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Barry Silbert: Bitcoin Cash Hard Fork Was An Industry “Disservice”

Since the Bitcoin industry entered late-October, there has been an auspicious rise in search queries for the cryptocurrency, in spite of the downtrend that shocked crypto-centric investors worldwide. As reported by Ethereum World News, per Google Trends, the “Bitcoin” query has risen to a four-month volume high. The search term, “Bitcoin Cash,” also saw a notable explosion in volume.

Tom Lee and Mati Greenspan, two industry savants, both commented on this trend, with the former calling the statistic “interesting,” while the latter noted that “we’re back.” And interestingly, mainstream media outlets have picked up on this renewed trend, recently covering the cryptosphere incessantly and through a variety of different mediums.

CNBC, for one, recently began to call upon the executives, analysts, and researchers in the cryptosphere to make appearances on their television segments, which have become fairly infamous for their (sometimes inaccurate) coverage of Bitcoin.

Last week, they brought on Barry Silbert, the man behind crypto-centric conglomerate Digital Currency Group (DCG), to speak on the current state of cryptocurrency affairs and its potential future.

Bitcoin Cash Hard Fork Was An Industry “Disservice” 

Discussing an industry hot topic, Silbert, who owns/manages stakes in this industry’s foremost startups, noted that the Bitcoin Cash debacle, which hasn’t even come to its final head just yet, is a distraction for investors.

Elaborating on this point, clearly indicating that he isn’t a big fan of the fracas, but remains a Bitcoin proponent, the DCG chief noted:

The fork is a distraction. The industry did itself a real disservice, but let me give you the other side of that — if Bitcoin emerges as the winner, it will have been battle-tested, as it has been challenged by competitive cryptocurrencies and internal development strife.

Silbert: Death Of ICOs, Ethereum (ETH) Sell-Off, And Crashing Stocks Prompted The Crash

Drawing the conversation back to this budding industry’s flavor of the month — the dismal market conditions — Silbert did his best to reason why Bitcoin, coupled with its altcoin brethren, underwent a jaw-dropping sell-off that caught investors with their pants down, as it were.

He first explained that crypto’s largest investors are funds/groups with asymmetric risk appetites. Silbert added that these funds often hold positions in high-risk, often-tumultuous technology stocks, coupled with cryptocurrency holdings. So, seeing that lines that can be drawn between the recent sell-offs seen in equities and crypto, it is apparent that the macro market has been proding Bitcoin investors.

The DCG head, one of the crypto industry’s foremost entrepreneurs then drew attention to the ICO market, which has been beaten and bashed by an SEC crackdown recently. Keeping in mind that ICOs primarily catalyzed 2017’s monumental bull run, the fact that “ICO market is completely unwinding” has evidently been a bearish catalyst for crypto assets.

Further speaking on this purposed factor, he explained that as ICO-funded tokens have collapsed, startups have sought to liquidate their war chests, which were primarily filled with Ether to stay financially afloat,

Last but not least, he noted that crypto hedge funds are finally seeing their first redemptions, putting further selling pressure on the cryptocurrency market, presumably through Bitcoin sell orders.

Title Image Courtesy of Marco Verch on Flickr

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Grayscale Adds Zcash Offshoot ZenCash to Crypto Investment List

Grayscale Investments has invested in ZenCash, a little-known, privacy-focused cryptocurrency.

Speaking at the Stocktoberfest East conference in New York City, Grayscale founder Barry Silbert – who also founded Grayscale’s parent company, Digital Currency Group – asked audience members to raise their hands if they owned offshore bank accounts.

“There is approximately 10 percent of the world’s wealth held in offshore bank accounts,” he said after some of the audience members raised their hands, adding:

“I believe that financial privacy is going to become a really, really important thing not just in emerging markets, but in the U.S. as well.”

For this reason, Silbert said, privacy coins were one of Grayscale’s primary focuses. That category includes zcash, a prominent privacy coin that Grayscale has previously revealed a stake in, as well the lesser-known ZenCash, which is a fork of a fork – via ZClassic – of zcash.

“I love the team,” Silbert said of ZenCash Wednesday, “I love the vision, and the community that we’ve gotten to know is incredibly passionate.”

He explained that the privacy coin is “broader” than its grandparent zcash, referring to its support for messaging and media applications.

Silbert said that ZenCash formed part of Grayscale’s “conviction list,” meaning that the firm has “meaningful dollars in a token.”

Despite his enthusiasm for certain digital assets, however, Silbert made it clear that the space as a whole is rife with soon-to-be flops.

“Most of the tokens are going to zero,” he said.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group.

Lotus image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Digital Currency Group Adds Zcash Offshoot ZenCash to Crypto Investment List

Digital Currency Group has added ZenCash, a little-known, privacy-focused coin, to its “conviction list” of cryptocurrencies. The other coins on the list are bitcoin, ethereum classic, zcash and Decentraland.

Speaking at the Stocktoberfest East conference in New York City, Digital Currency Group founder and CEO Barry Silbert asked audience members to raise their hands if they owned offshore bank accounts.

“There is approximately 10 percent of the world’s wealth held in offshore bank accounts,” he said after some of the audience members raised their hands, adding:

“I believe that financial privacy is going to become a really, really important thing not just in emerging markets, but in the U.S. as well.”

For this reason, Silbert said, privacy coins were one of Digital Currency Group’s primary focuses. That category includes the relatively prominent zcash, of which the lesser-known ZenCash is a fork of a fork – via ZClassic.

“I love the team,” Silbert said of ZenCash Wednesday, “I love the vision, and the community that we’ve gotten to know is incredibly passionate.”

He explained that the privacy coin is “broader” than its grandparent zcash, referring to its support for messaging and media applications.

Silbert said that ZenCash formed part of Digital Currency Group’s “conviction list,” meaning that the firm has “meaningful dollars in a token.”

Despite his enthusiasm for certain digital assets, however, Silbert made it clear that the space as a whole is rife with soon-to-be flops.

“Most of the tokens are going to zero,” he said.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group.

Lotus image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Grayscale Launches Fund for Top Crypto Assets (ETH Included)

The creator of the Bitcoin Investment Trust is today launching its fourth fund aimed at giving accredited investors a way to explore cryptocurrencies.

Unlike Grayscale’s previous funds, which focus on bitcoin, ethereum classic and zcash, the offering, formally called the Digital Large Cap Fund, is designed to give investors exposure to the five largest cryptocurrencies based on market capitalization.

At launch, the fund’s shares will be solely invested in a basket of crypto assets that will initially include bitcoin (BTC), ether (ETH), ripple (XRP), bitcoin cash (BCH) and litecoin (LTC).

The decision to include new currencies, and to sidestep other cryptocurrencies that are already offered by Grayscale, was based on the total value of the assets, according to Grayscale managing director, Michael Sonnenshein.

“Investors are looking for broad market exposure to the digital currency asset class,” said Sonnenshein, in interview today.

He told CoinDesk:

“This gives them the ability to make a singular investment that is going to give them exposure to approximately 70 percent of the market via this one vehicle.”

Investors will buy shares in the private placement investment vehicle, which is backed by actual cryptocurrency, valued at 4:00 p.m. EST. The valuation will be based on the Digital Asset Reference Rate provided by institutional trading technology firm, TradeBlock.

Each digital asset will be evaluated, less the fund’s expenses and other liabilities.

To account for changes in cryptocurrency market caps, it will be rebalanced on a quarterly basis, potentially removing existing digital assets and adding new assets. The fund is a passive investment vehicle that is not actively managed.

In addition to market cap, liquidity, operational requirements and the availability of custodial solutions will also be factors weighed during listing.

Additionally, the fund will not offer a redemption program at launch, meaning there is no assurance that the value of the shares will approximate the actual value of the assets held by the fund. The fund is offering shares on an ongoing basis to certain accredited investors as described by the US Securities and Exchange Commission (SEC).

Interestingly, the total assets under management by Grayscale, a subsidiary of Digital Currency Group, has decreased by almost $1 billion in the past couple months. In December, Silbert, the founder of DCG, tweeted the firm was managing $3 billion. In the current statement, that number has decreased to $2.1 billion.

As some of Grayscale’s previous fund can attest, the shares may trade at a substantial premium over the value of of the underlying asset if quoted on any secondary market in the future.

According to the official press release, Grayscale may eventually seek regulatory approval to operate a such a redemption program.

Sonnenshein further said that the firm intends to follow the path set forth by their first investment vehicle, the Bitcoin Investment trust, which trades over the counter with the ticker symbol, GBTC:OTCQX.

Sonnenshein said:

“It will be our intention to create a public quotation about this in about a year’s time.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group.

Image via Bailey Reutzel for CoinDesk

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.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Merrill Lynch Bans Clients from Investing in Bitcoin Fund

Merrill Lynch, the brokerage arm of Bank of America, has blocked financial advisers and clients from trading in bitcoin-related investments.

The ban extends to clients trading in Grayscale’s Bitcoin Investment Trust, a fund led by bitcoin entrepreneur Barry Silbert. The decision to block access to the fund was due to concerns about the “suitability and eligibility standards of this product,” an internal memo circulated to approximately 17,000 advisers states.

According to the Wall Street Journal, the bank has extended a ban on recently launched bitcoin futures contracts. A WSJ source said Merrill Lynch put the policy in place on Dec. 8, just two days prior to the launch of bitcoin futures by CBOE.

The source also said that existing bitcoin funds cannot be held in fee-based advisory accounts, but can be maintained in brokerage accounts, WSJ adds.

Silbert, a former Wall Street investment banker, told Reuters:

“We look forward to speaking with Merrill Lynch and addressing any questions or concerns they have about the Bitcoin Investment Trust. We are unaware of any similar policies at other brokerage firms.”

The Futures Industry Association (FIA), published an open letter to the CFTC before the launch of bitcoin futures, causing concern over the process in which cryptocurrency futures have come to market. Big banks and brokers including JPMorgan Chase, Citigroup, and Royal Bank of Canada have told clients regarding the denial of access to bitcoin futures, the WSJ report says.

Disclosure: Grayscale Investments is a subsidiary of Digital Currency Group, CoinDesk’s parent company.

Merrill Lynch 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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NYSE Files to Bring Bitcoin ETF Closer to Reality

The New York Stock Exchange (NYSE) has become the latest to put forward a Bitcoin ETF-related proposal to the SEC. NYSE is planning on launching to funds to track Bitcoin futures. The ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF will be the two exchange-traded funds that would allow traders to bet on how the volatile cryptocurrency futures contracts will perform.

These funds would closely follow the movements of the current futures markets operating out of CME and CBOE. From there, the funds would invest their assets in benchmark futures contracts with the option of investing in contracts outside the benchmark. NYSE was quick to point out that the funds will not actually own Bitcoins, stopping just a step shy of an actual Bitcoin ETF:

“By being long Bitcoin Futures Contracts, the Fund seeks to benefit from daily increases in the price of the Bitcoin Futures Contracts. The Fund will not be benchmarked to the current price of Bitcoin and will not invest directly in Bitcoin. When the price of Bitcoin Futures Contracts held by the Fund declines, the Fund will lose value.”

Adding further legitimacy

ETFs have been filed many times before, and each time they have been stopped at the SEC’s door. However, a lot has happened since those failed attempts, and the fact that futures have been launched, and the popular digital currency ahs hit new levels of acceptance, means that time may indeed be ripe for Bitcoin ETFs.

If NYSE successfully launches their futures-tracking ETFs, would be further legitimacy added to the unregulated and highly volatile asset. It could also lead to the currency hitting another rally as was seen in the run up to the launch of the Bitcoin futures.

Win Thin, global head of emerging markets strategy at Brown Brothers Harriman, the custodian of the proposed ETFs has said:

“It’s very hard for us, as currency analysts, to follow this. It represents further mainstreaming. Hopefully that what comes out of this: some more regulatory oversight. Beyond that, we don’t have any calls on where it will go from here.”

Barry Silbert, founder and CEO of Digital Currency Group, said:

“I think it is going to enable finally the approval of Bitcoin ETFs, and other digital currency ETFs, which is game changing,”

No objection?

Though the Winklevoss Twins and others have failed to earn the regulators’ approval for an ETF in the past, everything is different now.  With the successful launch of Bitcoin futures on the CME and CBOE exchanges, the SEC can no longer complain about the lack of a regulated mechanism for price discovery. This was their key objection when rejected earlier ETF proposals. A Bitcoin ETF is seen as huge for the currency, as it would open up Bitcoin trading to traditional investors.

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‘It’s An Orgy!’ Industry Reacts To US Bitcoin Futures Go-Ahead

“It’s an orgy” is how one strategist described the breaking news that US regulators have approved Bitcoin futures to start this month.

The US Commodity Futures Trading Commission (CFTC) confirmed Friday that CME Group and CBOE had met the requirements for regulated trading, while Cantor Exchange would also be able to debut Bitcoin binary options.

The news quickly rippled out across the industry and media, with a stream of delighted bullish statements gracing Twitter and other platforms.

Bitcoin prices are reacting in kind as of press time, with a surge towards $11,000 well underway. Bitcoin has gained $700 in a matter of hours, with another $600 to go before all-time highs of $11,360 seen earlier this week are challenged.

Curious alternative responses are meanwhile coming from the likes of Digital Currency Group CEO Barry Silbert.

Speaking on CNBC about the futures approval, Silbert told the audience they should look to take profits from the price rally and put them into Ethereum Classic and ZCash.

“I think it is going to enable finally the approval of Bitcoin ETFs, and other digital currency ETFs, which is game-changing,” he added.

Ethereum Classic is currently among the biggest successes of Bitcoin’s huge price increases this week, with today’s reversal generating near 30 percent growth for the altcoin.

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Barry Silbert Agreement Loses Support As SurBTC Exchange Appeals to Bitcoin Core Devs

Latin American cryptocurrency exchange SurBTC has come out in support of Bitcoin Core developers in its SegWit2x statement.

Joining the growing number of exchanges publishing official stances on the upcoming hard fork, SurBTC, which originally signed the NYA agreement, nonetheless said it was not prepared to support changes Core devs “don’t feel safe with.”

“The technical background of the team that currently collaborates on the core bitcoin project has an unprecedented level, we believe them to be, at least as a group, unbiased experts who deserve at least a voice on the subject,” the company wrote.

SurBTC is one of multiple signees of Barry Silbert’s agreement which later went back on their commitment to support SegWit2x.

At the time the fork was proposed, Bitcoin network users had become frustrated by high fees and slow transaction times.

Post-SegWit, however, priorities have shifted, and the contentious nature of the SegWit2x debate has divided the community and given supportive businesses a difficult publicity hurdle.

“Even though we would be happy to have moderately larger blocks to accommodate growing demand, we feel that Bitcoin needs (at least a majority) of Bitcoin’s core developers’ support in order to do this responsibly,” SurBTC continued.

Xapo position

On Monday, Xapo’s admission it would potentially take the BTC ticker away from the original BTC chain caused widespread outrage and defense in equal measure.

Discussing the ticker issue, SurBTC took a more neutral stance, predicted to be indicative of the broader industry response to SegWit2x when it comes into being November 18.

“All things said, if a contentious hard fork does happen, SurBTC could eventually list both assets but will allow for sure its users to at least withdraw both,” the exchange added.

“Due to practical reasons, we will continue to list BTC, and we will incorporate B2X (or the names that catch on among the industry) later.”

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Rootstock CEO Confirms Launch ‘By December’ After SegWit2x Hard Fork

Rootstock (RSK) CEO Diego Gutierrez has confirmed it will finally launch “between mid-November and mid-December” after the possible SegWit2x hard fork.

In a Twitter exchange Monday, Gutierrez said the timing of the initial release was deliberate to avoid complications from a hard fork occurring afterwards.

RSK is an open source smart contracts platform pegged to Bitcoin, the first such implementation for the network which will see significantly more capacity and faster payments.

When asked what stage the project’s technology was at, Gutierrez added the only reason for “waiting” was the SegWit2x hard fork issue.

“…On our side, all the tech is in place, and the reason why we’re waiting is because of the potential fork which might happen after mid (November),” he wrote.

On the subject of which chain RSK would support if a hard fork did occur, Gutierrez said that any willing to integrate smart contracts, but that “limited resources” meant the chain with most transactions would get “priority.”

China setback

SegWit2x has taken a back seat in the Bitcoin industry debate this month as regulatory upheaval in China becomes a decisive factor regulating price and volatility.

Community consensus has recently drifted towards discrediting the forking proposal, which came out of Barry Silbert’s so-called New York Agreement (NYA) in May.

The advent of Bitcoin Cash, Blockstream CEO Adam Back said as an example, made SegWit2x seem “moot.”

Catallaxy co-founder Francis Pouliot yesterday meanwhile added to the opinion that such hard forks were ultimately malicious acts, echoing Chain engineer Oleg Andreev last month, who described them as “FUD projects.”

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Bitcoin Owes Success to Three Different Waves of Innovators

Cryptocurrency is a complicated mixture of several different fields, which contributes to the difficulty people have in understanding it. Even the term is confusing and often leaves novices scratching their heads. However, the multidisciplinary nature of digital currency is also probably one of its greatest strengths.

Three different types of people are drawn to cryptocurrency: cryptographers/computer scientists, crypto-anarchists and finance professionals. Each of these types brings their own unique insights and perspectives.

The first wave: cryptographers and computer scientists

Bitcoin was invented and developed by the truly brilliant Satoshi Nakamoto. Although nobody knows Satoshi’s identity, we do know that the genius was exceptionally skilled in both cryptography and software development.

Cryptography is a rather eclectic field, the forte of mathematicians and codebreakers. Satoshi possessed a strong knowledge of cryptography, and when he combined it with his understanding of computer science, he discovered the solution to a vexing problem.

For years, some rather brilliant people had tried to devise a way to enable the transfer of value among a network of people who don’t trust one another. Such trustless transactions would have the potential to disintermediate the finance world completely.

Satoshi’s solution was the Blockchain, which serves as a perfect, trustless, distributed ledger of all transactions done on the currency network he created: Bitcoin.

Satoshi announced his development on the cryptography mailing list, an obscure forum frequented by some of the best cryptographers in the world. Hal Finney was one such person, and he worked with Satoshi very early in the Bitcoin’s history. In fact, the first Bitcoin transaction that ever took place was when Satoshi sent funds to Finney to verify that the software actually worked.

Over time, more and more cryptographers and computer science gurus became associated with Bitcoin, and sometime in 2012, Satoshi vanished. Others carried the torch and continued developing the protocol.

The computer scientists and cryptographers are the founders and maintainers of Bitcoin.

The second wave: crypto-anarchists

The second wave of digital currency enthusiasts were the crypto-anarchists. They saw Bitcoin as a way to liberate the world from the grip of oppressive governments and their fiat-based financial systems. This group tended to be politically motivated and unwilling to compromise on their basic principles.

Much of Bitcoin’s anti-establishment, decentralized culture comes from this group. Satoshi himself likely sympathized with their philosophy, based on posts he made to the mailing list and on BitcoinTalk.

Because of their nature, this group abhors all attempts to regulate digital currency. To them, cryptocurrency isn’t about becoming rich or achieving mainstream adoption. It’s a social and political movement.

The crypto-anarchists are the heart and soul of Bitcoin. They work hard to ensure the project remains decentralized and true to its founding principles.

The third wave: finance experts

Somewhere around the end of 2013, the digital currency sector caught the notice of finance professionals. This group is generally less politically motivated and more willing to compromise on issues such as regulation and taxation. They seek mainstream acceptance and adoption of cryptocurrency.

These finance specialists, many of whom have Wall Street credentials, have been highly successful in increasing the adoption of digital currency. With their help, Bitcoin has made significant inroads into the traditional financial system, and its value has boomed.

Some, like the Winklevoss twins, have sought to establish options for mainstream investors to participate. Though their proposed exchange-traded fund (ETF) application was denied earlier this year, they have appealed the ruling. Recent changes in key SEC personnel could aid their cause.

Likewise, Barry Silbert founded the Digital Currency Group which has full or partial ownership of a number of important Bitcoin-related companies. The Digital Currency Group owns Grayscale Investments, which sponsors the Bitcoin Investment Trust.

This trust is publically traded under the GBTC ticker, and its value is backed by sizeable Bitcoin holdings. GBTC is one of the only ways that US investors can expose their tax-advantaged retirement accounts to the price of Bitcoin.

Entire currencies, such as Dash, have been created when finance professionals discovered something that was missing in existing cryptocurrencies. Dash was founded by Evan Duffield, who himself holds a Series 65 license, and who realized that proper incentivization was missing from Bitcoin and other currencies.

Rather than relying on altruism to get people to run full nodes (as is the case with Bitcoin), Duffield thought these “masternode” owners should be paid for maintaining a copy of the full Blockchain (and performing other services for the network.)

While the number of Bitcoin nodes has been declining over the last several years, the number of Dash nodes has been rising.

A company called LedgerX will soon release a regulated market for the trading of Bitcoin futures, following the CFTC’s approval of their request this summer. This will allow traditional, mainstream investors to expose themselves to Bitcoin more readily, and will likely prove a crucial step in an ultimate ETF approval.

The finance group is responsible for much of the Bitcoin’s mainstream acceptance to date. They have brought in institutional money and are continuing to build on-ramps for traditional investors to gain Bitcoin exposure.

Multi-disciplinary

Bitcoin’s strength comes from the fact that so many disparate groups are interested in developing the project.

At first glance, it might appear that the programmers and cryptographers are solely responsible for Bitcoin’s success, but this isn’t so. Crypto-anarchists, financiers and others have all played meaningful roles.

Other talented individuals and groups will likely be attracted to digital currency in the future, and they likely have unforeseen roles to play as well.