations is now rubbing up against the increasing political instability (Brexit, Trump, Catalonia, Five Star) of developed ones.

In the old days, the two best candidates for flight to quality assets were gold and the Dollar. But the former is hard to get a hold of and even harder to store, and the latter is no panacea either. When the Argentinian government last devalued its currency back in 2001, it first forced all local banks to convert the dollar-denominated accounts of its citizens to the Peso. Even the citizens that were smart enough not to trust the local currency had their savings destroyed, learning the valuable lesson that dollars in the bank is not the same as dollars under the mattress.

One of the most important takeaways from past financial crisis is that when the stuff hits the fan, banks are nothing more than a policy tool for the government.

So can a cryptocurrency like Bitcoin be considered a flight to quality asset for certain countries? Given everything we’ve learned in the past 20 years, a better question to ask might be how could it not.

Source: Authored by Omid Malekan via Medium.com, | ZeroHedge

JPMorgan Busted Over Bitcoin Fraud… Seriously!

Oh, the irony…

https://s16-us2.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fmedia.salon.com%2F2013%2F02%2Fjamie_dimon.jpg&sp=0b75c357def09705e3b7052650b2dcb9Jamie Dimon has come a long way in seven months…

From “Bitcoin is a fraud” in September to “Busted for Bitcoin fraud” in April.

Reuters reports that JPMorgan Chase & Co has been hit with a lawsuit in Manhattan federal court accusing it of charging surprise fees when it stopped letting customers buy cryptocurrency with credit cards in late January and began treating the purchases as cash advances.

Simply put, the bank switched from charging regular interest rates to charging, higher, cash advance rates on purchases of cryptocurrencies without notice to customers about the change.

The named plaintiff in the lawsuit, Idaho resident Brady Tucker, was hit with $143.30 in fees and $20.61 in surprise interest charges by Chase for five cryptocurrency transactions between Jan. 27 and Feb. 2, his lawsuit said.

With no advance warning, Chase “stuck the plaintiff with the bill, after the fact of his transactions, and insisted that he pay it,” the lawsuit said.

Hundreds or possibly thousands of other Chase customers were hit with the charges, Tucker said.

The lawsuit is asking for actual damages and statutory damages of $1 million.

Full Docket below…

Source: ZeroHedge

Blockchain Remains A Solution In Search Of A Problem… For Now

Wall Street rethinks blockchain projects as euphoria meets reality

NEW YORK (Reuters) – Wall Street has been much more excited about the system underpinning bitcoin than the cryptocurrency itself, but the global financial industry has not yet been able to do much with the technology known as blockchain.

Reuters has found several blockchain projects launched by major financial institutions that have been shelved, as development of the technology enters a hype-meets-reality phase.

The casualties include projects by the Depository Trust & Clearing Corporation (DTCC), BNP Paribas SA (BNPP.PA) and SIX Group, Reuters has found.

These were among the wave of blockchain tests touted by the financial industry over the past few years, as firms bet the new technology would displace much of the sector’s infrastructure, cutting out middlemen, speeding transactions and reducing costs for things like securities and payments processing.

Yet as some projects were developed, companies pulled back for various reasons – from costs to industry readiness, underscoring that, for all its potential, blockchain is still in its early days.

DTCC, known as Wall Street’s bookkeeper, recently put the brakes on a blockchain system for the clearing and settlement of repurchase, or repo, agreement transactions, said Murray Pozmanter, head of clearing agency services at the DTCC.

The project, which had successfully tested with startup Digital Asset Holdings (DA), was shelved because banks and other potential users believed the same results could be achieved more cheaply using current technology, he said.

“Basically, it became a solution in search of a problem,” he said.

Post-trade services provider, SIX Securities Services, a unit of the group that operates Switzerland’s stock exchange, has also decided not take into production a prototype built by DA for the processing of securities, SIX spokesman Jürg Schneider, told Reuters.

“We wanted to go into another direction,” Schneider said.

The partnership with DA, run by former JPMorgan Chase & Co (JPM.N) executive Blythe Masters, was announced in 2016.

French bank BNP Paribas in 2016 said its securities services division had partnered with startups including SmartAngels to build a platform for private small businesses to manage their securities.

The bank stopped work on the project, and will instead team up with other financial institutions on another blockchain initiative called LiquidShare, said a source familiar with the matter. “Creating an enterprise-wide robust blockchain platform requires the full cooperation of the whole post trade ecosystem,” the source said.

PROOFS OF CONCEPT

The DTCC, BNP Paribas and SIX tests were among a barrage of blockchain “proofs of concept” announced with great fanfare by financial institutions.

“A large part of the problem has been expectation management, or rather lack thereof by many vendors and large consultancies that made claims that could not be fulfilled in the time spans they had said on stage at fintech events,” said Tim Swanson, founder of technology advisory Post Oak Labs.

Reuters reported last week JPMorgan was considering spinning off its marquee blockchain project Quorum. In July a partnership between settlement provider Euroclear and startup Paxos to develop a blockchain service was dissolved.

Still, other projects are moving forward.

 

Pozmanter said the DTCC is still examining another project with DA and that it is close to testing a blockchain-based trade information warehouse set to launch next year.

“We’re still bullish on the technology,” Pozmanter said.

The repo test with DA “met all its stated goals” and led to a new project that DTCC is examining, said DA spokeswoman Vera Newhouse.

SIX is working on a blockchain project with Nasdaq (NDAQ.O) and Australia’s stock exchange ASX Ltd (ASX.AX) said in December that DA will help replace its registry, settlement and clearing system, By  one of the most ambitious projects to receive a green light.

Source: By Anna Irrera &  John McCrank | Reuters

Bitcoin Winter Is Here

The Legendary Trace Mayer – Bitcoin’s Cold Winter: How Many Will Get Wrecked While Some Reap Riches

After an epic rise from $162 up to $19,886 in just over two years, the price of Bitcoin fell by nearly 70% between December 17, 2017 and February 6, 2018, to under $6,000. Alternative cryptocurrencies (altcoins) came under tremendous pressure too, and some of them lost 80-90% of their recently achieved all-time highs. Meanwhile, at least Bitcoin was able to recover some of those losses and temporarily reached $11,300 again. But over the past three weeks, the whole sector has came under tremendous pressure again.

https://i1.wp.com/www.creditcontraction.com/images/affiliate/Great-Credit-Contraction-Liquidity-Pyramid-Large.jpg

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