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Crypto is Taking Over the World, Bubbles are Normal; Shapeshift CEO Says to Blomberg

Crypto is making its way into the world of finance, slowly taking over an important part of the global markets. The recent Bitcoin (“BTC”) Bullrun seems to have attracted a substantial amount of fresh investors and this new wave of enthusiasm is very beneficial for the expansion of the ecosystem. This impression was shared by Erik Voorhees, CEO of Shapeshift in an interview for Bloomberg.

The well-known businessman and bitcoin bull said that not
only financial experts believe that the bearish season passed; from his point
of view, common traders also share this opinion and are venturing into the
world of crypto, albeit more cautiously:

“We’ve seen four or five of these bubbles at this point, so a lot of this is just cyclical. People wait until they feel the bottom is in and when they feel like the bear market Is over then they feel comfortable moving back into crypto. That´s probably the biggest reason why this is happening but often these things are just a confluence of many individuals making their own decisions”

Voorhees explained that bubbles are part of the typical behavior of an asset such as Bitcoin which is growing and settling in the industry. The experienced businessman explained that he is sure that cryptocurrencies are taking over the world. An opinion that has been shared by other investors such as Tim Draper and Mike Novogratz

Crypto is a Volatile and Heterogeneous Ecosystem

 “There have to be bubbles in crypto because crypto is taking over the world and it’s not just going to advance 5% a month without end” Said Mr Voorhees while calmly explaining why bubbles tend to be cyclical in crypto “There’s no way to go from a zero dollar asset onto one that is worth trillions without mass speculation and massive volatility we see in cyclical bubbles”

This graph shows the stages of a bubble. It seems very similar to the performance of the crypto markets
This graph shows the stages of a bubble. It seems very similar to the performance of the crypto markets

Voorhees also commented that there are already practical
cases for Bitcoin in various parts of the world but that most of those who use
it do so for speculative purposes. Finally, he explained that there are still
very few assets that can really affect the ecosystem since the gap in the
global marketcap is still too high:

 “In crypto you have to understand that even though there are thousand of these assets, it’s a very long tail and only the (first) ten or 20 have any importance at all and then there’s a lot that don’t really matter much, and they don’t really move the market”

The post Crypto is Taking Over the World, Bubbles are Normal; Shapeshift CEO Says to Blomberg appeared first on Ethereum World News.

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ShapeShift’s Voorhees: Bitcoin Won’t Become Trillion-Dollar Asset Without More Bubbles

The instant convertor’s CEO told Bloomberg that current volatility is an essential part of crypto’s metamorphosis.

The CEO of instant cryptocurrency exchange platform ShapeShift told Bloomberg TV on May 15 that bubbles are an essential part of the industry’s growth.

Speaking in an interview, Erik Voorhees argued that the volatility seen in bitcoin (BTC) and altcoin markets over the years is a necessary phenomenon for a nascent asset.

“There have to be bubbles in crypto because crypto is taking over the world, and it’s not just going to advance 5% per month without end,” he told the network. He then added:

“If it did that, people would start buying it up and frontrunning it and turning it into a bubble.”

Voorhees, whose firm offers trading wholly within the cryptocurrency realm and does not involve fiat currency conversion for users, was speaking as bitcoin set its highest price in over a year.

As Cointelegraph reported, a slow bull market which began early April gathered speed this month, with BTC/USD advancing over $8,000 to cap monthly gains of over 60%.

Voorhees did not identify a specific reason for the newfound market optimism, arguing the rise was due to mass individual trader activity.

“There’s no way to go from a zero-dollar asset into one that is worth trillions without massive speculation and massive volatility and cyclical bubbles,” he continued.

ShapeShift suffered at the hands of increasing regulatory scrutiny over the past year, Cointelegraph reporting on a sharp rise in law enforcement requests to the company.

The 2018 cryptocurrency bear market also took its toll on performance, ShapeShift making roughly one third of its staff redundant in January.

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Nouriel Roubini at Salt Conference in NY: Crypto Is the Mother and Father of All Bubbles

Economist and notorious cryptocurrency critic Nouriel Roubini said that “cryptos is the mother and father of all bubbles.”

Economist and notorious cryptocurrency critic Nouriel Roubini said that “cryptos is the mother and father of all bubbles” at the Salt conference in New York. CNBC reported on Roubini’s declarations on May 9.

During the conference, Roubini also reportedly said that bitcoin (BTC) and other crypto assets should not be called cryptocurrencies. According to him, “cryptocurrency is totally a misnomer” since “to be a currency, you have to be a unit of account, valuable and a scalable means of payment.”

Roubini also addressed bitcoin’s scalability, stating that while credit cards are capable of thousands of transactions per second, bitcoin’s network can only manage seven. He also claimed to have never witnessed a level of manipulation comparable to what is currently reported by the cryptocurrency market.

CEO of crypto bank Galaxy Digital and former Goldman Sachs partner, Michael Novogratz disagreed, and pointed out bitcoin’s price recovery after 2018’s collapse. He concluded:

“The debate is over, bitcoin won. It is now seen by people all around the world as a legitimate place to [store] their value.”

As Cointelegraph previously reported, Nouriel Roubini stated that blockchain is “no better than an Excel spreadsheet” during a panel in January.

On the other hand, in February, Novogratz argued that bitcoin occupies a unique place in the cryptocurrency landscape, stating that it “is going to be digital gold, a place where you have sovereign money.”

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The Burst of the Bitcoin Bubble: An Autopsy

An analysis of the bitcoin price movements from a leading Italian economist.

Marcello Minenna is the director of the quantitative analysis and financial innovation unit in Consob (Italian Companies and Exchange Commission), —Italian government’s authority responsible for regulating the Italian securities market — as well as an adjunct professor of stochastic finance at the London Graduate School of Mathematical Finance and at Luigi Bocconi University of Milan. He is an economic and financial columnist featured on leading Italian and international publications.

Sixteen months after from a peak value of $19,100, bitcoin is now hovering around $5,000. Despite its wide distance from the historical maximum, today’s price is good news for the market, as the recent rise could be the end of the collapse produced by the violent explosion of the digital currency bubble in 2018. From December 2017, the price of every digital asset has fallen, on average, 80%; for bitcoin, it has been the second collapse ever recorded, a violent fall even for an unconventional asset that has historically shown very marked boom-and-bust cycles. In 2011, the price declined by 93% — to $2 from a maximum of $39 — while in 2013, in just a few weeks, the price exploded to $1,151 to decline later to $177 over a 12-month period.

It is not certain that, this time, the bottom has been touched, despite the encouraging developments of the last weeks: Historically, the phase of rapid decline is followed by a stagnation of the price that can even last years, named in jargon as a “crypto winter.”

In the context of a widespread speculative bubble that the so-called “altcoins” have turned out to be, apart from any technical evaluation, simple variants more volatile and less liquid than bitcoin, almost perfectly correlated with each other. This feature made any attempt to diversify the risk between different crypto-assets futile.

BTC and ETH Price Behavior

1-year Rolling Correlation

Among altcoins, a specific mention should go to Ethereum; this is the digital currency classified as second in terms of capitalization that has been exploited as a technical platform for the proliferation of the initial coin offerings (ICOs). These ICOs have been exploited to cover real public purchase offers by collecting financial resources sheltered from regulators and by financing dubiously weak or shady projects. Most of these initiatives have invariably destroyed economic resources or turned out to be real scams in which investors’ defensive capabilities were substantially nullified.

Ex-post, the price pattern during the bitcoin bubble closely followed the asymmetric behavior of its historical cousins, starting with the Tulipan bubble of 1637, passing through that of the South Sea Company up to the most recent burst of the dot-com bubble of 1999-2000.

After a phase of moderate rise, a very rapid manic phase of vertical price growth of about nine months followed, with a final buying hysteria in December 2017 — the month in which the price more than doubled, starting from an already very high base. The summit was touched with a classic “double peak” in January 2018, synchronized — not surprisingly — with the achievement of the maxima on global stock markets and with the peak of liquidity released into the global economy by the main central banks. Since then, the price of bitcoin has had an almost uninterrupted decline, with very rapid collapses, and shorter and less convincing recoveries, with descending relative maxima.

What is the floor of this incredible descent?

On the subject, we must consider that bitcoin, its clones and the rest of the digital currencies do not have their own intrinsic value. Prices are simply determined by the intersection of demand and supply on individual exchange markets; these are often highly illiquid prices, differing from each other by hundreds of euros without effective arbitrage between the various markets due to the structural limits of bitcoin and settlement platforms. Therefore, it is very difficult to think of determining what the fair value could be.

Often for traders operating on these markets, the technical analysis is the only tool for interpreting price movements. This paradoxically means that the price dynamic, determined by the collective actions of the traders, sometimes follows the forecasting patterns of the technical analysis.

Under this overall picture, it is worth trying to isolate the main drivers of the rise and fall of bitcoin and other altcoins. The role played by the stablecoin tether has been predominant in the phase of the rapid price increase between March and December 2017.

A stablecoin is a digital currency anchored with a fixed exchange rate to a fiat currency traded on the forex market, such as the dollar or the euro. Its existence is justified by the fact that, at present, the conversion between fiat and digital currencies is still slow and cumbersome, given that it requires a funds transfer from traditional banks to crypto exchanges via cross-border banks’ payment systems, whose settlement may require several days.

The conversion between digital currencies is instead instantaneous and allows traders to protect themselves by using stablecoins from the very high volatility of bitcoin’s and altcoins’ prices. Of course, 1 tether is not equivalent to $1 because it cannot be freely converted, although the company itself has always declared to hold a reserve of dollars corresponding to the quantity of tether issued and circulating on the exchanges. However, for traders, tether performs the same function of the dollar, so it is irrelevant whether there is or is not full or partial convertibility.

In April 2019, there are at least eight different stablecoins on the market offering the same tether service, but in 2017, tether substantially managed a monopoly that heavily influenced the price trend on the various exchanges, as evidenced by a statistical analysis made by the University of Austin, Texas. What’s happened has a lot to do with the fact that the company that issued tether was de facto controlled by the largest crypto exchange in Asia, Bitfinex.

BTC Price and Techer Capitallization

Rolling Correlation

By examining the data (see Figures above) we can observe how the price behavior of bitcoin (and of the other altcoins) in the “pump” phase of the bubble is perfectly correlated with the issuing of new tether on the exchanges. As the aforementioned research shows, it is statistically probable that the Bitfinex exchange has artificially fueled the manic buying of digital currencies through the issuing of increasing amounts of tether. In a phase of exponential price rise, the issuing of tether without adequate coverage in dollars is a profitable strategy. In fact, speculators could buy digital currencies with newly minted tether, counting on being able to resell them at a higher price later and replenish the dollar reserves. The signal of strong price increases in increasingly accelerated times contributed to the growth of the media hype on digital currencies, which attracted retail investors with little experience in digital assets, often unaware of the enormous risks related to the terminal phase of a speculative bubble.

The long price contraction, perhaps not yet completed despite the recent recovery in prices, was caused by two main factors operating in two distinct time phases. Between January and April 2018, the decline was demand-driven and therefore determined by the flight of frightened speculative investors, highly exposed to losses due to the purchases made at very high prices. In this classic panic-selling, it can be noted that the support of a growing issue of tether was also lacking on the exchanges. In fact, since February, the growth of tether in circulation has slowed down and flattened out; this is indicative of the fact that, in a declining market, the strategy of issuing uncovered tether was no longer profitable.

In June 2018, the price apparently found a floor at around $6,000, a level still over 10 times greater than the price that bitcoin had at the beginning of 2017. At this point, the majority of speculative investors has already disappeared, and the volatility of digital currencies was drastically reduced as trades gradually became thinner (see figure below). Many analysts believed that, at this stage, $6,000 was the minimum level necessary to offset the energy costs of the miners that were digitally “coining” the new crypto assets. Until then, the need of a widening population of miners to catch cover rising production costs was a force that supported the price growth of digital assets.

1 year Rolling

However, this fragile balance did not hold. In November 2018, the announcement of another hard fork between digital currencies that aimed to coin a new bitcoin clone without substantial innovations caused a price earthquake that broke the fragile equilibrium achieved. In this deteriorating framework, the determining factor of the price decline seemed to be offer-driven and related to the digital currencies mining community. In fact, a substantial share of miners abruptly shifted its computing power (or hash rate) from bitcoin toward clone-currencies in the hope to reap risk-free profits from the blockchain fork, as already happened several times in the ascending phase of the bubble.

But at the end of 2018, things were changing: The anomalous shift in computing power took away support for bitcoin and dragged the price of digital assets in a downward spiral, including the clone currencies on which the miners had heavily invested. As a consequence, a part of the miners, which was already operating at a loss before this downturn, has been thrown out of the market, causing — for the first time ever — a decline of the overall computing power of the bitcoin network, which collapsed by 50% in just a few weeks (see figure below). In this short period of time, bitcoin and the altcoins went in a free-fall never experienced in the demand-driven phase of the bursting of the bubble, suffering losses in the order of 70%.

BTC

In 2019, the “Darwinian selection” of miners seems to have stopped, as testified by the recovery of the overall network hash rate — albeit at a more moderate rate. The bitcoin protocol provides an automatic mechanism of autoregulation such that the cost of currency’s mining tends to fall in the face of a decline in the network computing power. This periodic adjustment allows marginal operators to return to the market at lower costs.

In the early months of the year, cryptocurrencies slowly regained value, but the real surprise came on April 2, when, in just one hour, bitcoin spiked by almost $1,000, surpassing $5,000 — a new resistance that has basically held up over the weeks since.

It is not clear what the reason for this jump was (perhaps an algorithmically generated order or a liquidity squeeze connected to bitcoin derivatives followed by a forced buy-in on market makers’ quotes). After all, recently, various analysts had forecast a surge in the short term, and knowing the trigger event matters little. The real question is whether the market is heading back into bull mode. Multiple factors support an affirmative answer: the gradual recovery of the market capitalization of some stablecoins — tether first (see figure below) — the wear of the resources available to the bears, the albeit moderate return of various central banks to an accommodating monetary policy and the uncertainty linked to relevant phenomena on a global scale (the Libyan crisis, trade tensions, the Brexit conundrum and forthcoming European Union elections) that increases the appeal of digital currencies.

btc

2019 could prove to be a new starting point for digital currencies, given the slow recovery of investors’ interest. Investments in technological innovation and infrastructure have never stopped, and the interests of institutional investors go beyond the short-term speculative frenzy. Regulators are also gradually intervening in the reorganization of these frontier markets. The crypto winter may be less long than expected.

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‘Dr. Doom’ Roubini Doubles Down On Bitcoin (BTC) Bubble Quip

Bitcoin Still The Father (and Mother) of Market Bubbles

The recent crypto market has only imbued long-time Bitcoin cynic, economist Nouriel Roubini, with more strength. In a recent interview, the Stern School at New York University professor, also known as Dr. Doom due to his relentless cynicism towards certain markets, explained this subject matter.

He explained that from his standpoint, the “while crypto space is one of [those] asset [classes] that are not really money.” Backing his call, he went on to bash cryptocurrencies as a whole, noting that they are neither a currency/viable medium of exchange or a proper store of value. Although some would beg to differ, especially with the supply cap of Bitcoin and the impending Lightning Network, Roubini added that as BTC fell from $20,000 and $2,000, he’s still sure the cryptocurrency is the “mother and father of all bubbles.” Dr. Doom added that the fact that many asking for his advice on Bitcoin “did not even appreciate the difference between stocks and bonds or types of markets, or the basics of credit and interest rates” was an evident red flag that something was amok.

Thus, the New York-based economist concluded that investing in cryptocurrencies and Bitcoin is much like gambling or overtrading a fad.

Roubini Also Waving Legacy Market Red Flags

In the same interview, Roubini also touched on the fact that by some measures, the legacy market could be entering a precarious territory. The economist noted that while it is unlikely that a global recession is inbound, current macroeconomy conditions could be considered “mediocre,” as the world may enter into a phase of ” synchronized slowdown.” He added that nations in the European Union may start to “sputter towards something weaker than their level of potential economic growth,” presumably touching on the tumult that the eurozone has gone through with Brexit, the Yellow Vest movement, and other societal imbroglios.

He added that “excessive debt” is present in the corporate world. Interestingly, he noted that as long as the economy continues to grow at a steady rate, the build-up in debt could be justified. Yet, he made it clear that if there is a further slowdown, the levels of corporate debt could enter a “danger zone,” along with household debt across the U.S. and abroad.

Funnily enough, some argue that this, or a downturn in traditional markets due to high levels of debt to be more specific, could be good for cryptocurrencies, namely Bitcoin. Travis Kling, the chief investment officer of Ikigai, has explained on multiple occasions that BTC is a perfect hedge against irresponsible monetary practices, arguably exemplified in the swelling levels of debt the world over. Per previous reports from Ethereum World News, Kling, a former portfolio manager at Steven Cohen’s Point72 Asset Management, noted that the monumental rise of employed quantitative easing (QE) strategies is “how you would write the script” for the adoption of cryptocurrencies, especially ones that tout a decentralized nature.

Photo by Dawid Zawiła on Unsplash

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Better Than Corporations: Layoffs in Crypto Are On the Rise, Still Lower Than in Other Industries

Job cuts have become a reality in the crypto industry – but they pale in comparison to the biggest corporate layoffs in history.

Since Bitcoin hit its all-time high of $20,000, the dominant cryptocurrency has seen more than an 80 percent decline in value from that historic milestone over the past 12 months.

The popularity of Satoshi Nakamoto’s Bitcoin pioneered the way for other projects to explore the possibilities of blockchain technology. The brightest minds pushed the boundaries, which gave birth to Ethereum, Ripple and other projects that have provided new and unique use cases for distributed ledger technology (DLT).

Their success set the bar high, but that also led the way for a swathe of projects being launched which sought funding from initial coin offerings (ICO). Not unlike the dot-com bubble of the 1990s, hundreds of millions of dollars were raised by projects with half-baked ideas, and now it seems as though the hens have come home to roost.

According to a report published in July 2018, over 1,000 ICOs had been declared ‘dead’ while bigger projects began to slim down their operations to ensure they remain cost-effective and profitable.

Tightening the belt

Over the last two months, a couple of businesses have announced that they would be streamlining their operations.

At the beginning of December, a blockchain software startup and incubator ConsenSys headed up by Ethereum co-founder Joseph Lubin, announced plans to restructure its business.

Lubin revealed the plans in a letter to the staff of the company, calling the new chapter in the company ‘Consensys 2.0.’ It reportedly entails a more revenue-driven approach.

“We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are. We now find ourselves occupying a very competitive universe […] to ‘succeed wildly’ […] we must recognize that what got us here will probably not get us there, wherever ‘there’ is.”

Given that ConsenSys invests and helps startups building applications on the Ethereum blockchain, Lubin also made it clear that the company would become far more rigorous with projects under their care and wouldn’t hesitate to dissolve projects that may have looked promising at their inception.

As far as staff cuts go, ConsenSys has confirmed that it would reduce its workforce by 13 percent.

As a crypto industry investor Anthony Pompliano summed up in a recent newsletter, Lubin has taken a tough but necessary course action to take control of proceedings in trying times:

“Joe Lubin is a smart, ambitious guy. He has been at the forefront of many technology trends and built one of the most important companies in crypto. While unpleasant, it is encouraging to see him and his team making the hard decisions to put the business in a better position for future growth. Great leaders have to make the tough calls — I’m sure this one wasn’t easy.”

Like Bitcoin, Ethereum has endured a monumental correction from highs above $1,400 in 2017. It is currently trading at around $94.

Cointelegraph has reached out to Consensys for comment but has not received in by the press time.

Worst-case scenarios

While ConsenSys is adopting what Lubin has described as a “lean and gritty startup mindset,” other companies have had to take far more drastic measures to downscale their operations.

Social network Steemit announced at the end of November that it would be laying off over 70 percent of its staff as a direct result of the severe market conditions affecting cryptocurrencies across the board.

The decentralized platform, which runs on the Steem blockchain, has felt the pinch alongside the rest of the industry. Steemit CEO Ned Scott addressed the challenges in a video, citing a decrease in fiat currency returns from STEEM sales, the platform’s native cryptocurrency, as well as the running cost of Steem’s nodes.

In addition to the staff cuts, the company is looking at a number of technical changes in order to further reduce running costs.

The harsh market climate has taken its toll, considering that Steem once had a market capitalization of over $400 million in May 2017.

Blockchain, Bitcoin jobs on the rise

Even in this harsh slump, the outlook seems positive for the space in general. According to a LinkedIn study, blockchain developers are in high demand on the platform, becoming one of the fastest-growing emerging jobs in the United States.

Over the past three years, jobs relating to blockchain, Bitcoin and cryptocurrency have been on the rise on LinkedIn.

Facebook, for one, with its chequered attitude toward cryptocurrencies, listed five openings for blockchain-related jobs on its career portal earlier this month.

These jobs seem to be extremely lucrative, given the spike in interest in the space over the past two years. Blockchain engineers are said to be earning more than $150,000 a year.

Hired’s “State of Salaries” report also noted a 400 percent increase in demand for blockchain engineers by prospective employers since 2017, all despite the bear market that has dominated in 2018.

Crypto layoffs pale in comparison

According to data from Challenger, Gray & Christmas, an outplacement company, November saw an uptick in the amount of looming job cuts in different industries in the U.S.

As a sign of the times, Challenger cited General Motors move to cut 15 percent of its workforce — which equates to around 14,000 jobs — in October, a move that would reportedly save about $6 billion.

The company’s vice president, Andrew Challenger, believes that data collected by Challenger shows that the current economic climate is not helping matters:

“Monthly job cut announcements averaged under 35,000 in all of 2017 and just under 44,000 in 2016. In 2018, cuts are averaging nearly 45,000 per month, with the last four months averaging over 55,000. This upward trend is indicative of a potential economic shift and could spell a downturn.”

In comparison to more significant job cuts around the world, the current slump in the cryptocurrency markets and ensuring job cuts in associated companies seems relatively benign.

In 2015, The Washington Post published an article that took a look at the biggest job cuts in history by some of the biggest corporates around the world, according to data from Challenger.

IBM’s layoffs in 1993 are still ranked as the highest in history, with 60,000 jobs cut. Citigroup, Sears, Roebuck & Co, and the U.S. Army each cut over 50,000 jobs at different stages, but these job cuts put most others in perspective.

An objective view

As previously mentioned, one can draw similar parallels between the rise of internet companies in the 1990s and the rise of cryptocurrency- and blockchain-focused companies from 2010 onward.

Mainstream media headlines have often proclaimed the death of Bitcoin and cryptocurrencies over the past few years.

As an article from the Guardian back in December 2000 summed up, the year the dot-com bubble burst saw around 130 internet companies close their doors, leading to around 8,000 job cuts from internet companies. However, those that survived ended up laying the foundation for the cryptocurrency and blockchain industry we have today.

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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

[embedded content]

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.”

Adoption

Adoption

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.”