Comedian John Oliver rightly warned his audience about the risks of cryptocurrency, but his comparisons to Beanie Babies and gambling missed the mark.
Archives for March 12, 2018
Thomson Reuters has teamed with MarketPsych Data LLC, a provider of quantitative behavioral economics, to launch a new version of its MarketPsych Indices for cryptocurrencies like bitcoin. The new version offers Thomson Reuters’ first sentiment data feed for bitcoin, along with new and/or enhanced market sentiment data for several asset classes, new user capabilities and
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Crypto developers are increasingly using a novel method to market coins and encourage mass crypto adoption: “airdropping” cryptocurrencies into people’s wallets. Airdropping is done by developers of newly minted cryptocurrencies who decide to give these new coins — for free — to holders of an existing cryptocurrencies.
Just a few weeks ago holders of NEO were selected to receive another crypto coin called Ontology. Others, including the developers behind Everipedia and a smart-contract system called United Bitcoin, are also planning airdrops.
In order to implement an airdrop, the maker of a new coin can offer all of the holders of one cryptocurrency, like NEO, a chance to receive the up-and-coming token for free. The coin isn’t automatically distributed (usually), but users can opt in to participate in the airdrop.
“In certain ways people are getting free lottery tickets,” said Matthew Roszak, chairman of the blockchain advocacy group Chamber of Digital Commerce. “There will be a tsunami of airdrops this year,” he adds.
Given the volatility of many cryptocurrencies, and the fact that developers are, of course, out to make a profit, readers may by scratching their heads: what can airdropping actually bring to the table? To set the record straight, let’s have a look at some of the benefits airdrops can provide.
According to Rosza, digital coin developers are using the airdrop method to promote new projects instead of “spending money on billboards and T-shirts.” The aforementioned Ontology airdrop said it would distribute 20 million coins — or about 10% of total tokens — to NEO holders (both coins are distributed by China-based OnChain). For every NEO coin, investors are set to receive 0.2 Ontology tokens.
“We’re seeing it through digital token sales and smaller start-ups that are trying to get traction right away,” said Shone Anstey, executive chairman, president and co-founder of Blockchain Intelligence Group. The overall trend of being able to get new digital coins for free through public blockchains “shows the great utility of the public networks,” Anstey added.
“I think we’ll see airdrops as an increasingly sophisticated approach to customer acquisition,” said Spencer Bogart, partner at San Francisco-based Blockchain Capital. “Slipping money into someone’s pocket is a powerful way to get their attention,” Bogart said, adding that the airdrop process could spur mass adoption of a new cryptocurrency better than an initial coin offering (ICO).
Although ICOs have been able to catapult many start-ups forward, they are not always successful: about half of the ICOs issued in 2017 have failed already.
“When you give something to someone for free they will pay a little more attention than if you ask them to sign up,” said Erik Voorhees, CEO of ShapeShift, a platform for trading digital tokens. “Imagine if Walmart could put some kind of asset into everyone’s bank account in the U.S.”
On the other hand, some analysts are skeptical that the airdrop trend helps boost adoption and public awareness. According to William Mougayar, blockchain investor and author of The Business Blockchain, airdrops are being misused and abused, to the point where they are starting to lose their intended effect:
“The more scammy and over-promoted ICOs will tend to send airdrops liberally without a proper user opt-in authorization,” Mougayar said. “Sadly, airdrops are the new spam mail or coupons junk mail. They are hit and miss on benefits.”
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A central bank-issued digital currency could fuel faster bank runs during periods of financial stability, the BIS said Monday.
The Lightning Network (LN) notched another historic achievement over the weekend, as the LN mainnet reached 1,000 active nodes for the first time in its short history. Lightning Network Mainnet Reaches 1,000 Active Nodes That’s despite the fact that this nascent second-layer technology, thought by many to be a solution to Bitcoin’s scaling dilemma, remains
In a six-page letter to the Dutch senate and house, Finance Minister Wopke Hoekstra has outlined his concerns over the rapid and dramatic growth in cryptocurrencies.
Hoekstra emphasized that there has been little time to understand and react to the changing landscape and that the current supervision and regulatory framework is ill equipped to deal with it. Because of the cross-border nature of the technology and markets, closing those gaps requires a unified approach across governments and borders. The minister will actively be working in a European context, but the entire process will take time and coordination between disparate governments and agencies.
Like most other policy makers, Hoekstra sees the value in promoting and developing the technology behind cryptocurrency, such as cryptography and distributed ledger technology. However, in addition to the concern over fraud and hacking, the minister also expressed concern over the immature and unregulated nature of the market and how to better inform consumers of the potential risks.
Hoekstra described the following as starting points in his assessment of possible policies and regulations to control the risks associated with cryptocurrencies:
- Gaps in consumer and investor protection must be true need to be closed, but measures must be proportionate.
- The integrity of the financial system must be guaranteed.
- The innovative technique behind cryptocurrency must be preserved, such as cryptography and distributed ledger technology (DLT).
- The cross-border nature of cryptocurrencies requires one approach at the international level. National rules can simply be circumvented or difficult to maintain.
The minister further said that given the decentralized and cross-border nature of cryptocurrencies, a ban is not feasible, so it was more important to bring cryptocurrencies under the appropriate regulatory framework and the Dutch join with the French and German finance ministers to discuss cryptocurrency in the G20 context. The Netherlands wants to play a leading role in the European and international approach to cryptocurrency.
In further comments, Hoekstra stated, “I hope the usual process for the realization of legislation and regulations that these new rules can enter into force at the end of 2019. I foresee the changes to the [European Union] Fourth Anti-Money Laundering Directive will also contribute to the prevention of tax evasion.” This directive, which took effect in June 2017, lays out the most recent parameters and standards adopted by the EU to prevent money-laundering and terrorist funding.
He sees the change as helping to prevent the use of cryptocurrency for the purposes of tax evasion as well. While this letter is not policy, it does reflect the direction that The Netherlands, Europe and much of the world appear to be headed in.
This article originally appeared on Bitcoin Magazine.
South Korea’s ban on initial coin offerings (ICOs) could be relaxed in the months ahead, according to a new report.
A recent survey has shown that cash is only six percent down on debit cards as people’s prefered payment method. A lot of it has to do with its simplicity as well as security.
As of late, the Indian government has expressed keen interest in developing countrywide blockchain initiatives, but top officials are not too fond of cryptocurrencies themselves. Moving ahead, the country has been weighing its options, but some, like Shaktikanta Das, who heads a financial commission tasked with looking at cryptocurrencies and other financial matters, are asserting that regulation is too difficult to implement and properly enforce.
In early February, finance minister Arun Jaitley stated in his budget speech that the Indian government “does not recognize cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system.”
So far, only two committees in the finance ministry have actually tried to understand and recommend regulations for cryptocurrencies. The first committee, set up in April 2017 under Shaktikanta Das, who at the time was secretary of economic affairs, was dead-set against allowing cryptocurrencies in India from the start. The second panel, headed by Subhash Garg, the current secretary of economic affairs, is still weighing its options.
This seeming aversion to cryptocurrencies began several years back in 2013, when India’s central bank, the Reserve Bank of India (RBI), cautioned users against potential security threats. But these warnings, paired with the warnings from the finance ministry, have so far failed to deter many Indian investors.
Das is currently a member of the 15th finance commission that has been tasked with reviewing the government’s financial situation. He still maintains the belief that enforcing regulations would be a tough task:
“Let us accept that it would not be possible to regulate it effectively. Because they will do transactions from their houses. You cannot enter every home to check what transactions are going on. So, I think this is a serious challenge, and this should not be allowed at all.”
Das’ opinion matters because he has held several key positions in the finance ministry, heading the departments of revenue and economic affairs. He has also been a board member of the Securities and Exchange Board of India and the RBI, both of which are involved in drafting cryptocurrency regulations.
The big issue with cryptocurrencies, according to Das, is that they have no asset base: “[Fiat] currencies have the guarantee of the RBI, on behalf of the sovereign. That is the underlying guarantee for that. Share of a company—you have an underlying asset of the company. In cryptocurrencies, what is the asset base? It is created out of vacuum, it is created out of thin air.”
Some Asian countries, in particular, China, share India’s apprehensions. Japan, in contrast, passed a law in March 2017 allowing digital currency payments and declaring them assets, and since then have been making attempts at regulation. South Korean officials have also promised not to clamp-down on crypto.
Because of these attitudes, according to Anirudh Rastogi, managing partner at New Delhi-based law firm TRA, it may not be practical for India to write off cryptocurrencies completely:
“That would work very well if the global financial community was moving that way, but since it is not, and, if you want to be an outlier in that regard, it is going to have an adverse impact on your [India’s] financial system,” Rastogi said. “If two or three of the largest economies are giving it legitimacy, one needs to take a hard look at it before you take a drastic step.”
Moreover, measures to curb cryptocurrencies could instead encourage illegitimate transactions:
“You will just drive these transactions from otherwise compliant exchanges, which keep records, and basically drive them underground, making it very difficult to keep track of transactions,” Rastogi said. “It would be very difficult to enforce a ban, and that is one of the reasons why various jurisdictions have kept away…but have rather regulated cryptocurrencies,” he added.
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