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Why Slowing ICO Avalanche Benefits Blockchain's Image

The onset of Blockchain into the world’s financial markets has brought with it many new ideas, introduced rapidly to wide-eyed market participants over the last few years. Despite how far we’ve come, however, all the progress we can currently boast about was predated by a simple product called Bitcoin.

Revolutionary at the time (and still today), Bitcoin showed people that a safe financial ecosystem is possible without centralized authority figures, and that cryptocurrency is a great way to invest and trade. The idea caught on like a brush fire, and a new industry was born that seeks to forever change how we define money.

Bitcoin quickly spurred other projects like Litecoin, a more efficient clone, and Dash, which added a governance model and instant transactions. The industry stayed quiet until around 2015, when developers who recognized the Blockchain model’s wider applications introduced Ethereum. This was seven years after Bitcoin first hit the scene, but began the revolution anew. Since then, Ethereum has built its own loyal following and has even spawned new ideas of its own, unrelated to Bitcoin.

Sifting through a sea of ICOs

One of the most important functions of Ethereum is its ability to launch other cryptocurrencies. In what’s called an initial coin offering (ICO), companies can sell their own tokens, each with proportional relative value to Ethereum, and allow angel investors to exchange their Ethereum for these new tokens. Ethereum itself has value relative to fiat money, so launching an ICO became the new standard for startups that wanted to crowdfund cash fast.

ICOs boomed in popularity because of many factors. One important component was accessibility. The lack of regulations and ease with which anyone can buy cryptocurrency made the identification of willing investors an easy task. A second factor, speculation, encouraged these ICO investors to participate. Speculators and investors saw ICOs as cheap, high-potential investments. Early launches only solidified these expectations, with investors piling haphazardly into new ideas just to sell their tokens for large profits once the rest of the crowd caught on.

It’s important to remember that startups which launch an ICO owe their investors nothing, except the appropriate number of tokens promised. No equity needs to be sacrificed for funding, as investors expect nothing other than a business that keeps its promise to create a good or service, one that makes its tokens valuable in turn.

This potent value proposition has made ICOs the way to go for any new company, with ICO funding surpassing venture capital (VC) funding in 2017. However, despite the advantages of the ICO model, installing checkpoints and milestones into this untamed world helps filter out Blockchain startups that detract from the young industry’s delicate image.

Stemming the flood

The ICO method of fundraising is potentially excellent for both investors and startups alike, assuming both have noble intentions. However, for investors, the ability to “pump and dump” inexpensive ICO tokens is unhealthy and creates ill will within the community. Companies, too, must commit to milestones, make smart use of their newfound capital and deliver real results. Unfortunately, this doesn’t always happen.

Scam ICOs have proliferated in recent years due to low barriers to entry for new cryptocurrency brands. Diamond Reserve Club, for instance, was an early ICO that promised to invest in diamonds and give out diamond discounts to those who contributed most to the token sale. The founder, Maksim Zaslavskiy, did not return the funds invested nor had any intention of launching his business. Despite SEC intervention, many investors lost their money entirely. There are numerous other examples of such behavior.

Anyone can write a shoddy whitepaper, put up a website full of buzzwords, and create a smart contract that disseminates tokens to willing investors. Learning how to spot a real ICO from a fake one, or a high-quality, high-potential ICO from a weak one is vitally important. Since ICOs are unregulated in many jurisdictions,it falls on the community to protect itself.

Guiding the innovators of tomorrow

The Blockchain community is nothing if not clever, and is starting to figure out how to combat this unfortunate reality. Innovative companies have cemented themselves in the ICO process and seek to bring control and stability to the community. One such company, Iconiq Lab, seeks  to nurture other would-be Blockchain companies by serving as a startup accelerator.

Patrick Lowry, CEO of Iconiq Lab tells Cointelegraph:

“A lot of the best crypto startups out there have been bootstrapping to build a real product and service, rather than rush towards an ICO without even a prototype. It’s essential for them to raise additional funding to cover legal and marketing ICO expenses with so much already being put into business development. It is essential to identify these real, tokenizable business cases, provide the ICO-related funding needed, and accelerate startups like in the case of Iconiq. This ensures real business cases are developed and tokenized, providing high quality ICO participation opportunities.

A community is forming around the creation of smarter ICOs, and such groups may have the greatest impact on ICOs in the future. By sourcing, funding, nurturing and then launching the industry’s best startups under one roof, incubators demonstrate the possibility of maintaining high standards without regulation. Such self-regulation is arguably the best way to keep government officials from breathing down the industry’s neck.

New ideas in the ICOsphere

Accordingly, other services are carving out their own innovative approaches to improving the ICO market. LaunchMyICO, for example, uses a comprehensive, single platform to give new startups all the tools they need for a quality ICO event. Included are portals where these companies can write a whitepaper, build smart contracts and distribute tokens, engage in marketing efforts like developer bounties and community management and even handle customer service.

BullToken is a different spin on the “ICO investment community” model. Holders of BullToken can use their coins to vote on which startups to collectively invest in, and the winners will be able to ICO using the group’s support and funding. Starta Accelerator is another firm entering this new space, but takes a more traditional approach by inviting young companies with ICO ambitions to fly, pitch and join the company on the ground floor.

Showing the world a better side of Blockchain

The ICO craze shows no signs of tapering, and it is increasingly the responsibility of experienced incubator and accelerator programs to stem the flow of scams or ill-prepared projects. Smart startups will jump at the chance for a new mix of traditional and “Wild West” funding, especially given the alternatives. Venture capital funding is slow and painful, requiring founders to sacrifice equity for cash. Bank loans aren’t any better, and attach companies to a ball-and-chain of troublesome debt and interest payments.

Even conducting an ICO without any guidance is dangerous and prone to failure for the uninitiated. In the future, as investors seek to limit their risk, gaining entry to an ICO co-op will become a prerequisite to uncovering cryptocurrency funding. This is the way it should be.

Installing obstacles and effective filters into the ICO process is good for the industry and for participants themselves. Most importantly, it maintains the young industry’s positive image for an audience that has quickly grown more scrutinous.

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Goldman Sachs CEO Open to Considering Bitcoin Trading Once Currency Becomes Established

Goldman Sachs’ CEO Lloyd Blankfein has been one of the most open-minded Wall Street CEOs on Bitcoin. He isn’t a Bitcoin bull like Michael Novogratz; but neither has he derided the currency as has JP Morgan Chase CEO Jamie Dimon.

In fact, Blankfein has even pointed out that people distrusted paper currency when it was first introduced and later accepted it. The implication of his statement is that Bitcoin could become an acceptable means of exchanging value in the future, even if it isn’t widely accepted today.

In an interview with Bloomberg, Blankfein said:

[Bitcoin] is not for me. But there is a lot of things that there weren’t for me in the past that have worked out very well. If it was 20 years forward and it worked out, I could tell you why it worked out. But based on everything that I know, I am not guessing that it will work out.

Vehicle to perpetrate fraud

Lloyd Blankfein does not believe that everything is rosy for Bitcoin. When asked about the risks associated with Bitcoin, he highlighted its use in crime:

One of the main uses of Bitcoin is as a vehicle to perpetrate fraud. And that is maybe because you can’t trace it. So is cash, but guess what, it is hard to accumulate cash, sometimes.

Bitcoin may be used in crime, but the favourite currency of criminals all over the world remains the US dollar. Even JP Morgan Chase was found guilty of assisting money laundering in Switzerland. So the Goldman CEO was certainly on weak ground when highlighting that particular risk factor

We will think about it

When asked about whether Goldman was thinking about an investment banking strategy for Bitcoin, Blankfein said:

We will see. If it works out and it gets more established, it trades like a store of value, it doesn’t move up and down 20% and there is liquidity in it, we will think about it.

If Goldman does establish a trading desk for Bitcoin, it could trigger a stampede of institutional money into Bitcoin. Nothing could please the Bitcoin bulls more.

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Fed Vice Chair: Cryptocurrencies Threaten Financial Stability

Digital currencies may pose a threat to financial stability as they gain popularity, said U.S. Federal Reserve vice chairman for supervision Randal Quarles.

Speaking at the 2017 Financial Stability and Fintech Conference on Thursday, Quarles warned against the rise of cryptocurrencies, saying private decentralized currencies could have “spillover effects” on the broader financial system if they grow too big.

Their volatility, and the fact that they are not backed by any institution or physical assets, make them difficult to get a handle on, which means it is unclear what would happen in an emergency situation, he said.

During his speech, he said:

“Risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the U.S. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system.”

While Quarles warned against digital currencies, he explained that the note of caution reflected a lack of understanding as to how they would react to times of adversity, saying “it is not clear … whether the payment system would be able to function, in times of stress.”

Fedcoin? Go slow

He also suggested “extensive reviews and consultations” before any central bank issues its own homegrown cryptocurrency, especially in nations where cash is prominently used.

Rolling out such currencies too quickly could also spook residents and lead to a drop in economic activity, Quarles warned. And deployment of “unproven technology” could potentially cause other issues.

While Quarles is wary of using cryptocurrencies as any sort of federal monetary system, he does support the idea of using digital currencies as “secure limited-purpose” tools for settlement processes.

He recommended further research into cryptocurrencies to establish use cases.

Randal Quarles image via C-SPAN

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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ICE Agent: Cryptocurrencies Increasingly Used in Money Laundering

Criminal organizations are increasingly using digital currencies to launder money or otherwise pay for illicit activities, according to one U.S. Immigration and Customs Enforcement agent.

Child exploiters, drug smugglers, illegal firearm sellers and intellectual property rights violators are all beginning to use cryptocurrencies for their transactions, said Matthew Allen, ICE’s special agent in charge of Homeland Security Investigations (HSI).

Allen testified to the Senate Judiciary Committee on modernizing anti-money-laundering laws to limit both laundering and terrorist financing on Nov. 28, explaining that virtual currencies are the newest major method for hiding criminal proceeds.

In his testimony, he said:

“HSI agents are increasingly encountering virtual currency, including more recent, anonymity enhancing cryptocurrencies (AECs), in the course of their investigations. AECs are designed to better obfuscate transaction information and are increasingly preferred by [transnational criminal organizations].”

Some exchanges are beginning to design services specifically to thwart tracking by use of mixers that anonymize virtual currency addresses, making it even more difficult to determine which user conducted a particular transaction, Allen said.

Drug arrests

The department has had some success in identifying criminals who use bitcoin, however. Allen pointed to the November 2016 arrest of Utah resident Aaron Shamo, who allegedly ran a Xanax and fentanyl manufacturer group.

Shamo allegedly took his profits in bitcoin, and HSI seized approximately $2.5 million from him at the time.

Another alleged fentanyl vendor, Pennsylvanian Henry Koffie, was arrested this past July and had $154,000 seized. Allen said Koffie sold nearly 8,000 orders of the drug, “most of it paid for with bitcoin.”

Lady Justice image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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DASH Price Surprises the Whole Market: Very Optimistic Future

Dash had a strong rally against bitcoin which has started at the beginning of this month. A massive 150 percent advantage did struck its domination over BTC at one point. Even now after the massive BTC rally [but its market minor crash]  Dash is still leading with 11.00 percent the Bitcoin market.

As mentioned in our previous DASH/USD press, if the value pullbacks but does not enter its range are between the $620.00 and $662.00 while finding support above the important $665 – then the token price could very possibly continue gaining with momentarily corrections.

dash analysis

Source: coinmarketcap

Despite the fact that for the moment Dash is clearly gaining and the only on the green zone, it would be of best for traders to be on the lookout as the minor crashes are very speedy. Re-entering the ranging area while pairing with US Dollar in the middle of it would be of no recommendation to trade at all as the outcome is clearly not easy to predict.

The optimistic space which is surrounding for quite some Dash enthusiasts and holder could be a result of its upgrade which were on the way and on development.

The version 12.2 upgrade is one step on the way to Dash Evolution, the currency’s plan to make “digital [currencies] be so easy to use your Grandma would use them.” Core developer UdjinM6 wrote of the recent update:

The most notable changes are:

  • DIP0001 implementation (which is a 2MB block upgrade);
  • Transaction fee reduction 10x (activates via DIP0001 activation);
  • InstantSend vulnerability fix (activates via DIP0001 lock in);
  • PrivateSend improvement which should allow user to have mixed funds available much faster;
  • Various RPC changes;
  • Lots of backports from Bitcoin Core and refactoring of our own legacy code which should improve performance and make code more reliable and easier to review;
  • Experimental HD wallet with BIP39/BIP44 support.

this blocksize increase follows the on-chain scaling plan announced by founder Evan Duffield earlier this year. Duffield announced that through the use of custom hardware, Dash will create a network that can scale to large numbers of transactions by using big blocks.

Many projects in the space believe that on-chain scaling is impossible. That’s simply because they haven’t explored alternative P2P architectures for higher performance. We intend to show just how far an incentivized second tier [masternode] architecture can take a project like Dash.

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Almost Half of ICO Funding Goes to Europe, Report Finds

Startups in Europe raised more capital through initial coin offerings (ICOs) in the last three years than any other region on the planet, according to a study released Thursday.

More than a third of all ICOs – 40% – are based in the European Union (EU), according to the analysis by venture capital firm Atomico. These 446 transactions raised $1.76 billion, nearly half (46%) of the worldwide total from token sales. The second biggest region for this activity was North America, with 244 campaigns raising $1.076 billion.

The report, entitled “The State of European Tech,” cited data collected by Token Data, a startup that tracks ICOs, as well as Atomico’s own survey of investors and startup founders.

What’s more, the EU might become the global leader in cryptocurrency and blockchain development over the next five years, according to the report. An increasing number of startups on the continent focus exclusively on blockchain development, accounting for a much higher share of companies founded in 2016 than in 2012.

Sprawling teams

Notably, the report found that roughly 25% of ICOs had some sort of decentralized team, where the company launching a campaign was headquartered in a different location than the founder or chief executive.

Ricky Tan of Token Data said he expects this figure to increase in the coming years.

In the report, he said:

“We see a pattern of geographical diversity between ICO founding teams and also within the teams themselves. If the future of business ideas lies in decentralisation, then decentralised founding teams will be a key aspect of it.”

Europe also has the greatest number of bitcoin nodes, with more than 5,000, according to the Atomico report. The U.S. comes in second with just over 3,300 nodes.

While the number of ICOs and blockchain startups is increasing, interest in “blockchain” in general is increasing even more rapidly.

Data from Stack Overflow cited by Atomico shows an exponential growth in the number of searches for the term, jumping from 110 in January 2015 to 14,500 in September 2017.

European Union flag image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Law and Legislation being Put Out by South Korea for Cryptocurrencies

The Financial Services Commission (FSC) – the leading head of the financial regulatory scene of South Korea, has drafted out the final form of a proposed legislative package that would legalize and regulate virtual currency exchanges in the country.

However [in an ironic manner], the movement was made while categorizing crypto-exchanges as “unauthorized fundraisers”.

The FSC’s new legislative initiative seeks, then, to clarify the previously ambiguous regulatory atmosphere surrounding crypto e-commerce ventures in the Asian tech hub nation.

Accordingly, under the new laws, cryptocurrency exchanges in South Korea would be mandated to acquire a license from the FSC before being allowed to open their doors.

Exchanges will need to prove their reputability, per an anonymous FCS official:

“Cryptocurrency exchanges will be required to maintain standards for consumer protection, such as having separate deposits for customers’ assets, and for increasing transparency, such as having a procedure for confirming customers’ identity.”

“The authorities will also be empowered to prosecute exchanges that break these rules.”

cryptocurrency investing

On the other hand, the Vice Chairman of FSC did declare a new setting of anti-money laundering [AML] laws which will give SK officials the possibility to devise ways to mitigate “virtual (currency)” laundering:

“We will improve the safety of financial transactions by establishing a discipline system corresponding to the risk of money laundering of new products.”

“We will draw up thorough countermeasures that prevent cryptocurrencies, like bitcoin, from being a new channel for money laundering.”

To explain the approach – FSC will be making sure that crypto-exchanges will be taking shape that would fit the stricter Know-your-Costumer regulations so they can have a better overview of could-be launderers.

All in all, then, crypto buying and selling will be allowed in South Korea, although it will be heavily regulated at the exchange level.

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SF Fed President: No Plans to Put USD on a Blockchain

The Federal Reserve is not working on a cryptocurrency version of the U.S. dollar, the head of one of its regional banks said.

As first reported by Reuters, John Williams, president of the Federal Reserve Bank of San Francisco, offered his thoughts about the developments in distributed ledger technology and what its progress means for central banks. Speaking at the 54th annual Economic Forecast Luncheon in Phoenix, Williams took a question from the crowd about what he thinks bitcoin’s rise means for the economy, as shown in this Periscope video from the San Francisco Fed’s account.

He answered by first pointing to the underlying blockchain technology’s potential to improve the efficiency and security of payments, but then said:

“The other thing I think is interesting is this question of central bank-issued digital currency. Right now, the Federal Reserve is not developing its own digital currency, but there is a lot of research going on around the world thinking about this question.”

Williams told the crowd that his remarks should not be construed as a suggestion of what the Fed might or might not do, but he does think government-backed cryptocurrency will remain a hot topic among central banks.

“I think this will be a very exciting area over the next decade,” he said.

‘Very premature’

This follows similarly tentative comments yesterday by Williams’ counterpart at the New York Fed, William Dudley.

“I think at this point it’s really very premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” Dudley said at a quarterly public engagement event in New Brunswick, New Jersey, according to Bloomberg.

But economists at the Fed have been keeping an eye on this space since long before the recent run-up in bitcoin’s price and media attention.

In a 2015 conversation with CoinDesk, David Andolfatto, a vice president of the St. Louis Fed, argued that bitcoin and the Fed are not really that different, saying that the central bank is in a sense open-source and all money is just a ledger of one form or another.

Portrait of John C. Williams via the San Francisco Fed website.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Gridcoin(GRC) Price is Very Attractive

Gridcoin has been trading within the triangle patter since August. Although on the 26th of November after multiple rejections of the 200 Moving Average and uptrend trendline, it broke that patter and went higher.

Currently, higher highs and higher lows patter is there which does suggest the continuation of the uptrend. First strong resistance is at $0.067, that is 227.2% Fibonacci retracement level applied to the last corrective wave down before the triangle pattern breakout. This is indeed a very strong resistance which has to be broken in order for GRC/USD to go further up.

If the break above $0.67 will be confirmed, Gridcoin should rise much higher hitting $0.115. This target price is confirmed by two Fibonacci levels, 527.2%, and 361.8%. Only a break below the $0.03 support could invalidate bullish outlook.

gridcoin price

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ECB's Yves Mersch: Banks Need Faster Payments to Counter Bitcoin

Commercial banks need to develop faster payment systems to counter the rise of cryptocurrencies, according to one European Central Bank executive.

Yves Mersch, who sits on the ECB’s executive board, made the argument even while dismissing the impact of cryptocurrencies during an event in Rome, according to a Reuters report.

Speaking this morning, Mersch said:

“Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.”

Mersch reportedly added that the ECB would experiment with cash “on different digital technologies,” while more “adventurous applications” do not warrant attention.

The statements come a month after another ECB executive board member, Benoît Cœuré, indicated that the bank is not ignoring cryptocurrencies, but rather is monitoring their use.

At the same time, Cœuré maintained the bank’s long-held position that digital currencies are not a threat to the euro, saying “the amounts involved are marginal.”

Despite these claims, a 2015 report by the ECB noted that cryptocurrencies could impact monetary policy and financial stability in the Eurozone. At the time, the bank said bitcoin was more attractive than traditional financial institutions in certain areas, including remittances.

The ECB’s president, Mario Draghi, also recently said it cannot regulate bitcoin, although he did declare that EU member nations cannot launch their own cryptocurrencies.

Yves Mersch image via CoinDesk archives

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.