The headline of this article incorrectly stated that DCG invested $114 mln into Silvergate Bank. The headline has been updated.
The Digital Currency Group (DCG), a cryptocurrency venture capital firm, has reported they have invested in the Silvergate Capital Corporation, which contains the crypto-friendly Silvergate Bank, in a tweet yesterday, Feb. 26.
The Silvergate Capital Corporation had posted on its site yesterday, without disclosing the investors, that they had sold 9.5 mln shares of Silvergate stock through a private placement for a total of around $114 mln. The news post writes about the projected goals behind the acquisition:
“Proceeds from this placement will support further growth in the Bank’s nationwide fintech deposit initiative and its business banking and residential lending activities.”
Cryptocurrency companies have traditionally had a hard time finding banks to accept them as customers. Over the weekend, the Bangkok Bank terminated the account of the Thai Digital Asset Exchange, and in January of this year, several Indian banks suspended or limited the accounts of crypto exchanges.
Hagan Homes, one of Northern Ireland’s biggest residential property developers, will now be accepting Bitcoin (BTC) as a payment method, the Belfast Telegraph reported Feb. 22.
Jamesy Hagan, the managing director of Hagan Homes, said there is both an increasing international interest in working, living, and investing in Northern Ireland, as well as a “significant growth in the use of Bitcoin worldwide:”
“Our acceptance of this new channel reflects our willingness to respond to the market.”
The Belfast Telegraph writes that Hagan Homes is reportedly the first house-building firm in the Republic of Ireland to accept BTC payments.
Hagan did recognize the challenges in accepting Bitcoin as payment. He noted the current volatility in the crypto markets, with BTC’s price going from $20,000 to $7000 in the span of just a few months:
“Of course, there are some risks to using Bitcoin for payment due to the cryptocurrency’s volatility, but buyers and sellers are finding creative ways to deal with these challenges […] By incorporating the learning from our peers into our approach we can embrace this innovation.”
Icelandic information technology service Advania has confirmed with their security footage that the police have apprehended the right two men for the three burglaries at data centers in Iceland last December and January, local news outlet Visir reported Feb. 21.
Visir had earlier reported that there were three burglaries in total, from a period of Dec. 5, 2017 to Jan. 16., 2018, and that 600 graphics cards, 100 power supplies, 100 motherboards, 100 memory discs, and 100 CPU processors had been taken from a house in the municipality of Reykjanesbær.
The burglars also broke into data centers in municipality of Borgarbyggð, with a total of 600 PCs stolen from both places.
Advania announced that the thieves had broken into a new building under construction in Reykjanesbær in mid-January, but that the building had fortunately been well-covered with security cameras.
Advania told Visir that what was stolen was “not a device that stores data and there was only a financial loss,” but that they cannot specify what kind of equipment was stolen due to the ongoing investigation.
According to local news outlet Ruv, police have been monitoring energy consumption for abnormal increases after the theft, for the stolen computer equipment reportedly can be used to mine BTC, an energy-heavy process. It is not yet known if the equipment still remains in Iceland; Ruv reports that the two men currently in custody have not been cooperative with the police.
The total amount stolen from all three burglaries is estimated at 200 million krónur, or $1,990,000.
Eyjólfur Magnús Kristinsson, CEO of Advania Data Centers, said that either a quarter or a fifth of that total value had been stolen from Advania.
Laszlo Hanyecz, the man that completed the world’s first documented Bitcoin (BTC) transaction for a physical item in 2010 — 10,000 BTC for two pizzas — has now bought two more pizzas using the Bitcoin Lightning Network.
Hanyecz posted on the Lightning-dev mailing list today, Feb. 25, that he had to get his friend in London to “sub contract” out the pizza delivery to a local pizza place in order to pay on the Lightning Network, because “pizza/bitcoin atomic swap software” is yet unavailable.
However, according to Hanyecz, the transaction still “demonstrates the basic premise of how this works for everyday transactions. It could just as well be the pizza shop accepting the payment directly with their own lightning node.”
The original BTC-pizza transaction took place on May 22, 2010 and has been celebrated as Bitcoin Pizza Day ever since. There is a Twitter feed dedicated to a daily posting of what 10,000 BTC equals according to that day’s market value — today’s value is tweeted as $97,560,750.
This time around Hanyecz paid 649000 satoshis, or 0.00649 bitcoins, which equals around $62 for both pizzas.
In order to receive the pizza, Hanyecz decided that the best way to prove he had paid for it was to show the driver the first and last four characters of the hex string of his Lightning payment hash preimage, and if it matched with what the driver had, he would get his pizza.
Hanyecz posits the pizzas as prizes to be received only if the lightning transaction can be done successfully, writing that if he couldn’t show the driver the pre-image, “the pizza would not be handed over and it would be destroyed.”
The trial was a success, Hanyecz got his pizzas, but he added that “it’s probably not a good practice to share the preimage.”
Hanyecz included a link in his post to several photos of him and his family enjoying the pizzas, one kid wearing an “I love pizza” shirt, the other in an “I love Bitcoin” one, and the notepad with the partial preimage displayed in front of the pizza box:
The first ever documented physical purchase on the Lightning Network, a “second layer” payment protocol considered the next step in BTC’s evolution by increasing the capacity of the network for a global audience, reportedly took place on Jan. 20 of this year. Reddit user /u/btc_throwaway1337 posted that he bought a VPN Router through a payment channel provided by TorGuard, a purchase comparable in significance to the original Pizza day.
Hanyecz ends the post about his successful lightning BTC-pizza transaction by asking his readers, “So is there any point to doing this instead of an on chain transaction? For what I described here, probably not:”
“The goal was just to play around with c-lightning and do something more than shuffling a few satoshi back and forth. Maybe eventually pizza shops will have their own lightning nodes and I can open channels to them directly.”
Exchange and wallet service Coinbase and its professional trading platform Global Digital Asset Exchange GDAX both announced they had implemented Segregated Witness (SegWit) support for Bitcoin transactions in blog posts published Friday, Feb. 23.
In their blog pos, GDAX characterizes SegWit technology as “a critical step forward in the development of Bitcoin” and promises support for SegWit transactions will be made available to 100% of their customers “over the coming days”. Coinbase also said they would be rolling out support for all customers over the next week.
SegWit technology is designed to reduce transactions times and fees on the Bitcoin network. Many popular Bitcoin exchanges and services have been plagued network congestion from inefficient use of block space, a problem SegWit seeks to solve, resulting in widespread frustration among customers.
The past week has seen several major SegWit adoption milestones. The latest version of Bitcoin Core, which was released for public editing Feb. 15, introduced full SegWit support for the first time. Just a few days later, on Feb. 20, the same day Coinbase said it had finished SegWit testing, major crypto exchange platform Bitfinex also announced full SegWit support for all customers.
This week was also marked by record low transaction fees on the Bitcoin network, down significantly from all-time highs in December, 2017 and January, 2018.
When GDAX announced that Bitcoin Cash (BCH) would be available to trade on their platform in mid January 2018, the news fell flat for many traders, who would have rather seen the implementation of SegWit on the platform prioritized.
Moving forward, both GDAX and Coinbase noted in their blog posts that they’re committed to implementing additional scaling solutions for the Bitcoin network, including so-called ‘Layer 2’ solution, the Lightning Network.
On the list of anti-cryptocurrency countries, Poland has never really stuck out. In fact, there has been enough evidence to suggest that the Eastern European country was moving towards embracing Bitcoin and Blockchain technology.
However, a recently uncovered smear campaign by the NBP (National Polish Bank, or Central Bank) has thrown that all out of alignment. The NBP has admitted to paying a number of YouTubers a sum of about $21,000 in order to dissuade Polish citizens into buying cryptocurrencies for fear of losing all their money.
The NBP has called this an ‘educational campaign’, trying to get across the dangers of cryptocurrencies, but it has come across more as a smear campaign which raises questions about the Polish government’s view of cryptocurrencies.
Poland, along with a number of EU countries, has never shown any true discontent for cryptocurrencies prior to this latest campaign to discredit them. Back in 2013, there were reports of an official from Polish Ministry of Finance saying, “What is not forbidden is permitted. However, we certainly cannot consider Bitcoin to be a legal currency.”
In 2015, the Polish Finance Ministry issued a statement to the effect, “Any regulatory action addressing the problems of trading virtual currencies. They should be taken either as a result of initiatives at the EU level with a view to the cross-border nature of the business or as a result of a threat market failure cryptocurrency.”
In an interview around February 2015, Filip Godecki, CCO of Bitcurex, a major Polish cryptocurrency exchange, explained the government’s stance as neutral: “From our perspective, it would be difficult to talk about a negative trend. The attitude toward Bitcoin in Poland is neutral, converging with tendencies in most EU countries. Institutions are looking at the project from a certain distance, waiting for what comes next. The situation is similar with banks.”
In February 2017, trading of Bitcoin and other cryptocurrencies was officially recognised in the country. It was stated on a governmental website that from Dec.1, 2016, “The issuance of electronic currency and purchase and sale of electronic currency via the internet stand classified by official statistics services in Poland.” While there may be no definitive stance on Bitcoin and cryptocurrencies coming out of Poland, the government has seemingly allowed it to exist and continue functioning.
One of the bigger indicators that the Polish government was leaning towards being Bitcoin friendly was when in March 2017 it released its Best Practicesdocument to promote digitization of the national cryptocurrency market and help startups establish themselves in the market.
These guidelines were followed by several other programs aimed at promoting cryptocurrency technologies, such as the Ministry of Digitization’s “Blockchain / DLT Stream and Digital Currencies” program.
Еven more telling is that many well known cryptocurrency businesses set up shop in Poland over the years because the banking system was so welcoming and a lot more liberal than many others in Europe. Even the British stock exchanges and even the infamous Mt.Gox had their financial backing set up in Poland.
Despite Poland making no final call on its perception on Bitcoin, Blockchain and the entire cryptocurrency market place, there is evidence that the government sees potential and possibility in it. It therefore is very surprising that the Polish central Bank has launched this smear campaign that was partially hidden, but also unashamedly done.
Speaking to Cointelegraph, Polish Journalist and Youtube-blogger Karol Paciorek briefly explained the math between this campaign:
“There was a product placement deal between NBP and three large youtube channels: Marcin Dubiel – 937,000 subscribers; Wiśnia – 818,000 subscribers; and Planeta Faktów 1 mln subscribers. It’s an educational campaign paid from a government-based organisation. Someone asked NBP how much they have paid for the campaign, and got an answer – $21 000.”
The issue is that these videos are very slanderous of Bitcoin, and could hardly be called educational in the real sense of the word. Furthermore, there was no indication that it was a paid-for, or sponsored, video.
Another blogger, Maciek Budzich from the Mediafun Blog, has also written about the strange sponsored videos and their effect on the perception of cryptocurrencies in Poland. Budzich shows the actual response from the NBP when asked about the campaign, it details information including the figure spent. In Poland, every citizen has the right to ask the state authorities (as part of access to public information) about money and state spending.
Budzich states he is uncertain of the letter’s authenticity, but takes it as true pending any response from authorities. It has also appeared on other sources. It transpired, through Budzich, that Gamellon, a Youtube network partner company was the recipient of the state funds and that they had connections with some of the Youtube channels that were used. The only confirmation he got was that Gamellon cooperated with the NBP, but refused to share further details, and would not divulge the provisions of the contract.
The evidence is clear that the Central Bank worked towards smearing cryptocurrencies on these Youtube channels which raises questions about the stance Poland will take when it does come down to regulating digital currencies in the country.
There is further, tangible, evidence of the NBP’s thoughts on digital currencies with their information portal, which is labeled: “Virtual currency is not money.” It’s frontpage states:
“This is a digital implementation of a contractual value between two users that is not issued and is not guaranteed by any central bank of the world, such as Polish zloty, which is issued by the National Bank of Poland. Another risk is the lack of universal acceptance of such cryptocurrencies. Virtual currencies are not accepted in all retail stores and services. They are not a legal tender or currency.”
What effect did this have?
The campaign certainly got noticed, but probably for the wrong reasons as most media sources reported on the secret funding aspect, rather than the ‘educational’ campaign. In Poland, when the news broke that the Youtube videos were paid for by the NDP, the reaction among the country’s crypto community was one of anger.
Speaking to Cointelegraph, a local Polish cryptotrader going by the name of Crypto Polish Guru on Twitter, gave some insight:
“People are angry about this action, or they ignore it, the young people, that is. Older people don’t watch Youtube! In my country, citizens do not like the government anyway.”
The advancement of Blockchain and fintech in Poland is also a bit stop-start according to Crypto Polish Guru.
“We have the Ministry of Digitization, but Minister Anna Streżyńska was dismissed two or three months ago. She created a Blockchain group to work towards building a good environment for crypto in Poland, for me that was one of our best ministers. Now I think that they will liquidate the Blockchain working group.”
Why the secrecy?
The NBP’s decision to launch a biased and convoluted ‘educational’ campaign based on the danger of Bitcoin is what is drawn into question here. It would be understandable and agreeable if they were to issue a statement, like they have done, about what cryptocurrency is and is not, but it seems strange that their attempts to get their warning across came over as such fearmongering.
There was no link back to the NBP from the Youtubers, there was no ties from the videos to the bank. The connection only emerged when the NBP was queried on whether or not they were bankrolling the campaign. This calls into question the tactics of the central bank, and its motives in getting its point across in such a way. It also raises questions about how Poland will be regulating cryptocurrencies in the future.
Although the campaign was not broadcasted and advertised as a sponsored campaign by the NBP, they have never been afraid to furnish details of their so-called educational campaign. Tomasz Jaroszek, writing for doradca.tv, much like Budzich also questioned the NBP, and demanded a response, which he got.
The NBP’s rather lengthy response defends their efforts in educating the Polish population on the dangers of cryptocurrencies, going to list a number of fair dangers, such as volatility and no central backing and cyber crimes.
The NBP begin their gambit putting into context their authority to lead this campaign as they state they were carrying out their “constitutional and statutory tasks” for the sake of the “value of Polish money, and the stability of the Polish financial system.”
Following the listed reasons of the dangers of cryptocurrencies the NBP then goes on to direct attention to a warning they put out in June last year before explaining the December campaign:
“The goal of the information campaign conducted since December 2017 is to reach the widest possible audience, potentially interested in using virtual currencies – including people who have no experience in risky investing – with basic knowledge about the risks associated with investing in cryptocurrencies. This campaign hopes to make people interested in investing in cryptocurrencies refrain from actions that could bring them measurable losses, or if they will consciously take such actions, assume the risks associated with them. The NBP decided to conduct a campaign via the media – digital and traditional.”
The caveat however is that the NBP openly admitted it is not opposed to Blockchain technology, seemingly indicating this was not aimed to be a smear campaign:
“At the same time, we emphasize that the NBP is not opposed to the development of Blockchain technology and its use, but the application of this technology to the financial market must be just as safe and proven as it is with other technologies.”
A knee jerk reaction?
It is hard to understand the NDP’s decision to act in such a manner. Clearly they have a duty to inform about the dangers of cryptocurrencies, but the campaign they went on seems confusing.
Crypto Polish Guru’s closing remarks on why this played out in the way it did may have to do with a time when the NBP did not react.
“A few years ago in my country we had a large affair with Amber Gold – a company offering a high percentage returns for deposits made with them [essentially, a pyramid scheme]. It ended up going bankrupt and all investors lost all their money. At that time, the NBP, and other institutions didn’t react at all and they were strongly criticized.”
Jimmy Song, Bitcoin developer and venture partner at Blockchain Capital, has announced a new initiative called Platypus Labs, designed to educate and compensate Bitcoin (BTC) cryptocurrency developers.
Platypus Labs will focus on training developers to specifically work with Bitcoin Core, but it could eventually expand to covering developing other altcoins. Blockchain Capital will be funding the education endeavor, as Song sees their position in the Blockchain “ecosystem” as “having a connection to a lot of different companies while maintaining independence.”
As to where the inspiration came from for Platypus Labs, Song told Cointelegraph,
“Part of my joining Blockchain Capital was to provide value to the Bitcoin ecosystem. After some extensive conversations about what would make sense for us to do that would make my involvement a win-win, we came up with a Labs concept as a way in which we could provide a lot of value to the ecosystem, our portfolio companies and to ourselves. To be perfectly honest, a lot of the ideas for how to run the labs came from listening to the developers and companies and seeing what they thought would be good.”
Song himself has his own two-day seminar entitled, “Programming Blockchain,” that he is leading this year in the US, Hong Kong, South Korea, Brazil, and Greece.
When asked what he sees for the future of Blockchain education globally, Song told Cointelegraph:
“I’m really hoping for more entrepreneurs to step up and take on the challenge! Obviously, I’ve got my own seminars to help in that way, but a lot of what I’m hoping for is for the ecosystem to grow. There is a lot of profit to be had for educators in this space. What exactly that will look like, I don’t really know. I suspect that a lot of innovation will take place in the Blockchain/Bitcoin education space because there’s such a great need.”
Song’s cryptocurrency education hub will be physically based in San Francisco, and Song reportedly hopes to implement a residency program in the near future.
Bitcoin developers traditionally have donated their time as volunteers, and some instances where they have been hired by companies have led to conspiracy theories that the company in charge may have ulterior motives.
For example, a Medium piece written last December aimed at debunking the theory that second layer Blockchain-technology Blockstream had hired Bitcoin Core developers in order to keep the first layer slow and cumbersome to use.
The Robinhood mobile trading app launched zero-fee Bitcoin (BTC) and Ethereum (ETH) trading for the first batch of the users of its Robinhood Crypto platform on Thursday, Feb. 22, as announced on the company’s blog.
The first users to get access to the commission-free platform are customers residing in the US states California, Massachusetts, Missouri, Montana, and New Hampshire. Robinhood noted that the application will be rolled out gradually with support for “many more states” coming “later.”
At the moment, all users of Robinhood are able to monitor the market for the prices of 16 different cryptocurrencies, regardless of whether or not they have access to the actual trading feature.
As Robinhood stated on Jan. 25, the main goal behind launching its zero-fee cryptocurrency trading platform was to bring as many new customers as possible. Robinhood claimed that the company is planning “to operate this business on break even basics.”
According to the latest blog post, the current number of Robinhood Crypto users has reached four million with over $100 bln in transaction volume on its brokerage platform and over $1 bln in saved commissions in equity trades.
Apart from the launch of cryptocurrency trading, Robinhood has also released its Robinhood Feed which allows cryptocurrency investors to discuss cryptocurrency markets, trends and news online.
The Treasury Committee of the UK Parliament will be launching an inquiry into cryptocurrencies and their effect on UK investors and businesses, BBC reports today, Feb. 22.
The inquiry was prompted by the rising global interest in cryptocurrencies, as well as the recent rise and fall of the crypto market since the new year.
Nicky Morgan, chair of the Treasury Committee, told BBC that she wants to protect individuals that “may not be aware that [cryptocurrencies] are currently unregulated in the UK,” but doesn’t want to hinder innovation of the Blockchain technologies behind digital currencies.
Morgan told BBC:
“The Treasury Committee will look at the potential risks that digital currencies could generate for consumers, businesses, and governments, including those relating to volatility, money laundering, and cyber-crime. We will also examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities, and to what extent they could disrupt the economy and replace traditional means of payment.”
BBC writes that the committee will explore what they see as the key questions of crypto, namely if it could ever replace traditional payment systems and what benefits it brings to the public, businesses, and governments.
In terms of regulation, the committee will hear evidence on how regulation could “benefit digital currency start-ups by improving consumer trust,” and will examine how other countries have dealt with regulating digital currencies.
The House of Lords, Britain’s upper house of Parliament, had recommended exploring Blockchain technologies for government services including national security and public safety, healthcare, cybersecurity and customs and immigration in November of last year.
Bank of England (BoE) Governor Mark Carney said on Feb. 20 that while cryptocurrency has “failed” as a currency in his opinion, Blockchain technology “may still prove useful” for financial transactions.
The idea of having Blockchain without cryptocurrencies had been brought up negatively during the World Economic Forum in Davos in 2016. Crypto investor and founder of Cryptocash Guido Rudolphi said that companies that use Bitcoin (BTC) without Bitcoin technology will fail.
In November 2017, UBS Chairman Axel Weber said that Blockchain without cryptocurrencies can be useful for banks, for it retains their monopoly on currency but still gives them access to the new technologies.
Dutch financial group ING (INGA.AS) has confirmed that Bitfinex, one of the world’s largest Bitcoin exchanges by daily trading volume, has a bank account with them in the Netherlands, Reuters reported Tuesday, Feb. 20.
In an email to Reuters, ING spokesperson Harold Reusken confirmed that Bitfinex has a bank account with ING in the Netherlands. How Bitfinex was managing its banking affairs since a split with Wells Fargo last April is unclear, Reuters reports.
The connection between Bitfinex and ING was first reported on Feb. 14 by Dutch news outlet Follow the Money. According to Follow the Money, ING bank cannot disclose the value of Bitfinex’s account due to privacy laws.
Reusken said that ING is intensively testing Blockchain technology and highly interested in cooperating with “companies that are in the value chain of cryptocurrencies”. However, he expressed some scepticism about cryptocurrencies, noting that ING customers cannot buy or sell digital currency via the bank.
“With regards to companies that are active in the crypto market, we are very conservative,” Reusken stated.
On Jan. 30, 2018 Cointelegraph reported that Bitfinex exchange and its sister company, the token issuer Tether, have received subpoenas from U.S. Commodity Futures Trading Commission (CFTC) for undisclosed reasons.
Earlier today, Cointelegraph reported that Bitfinex has launched the Segregated Witness (SegWit) Bitcoin scaling upgrade to all customers, ahead of Coinbase, which plans to fully-launch SegWit technology by mid-next week.
While Bitcoin (BTC) dominance is up and Bitcoin transaction fees are down, the crypto market is seeing an overall downturn by press time, Wednesday, Feb. 21, with all of the top 30 coins on CoinMarketCap in the red.
Bitcoin dominance, or BTC’s market cap as a share of the total market cap for all cryptocurrencies, is at a monthly highly today of around 39.4 percent, corresponding with the recent sharp drop in Bitcoin transaction fees.
A year ago today, BTC had about 86 percent market dominance, a figure that has been falling on average ever since, despite its short rise up to 66 percent in early December.
Bitcoin transaction fees had seen all-time highs in January 2018, rising to about $37 for a fee that would have your transaction mined fastest, on the next mined block.
However, Bitcoin’s last transaction fee as recorded by Blockchair was $0.36/kB at 3:11pm UTC, Feb. 21, a 6-month lows for the leading cryptocurrency.
Bitcoin Cash (BCH), a well-known Bitcoin hard fork that took place August 2017, has positioned itself as superior to Bitcoin in part because of having lower transaction fees than BTC. Bitcoin Cash’s last transaction fee recorded at by Blockchair at 3:28pm UTC is in fact slightly lower than Bitcoin at $0.22/kB. However, other transactions made this afternoon showed fees of as high as $0.91/kB.
Crypto investor and evangelist Roger Ver, arguably the most well-known and active proponent of BCH, tweeted last week about the benefits of BCH over BTC, calling Bitcoin, “slow, expensive to use, and unreliable for transactions.”
Twitter user UFoundMe commented on the tweet on Feb. 18 with an image capture showing the average fees of BCH and BTC converging:
A cryptocurrency investor fell victim to unidentified assailants in Moscow who reportedly disfigured him and stole over $1 mln worth of Bitcoin, today, Feb. 23, according to local crypto journal Forklog.
According to Forklog, the victim, who has not been named, was in the southern district of the Russian capital when a group of muggers stopped him and demanded he transfer his holdings.
When he refused, they “mutilated his face with a knife” before he surrendered his collection of around 100 BTC, approximately $1,020,000 at press time, according to the publication.
The incident comes just weeks after robbers targeted a well-known YouTube blogger in St. Petersburg, assaulting him and stealing possessions including funds worth $425,000 from a safe.
The unknown Moscow victim is currently receiving medical attention while police attempt to ascertain the sequence of events, according to Forklog.
Security issues surrounding ownership of and even interaction with cryptocurrency continues to fall under the spotlight in both Russia and neighboring states. The Ukrainian Security Service raid of the Odessa office of Forklog itself in December 2017 highlighted the potential for even authorities to indulge in criminal activity, while the abduction of EXMO exchange CEO Pavel Lerner in Kiev in December only ended after payment of a $1 mln ransom.
Crypto exchange and wallet service Coinbasereported today at 1:53 a.m. PST, about five hours ago to press time, that Bitcoin (BTC) buys and sells are “intermittently available”.
The notice on Coinbase’s status site states:
“A recurring issue with one of our processes is causing Bitcoin buys and sells to become temporarily unavailable. Our team is investigating and working to restore full service as soon as possible.
Coinbase customers may experience intermittent outages of BTC buys and sells over the duration as we resolve this issue. We apologize for any inconvenience this may cause.”
The official tweet announcing the service interruption this morning on Coinbase’s separate Support Twitter account was met with almost all negative comments from customers, some claiming their funds had been frozen on the service since long before.
[status] Investigating: A recurring issue with one of our processes is causing Bitcoin buys and sells to become tem… https://t.co/Zc5he85Q8h
Coinbase had experienced technical problems of a different kind earlier this month, when accidental multiple charges for credit and debit card purchases of crypto were reported by Coinbase customers. Visa accepted full blame for the issue, citing an unexpected error caused by the change of the merchant category code (MCC) for crypto purchases that took place at the beginning of February.
Coinbase’s site also suffered an outage on May 25 of last year, citing an unprecedented amount of traffic volume as the cause.
In mid-January, the Kraken cryptocurrency exchange was offline for more than 48-hours, after a regularly scheduled two-hour maintenance was extended when a bug was found in the production environment.
Patrick Byrne, the CEO of Overstock, which was the first major retailer to accept Bitcoin (BTC) back in 2014, has said that he is “not really interested in cryptocurrencies per se,” but revealed a little-known Blockchain project his company has invested “millions of dollars” into in an interview with Business Insider Friday, Feb. 23.
When asked if he’s interested in “everything cryptocurrency” or “really interested in the Blockchain [sic]”, Byrne prefaced his answer by saying he is “really letting something big out of the bag”, going on to reveal both Overstock’s and his personal interest in a virtually unknown Blockchain project called Ravencoin, which launched very quietly on Jan. 3, 2018.
The Ravencoin project’s single blog post, published Nov. 1, 2017, opens with a sentence designed to pique the interest of a Game of Thrones-loving crypto investor:
“In the fictional world of Westeros, ravens are used as messengers who carry statements of truth.”
The post goes on to describe Ravencoin as “a use case specific Blockchain, designed to efficiently handle one specific function: the transfer of assets from one party to another.”
Ravencoin was first mentioned on Bitcointalk.org on Jan. 14, 2018 in a post that described its Jan. 3 launch as containing “very little info regarding the future of the project,” but that “since then, several community members have learned that there is an active development team on this coin.”
Byrne told Business Insider that Overstock has put “millions of dollars into teams” for Ravencoin, stating confidently, “[w]e think this coin actually has quite a future.” Byrne then compared Ravencoin to leading cryptocurrency Bitcoin, saying:
“It’s Bitcoin, but a thousand times more energy efficient.”
In his interview with Business Insider, Byrne follows the project’s 4-page whitepaper in identifying the problem of the rising expenses of BTC mining and its centralization around ASIC production and cheap electricity. Byrnes claims that Ravencoin solves said problems by being “ASIC resistant” and “redemocratiz[ing] mining,” going on to describe the current concentration of industrial-level mining in China:
“Anyone can download this software, and you don’t have an advantage by having this big mining warehouse in China.”
A four day old post on the /r/cryptocurrency sub-Reddit titled “What are your thoughts on Ravencoin?” further highlights the relatively unknown status of the project:
“This coin is very new and also implements a brand new algorithm, X16R. Surprised that there’s not a single mention of it in this subreddit, even though thousands of miners are already mining this coin. Is it being kept secret to keep mining difficulty down?”
Only one person has responded so far, the day it was posted, saying: “Never heard of it until now.”
Byrne also told Business Insider that because Overstock was the first major corporation to accept BTC as far back as 2014, the company deserves credit for keeping Bitcoin relevant: “I like to think that we saved that community [Bitcoin] about five years in their adoption cycle.”
In early January of this year, a glitch with Overstock’s payment system inadvertently allowed customers to pay with Bitcoin and Bitcoin Cash (BCH) interchangeably for a three-week window before the mistake was caught, charging customers in BTC or BCH at a 1:1 ratio and thus giving BCH holders a massive, unintentional discount.
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Last year was the least volatile in stock market history of decades. Traders who historically have profited off of pricing swings have given their jobs to high-frequency trading algorithms run by computers that act on the millisecond. On Wall Street, humans are a commodity being replaced by machines, and yet four years of volatility in the stock market can be covered in a month of pricing movements in the cryptocurrency markets.
Veteran cryptocurrency investors know this to be a fact, but exactly why is this asset class more volatile than any other liquid asset in the market?
1. No intrinsic value
Despite company sized valuations, cryptocurrencies don’t sell a product, earn revenue or employ thousands of people. They generally don’t return dividends, and just a tiny amount of the total value of the currency goes into evolving it. Because of this, it is hard to value. How do we know if it is overbought or oversold? When is it a good value or overpriced? Without any fundamentals to base this information off of, we can only rely on market sentiment, often dictated by the media that makes money on viewership.
2. Lack of regulatory oversight
Cryptocurrency is a worldwide phenomenon, and while governments are clamping down on the industry, regulation is still in its early days. Such limited regulation allows for market manipulation which, in turn, introduces volatility, and discourages institutional investment, since a large fund has no assurances that their capital is truly secure or at least protected against such bad actors.
3. Lack of institutional capital
While it is undeniable that some pretty impressive venture capital companies, hedge funds and high net-worth individuals are both fans of and investors in crypto, as a segment, most of the institutional capital is still on the sidelines. As of this writing, we have limited momentum on a crypto ETF or mutual fund. Most banking heads admit that there’s some validity in the space, but have yet to commit significant capital or participation publicly. Institutional capital comes in a variety of forms, such as a large trading desk that has the potential to introduce efficiency and soften market volatility, or a mutual fund buying on behalf of their investors for the long term.
4. Thin order books
Crypto investors are taught to never keep coins on an exchange, which can be hacked. As a result, most of the tradable supply is not on an exchange order book but in off-exchange wallets. In contrast, nearly all of the tradable stock of a publicly listed company is transacted on a single exchange. A large market order can eat into an exchanges order book on the way up or down, causing something called “slippage.” We saw an exaggerated example of this in GDAX Ether flash crash, but less extreme versions of this occur on a daily basis. Because of the capacity for large traders to move the market in either direction and employ tactics to encourage this, volatility goes up.
5. Long term vs. short term
If you invest into something that you don’t expect to take out until you’re 60 years old, then you are probably less concerned about it’s daily or even yearly price movements, thus you’re less likely to trade it. Cryptocurrencies, for the most part, can’t be bought in retirement accounts, and are generally inaccessible to retail brokers and financial advisors, so an entire ecosystem of investors is left out. This leaves us with early adopters that are comfortable with the technology hurdle of dealing with wallets, and web-based trading platforms, the same ones that are refreshing Blockfolio every 10 minutes, high-fiving each other when the coins moon, or sweating in a panic when the price drops. These are the same kind of people who don’t have the discipline to just buy and hold for the long run, and therefore contribute to the panic sells or FOMO buys.
6. Herd mentality
Crypto is largely a phenomenon of millennials, who distrust government, are early adopters in tech, and have been mainly shunned out of investment wins earned in the last decade of rising real estate and stock market prices. But most millennials do not have the long-term investment experience of their more mature generational counterparts. They also tend to have less disposable income as a result of historically poor job economics, and less time in the workforce. This combination of factors results in a few things; an appetite for risk in the hopes of landing a windfall of cash and utilizing a larger share of whatever capital they have to invest in risky instruments, including purchasing such investments on credit. When the market goes down, this is money that they literally cannot afford to lose, so will dump at the first sign of trouble. Since this is a reactionary behavior, they will generally lose money before getting out of the market. When the market starts surging up, they will buy with the money they don’t have. As a group, this appears to be coordinated en masse, but it is just the motivations of many single entities that propagate into a herd mentality. If you pair this behavior with the swings caused by large ‘whales’ in a thinly traded market, you have a synergistic effect.
When will volatility decrease
Over time, we can expect more regulation, a greater diversity of investors, and a more mature outlook on the crypto market. We can also expect higher utility value as merchants find more accessible ways of accepting cryptocurrency, and the technology behind transactions also improves. While volatility may decrease, we can also expect a gradual but steady surge in the value of the cryptocurrency market as a whole. Just as the stock market has given way to long-term holders, so too will the cryptocurrency markets. At the very least, it appears to be something that is going to be here for the long run.
The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.
Arthur Iinuma is a co-founder and president of ISBX, a leading software consulting firm in Los Angeles. He was a former FINRA-licensed trader at Morgan Stanley and later VP at UBS. He is a cryptocurrency trader and an accredited angel investor. Arthur is also a contributor to Forbes.
As the cryptocurrency market expands, so too does the volume of energy required to maintain it. If the Bitcoin market alone continues to progress at its current rate, it will soon consume more energy annually than countries such as Peru. One potential solution to this issue is renewable energy; and that is where 4NEW hopes to come into play.
Describing themselves as ‘world’s first eco-friendly, tangible, waste to energy Blockchain solution,’ 4NEW’s premise is to take waste products and transform them into a usable energy source. This technology has been in adoption for over 70 years with approximately 83 independent waste to energy plants already in use within the US and many more in other countries. This energy can be sold to the national grid, or used to power 4NEW’s own mining farm. Their white paper explains that it will be cost-effective.
“The cost to produce the energy is met through the revenue generated from the waste collection services and sale of byproducts facilitating a sustainable operation at breakeven or a marginal profit. Therefore, the energy produced is unencumbered and freely available for utilization or sale to the national grid.”
Integral to this system is the unique 4NEW crypto token, KWATT (currently ERC20, Ethereum based contract). Each of these embodies 1kW of electricity annually (the global average retail price per kW of electricity is currently $0.15). The ICO opened at the end of January and will continue until March 2018. Following this, 4NEW plan to open two new renewable-powered mining sites in the UK. These will initially produce 10 megawatts of electricity an hour, progressing to 40 megawatts an hour once the systems are fully up and running at maximum capacity. The estimated maximum capacity annually is 346 mln kW, scaled down to 300 mln kW to account for factors such as repairs and routine maintenance.
Crucially, as 4NEW will produce their own energy, they can apply their own fixed price to sales, leading to a standardization of fees. This sets it apart from other Blockchains which have to purchase their energy externally. This Blockchain enables KWATT coin holders to either sell the energy within their coins to the national grid or utilize them on 4NEW’s mining farms.
4NEW proudly state that their team holds over 300 years combined experience in crypto and Blockchain. CEO Sandeep Golechha says he hopes their methods of energy utilization will become industry standard, should their power plant, Blockchain and mining plant be fully operational by Q3 2018 as intended.
The crypto energy crisis
The huge energy costs associated with Bitcoin transaction and mining are growing and will continue to do so. 4NEW states on their website that in just over 14 months, worldwide energy usage associated with Bitcoin transactions grew from the equivalent of 7.5 US households each day to that of 17.5 households. Iceland already uses more energy on crypto mining than on powering households. Other studies reveal its estimated usage of 42TWh of electricity a year exceeds countries such as New Zealand and Hungary (and 157 other countries) and consuming as much CO2 as one mln transatlantic flights. These daunting statistics highlight the urgent need for crypto to turn to renewable energy as a source– which 4NEW is helping to facilitate. Should the scheme continue to prove successful, the world could observe a substantial drop in energy costs associated with crypto, especially from mining farms using extremely polluting sources such as coal.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
The annual report mentions cryptocurrencies under the “Competition” subsection when describing how new competitors have emerged that threaten J.P. Morgan’s operations:
“Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation.”
The report notes that these new technologies, evidently including Blockchain, although they don’t mention it by name, “could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies.”
This competition could potentially “put downward pressure on prices and fees for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share.”
Last week, Bank of America’s (BOA) released their SEC annual report that also contained a mention of cryptocurrencies as a threat to their business, with the risk of competition described in very similar terms: “the widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services.”
In the beginning of February, an alleged internal report from J.P. Morgan Chase referred to cryptocurrencies as “innovative” and “unlikely to disappear” , also noting cryptocurrency’s potential to be successfully applied to payment system areas that are traditionally problematic or slow, such as cross-border payments.
The meteoric rise of Bitcoin’s value in 2017 was enough to bring it into mainstream consciousness – but people are clamoring to get on the Blockchain and cryptocurrency train.
That has culminated in a number of weird and wonderful advertising campaigns, featuring some interesting celebrities and big businesses, all vying to promote and capitalize on the crypto craze that is sweeping the world.
Early adopters of Bitcoin have become prominent figures in the industry, but actors, musicians and scamsters have all played their part in a fascinating few years of marketing and advertising drives in the space.
For decades, actors and musicians have been used to promote a number of goods and services. The tobacco industry is famous for this- using movie stars to promote smoking in popular movies for decades.
It’s safe to say we’ve seen it all. Celebrities from all walks of life have been linked with Bitcoin and cryptocurrencies for years.
World-renowned footballer Lio Messi was used to endorse a company producing Blockchain hardware, while flamboyant boxer Floyd Mayweather entered the fray with an Ethereum-based ICO last year, and Luis Suarez was also linked with the very same project.
Rapper 50 Cent reportedly made over $7 mln in Bitcoin, having accepted payment in the cryptocurrency for his 2014 album Animal Ambition. He flaunted his millions last month, having hodled his Bitcoin stash for four years before cashing out.
Some celebrities have been involved in perplexing cryptocurrency projects. On Feb. 20, American actor Steven Seagal shared a post on Twitter announcing himself as the brand ambassador for Bitcoiin2Gen (B2G), which ironically is an Ethereum-based ICO claiming to be the second generation version of Bitcoin.
Japan has a voracious cryptocurrency market which has led to some pretty spectacular, and typically Japanese showbiz acts.
Image source: Agence France-presse
The Virtual Currency Girls are a Japanese pop group that have been spreading the cryptocurrency gospel through song and dance. The Japanese Pop group got plenty of attention when it was formed. Each of the singers takes the identity of popular cryptocurrencies like Bitcoin and Ethereum- and the group’s lead singer 19-year-old Rara Naruse says that was a strategic move:
“We have carefully selected a handful of currencies that are sure to exist in the future in order to broaden the public’s understanding of them using entertainment as our medium.”
The cryptocurrency boom hasn’t stopped there, with local news outlets highlighting a swathe of exchanges running TV commercials on local channels. According to Japan Times, Japan’s biggest exchange BitFlyer was the first to air a crypto TV commercial in April 2017, while other followed suit over the next few months. BitFlyer and embattled exchange Coincheck ran as many adverts as industrial and commercial giants Toyota, McDonalds Japan and NTT Docomo.
Exchanges have also gone as far as billboard advertising on busy streets around Japan as seen below.
Credit: Cory Baird/Japan Times
Scamcoins lead to bans on Facebook
While many exchanges are operating legitimate businesses and celebrities are aligning themselves with promising Blockchain and cryptocurrency startups, thousands have been fleeced by a multitude of scams in the crypto space.
Facebook’s justification is that it is protecting users from dodgy companies advertising cyptocurrencies and ICOs – making it “harder for scammers to profit.”
To this very end, the move could be understandable and could protect uneducated investors from scams masquerading as cryptocurrency offerings. It does however paint all cryptocurrencies with the same brush, which could have an effect on the way legitimate, regulated exchanges and Blockchain startups advertise in the 21st century.
Social media has reformed advertising with its ability to provide advertisers with incredible accurate target markets. Still besides social media, cryptocurrencies, ICOs and exchanges could benefit from traditional advertising platforms like television, radio and print media.
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