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Russian Economic Minister Says BTC Is ‘Soap Bubble’ But Lauds Crypto’s Influence on Tech

Russia’s economic minister has compared BTC with a “soap bubble,” while seeing its influence on increasing tech investments as positive.

The Minister of Economic Development of Russia referred to Bitcoin (BTC) as a “soap bubble” that has has led to investors’ losses, Russian informational agency RBK reported Nov. 28.

Minister Maksim Oreshkin, speaking in an interview with RBK, noted how the the cost of Bitcoin (BTC) has decreased dramatically, referencing the coin’s rise to $20,000 in December 2017:

“When Bitcoin’s price jumped up to $20,000, and now it is lower than $4,000, we said very simple things: Bitcoin itself is a soap bubble, it deflated, that’s what happened”

However, Oreshkin also said that despite a fair number of losses among investors, cryptocurrencies “gave a positive impetus” to tech innovation. The Minister noted that many investment projects have been created within the industry of new technologies, such as blockchain, which is good for business.

Earlier this month, the chairman of the Russian State Duma Committee on Financial Market said that the country was considering issuing a state-backed stablecoin that would be a complete equivalent to the Russian fiat ruble “in a digital space,” as Cointelegraph reported Nov. 8.

Back this summer, Paul Krugman, a Nobel Prize winning economist, expressed some “scepticism” about cryptocurrencies, adding that “total collapse is a real possibility,” Cointelegraph wrote Jul. 31.

Cryptocurrency legislation in Russia still remains unclear, as the government’s main bill, “On Digital Financial Assets,” has been postponed several times since January 2018.

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Hodler’s Digest, August 13-19: Joseph Lubin Embraces Crypto Bubbles, While Playboy Gets Impatient for Blockchain

Coming every Sunday, the Hodler’s Digest will help you to track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions, and much more — a week on Cointelegraph in one link.

Top Stories This Week

Top Stories This Week

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Ethereum Co-Founder Joseph Lubin Doesn’t Believe Market Collapse Prevents Growth

Joseph Lubin, the co-founder of Ethereum and ConsenSys, said in an interview this week that he doesn’t believe that crypto market slumps prevent further growth. He added that each bubble brings in a significant burst of activity, as more developers join the community. Lubin noted that the crypto market volatility can be attributed to “trader types,” i.e. speculative investors, saying that it is not necessarily an indicator of underlying infrastructure enhancement.

Playboy Sues Canadian Blockchain Firm Over Alleged Fraud, Breach Of Contact

Playboy Enterprises is suing Canadian firm Global Blockchain Technologies (GBT), alleging that it failed to integrate blockchain technology into Playboy’s online media channels. Playboy had announced in March its plans to develop an online wallet that would enable customers to use crypto and support the Vice Industry Token, with GBT announcing its participation in May. In the lawsuit, Playboy said that the firm not only failed to fulfill the requirements of their agreement to implement blockchain tech, but also omitted a promised payment of $4 million.

Turkish Lira’s Fall Highlights Rising Crypto Interest In Turkey

In an article this week, Bloomberg writes about the currency crisis in Turkey caused by geopolitical factors, juxtaposing Bitcoin’s comparatively low volatility in the country. According to data from Google Trends, interest in Bitcoin increased markedly within Turkey in August, while local exchanges have seen volumes rise by over 150 percent this week alone.

Investor Sues AT&T Over Alleged Loss Of $24 Million In Crypto Due To Phone Hacks

An U.S. investor has filed a $224 million lawsuit against telecoms giant AT&T over alleged negligence that he claims caused him to lose $24 million in crypto. The plaintiff, Michael Terpin, claims in the lawsuit that the money was stolen via a “digital identity theft” of his cell phone account. Claiming to be a victim of two hacks within seven months, Terpin points to AT&T as letting a hacker acquire his phone number without the proper identification, which later let the imposter gain access to Terpin’s crypto holdings.

US Federal Court Denies Motion To Remand Against Ripple

The U.S. District Court, Northern District of California has ruled to deny a motion to remand against Ripple, its subsidiary XRP II, and Ripple CEO Brad Garlinghouse, in a class action lawsuit alleging that Ripple sold XRP tokens in violation of both the U.S. the Securities Act and the California Corporations Code. According to court documents, the plaintiff failed to show whether the presence of a Securities Act issue was sufficient to bar the defendant from removing an action under the Class Action Fairness Act.

Most Memorable Quotations

Most Memorable Quotations

Joseph Lubin

“We’ve seen six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening but when you look back they look like pimples on a chart,” — Joseph Lubin, co-founder of Ethereum, ConsenSys

Michael Terpin

“What AT&T did was like a hotel giving a thief with a fake ID a room key and a key to the room safe to steal jewelry in the safe from the rightful owner,” — lawsuit against AT&T by investor Michael Terpin, who claims the telecom giant allowed hackers into his phone

Laws And Taxes

Laws And Taxes

European Parliament Works On Crowdfunding Regulations Covering ICOs

The European Parliament’s Committee on Economic and Monetary Affairs is developing new crowdfunding regulations that could extend to some initial coin offerings (ICOs), possibly bringing some ICOs within the remit of the new draft regulatory framework for crowdfunding. According to a report, the draft crowdfunding rules might not be an answer for ICO regulation, but are at the least a “much-needed step.”



Swedish Crypto ETF “Alternative” Now Aimed At US Investors

A Bitcoin (BTC)-based exchange traded note (ETN) listed on the Nasdaq Stockholm exchange is now being targeted towards U.S. investors as of this week. This “soft” ETF alternative, which has been traded on the Swedish exchange since 2015, is now being quoted in dollars under the ticker CXBTF as of Wednesday. The addition of a dollar quotation for Bitcoin Tracker One, which is still technically listed and traded in Sweden, is considered by many to be a gateway for U.S. investors.

US Square Cash App Expands Crypto Trading To All 50 States

Mobile payment company Square’s Cash App has expanded its Bitcoin (BTC) trading to all 50 U.S. states. Square had first launched Bitcoin trading in November 2017 for a fraction of its users, with the app launching for almost all users in January with the exception of those in New York, Georgia, Hawaii, and Wyoming.

Japanese Social Messaging App LINE Created $10 Million Blockchain Fund

Japanese messaging giant LINE has announced the creation of a $10 million blockchain venture fund as part of its expansion into the cryptocurrency market. The fund, which is launched via Hong Kong-based subsidiary unblock corp., contains funds from fellow LINE sister outfit LVC Corporation. The company commented in a press release that the unblock ventures’ token fund will expand in the future with the growth of the market.

US National Insurance Advisory Introduces Blockchain-Based Database

The privately held insurance advisory American Association of Insurance Services (AAIS) has introduced its blockchain-based insurance database and reporting tool based on IBM’s enterprise blockchain solution, using Hyperledger Fabric. The platform, dubbed Insurance Data Link (openIDL), intends to reduce “burdensome” statistical reporting processes, as well as cut costs and data processing time for insurance carriers.

Mergers, Acquisitions, And Partnerships

Mergers, Acquisitions, And Partnerships

Bank Of China Partners With China UnionPay For Blockchain Payment Systems

The state-backed Bank of China (BOC) and financial services corporation China UnionPay (CUP) have announced a partnership to look into the application of blockchain for payment system development. According to the announcement, the impetus to explore blockchain came as a response to market demand. The two firms plan on jointly investigating big data and distributed ledger technology deployment in order to improve mobile banking products.

Ripple Adds Three Crypto Exchanges To Cross-Border Payments Settlement Product

Ripple has partnered with U.S.-based Bittrex, Mexican Bitso, and Philippine Coins.Ph cryptocurrency trading platforms within its initiative to build a “healthy” ecosystem of digital asset exchange. The partnership will allow Ripple’s xRapid payments solution, a liquidity solution for Ripple’s blockchain-based real-time gross settlement system, to move between XRP and U.S. dollars, Mexican pesos, and Philippine pesos.

Fintech Startup Signs MOU With Central Bank of Curaçao, Sint Maarten

Barbados-based fintech startup Bitt Inc. has signed a Memorandum of Understanding (MOU) with the Central Bank of Curaçao and Sint Maarten (CBCS) in order to develop a central bank digital currency to facilitate financial payments. According to the announcement, the bank is looking to “reduce the level of cash usage within the monetary union” and facilitate more AML and KYC-compliant transactions between the islands.

Jamaican Stock Exchange Partners With Canadian Fintech Firm To Add Crypto, Tokens

The Jamaica Stock Exchange (JSE) will work with Canadian fintech company Blockstation to facilitate the implementation of digital currency and token trading on the exchange. Before the deal with brokered, Blockstation completed beta testing in Jamaica with the participating institution and five broker members participated in a live workshop with representatives from local regulators.

Funding Rounds

Funding Rounds

Crypto Startup Raises Almost $23 Million With Participation From Airbnb Co-Founder

Cryptocurrency trading platform SFOX has announced the closure of a $22.7 million Series A funding round with participation from Airbnb co-founder Nathan Blecharczyk, along with Y Combinator, Khosla Ventures, Digital Currency Group, and Blockchain Capital. The Series A funding round, led by co-founder and partner at Tribe Capital and Social Capital, Arjun Sethi, has the goal of adding cryptocurrency pairs, improving trading liquidity, and expanding into “new geographical regions.”

Blockchain Startup Axoxii Raises $32 Million With Goldman Sachs, VC Investors

Enterprise-focused blockchain startup Axoni has raised $32 million in a Series B funding round led by Goldman Sachs and Nyca Partners, with numerous other investors including Wells Fargo, JPMorgan, Citigroup, and Andreessen Horowitz. The fresh investment brings Axoni’s total financing to $55 million to date.

Winners And Losers

Winners And Losers

Winners And Losers

Total market cap is at around $213 billion after a week of ups and downs, with Bitcoin trading around $6,385 and Ethereum around $296.

The top three altcoin gainers of the week are WINCOIN, PetroDollar, TaTaTu. The top three altcoin losers of the week are InflationCoin, RabbitCoin, Niobium Coin.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

FUD Of The Week

FUD Of The Week

US Regulator Increases Scrutiny Into Crypto Mining Firm Blockchain Riot

The U.S. Securities and Exchange Commission (SEC) has intensified its probe into crypto mining firm Blockchain Riot, a former biotech firm that changed its name to contain the word “blockchain” last year. This week’s quarterly earnings report reveals that the firm received a letter from the SEC indicating that the agency had begun to focus on Riot Blockchain’s registration statements, with the possibility of issuing a stop order preventing shares of the company from being traded until the agency considers that deficiencies have been addressed.

GPU Manufacturere Nvidia Sees Stock Price Fall Due To Decrease In Crypto Mining

U.S.-based graphics processing unit (GPU) manufacturer Nvidia stocks fell after announcing its third-quarter estimates, as the firm’s revenue was affected by a decrease in crypto mining as crypto markets have been falling. Nvidia shares declined more than five percent in the extended session. The company had reported that crypto mining sales were significantly lower than expected in Q2, adding that it does not expect to make significant blockchain-related sales for the rest of the year.

Report Shows More Than $2.3 Million Stolen In Crypto Scams In Q2 2018

A recent report from Russia-based antivirus and cybersecurity firm Kaspersky Labs states that in the second quarter of 2018, cybercriminals stole over $2.3 million dollars via various crypto scams. The report lists “crypto giveaways” as one example of the scams involved, as well as those with cybercriminals posing as being part of new ICO projects to collect money from potential investors.

“Unhackable” Crypto Wallet Sponsored By John McAfee Reportedly Hacked

A group of researchers have reportedly hacked the Bitfi crypto wallet, which Bitfi’s executive chairman, cybersecurity pioneer John McAfee, has called “the world’s first unhackable device,” a claim backed up with a $100,000 bounty for breaching the device. This week, several researchers have written online that they could successfully send signed transactions with the wallet, claiming they met the conditions of the bounty program by modifying the device, connecting to the wallet’s server, and transmitting sensitive data with it.

Best Features

Best Features

Artists Ai Weiwei and Kevin Abosch Are Using the Blockchain to Make Us Question What’s ‘PRICELESS’

Two artists address the current human rights issues around the world using the Ethereum blockchain to illustrate their examples. According to Weiwei, blockchain “is not about the technology, but an opportunity to set up a new system that could dismantle the old system, or at least offer a new possibility for communication.”

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Ethereum Co-Founder Joseph Lubin: Crypto Price Collapse Will Not Constrain Further Growth

Ethereum co-founder and ConsenSys Inc. CEO Joseph Lubin said in an interview with Bloomberg Aug. 14, that he does not see the recent cryptocurrency price collapse as a constraint to further growth.

In а recent discussion on the state of the cryptocurrency market with Bloomberg, Lubin said that the value surges of the past year were just another bubble like the previous “six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening.”

He added that on close scrutiny those peaks look like “pimples on a chart.” Lubin said that each bubble, such as the current one, has brought a significant burst of activity. He stated:

“…we build more fundamental infrastructure, we see a correction, and the potential gets even more impressive… I absolutely expect that there is a strong correlation between the rise in price and the growth of fundamental infrastructure in the ecosystem and the growth of development in the ecosystem. We are probably two orders of magnitude bigger as a developer community than we were eight or 10 months ago.”  

Lubin attributed volatility to “trader types,” i.e. speculative investors, saying that it is not necessarily an indicator of underlying infrastructure enhancement. When asked about how the price volatility affects him, Lubin answered:

“So we can look at the price and make growth plans and projections, and we’re still on track, basically. So this is not unexpected.”

Yesterday, Ethereum (ETH) dropped to a 9-month price low, and was trading at $288. The last time the altcoin fell below the $300 price point was in early November, 2017. This morning losses expanded to 16 percent on the day and almost 35 percent over the last week.

Currently, ETH is trading around $263, down 7 percent on the day, with a market capitalization over $26 billion.

Ethereum’s 24-hour price chart. Source: Cointelegraph Ethereum Price Index

Ethereum’s 24-hour price chart. Source: Cointelegraph Ethereum Price Index

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Nobel Prize Winning Economist Paul Krugman Expresses Skepticism About Crypto, Predicts Collapse

Nobel Prize winning economist Paul Krugman has expressed his skepticism about the value of cryptocurrencies in a New York Times Opinion piece published July 31.

Krugman, who was awarded the Nobel Prize in Economic Sciences in 2008, explains his position as a “crypto skeptic” by noting the high transaction costs and an “absence of tethering” associated with cryptocurrencies.

Krugman describes how the history of money has been slowly moving away from gold and silver coins, to banknotes, and now to credit cards and other “digital methods,” all of which served the purpose of making purchases less costly.

According to Krugman, those that celebrate cryptocurrency — which he notes has a relatively high cost of doing business — are thus “effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years.” Krugman further poses the query:

“Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question.”

In regards to crypto’s lack of “tethering,” Krugman notes that “total collapse is a real possibility:”

“If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless.”

The economist goes on to note that in the future, while there might be a “potential equilibrium” where only Bitcoin — out of all cryptocurrencies — survives simply for use in “black market transactions and tax evasion,” the reality is that “disappointment will probably collapse the whole thing.”

Krugman concludes by noting that he could be wrong, adding a call to all crypto enthusiasts to prove his crypto skepticism false:

“But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Don’t just try to shout down the skeptics with a mixture of technobabble and libertarian derp.”

Other well-known traditional financial figures and economists have shown similar pessimistic views about the nature of cryptocurrencies and blockchain tech. Berkshire Hathaway vice chairman Charlie Munger referred to Bitcoin this spring as “freshly harvested baby brains,” and Apple co-founder Steve Wozniak said in June that blockchain is a “bubble.”

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​​Market Mania Is Unavoidable, But Crypto Must Get Past It

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

The financial bubbles of 17th and 18th century Europe are favorite references for those, among both believers and detractors, who warn of the excesses in crypto-asset markets.

The events of those times long past capture the same problems of information asymmetry and irrational speculation that leave many seasoned observers concerned about this moment. The South Sea Bubble, the Mississippi Bubble, and Tulip Mania were all examples of how, during money-crazed manias, unscrupulous entrepreneurs and early investors exploit their privileged access to information to do great harm to an ill-informed investing public. This, at its essence, describes the risk inherent in initial coin offerings (ICOs).

But the historical context behind those centuries-ago events is also important: they were a direct, almost unavoidable side effect of the invention at that same time of limited liability companies, stock markets and derivatives, some of the most game-changing financial innovations of all time.

On the one hand, these inventions – spearheaded by the Dutch – created vast new opportunities for a growing middle class to engage in wild, ill-conceived speculation. But on the other, they unlocked a giant, previously unavailable pool of collective capital, offering a much more efficient way for entrepreneurs to fund their ventures.

Vast worldwide enterprises were launched on the back of these new money-raising tools. They gave us the global capitalist economy we now take for granted.

This context is important because everything that looks like investor mania in cryptoland today – the 2017 bubble in token prices, the scam coins, the vaporware, the 10-figure ICO raises without a line of code written – might similarly be viewed as the unpleasant but unavoidable side effect of a major technological transformation.

If crypto-assets, smart contracts and blockchain technology fulfill their potential to decentralize the economy, the change they promise could be just as profound, if not more, as that sparked by those inventions during the Dutch renaissance. This technology represents a radical re-imagining of record-keeping, fundraising, organizational design and of money itself.

At times like this, you just can’t stop the unsavory, get-rich-quick types.

Tech lures speculation

As I’ve noted elsewhere, if you examine moments through history when a new, general-purpose technology upended the economic order, they were almost always accompanied by periods of intensified financial speculation.

It was the case with railroads, with electricity and, of course, with the rise of the internet in the late nineties. The Venezuelan economist Carlota Perez has even argued that the social phenomena of bubbles and speculation are necessary elements in how societies fund and build the infrastructure upon which transformative technologies become entrenched in the economy.

But the opposite causal relationship does not necessarily hold true.

Tracing every moment of hype and speculation that has been associated with a new technology will not at all find that it’s always associated with the successful deployment of a powerful new technology. History is rife with supposedly “revolutionary” ideas that captured people’s imaginations but weren’t ultimately deployed in a widespread, society-altering way.

The past 50 years are full of them: the Segway, Google Glass, Betamax, the Concorde, to name a few. Note: all of these were impressive technologies and some have gone on to be important components of subsequent inventions. But for various reasons – the cost of production, marketing, fashion, etc. – they never took off in a way that matched the hype.

Gambling as a service

I was thinking about all this as I read about Augur’s impressive launch of its prediction market. In one day, its ethereum-based decentralized application processed $400,000 in bets on everything from U.S. elections to the World Cup.

The question to me is whether the initial enthusiasm for decentralized prediction markets – in which contracts can be written for payouts between parties on the outcome of any particular event – will go beyond human beings’ natural proclivity to gamble and ultimately deliver on Augur’s real promise to society: a crowd-sourced, market-based forecasting system and an incentive, reputation token model for rewarding honesty.

In this case, the market Augur is developing literally requires speculation to function. Gambling is not just a byproduct; it is integral to its success. But just because people want to bet in this way does not mean that the price discovery around their predictions will be widely used by society at large to process and value information about occurrences that matter. Only time will tell on that one.

You could ask similar questions about other sectors of the crypto industry that attract significant speculation but also represent potentially powerful, cutting-edge ideas. While I’m convinced that the underlying concepts of incentivized consensus, cryptographically secured distributed ledgers, digital assets, and decentralized exchange will succeed in some form, I see no guarantees yet that any of the various manifestations of those ideas – including bitcoin – will necessarily survive and make an impact on the world.

So, let’s ask these questions:

  • Are ICOs just enabling scammers and founders of doomed-to-failure projects to get rich on the greater fool theory of bubble-nomics? Or is this truly the killer app of blockchain technology, the one that emancipates capital from Silicon Valley gatekeepers and creates a global market for ideas?
  • Was the recent enthusiasm for Cryptokitties a fad, a crypto Beanie Babies moment, or will it go down as the vital use case that proves the value of digital scarcity and fosters markets in which producers of unique creative works can monetize them
  • Will bitcoin be forever viewed as a fanatic passion of “To the Moon” HODLers or can it truly be the foundation of a new global reserve asset and payments platform?

These and others like them are vital questions to answer if we are to ensure that blockchain technology’s vast potential plays out to the benefit of matters to society at large.

Value to society

Answering these questions comes down to how the technology itself is integrated into the wider economy.

That notion itself can refer as much to a new type of market as any other kind of technology. (The early Dutch stock markets offer a good analogy here for Augur’s prediction markets – organizational technologies in their own right.) Regardless, there still has to be broad-based value to society if the technology (and the market it supports) is to survive and prosper.

Here the history of Europe’s early capital markets is again valuable. The fallout from the disastrous South Sea Bubble didn’t kill the idea of public capital markets for funding new ventures, but it did bring order and societal interest into play. These came in the form of new rules from governments on who could issue public stock and how. From that evolved the entrenched, regulated stock exchanges and related asset markets that we use today.

This is not at all to say that government regulation must be the answer to crypto’s aspirations to go mainstream – the very concept of a censorship-resistant system tends to run counter to it. But it does mean that those of us involved in developing this technology should encourage protocols, best practices, standards and norms of behavior that have at their core the interests of society at large.

History suggests that naysayers like Nouriel Roubini who scoff at the hype and speculation in crypto communities could be blind to the major transformational moment that underpins it. But it equally offers a warning to crypto enthusiasts: don’t get lost in the hype; create something that lasts; build something that matters to everyone.

South Sea Bubble image via Wikimedia Commons.

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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Bank of Finland Releases Scathing Crypto Report, Calls Digital Currency a “Fallacy”

The Bank of Finland released a paper on June 21 titled “The Great Illusion of Cryptocurrencies,” explaining why they think the concept of a digital currency is a “fallacy.”

The paper, written by Aleksi Grym, Adviser on Digitalization and Head of the Digital Central Bank process in the Financial Stability and Statistics Department. It aims to explain how cryptocurrencies’ fundamental nature “shows how poorly understood the concept of money itself still is today” and how the Internet and social media have “muddled our sense of fact and fiction.”

In Grym’s words, cryptocurrencies are not real currencies but instead “accounting systems for non-existent assets.” He makes the argument that digital ledger technologies, like blockchain, are actually the same as other record keeping systems, but that their implementation for crypto is “unrelated to the fundamental characteristics of money:”

“For all intents and purposes, that ledger is a centralised ledger. The fact that there are multiple synchronised copies of it, distributed across a network, is irrelevant, as each one has the same data.”

The article cites several studies on Bitcoin (BTC) and cryptocurrencies with relatively negative views on crypto as either a speculative instrument or a bubble whose “fundamental value is zero.” Grym also discredits the idea of a central bank issued digital currency, noting that it would “practically mean bank accounts at the central bank.”

Grym then asks the question, “again, what is money?” noting that the definition has changed over time, but that money is normally described as functioning as a unit of exchange and having a store of value and a unit of account. The article notes that money, presumingly referring to crypto, is not created “out of thin air,” but comes from liquidity transformation.

According to the article, the main impetus for buying cryptocurrencies are either for criminal activities, creating a sense of community, security against “real or imagined” state oppression, and the thrill of trading. Grym then compares buying Bitcoin to the “intangible value” for some customers that buy “toys, fashion, art, club memberships, or firearms.”

Last week, Cointelegraph published an overview of all of the “FUD” (Fear, Uncertainty, Doubt) in the crypto sphere since Bitcoin’s inception, detailing the many comparisons to the Dutch “tulip mania” as well as the multiple Bitcoin “deaths” reported in the media.

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Apple’s Steve Wozniak Calls Blockchain a ‘Bubble,’ Thinks Bitcoin Is Still ‘Just Amazing’

Apple co-founder Steve Wozniak believes that blockchain is a bubble similar to that of the dotcom era, but that it could have potential in the future, CNBC reported yesterday, June 26.

During the NEX technology conference in New York, Wozniak said that the dotcom era created a similar kind of hype around companies that did not end up delivering on their promises:

“It was a bubble, and I feel that way about blockchain.”

However, Wozniak did add that blockchain is “decentralized and totally trustworthy,” noting that it just may “take a while” for its potential to fully come to fruition:

“It doesn’t change in a day, a lot of the blockchain ideas that are really good by coming out early they can burn themselves out by not being prepared to be stable in the long run.”

Wozniak had expressed similar sentiments about the future potential for both blockchain and cryptocurrencies last month.

CNBC notes that Wozniak singled out Ethereum (ETH) as one cryptocurrency that could last in the long term, due to its versatility in allowing developers to build on its blockchain. In mid-May at a conference in Vienna, Wozniak had also compared Ethereum’s platform to Apple’s platform, stating that it could become just as influential as Apple in the future.

According to CNBC, Wozniak yesterday mentioned the possibility of using blockchain for a social network competitor to Facebook, which he said was currently working as a monopoly in the sector.

Wozniak, who had referred to Bitcoin (BTC) as “pure digital gold” earlier this month, noted that Bitcoin is still “just amazing” to CNBC.

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Co-founder of World’s Most Centralized Tech Company Calls Blockchain a Bubble

The co-founder of a company that makes billions of dollars by essentially centralizing technology has called decentralized blockchain a hyped bubble.

Apple co-founder Steve Wozniak took to the stage yesterday at the NEX technology conference in New York to talk about blockchain and Bitcoin. According to CNBC he said that the hype around the industry is similar to the dot com bubble; “It was a bubble, and I feel that way about blockchain,”

He then referred to the number of companies jumping onto the internet bandwagon in the early nineties with good intentions that went bust. This can be likened to the high percentage of failed ICO projects over the past year. Wozniak elaborated on his hyped bubble theory;

“If you look now you say all that internet stuff happened, we got it, it just took a while. It doesn’t change in a day, a lot of the blockchain ideas that are really good by coming out early they can burn themselves out by not being prepared to be stable in the long run.”

Wozniak, however, is self-admitted Bitcoin bull who sold out last year; “All of the sudden it was way down, then way up in the sky,” he said. “I got scared, and sold everything but one bitcoin.” He went on to state that Ethereum had a better ability to outlive the hype as it allows programmers to develop their own decentralized applications (dApps) to run on it.

The entire concept of a dApp goes against Apple’s core philosophy which is all about control. By locking consumers into its own ecosystem, which is governed by its own non-standard standards, the billion dollar firm can retain a tight grip of control over both its products, and those that buy them.

This is the quintessence of centralization, keeping users in a never ending loop of needless upgrades necessitated by timely and expensive product releases ensures they come back for more. Just recently the firm faced multiple lawsuits for forcing software updates that intentionally slowed down perfectly operational devices in a ploy to force users into buying the newest model. If this isn’t centralization of technology, what is?

Many have compared the current nascent blockchain and cryptocurrency industry to the dot com bubble which lasted around five years. Bubble or not, we are still in year one at the moment and there is a lot further to go, especially if consumers have the desire to move away from centralized monopolies like Apple, Google, Facebook et al.


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Bitcoin Is “Epidemic of Enthusiasm” Says Nobel Prize Winner Robert Shiller

Beyond economics, Bitcoin (BTC) is a “social movement” that runs along “generational and geographic” lines, Nobel economics prize winner Robert Shiller told Bloomberg Tuesday, June 26.

Shiller, who currently serves as Sterling Professor of Economics at Yale, said that the clear demographics of Bitcoin suggest its popularity is not reducible to “a rational response to new information”:

“The East Coast is less into it than the West Coast. Silicon Valley is really into it… It’s a social movement. It’s an epidemic of enthusiasm. It is a speculative bubble. That doesn’t mean that it will go to zero.”

While recognizing that there is some “impressive cryptographic theory” coming from computer scientists in the emerging crypto industry, he argued that crypto innovations are drawing disproportionate attention, largely due to “investor excitement” at “getting rich quick”:

“Do you know what’s going on inside your laptop? There are millions of interesting stories about brilliant engineering devices… but we don’t hear about them. That’s because they’re not part of a bubble.”

The “bubble” status of cryptocurrencies, according to Shiller, doesn’t compromise their ability to recover multiple times, even when the bubble temporarily bursts.

Referring to Bitcoin’s 87% decline in November 2013 – and more broadly, to its infamous ups and downs ever since – Shiller sardonically quipped that “tulips are still valued, there are some expensive tulips.”

Shiller therefore suggested that Bitcoin’s cachet as a “remarkable social phenomenon” leaves ample room for its future resilience, whatever a comparison with historical speculative bubbles may seem to imply.

Bitcoin indeed continues to enjoy its “afterlife” in the wake of detractors repeatedly proclaiming the ‘death’ of Bitcoin and of cryptocurrencies in general.

Meanwhile, a fine grained demographic analysis of the cryptocurrency user base that would convincingly confirm or refute Shiller’s intuitions as to the social determination of the crypto sphere remains to be undertaken.

Two surveys by Finder and LENDEDU into cryptocurrencies in the US have seemingly pointed to a higher proportion of crypto owners among so-called “Millennials” and “Generation X.” Notably, however, neither survey appears to have weighted its sample to ensure the findings would be representative and accurate if scaled.

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Mike Butcher of TechCrunch: It Is up to the Industry to Get Its Own House in Order

This interview has been edited and condensed.

Mike Butcher, an editor-at-large of TechCrunch is a pioneer of the tech and journalism industries. He has also started covering the crypto industry and blockchain technology, as — in his words — “that is effectively going to be a new way to the future.”

He first heard about crypto back in 2011 and it was ‘Bitcoin that got [him] interested’ in the space.’

“I think it is sort of a general theme — decentralization. It is really fascinating, you know. We had Google, Apple, Facebook, Twitter, Amazon, effectively build centralized networks for the last 25 years of development of the internet and what we are doing now is we are looking for [the] decentralized players of the future. I mean, the fascinating ideas: for instance, you can create the decentralized Uber, which will be an incredible kind of move. And the exciting thing about it is how we will have brand new actors. There is more collaboration between all of these projects than in previous systems, so that is why it is so amazing.”

Catherine Ross: Does the crypto space really resemble the beginning of the tech market? There’s been a lot of comparison to the ‘dotcom’ bubble.’

Mike Butcher: Yeah, it is very similar to previous bubbles in many ways. What is different about this one is the amount of money that is in the space. Previously, in sort of mid-nineties [sic], in order to be able to work in the internet space, you had to raise proper, real money. And that was a different kind of era. But now, the money is effectively built into the bubble. And so that is why it is so fascinating and potentially dangerous for some people, given that there is such a lack of sophistication amongst people who want to be involved in this space — whether or not the’re investors or the people who want to be involved in the ICOs.

CR: Do you think the crypto industry is similar to the derivatives market?

MB: Well, there are some parallels out there.

CR: And do you think [crypto] will have the same fate?

MB: Well, I mean if you look at what is going to happen in the next year or so, crypto assets will probably eventually be regulated, like other kinds of assets — to some extent — depending on what they are. You’ve got some big players like Goldman Sachs becoming involved, launching their own [cryptocurrency] trading desk*. So, that is clearly going to happen, and you have got some sovereign funds becoming involved as well. I think that there’s the legitimacy coming, it is not there quite yet in some places. But it makes a lot of sense, if you think about it. You know, even [science fiction] writers have been talking about the idea of having global currencies, which are not the fiat currencies. We already have credit in things like Star Trek and Star Wars. So it is clearly the idea that the time has come.

Mike Butcher

Mike Butcher at BlockShow, Berlin 2018

In his speech at BlockShow in Berlin entitled ‘Disinformation Can Kill Crypto,’ Mike stressed the importance of creating the ‘trust’ toward the industry or “the public will return to centralized systems.”

CR: You talked about the danger of disinformation in the space, mentioning that it’s very important to build content platforms that people can trust. How do we achieve that?

MB: Well, I mean the way that the traditional financial media operates is that there is a separation of powers: between journalists who write content, news and advertising and commercial people. And they don’t talk to each other, right?

CR: Right!

MB: So, in fact, they are not allowed to talk to each other. And if they do talk to each other, that is a conflict of interests. The people who advertise on the website go through the commercial people by advertising, and they speak to the clients. When you write the content, you should not be talking to those people. You should be actually writing about what is going on, and then you are paid by the media organization. That is how journalism has evolved over the last two hundred years or so, roughly. And if the media outlet is abiding by those rules, the separation of powers between the advertising and editorials, and if journalists are not being paid to write about the companies, and if they are being paid generally as a salary to write about what the news is, then that is ok. But if there is any change in that, if journalists are being paid to write specific stories, then that is not allowed, that is wrong.

CR: That is not journalism.

MB: That is not journalism! And right, so, don’t read those guys! So, just don’t read them. I’ve been shown [that] you guys are abiding by those rules. And so the market is always in the crypto moving [sic] every day, it is kind of [a] pretty crazy world out there. And it is up to those journalists that bad actors don’t get any promotion. And, like I said, there is independence out there. One part of the problem, of course, is that journalists are not just a part of the media space anymore, you have all these Telegram groups, you have got all these WhatsApp groups, you have got online boards, or whatever it is, messaging services. That is where a lot of the problems develop. But I do think that the part of my talk [at Blockshow] was that if we do not pay attention to this, then decentralization and the blockchain technology will not be trusted. It won’t ever go mainstream because it will not be trusted by anybody. And so it is everybody’s job in the industry to promote good media, media that actually has the separation of powers in between advertising and editorial and that is independent. It is our job to do that and de-emphasize and detune the bad actors in the space.

CR: So what you mean is that you can read medium and any other blog articles, but you need to be very cautious about making an investment decision.

MB: Absolutely! I mean that is always out there, isn’t it? Checks and balances, always do your research. Even the most sophisticated investors today find it difficult to understand what is going on. And many of them are extremely cautious. Actually, they operate much more [cautiously] than the average person. So, and I think what’s going to happen is that, if more problems continue to happen, then regulators will come in, then there actually will be some heavy-handing regulation and some of the more innovating aspects of what has happened in the last few years might be stamped on, you know, it might change. So, it is up to the industry to get its own house in order.

Mike Butcher

Mike Butcher at BlockShow, Berlin 2018

CR: You have obviously visited a lot of events and have met a lot of people from the [crypto] industry. Is the crypto community somehow different from others?

MB: It depends. I mean, if you take blockchain projects, they remind me of early internet space with developers coming up with the fascinating new ideas, and you have got that sort of people much more involved in the crypto [industry]. As a currency side of things, it is sort of different from the traditional services. It’s a startup space where you have got, you know, the entrepreneur and the venture capitalist. But the two are merging. If you think about six months ago or a year ago, the ICO space took place really quickly.

CR: Indeed.

MB: Everyone was actually quite blindsided by how quickly it took off. Now what’s going on with private sales, private ICOs is that you have got more traditional investors becoming involved at the earliest phases of an ICO and a private sale. And actually sometimes even [a] public ICO is being cancelled. Or the public sale is changed in sort of different order, sort of [a] 50/50 relationship later on with the public sale.

If you want to build something, and if you want to be an entrepreneur, you don’t just make money from the ICO, […] you go build it.

MB: What you do is you bring another partner to help you build it. People who have networks and relationships you don’t have as an entrepreneur. And it does require professional investors, because they have the contacts, they have the know how, the knowledge. They have the partnership relationships and they have the experience about how to scale the company. All the staff [are] familiar with the start up space. So the worlds are gradually starting to merge.

CR: You’ve visited quite a lot crypto events recently. What is the best way to benefit from one?

MB: It is always the same — as at any conference. Just learn how to network, learn how to introduce yourself well. I mean, the best way to do these things is just to introduce yourself, but talk about the issues [that], you know, display your knowledge. As soon as somebody starts pitching you, well, it is kind of discouraging. I think it is more interesting to have a conversation first. Show up how clever you are first.

CR: Great advice. Thank you, Mike! And thanks for being here with us!

MB: My pleasure!

*On January 24, 2018 Lloyd Blankfein, Goldman Sachs CEO, told CNBC that the company has no plans to launch its own cryptocurrency trading desk.