Another day, another foreboding piece of analysis. A leading analyst claims that as Bitcoin (BTC) has yet to break out of its current range, there’s a growing potential that the cryptocurrency could fractal, and undergo a drop that looks much like that seen in November of yesteryear.Bitcoin Could Fall Again To New LowsFinancial Survivalism, an up-and-coming analyst centered around Bitcoin, recently took to Twitter to issue a harrowing comment. He noted that the longer than BTC fails to surmount a long-term declining trendline at ~$4,600, the higher likelihood that the cryptocurrency’s price could “mirror the price action from September 20th to November 25th of last year.The longer we stay stuck in this range the more I feel like we will mirror the price action from September 20, 2018 – November 25, 2018. This is what that would look like. $BTC #Bitcoin pic.twitter.com/oaR7VTA4dk— Financial Survivalism (@Sawcruhteez) March 2, 2019Per the analyst, this would mean that BTC could trade flat for another two to three months, before falling dramatically to the $800 price point. This, of course, is a worst-case scenario, but Survivalism does allude to a good point about market cycles and behavioral finance.Interestingly, this isn’t the first time that Survivalism has been overtly bearish. In an array of previous posts, the former insurance agent noted that if BTC is following a Hyperwave trend, which is primarily applied to bubbles like crypto, Dotcom, etc., the asset could eventually revisit where it peaked in the 2014/2015 market cycle. Survivalism argues that this point is around $1,200, but would set the stage for another parabolic rally eventually.Related Reading: Uncertainty About Bitcoin Is Gone, BTC Falling To $1,000 Unlikely: ResearcherStill Bullish On CryptoWhile the analyst seems to be convinced that BTC will establish lower lows in the medium-term, he is still somewhat bullish on both the short and long-term. In his latest market update, posted on TradingView for free, Survivalism drew attention to his favorite set of technical indicators and how they read at current. BTC in relation to CME/CBOE futures currently has a 0.68% spread, while the number of sell-side futures is showing signs of breaking down, potentially in a market-wide short squeeze.The TD sequential, used primarily to track trends, has flipped bullish, as Bitcoin holds above its Ichimoku Cloud. As the Relative Strength Index reads sub-50, BTC remains above its short-term moving averages, and the Stochastic Oscillator just issued weekly and monthly buying signals, Survivalism argued this confirms that there’s a chance that the flagship cryptocurrency could move higher in the short-term.For the long haul, Survivalism seems to be all but convinced that the U.S. economy and macroeconomy will begin to buckle under the weight of its debt and other fiscal shortcomings, potentially setting a stage for the creation of a Bitcoin standard or a system of similar caliber. The full-time trader isn’t the only convinced that a financial revolution is on the horizon. Travis Kling of Steven Cohen’s Point72, for instance, has begun to claim that the Federal Reserve’s enamorment with printing money will likely end in disaster. But as to when that will occur, he was hesitant to say.Featured Image from Shutterstock
Archives for March 3, 2019
CCN spoke to the CEO of MyCrypto, Taylor Monahan, about the recent departure of Ethereum community leader Afri Schoedon. Schoedon played a crucial role in the development of Parity wallet but has now sworn off Ethereum development after a meme made him the subject of targeted harassment.
Polkadot is an Ethereum scaling solution. Schoedon trolled the Ethereum community when he tweeted that Polkadot already does what Ethereum 2.0 wants to do. The backlash was swift, severe, and a bit ridiculous. Schoedon wound up quitting all work on Ethereum, though he’s kept his job at Parity, according to BreakerMag. Monahan says that Schoedon’s specialty, from way back, was helping people understand Ethereum.
“He’s been around since the very, very early days. I actually came into contact with him 2015 on the Ethereum StackExchange, where he was a master at answering all the questions. From there, his involvement on the community side and on the education side has only grown.”
“I’m not sure when, but at some point he became the release manager for Parity, which means that he manages all the releases. He writes the notes for the releases. He works closely with all the node operators, like the exchanges and ourselves, to ensure that we’re up to date. If we have any issues, we have a point of contact through him.”
‘Wait, People Are Blowing Up About This?’
“I missed the escalation of the drama. But someone at EthDenver was like, ‘What do you think of this Afri situation?’ They said he had tweeted something and they showed it to me. I had already seen it and was like ‘wait, people are blowing up about this?’”
Monahan somewhat agrees with the sentiment of the original tweet by Schoedon.
“The thing is, if you’ve been involved in Ethereum since the pre-sale days, or even like 2015-6, the timeline originally was the Serenity hard fork, and 2018/2019, was supposed to be the move to proof-of-stake. Now, obviously, as anyone who deals with developers knows, developers are terrible at timelines.”
She points out that Schoedon never stood out as a leader and was never considered a leader, but when he acted in a way that people didn’t like, they got up in arms about his de facto leadership role.
“I don’t think he ever stood up and said, ‘I’m a leader.’ And I don’t think people ever considered him a leader. But when shit hit the fan, they were like, ‘Leaders shouldn’t do this!’”
About That MyEtherWallet Twitter Handle Controversy
Monahan says that the toxicity in the community is really shameful. Monahan was an example in the open letter from Ethereum people to the community. People took offense when she split MyCrypto away from MyEtherWallet. She explained to CCN that, at the time, she felt she had no choice but to found a new company.
Perhaps her only mistake was taking the MyEtherWallet Twitter handle with her, which infuriated some community members. She tells us that an offensive comment – “would bang though” – was the top-rated comment on a Reddit thread about her when she discovered it.
“It happened for a variety of mostly business reasons. In 2017, the original founder just sort of disappeared. I was paying people out of my own pocket. Talked to a lot of lawyers trying to resolve the situation, and the lawyers said one option was to start a new company. […]”
“I didn’t even have a personal Twitter. I assumed that the co-founder wouldn’t care, so I made a poor choice, and I thought that the people were following @MyEtherWallet would want to continue following the people that were building MyEtherWallet. It turns out that they don’t give a f*ck about me or my team – they want to follow whatever MyEtherWallet is, and so that really upset people.”
She says she understands why people were upset. They reacted by calling her a slew of insults.
Growing Community Probably Means Growing Toxicity
The conversation then veers to the subject of how to fix the situation. Monahan says there are probably no good answers for this. As the community grows, there’s bound to be more trolls and negative personalities entering it. It’s not a small town vibe anymore.
“If we get so caught up in hurting each other and breaking each other down and fighting within our own little chains, it’s not going to help cryptocurrency as a whole progress. […] One of the reasons I was originally attracted to Ethereum was because I never found a place in Bitcoin. I thought it was very dramatic and political. And Ethereum was the exact opposite.”
“It was very welcoming. Very developer focused. It was focused on building things, and being optimistic, and idealistic. Obviously,
as Ethereum has grown, the original community feeling gets lost and the toxicity does become a bigger part. The toxicity, the politics, all of those things.”
Crypto Communities Need to Keep Their Eyes on the Prize
As to solutions? They’re unlikely. Censorship is clearly not an option. While censorship has been used in various Bitcoin forums to steer discussions around the scaling debate, overall, cryptonaughts are against such old-world tools for dealing with “problems.”
“In terms of solutions, I think it’s hard. How do you make people be nice on the internet? Most people would answer that you can’t. It doesn’t work like that. But I think everyone needs to be more mindful of what we’re trying to accomplish and focus on the big picture. Us versus the world, versus centralized banks. Us versus the government. Rather than half of Ethereum versus half of Ethereum or Roger Ver versus everyone.”
In the end, communities crack. Ethereum may not be done with its forks. It’s unknown what will become of all the Ethereum miners when the smart contract godfather goes proof-of-stake. As for politicking and dramatic engagement, it’s probably not over with. We still have tweets like the following on a ridiculous and regular basis:
Why do the BTC, ETH types want a Vitalek and not me (Satoshi as always)?
VB is awkward.
I am threatening.
He is an excuse NOT to work (ICOs etc)
I teach discipline and effort
Proof of doing little
Proof of work
— Dr Craig S Wright (@ProfFaustus) February 25, 2019
Following last week’s increased levels of volatility, Bitcoin (BTC) is now nearing the end of a relatively involatile weekend, and it has further established that it is currently caught in a tight trading range between $3,800 and $3,900.Although the persisting bear market has led the sentiment of crypto investors to near rock bottom, one analyst is now pointing out that if history repeats itself, Bitcoin may surge as high as $300,000 during the next bull run.Analyst: Next Bitcoin Bull Run Could Send BTC to $100k – $340kAt the time of writing, Bitcoin is trading down slightly at its current price of $3,840. Last weekend, BTC experienced some volatility when its price surged to highs of $4,200 before facing increased selling pressure that sent it spiraling down to $3,800, where it found support.Although the magnitude of BTC’s price swings has decreased significantly as the bear market has prolonged, the cryptocurrency’s current price movements may be extremely small as compared to where it is heading in the long-run.Scarface, a popular cryptocurrency trader on Twitter, recently spoke about where Bitcoin’s next potential bull run could take it, presuming history repeats itself.“Each time Bitcoin has crashed 70%+ the following cycle peak has been 5.1-16.89 times higher than the previous. If that happens again then the next all time high will be roughly $102,000 – $336,000.”Each time Bitcoin has crashed 70%+ the following cycle peak has been 5.1-16.89 times higher than the previous.If that happens again then the next all time high will be roughly $102,000 – $336,000.Roll the dice & take the risk – Buy Bitcoin.— $carface (@TraderScarface) March 2, 2019Although there is no guarantee that history will continue to repeat itself, Bitcoin would require a massive influx of funds in order to propel its price to highs of over $300k, as it would then have a market capitalization of over $7 trillion.Increasing Number of Transactions and Trading Volume May Be Bullish Signs for BTCAlthough the prospect of Bitcoin skyrocketing to highs of over $300k may just be an exciting pipe dream, one prominent analyst is now pointing out that the growing number of Bitcoin transactions and trading volume on exchanges may be a positive sign for the cryptocurrency.“What I’ve been watching lately are the number of transactions on the Bitcoin blockchain and the total volumes across crypto exchanges, both of which are holding at their highest levels in more than a year…Even though we’re still officially in a bear market there is plenty of cause for optimism,” explained Mati Greenspan, the senior market analyst at eToro while speaking to Bloomberg.As Bitcoin exits the weekend and enters a new week, analysts and traders alike will be closely watching to see if the crypto garners greater levels of volatility after trading sideways for the past week.Featured image from Shutterstock.
Paying taxes on Bitcoin and other cryptocurrencies is becoming a priority for individuals in the US after the IRS announced on July 2nd, 2018 that one of their core campaigns and focuses for the year is the taxation of virtual currencies.
Because cryptocurrencies are treated as property in the eyes of the law, they are subject to capital gains and losses rules just like stocks, bonds, real estate, and other forms of property.
The challenge with cryptocurrency in regards to taxes is that the data making up your crypto buys, sells, trades, transfers, mining income, forks, splits, air drops, wallet transactions, and other crypto activity is likely scattered across many different platforms and exchanges. This can make the tax calculation and reporting process difficult.
These five tips will help make the crypto tax reporting process easier and allow you to stay in the good graces of the law.
1. Keep a Record of Every Exchange Where You Have Bought or Sold Cryptocurrency
Exchange data is essential in the crypto tax reporting process. Exchanges are likely the places where you originally converted fiat currency into cryptocurrency, and thus your cost basis is originally established here. You should have complete historical data from every exchange that you have used. Most exchanges have an option that allows you to export your complete trading history.
Having this data on hand will make the reporting process easy whether you are doing calculations by hand or with the help of crypto tax software.
2. Maintain Records of Any Crypto That You Received as Income
Cryptocurrency that is received as income is treated differently than crypto trades for tax purposes. It’s important that you have records of income events such as Bitcoin mining payouts, crypto received from a job, or any other form of cryptocurrency received as income. You should keep track of the amount of crypto received as well as the date and time that you received it.
3. Learn How to Calculate Gains and Losses on Bitcoin and Crypto investments
You owe taxes on what you gained from trading, so it’s important to understand how to calculate your gains. To calculate your capital gains and losses, you use this formula:
Fair Market Value – Cost Basis = Capital Gain / Loss
Cost Basis is the original value of an asset for tax purposes. In the world of crypto, your cost basis is essentially how much it cost you to acquire the coin.
Fair market value is just how much an asset would sell for on the open market. Again with cryptocurrency, this fair market value is how much the coin was worth in terms of US dollars at the time of the sale.
Therefore, to calculate your gain or loss on each trade, you need to know at what USD value you acquired the crypto for and at what USD value you traded or sold it for. If you haven’t been keeping track of the USD value of your trades, you can use crypto tax software to crunch those numbers for you.
4. Speak with a Crypto Tax Specialist
If your crypto trading activity was pretty straightforward, it is likely that you will be able to handle your own tax reporting without much trouble. However, if your situation is complicated and you don’t want to deal with the reporting process yourself, it may be helpful to speak with a Bitcoin accountant or a specialized crypto CPA. Certain accountants have become specialists in cryptocurrencies, and they work full time to help traders sort through the tax implications.
If you have specific questions regarding your situation, it could be beneficial to consult an accountant.
5. Save Money on Your US Tax Bill by Reporting Your Crypto Losses
When you realize a capital gain (you sold your crypto for more than you purchased it for), you owe a tax on the dollar amount of the gain. However, when you sell (or trade) your crypto for less than you purchased it for, you incur a capital loss, and you can use this loss to offset gains from other trades or even a gain from the sale of other property like stocks in your portfolio. This can save you a substantial amount of money if you have heavy losses.
While tax season isn’t the most fun time of the year, it doesn’t have to be stressful. Keep good records and leverage the Bitcoin tax tools that are out there to seamlessly file your cryptocurrency taxes for the year.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
After a rousing introduction to NEO DevCon 2019 by platform co-founder Da Hongfei on the evolution towards a smart economy, Erik Zhang joined the 500-or-so-strong audience via video link to talk about how NEO aims to build out its vision of the future. His presentation focused on proposed techniques to improve the overall efficiency of the NEO platform.The purpose of the new protocol upgrade, touched upon by Hongfei and elaborated by Zhang, is to scale sufficiently to allow for the building of a fully-integrated digital economy – something deemed impossible using current tech. This, the two founders hope, will make NEO “the number one blockchain by 2020”.NEO 3.0: Bringing Blockchain Tech up to Enterprise LevelIn his presentation titled “Possible Improvements in NEO 3.0”, co-founder of NEO, Erik Zhang, talked about the evolution of the project from its current version to NEO 3.0. The goal of the protocol reimagining is primarily to create a decentralised platform capable of supporting large-scale commercial applications. These will form the backbone of the project’s vision of a smart economy. A crowded house for the start of Dev Con 2019.Currently, the possible applications of blockchain and smart contracts are limited by inefficiencies within the technology itself. The team hopes to improve this with the launch of NEO 3.0 – an upgrade that will simplify the architecture of the platform.Zhang spoke about the three pillars around which the project will be built. These are:Reliability.Increased storage capabilities.Increased transaction per second output.To achieve these goals, Zhang details a radical simplification and streamlining of various aspects of the existing protocol. NEO 3.0 will be optimised to support a majority of applications built upon it on a second layer:“… we will streamline the architecture of the main chain and work hard to increase TPS of the main chain.”As part of this simplification process, the project also intends to remove what Zhang terms global assets from the platform. These are distinct from the more versatile “contract” assets created using smart contracts. Zhang states:“In NEO 3.0, all assets are created using smart contracts, even NEO and GAS.Since global assets are not integrated with smart contracts, the management of them is problematic. Support is being dropped for this group of assets to further simplify NEO’s architecture and allow the platform to better serve enterprise applications.The third simplification technique proposed by Zhang is to unify all transaction types. Different transaction types, for example miner transactions, issue transactions, and contract transactions, have specific functions or are related to a given business:“In NEO 3.0 there is only one type of transaction – that is ‘Transaction’. The role of this unique type of transaction is to run smart contracts.”Five New Features ComingZhang went on to explain the new features coming to the platform with the launch of NEO 3.0. These are as follows:Native contracts – a new type of smart contract running code directly instead of using the NEO virtual machine. NEO and Gas will exist as native contracts in NEO 3.0.Manifest and permission system – a system by which smart contracts are classified to facilitate efficient communication between them.Internet resource access – will allow users to access internet resources using smart contracts.Improvements to the dBFT consensus mechanism.Finally, the most important of these new features is the development of NeoFS, a proposal to build out a distributed storage network complete with its own economic incentives – much like those of SiaCoin and other decentralised data storage platforms. Currently, the cost of storing data on a blockchain is prohibitively expensive for the technology to be used by large enterprises. With the development of NeoFS, data will be stored much more efficiently, creating greater overall platform utility.According to Hongfei, the roadmap for the launch of NEO 3.0 is still to be determined. He provided an estimate of a year to a year and a half for its successful launch to main net during his opening speech at DevCon 2019. Naturally, he was reluctant to give a concrete date at this early stage in the development of the upgrade.Related Reading: The NEO Guide – Key Information You Need to Know About the CryptoFeatured Images: NEO Photographers
Like many other Internet communities, the crypto space has trends. Over recent weeks, the Trust Chain event, along with the “Delete Coinbase” campaign, have trended on what has been dubbed Crypto Twitter. Most recently, however, #stackingsats (Stacking Satoshis) has begun to garner traction in the halls of the school of Bitcoin.Twitter’s Jack Dorsey Accumulating BitcoinEach and every week, industry participants the world over have posted their weekly purchases of BTC (usually valued at $25), in a bid to show that they are stacking satoshis, fractions of Bitcoin, in preparation of further adoption. Although the pseudo-movement has already seen participation from Pierre Rochard, Spot, among many other prominent personalities, the accumulation movement scored a big win on Saturday, as Jack Dorsey, the chief executive of Twitter and Square, joined in on the fun, purchasing Bitcoin on his own app.#stackingsats pic.twitter.com/39ZW8e4XOU— jack (@jack) March 3, 2019As seen below, the Silicon Valley mainstay purchase $25 worth of BTC on the Cash App, which sold $166 million worth of the cryptocurrency in 2018. It isn’t clear if Dorsey will return for the next round of Stacking Satoshis, but the nod to the Bitcoin community was appreciated nonetheless.Rationale Behind #StackingSatsSo what’s the deal with Stacking Sats, and why are so many bigwigs in this industry, like Jack Dorsey, getting involved?Well, many argue it’s quite simple. Matt Odell, who has kept to accumulating amid this so-called “crypto winter,” recently broke down this movement in a simple image. The pro-Bitcoin coder, noted that as it stands, you can buy 262 satoshis (0.00000262 BTC) for one U.S. penny, 26,200 satoshis for a dollar, and so on so forth. Hinting at Bitcoin’s supply cap of 21 million, Odell added that in a couple of years, the world will look back at 2019 and be “blown away” about how cheap the cryptocurrency was.262 sats for a penny
26,200 sats for a dollar
2,262,000 sats for a hundoIn a couple years we will look back at 2019 and be blown away at how cheap bitcoin was. #stackingsatshttps://t.co/JISUfigX2L by @jackopr1 pic.twitter.com/frMtGf9T1s— Matt Odell (@matt_odell) March 2, 2019This is, of course, in reference to the extreme (and very real) scarcity of BTC, and the importance of that characteristic, especially in a world rife with inflation and seemingly irresponsible monetary and fiscal practices.Related Reading: Researcher: Bitcoin Will Easily Surpass Market Cap of Gold at $8 TrillionDennis Pourteaux, a BTC investor that graduated from Harvard, also recently touched on the cryptocurrency’s scarcity, arguably the key driver behind BTC’s long-standing value. Pourteaux, citing a post from Trust Chain creator Hodlnaut, a Netherlands-based Bitcoin enthusiast, noted that per his napkin math, there are a mere 300,000 satoshis (0.003 BTC) available for every human alive today. At current market valuations, such a crypto sum is valued at $11 — the minimum hourly wage in a number of U.S. states.If everyone on the planet had an equal number of bitcoin, we’d each have 0.0003 bitcoin (300,000 sats). Today you can buy this amount for just over a dollar. It won’t always be this way. https://t.co/JheGzo9g4t— dennis pourteaux 🌱 (@pourteaux) February 24, 2019While $11 in investable disposable income may be hard to obtain for some, many crypto enthusiasts responded to the noticing by remarking that it would be unwise for prospective investors to not go above and beyond their 0.003 BTC allocation.Featured Image from Shutterstock
Since January, for over two months, Bitcoin has remained in a relatively tight price range from $3,200 to $4,000, unable to break out of key resistance levels above $4,200.
Similarly, from September to November, in an identical time frame, Bitcoin maintained low volatility in the $6,100 to $6,700 range.
The last time the dominant cryptocurrency showed an extended period of stability, it dropped from the $6,000 region to $3,122, by nearly half.
Some traders have suggested that BTC could become vulnerable to a similar downside movement in the near-term if it fails to demonstrate momentum.
Momentum is Key, Bitcoin Has to Break Out of $4,000
Historical performance is not a guarantee of an asset’s future performance and as such, it has to be only cited as a reference.
In late 2018, Bitcoin did show weakness after falling from $6,000 to $3,122 in a short time frame following two months of low volatility.
But, during that period, the sentiment around cryptocurrencies as an asset class was on the decline and investors were still recovering from the intense 85 percent correction of the crypto market.
The longer we stay stuck in this range the more I feel like we will mirror the price action from September 20, 2018 – November 25, 2018. This is what that would look like. $BTC #Bitcoin pic.twitter.com/oaR7VTA4dk
— Financial Survivalism (@Sawcruhteez) March 2, 2019
Moreover, at $6,000, Bitcoin was down about 70 percent from its all-time high at $20,000 and most investors were confident that the asset had not established a proper bottom.
Throughout the past five corrections, BTC has tended to drop by around 85 percent on average from its all-time high to find a bottom to initiate an accumulation phase.
As cryptocurrency technical analyst with an online alias “Hsaka” suggested, when zoomed out, the price chart of BTC demonstrates the asset’s resilience from steep corrections and its ability to recover in longer time frames.
We are here. pic.twitter.com/OaclTNLynl
— Hsaka (@HsakaTrades) March 2, 2019
Previously, Jeff Sprecher, the chairman of the New York Stock Exchange, said that despite several long-lasting bear markets and the emergence of many cryptocurrencies with seemly better technologies, Bitcoin has found a way to survive time and time again.
“Somehow bitcoin has lived in a swamp and survived. There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention,” Sprecher said, adding that ICE will continue to build an infrastructure surrounding BTC through Bakkt, a regulated cryptocurrency exchange.
Since 2015, for four years, Bitcoin has consistently recorded higher yearly lows and if the asset follows the trend of its historical performance, it is highly likely that BTC will remain above the yearly low of 2018 at $3,200 by the year’s end.
Crucial Sign That Shows Investors are Comfortable With Price Range of Crypto Assets
While some analysts have emphasized that institutional investors are not concerned about the price of crypto assets but rather on the existence of regulated custodial services and investment vehicles, the low prices of crypto assets could continue to appeal to institutions.
Throughout 2018, Grayscale reported that institutions have invested over $250 million in its cryptocurrency investment vehicles. In February, Morgan Creek revealed that two U.S. public pension funds invested in its crypto fund.
A potential retest of the 12-month lows of Bitcoin always remains a possibility but in consideration of the relatively fast movement BTC has shown from mid-$3,000 to $4,000 in the past month, many traders expect BTC to move toward the $4,200 resistance level once again.
As Alex Krüger told CCN, BTC experienced a pullback once it reached a major resistance level at $4,200. “Lots of levered longs piled up. And people FOMOed in. BTC reached the first level strong resistance ($4200) and a correction ensued,” he said.
But, it is too early to determine whether that minor pullback could lead the asset back to its yearly lows in the near-term.
Ripple’s regular movement of funds from its escrow wallet to a hot wallet is always noted by crypto whale watchers, such as Whale Alert, which tracks large movements of coins. Ripple conducts a transfer at the beginning of every month and usually returns a large portion of XRP back to escrow. They are authorized by smart contract to use the whole amount if necessary, but prices have been kind to them in recent years.
Here’s a tweet from Whale Alert this morning:
— Whale Alert (@whale_alert) March 1, 2019
However, their latest movement used Ripple’s “memo” feature to include a cryptic message:
“The revolution will be televised…”
Will Ripple’s Revolution Be Televised?
The note is a reference to “The revolution will not be televised,” a famous quote from a 1970s song from Gil Scott Heron.
The line from Heron’s song/poem has been referenced frequently by radical movements. The song talks about the ways that revolutionary thought had been co-opted by the mainstream media and hipsters of the day. It’s most flagrantly outlined in the following lines:
There will be no slow motion or still life of
Roy Wilkens strolling through Watts in a red, black and
Green liberation jumpsuit that he had been saving
For just the right occasion
Green Acres, The Beverly Hillbillies, and
Hooterville Junction will no longer be so damned relevant
and Women will not care if Dick finally gets down with
Jane on Search for Tomorrow because Black people
will be in the street looking for a brighter day
Memos Becoming a Habit for Ripple
This is not the first time Ripple has included a memo in its escrow movement. Last month, they wrote “Crawl… walk… run…” as a reference to Ripple Labs CEO’s October 2017 Q&A session on Quora.
Brad Garlinghouse had said:
“[I]t’s safe to say that we have to crawl before we walk before we run. This is uncharted territory for banks and payment providers, and it’s going to take time before you see broad adoption of digital assets solving this multi-trillion dollar opportunity. Suffice it to say, we are very pleased by the interest from various pilots our customers are already running.”
This marks the fourth time Ripple has made a cryptic memo. The first time was in November, saying:
PublicServiceAnnouncement: Always avoid green eggs and ham
Then they did it again in December when they wrote:
It is fun to have fun but you have to know how.
The January withdrawal contained no memo.
Ripple’s comment that the revolution “will be televised” is cryptic at best. Are they referring to some upcoming live stream? Does Ripple view itself as an agent of change? Ripple does occasionally do live-stream question-and-answer sessions and frequently engages with social media as a means to connect with its user base. But what “revolution” are we talking about? The blockchain revolution? Which part will be televised?
Perhaps we at CCN are being dense about the poetic nature of the memo. We’d just like some clarification, please, Ripple. We also wonder what else the monthly memo could be used for.
For their part, Ripple is thriving since XRP’s listing on Coinbase. They’re holding steady above $0.32 with a daily volume of over $700 million at press time. So far, the “Coinbase effect” hasn’t defeated the recent bull momentum that XRP picked up.
The bitcoin price posted its first monthly gain in February after a dismal seven-month drought. However, technical analysis suggests the original cryptocurrency could crater to new lows because a downtrend appears to be forming.
Bitcoin Price Spiked 11% In February
Mati Greenspan is a senior market analyst at Tel Aviv-based crypto trading platform eToro. He told Bloomberg that February’s 11% spike in the bitcoin price is encouraging, but it isn’t out of the woods yet. Greenspan noted that trading volume has rocketed to a 12-month high.
After six months in the red, it’s great to finally close one in the green. What I’ve been watching lately are the number of transactions on the bitcoin blockchain and the total volumes across crypto exchanges — both of which are holding at their highest levels in more than a year.
Even though we’re still officially in a bear market, there is plenty of cause for optimism.
However, Greenspan noted that bitcoin’s failure to stay above $4,000 is part of a longer-term downtrend that’s materializing.
Technical Analysis Not Always Accurate
As of this writing, bitcoin’s technical chart is somewhat bullish because its RSI (relative strength index) is hovering at 36.
An RSI of 30 indicates that an asset is oversold, which is a bullish indicator. RSIs of 20 and 80 are typically used as oversold and overbought signals, respectively.
While some stock traders swear by technical analysis, it’s not always an accurate predictor of market movements. As CCN reported, a Fundstrat analyst predicted in June 2018 that the bitcoin price was just days away from a major breakout.
At the time, Robert Sluymer — the head of technical strategy at Fundstrat Global Advisors — said he was confident that bitcoin would spike because the charts suggested so. He also noted that bitcoin was oversold at the time, with a relative strength index that had topped 40.
“I think the markets always respond to technical analysis,” Sluymer said in June. However, that rally never happened.
— CNBC’s Fast Money (@CNBCFastMoney) June 7, 2018
DOJ: Crypto Markets Are Manipulated
Of course, there are many unforeseen factors that account for bitcoin’s erratic price movements. One is market manipulation.
“Platforms lack robust real-time and historical market surveillance capabilities — like those found in traditional trading venues — to identify and stop suspicious trading patterns,” the report said.
In November 2018, the US Department of Justice launched a criminal investigation into whether the crypto market’s spectacular 2017 bull run was manipulated.
US Bills Seeks to Protect Cryptocurrency Investors from Market Manipulation https://t.co/xeTXBHA5vZ
— CCN.com (@CryptoCoinsNews) December 7, 2018
Push to Legitimize Crypto is Underway
In December 2018, two US congressmen introduced bipartisan legislation designed to prevent bitcoin price manipulation and to position the U.S. as a leader in the crypto industry.
At the time, Congressmen Darren Soto (Democrat-New Jersey) and Ted Budd (Republican-North Carolina) urged fellow lawmakers to embrace crypto and blockchain, saying the United States must not ignore its “profound potential” to boost the economy.
Market observers say mainstream crypto adoption hinges on regulatory clarity to legitimize the market and rid it of the scam artists that give the entire space a bad name.
Bitcoin in 2019: Analysts See Institutional Investors Wading into Crypto https://t.co/fcVCFPsFOX
— CCN.com (@CryptoCoinsNews) December 30, 2018
Randy Wilson is a partner in Digital Risk at Deloitte.
2019 will be the year the rubber meets the road for blockchain consortia.
If 2017 was a buzzy time that saw a number of successful proofs-of-concept launch, 2018 was a more sedate period when the lawyers got together to develop the framework under which consortia could operate. However, 2019 will be the year that these platforms go live and expand across commodities, processes, markets and geographies.
By now, the benefits of the technology have been demonstrated; the next step is to make this technology work at scale, that is, to build the shared platform that addresses industry challenges, benefits the majority of market participants and convinces the transacting ecosystem to embark on the journey.
The consortium model
The preferred vehicle for launching enterprise-grade blockchain platforms is the consortium.
The idea is simple: If we as a group have enough volume and can drive sufficient liquidity across our platform, the rest of the market will join and transact. Market participants working with their peers have an edge over tech start-ups when it comes to creating a common approach and driving adoption of the platform.
The formation of the Intercontinental Exchange (ICE) provided a replicable example: a leading group of companies and banks came together to create a common derivative platform and the initial investors retained ownership over it.
Now the model is being re-applied across the value chain in the energy sector and beyond. First movers that can bring enough volume onto their blockchain platform will eventually compel the entire market to adopt their technology. The tipping point is estimated to be around 70 percent.
If you can get that share of entities to do business on the platform, the remainder of the market will have no choice but to follow. But time is of the essence: attract only 25-30 percent of the market and you will be stuck serving a fragmented group of clients with little chance of creating attractive positive returns. We have seen many shared industry platforms featuring other technologies suffer this fate.
Near-term growth is still quite challenging even if a platform launches successfully. Large companies have concerns about the enterprise readiness of blockchain technologies and are hesitant to commit live transactions to the platform.
Many want other consortium members to go first so they can identify and remediate significant risks. It is difficult to get a platform going if members adopt such a ‘wait and see’ approach.
Attracting non-members to use the platform can be a challenge. There is usually very high interest at the start of a consortium from parties outside the initial investor group, who also want to get in with some skin. The original investors like the added trade volumes the outsiders bring, but not necessarily seeing their share in the entity diluted. This can result in a serious stalemate. Why would a non-member help a competitor create a platform if they are not adequately compensated for involvement?
The answer is: if they are forced to use the platform because the rest of the industry has adopted it as the place to trade. This must be managed carefully. Failure to do so could encourage outsiders to form a competing consortium. The last thing anyone wants is the emergence of 10 or more rival platforms.
Evolving the model
Two of the most common business models for consortia-led blockchain ventures are as non-profit or for-profit entities. The non-profit approach is most often focused on an industry challenge that has a significant social impact. Such entities often operate as opensource projects and have public or third-sector involvement. The for-profit model is used where development is private sector-driven and where there is the promise of an exceptional medium-term valuation as seen in many supply chain-related ventures.
But another model exists that can encourage broad market participation, and also provide initial investors with a means for creating and recouping value around the platform. The traditional utility model remains relatively unexplored when it comes to blockchain ventures and may hold special promise here – not as the solution, but as part of a hybrid model.
In this model, a consortium first provides basic capabilities – network consensus, transaction distribution and verification, basic smart contract templates, tokenized assets, digital documents, among others – as a kind of utility. Usage fees are established using a cost-based model, and any excess revenue is distributed back to all market participants based on some measure of use, such as volume/value channelled through the platform.
This addresses the issue of founding members having too preferential a position relative to other participants. The consortium can then focus, through a second legal entity, on establishing the second-order benefits unlocked through wider adoption and effective use of the base layer.
Here the opportunity is to create market-specific solutions that harness the core capabilities and further embed the specialist user interfaces, business rules, process flows and data analysis dashboards needed by particular groups of participants. In such a scenario, the core platform could even be opened to rival consortia who would also stand to gain from developing on a common underlying platform.
Wait – did we just invent public blockchain? Well not quite, not yet at least. For some considerable time to come it will remain necessary for consortia groups to maintain a level of control over the operation, accessibility, security and performance of new networks.
The role of data
Energy companies are now cognisant of the value of the data they create. Just as consumers have much greater awareness that the data they provide has value, so too do organizations.
A successful blockchain platform will eventually secure a rich, validated set of transactional data unmatched anywhere else within the industry and it will enable market participants to be firmly in control of when with whom, and how much they share. Those companies will insist that any value received for data originating within their organization and used by some entity in the future flows largely back to the source.
The platform’s role in managing reference data (the countless registers of facilities, ports, vessels, routes, products, deal specifications, procedural documents and even contractual templates) can also provide very real industry value. Many companies would pay a platform provider for access to reference data if they trusted the completeness and reliability of the source.
Several lessons can be learned from the formation of blockchain consortia to date that can be used by other potential adopters, and the most important are around the structure and strategic alignment.
Create a new legal entity structure to deliver your blockchain solution. Separate standalone legal entities allow large industry players to jointly invest in an innovative environment, protects their interests and provides the right level of operational flexibility. The trick is to address the risks involved with investing in a consortium, but not constrain its ability to make decisions effectively.
Structure to maximize adoption, not profit. The goal is to encourage adoption and participation outside of the core members. Models that give too much profit to too few members have struggled and many have failed.
Form an independent board. The board must transition from individual members actively involved in setting up the new entity to those who can focus on the longer-term strategy. It is important to move from a project steering group to an independent board.
The key is to find the right model that adequately protects the interests of the investors, encourages adoption and also promotes the flexibility and innovative spirit essential for a successful start-up. A consortium is a group with a shared goal and it is crucial to be smart about creating a structure that gives the members the best chance of making the right trade-offs.
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