CoinMarketCap Launching Cryptocurrency Indices

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A recent blog post by the leading data provider, CoinMarketCap, explains their launch of cryptocurrency benchmark indices on NASDAQ GIDS, Bloomberg Terminals, Thomson Reuters’ Eikon (Refinitiv), and Börse Stuttgart. Each of these is amongst the largest platforms, which means cryptocurrency data will be accessible to hundreds of thousands, if not millions of investors. As of October 2016, there were 325,000 Bloomberg Terminal subscribers globally.

There are two indices, one including Bitcoin and one without. The primary index, which includes Bitcoin, is called the CMC Crypto 200 Index (CMC200), and it covers over 90% of the cryptocurrency market globally. The second index, not including Bitcoin is called the CMC Crypto 200 ex BTC index (CMC200EX), is used to track market performance without Bitcoin’s influence, which accounts for roughly 50% of the total cryptocurrency market cap.

CEO of CoinMarketCap, Brandon Chez commented on the news saying:

“We are excited to launch and share these indices with the market. These indices will promote greater accessibility to cryptocurrency data in an easier-to-digest format. In partnership with Solactive, our chosen index administrator, we hope these professionally-calculated indices will serve to expand the reach of cryptocurrencies into the larger financial markets.”

They have partnered with Solactive AG, an independent German index provider, to calculate and administer the indexes, including rebalancing them quarterly. Solactive AG administers over 3,000 custom indices, so they are well trusted to calculate accurately and uphold to any industry standards.

Fabian Colin, the head of sales over at Solactive AG mentioned that:

“We are very proud to be chosen as CMC’s index provider of choice in this exciting journey. The ability to access CoinMarketCap data gives us the opportunity to develop custom indices for new clients. Conversations have already started. We are looking forward to developing more crypto indices in the future, which will optimistically result in investable indices and might lead to further products.”

Regarding CoinMarketCaps prestige, the blog post also acknowledges the fact that they made “market capitalization” a popular term back in 2013 when they launched. They are also known to show other statistics, reliably, such as circulating supply.

Putting thought into how they calculate this metric, the post reads that “the circulating supply metric used by CoinMarketCap accounts for locked, reserved or non-saleable coins or tokens that cannot affect the price of a cryptocurrency, and hence are not factored into a cryptocurrency’s market capitalization.”

These indices are currently live across the platforms mentioned, and we hope this is only the beginning for what is to come. As more mainstream systems integrate with cryptocurrency data, then mainstream investors will want to educate themselves on this new asset class.

Tether Not Completely Backed by USD Alone

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Recently, reports have been citing that the largest stablecoin Tether (USDT) is not backed by US dollars.

This statement is not completely true because they are backed by USD, but not entirely. They are backed by the US dollar in addition to other assets which may be loans or “cash equivalents.”

One section of their homepage reads:
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”

While it’s good they stand by their true slogan that “every tether is also 1-to-1 pegged to the dollar,” this more in-depth explanation goes against what they have been implying for years. For the past several years now they have been claiming that each tether is backed by a dollar, which may be true in terms of the valuation of their portfolio, which is also news to investors but is certainly an indirect way to word things. The reality is that there is not a dollar for each tether in the bank. If everyone wanted to redeem their Tethers for US dollars right now, Tether would need to sell all of their assets for cash. Doing this has inherent risk, which worries investors.

In response to Tether rumors, several stablecoins have been coming into existence. One unique example is Dai, by Maker, which is actually a decentralized, collateral-based stablecoin. This means that users can send Ethereum to a smart contract as collateral to get Dai. The smart contract acts as a self-stabilizing mechanism to adjust fees and incentives for users to create Dai. Simply put, if the price of Dai exceeds $1 due to Ethereum’s price rising, then the incentives will be such that users want to create more Dai. As a result, more Dai enters the circulating supply, driving the price down towards $1. If the price is below $1, then the demand goes up because users can get more Dai for less money – taking advantage of an arbitrage opportunity. Dai is a publicly transparent, decentralized stablecoin based on the Ethereum blockchain.

On the other hand, another centralized stablecoin alternative is Stably. Stably was recently added to Binance and has growing volume.

So, 2019 seems to be a year for stablecoins, which means Tether should clean up their image a bit.

The Future of Cryptocurrency Looks Bright as Square and Twitter CEO Bets Big on Bitcoin

Apple iPhone X on office desk with icons of social media facebook, instagram, twitter, snapchat application on screen. Social network. Starting social media app.

Volume is increasing, fees are manageable with a median cost of ~$0.23, and the lightning network has more nodes than ever. There are 3,702 nodes on the lightning network at the time of this writing, all according to BitcoinVisuals.com. Additionally, mining difficulty has been slowing rising since January 2019. This means that the cost of mining is expected to increase, which in turn, should increase the bottom price for Bitcoin. Miners will not want to sell Bitcoin for less than what it costs them to mine.

Over the past month, Bitcoin has risen ~$500 and people think it may break through the $4,000 mark.

Along with all of this, Jack Dorsey, the CEO of both Twitter and Square is betting big on it, alluding to buying $10,000 worth of Bitcoin per week in the current market. While Dorsey is a billionaire, this is still not small change, and quite a statement to be had.

It’s worth discussing that Jack Dorsey is the CEO of Square, a payment processing company, which also owns Cash App, an app where you can buy and sell Bitcoin, in addition to loading cash and spending it as you will.

While Dorsey has always been a tech enthusiast, there may be some business reasons for his enthusiasm towards Bitcoin. Payment processing companies have a notoriously low-profit margin with VISA and Mastercard services taking big cuts out of the transactions they process. If blockchain technology and second layer solutions such as the lightning network take hold, then VISA and other middlemen can be cut out of the transaction.

If Dorsey promotes Bitcoin properly, onboard more users through his Cash App, and then has people spending Bitcoin through Square terminals, then he has a lot to gain.

Additionally, if people begin tipping on Twitter more, then Twitter can become a pioneer in the micro-tipping space as a social network. Micro-tipping is not very popular yet across the internet, but people believe it will be very common in the future across the web as cryptocurrencies become the financial backbone of the internet. A micro-tipping example can be simply sending someone $0.0001 cent worth of cryptocurrency for answering a question, or simply creating nice content. If Twitter further integrates easy “tip” buttons that can be tied to a user’s wallet, then both Twitter and Square can act as a leader bridging the traditional world with the cryptocurrency world.

Facebook’s Cryptocurrency Division Acquires Blockchain Startup

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Still, it’s helpful to understand Chainspace’s mission. Chainspace is creating a scalable smart contract platform led by a team of researchers. They are focused on ways to open more throughput (transactions per second) on blockchain networks and studying use-cases outside of monetary transactions such as voting.

Evidently, they also plan to keep their work open-source – which is good.

The Chainspace website currently reads:
We’re excited to announce that the team is moving on to something new. Chainspace code and documentation will still be open source, and all previously published academic work remains available.”

According to Cheddar, four of the five researchers listed as authors on their academic whitepaper will be joining the Facebook team. Two in particular – “Alberto Sonnino and George Danezis, already list their employment as blockchain researchers in Facebook’s ($FB) London office on LinkedIn.”

A Facebook spokesperson responded vague and unclear plans for the future:

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

What we do know is that last year there were reports of Facebook working on a possible stablecoin to be used in their popular chatting platform, WhatsApp. Nothing about this has been released to date, but it would be interesting to see how WhatsApp’s 1 billion daily user base affects the cryptocurrency market. While most people have mixed feelings on Facebook entering the industry, it’s generally agreed upon that this would be great exposure.

More About Community Sentiment

There is a mixed sentiment across the cryptocurrency industry with regards to social media giants entering the general blockchain space.

On one hand, blockchain technology can lend itself to offer a more transparent relationship between the corporation and end user. If properly integrated into their existing systems, there can be live dashboards showing how personal data is being used, ads are being targeted, and real accounts being created – if that can be verified.

On the other hand, corporations can begin profiting off of existing cryptocurrencies simply by integrating them. In the end, they can start to accumulate mass amounts of coins and dominate the industry. Additionally, if they were to release a stablecoin such as “Facebook Coin” to be used towards paying for on-site purchases, then it defeats the purpose of decentralization, which is where blockchain technology shines. There are centralized and permitted-blockchain use-cases, but they are narrower and not fitting for this.

Despite how the community feels, social media giants will continue to research blockchain technology and penetrate the market however they can. Even in a recent Joe Rogan interview, Twitter CEO Jack Dorsey noted his interest in blockchain technology and admitted to being a Bitcoin holder. His mentions went viral amongst the community and can be seen all around Twitter and Facebook groups.

Celebrating Bitcoin’s 10 Year Anniversary

Golden Bitcoin

Over the past 10 years, Bitcoin has proven to be resilient and ahead of its time. With legal uncertainty, outspoken skeptics, contentious hard forks, and high volatility, Bitcoin continues to prosper as the most liquid and trusted crypto asset in the market. Today there are thousands of cryptocurrencies, hundreds of competing exchanges, and billions of dollars invested in related projects.

Bitcoin introduced more than just digital cash to the world. It introduced entire new ecosystems which are peer-to-peer and Turing complete – simply look at Ethereum and various decentralized exchanges. It introduced peer-to-peer micro-tipping, which is possible on major platforms such as Twitter and Reddit and ultimately changed the way we interact with money on the web.

Some argue that Bitcoin represents the third progression of the internet. Initially, the internet was meant to act as an educational tool, then it was meant to share information through social media, and perhaps the next step is to share and transact real value, globally, in a peer-to-peer fashion.

Most importantly, it changed the way the people view how currency works and placed a greater emphasis on personal responsibility and privacy.

What Lies Ahead for Bitcoin

10 years is a significant milestone, but Bitcoin is still not where it needs to be. Moving forward the industry needs to focus more on merchant adoption, scalability, and simple user interfaces. After all of the Ethereum ICOs and Bitcoin Improvement Proposals, the industry is ready to see practical value rather than theoretical value. Over the next 10 years we hope to see the Lightning Network come to fruition, ETFs enter the market, and millions of merchants accept Bitcoin as payment.

The Lightning Network is an off-chain scaling solution which will allow Bitcoin transaction to occur instantaneously with negligible fees. There is lots of hype around it and various companies are working to create more volume on the network. As the Lightning Network grows, so should the number of merchants accepting Bitcoin since they should be correlated. Many businesses both large and small will set up payment channels with the Lightning Network directly. At that point, Bitcoin will be a truly global, usable, and peer-to-peer digital cash system.

Lastly, competition will continue to grow amongst blockchain and non-blockchain schools of thought. There are protocols such as DAG and Mimblewimble, which differ completely from blockchain and have major projects behind them such as IOTA. With entirely different schools of thought, the decentralized revolution will continue to grow, and ultimately, more competition fuels more innovation.

As for legal regulation, we believe this will come with time. Many countries acknowledge cryptocurrencies, tax them, and regulate exchanges. While regulation needs to be fine-tuned, it is not what it is holding Bitcoin back at this point.

While the past 10 years have been exciting, we are even more excited for what the next 10 has in store.

What is the Finney Phone and What Does it Mean for Crypto?

What is the Finney Phone and What Does it Mean for Crypto?

Finney, the first blockchain focused smartphone, is expected to begin shipping in late December. Created by Sirin Labs, the phone’s operating system is SirinOS, which is a fork of Android made with the intention of implementing blockchain technology at its core. The Finney will allow users to securely and reliably use blockchain products and services.

The phone will include a decentralized marketplace (dCENTER), a built-in cold storage wallet, token conversion services, encrypted communication, peer to peer resource sharing, and incentivized educational apps. It will also include a 12 megapixel camera and 128GB of memory.

The default cryptocurrency used to purchase apps and use their services will be Sirin’s own SRN token. Just to purchase the Finney, which is priced at $1,000, requires the use of SRN.

In preparation to satisfy clients and meet demand, Sirin Labs has partnered with Foxconn, the same manufacturer Apple uses for their iPhones. In an interview with CNN, Sirin’s CMO Nimrod May said:

“By choosing Foxconn to build the FINNEY, we’re demonstrating the public’s desire to have a mass-market smartphone that is able to safely and securely operate within blockchain and cryptocurrencies.”

Sirin Labs raised over $157,000,000 by issuing SRN tokens through an ICO. They used the capital to fund the development and marketing efforts of the Finney. While the future success of the phone is uncertain, the community is excited to see a finished product delivered.

What Does This Mean for Crypto?

The Finney phone is one step in the right direction toward mainstream adoption. There are inherent limitations with blockchain technology that hurts the user experience.

For example, most cryptocurrencies require their own wallet to be downloaded due to compatibility issues. This means that if a user wants to hold Bitcoin and Monero, they will need to download two different wallets, one for each currency. This can become cumbersome when dealing with lots of different cryptocurrencies and tokens.

Additionally, finding, using and downloading decentralized applications is not a smooth process. We expect that Finney’s decentralized marketplace, coupled with token conversion services and a built-in cold storage wallet will allow virtually anyone to explore the decentralized world at their fingertips, relieving many of the pain points users experience today.

Until the phone is released, we cannot know for certain the extent to which blockchain technology is integrated, but at the very least we view the Finney as a foundation for a robust, blockchain-focused OS.

Don’t Mention the B Words – Cryptomarket Turmoil Grabs the Headlines

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As the cryptomarket progressed through much of this year, a jump in volatility and a wave of bearish sentiment, following December’s broad-based cryptomarket rally, led to plenty of debate on whether Bitcoin and the broader market gains to record highs back in December was just a bubble ready burst.

Certainly, when comparing to the dot.com era and bubbles of old, more than 1,000 gains in a matter of weeks suggested that the gains were unsustainable and, while the Bitcoin bulls talked up the prospects of Bitcoin hitting the dizzying heights of $100,000 and more before the end of this year, the reality has certainly taken a bite.

Of particular interest is why few if any have mentioned the words bubble and burst, as for Bitcoin alone, a 75% slide from December’s all-time high would have shaken any of the major equity markets into submission.

To put it into perspective, the NASDAQ tumbled by 71% from its peak to trough in the dot.com meltdown and, while few will say that blockchain technology is worth less than the paper it’s written on, the reality is that many of the crypto coins traded across the crypto exchanges today are traded based on a white paper and concept, with few actually successfully transitioning from idea to tangible product. Perhaps that alone should be an alarm bell, particularly for market historians.

Even Bitcoin’s fight to become a viable alternative to fiat money seems flawed, with its lengthy transaction times and higher fees relative to some of the other cryptocurrencies looking for a slice of the real money pie.

So, while we can expect Bitcoin and the broader market to continue to find near-term support at such low price levels, investors continuing to believe that the next crypto rally is just around the corner, one does need to question whether the current market dynamics are sustainable.

Ripple’s XRP has shown greater resilience in the lead into and after the Bitcoin Cash hard fork and much of this has to be attributed to the team’s success in delivering an array of real-life blockchain products that have been adopted by institutions as a means to remit monies cross-border.

The team’s success is certainly far greater than any of its peers and to be fair, one does question why Ripple’s XRP has not replaced Bitcoin at the top of the crypto list by market cap, though it may just be a matter of time now and, if the general trend continues, the Ripple effect may evolve into a wave of support that could accelerate XRP’s ascendancy to the top.

We can expect investors to be licking their wounds following last week’s losses and Monday’s sell-off, which may well provide some early gains for the broader market this morning, but the reality is that investors may begin to wonder whether the latest sell-off and the effects of last week’s Bitcoin Cash hard fork on the broader market is reason enough to hold back on the Bitcoin ETF approvals.

Some institutional investors will be lining up for a piece of Bitcoin at sub-$5,000, but the smarter money may hold back for just that little bit longer, with even the more bullish of the Bitcoin bulls likely to be calling an end to the broad-based market sell-off in hope rather than certainty.

For those that are interested in the numbers, the cryptomarket cap has tumbled from last December’s $828.54bn all-time high to $159.72bn and, while this is obviously not an all-time low, it’s 2018 low and, when considering the continued rise in the number of cryptocurrencies, this market has been going in reverse through the year and it may take more than the SEC to stop the rot.

Blockchain – Here to Stay and in Rapid Adoption Mode

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There will be few that will argue against the evolution of blockchain technology and the anticipated benefits of blockchain to the real world, with a broad spectrum of industries testing blockchain technology in a bid to take advantage of the technology that most believe will deliver, not only efficiency gains across multiple industries, but deliver much needed transparency and data protection that has been lacking for many years.

Social media platforms, media companies, financial institutions and more have all been victims of identity theft and in some cases, the likes of Sony and Facebook springing to mind, the outcomes have been somewhat embarrassing to the industry moguls and to the shareholders who ultimately pay the price.

Scalability, data protection, and cost-effectiveness are certain words that most would consider when exploring advancements in a particular business and blockchain technology and the continued advancements certainly deliver on all three counts.

Some hesitation in adoption has been apparent across a number of industries, while others have been incorporated into everyday practices with ease, Ripple’s various cross-border payment platforms being one and the degree of success may have as much to do with a team’s ability to appropriately position the technology, enabling the right industries to explore and ultimately adopt.

As time passes, more testing is underway, with multinationals even looking to enter partnerships to develop need specific blockchain technology that further reinforces the positive outlook for the technology developed and rolled out in the wake of the Global Financial Crisis.

While the news wires have been relatively silent on the cryptocurrency front, it’s been a very different story on the blockchain front, with Central Banks, financial institutions, logistics and trade companies, gaming sites, media, and entertainment organizations and e-commerce platforms, to name but a few, busy behind the scenes developing and beta testing technology with the sole intention to adapt and move forward.

Why the euphoria?

Simply put, it’s a case of cutting out the middleman, generating fees without the cream being taken off the top, which should ultimately translate into wide profit margins, for some at least.

White papers of the more successful blockchain launches have not fallen short in highlighting the shortcomings of industry practices and so, the only thing that remains is for the right people to be in the right place to deliver on the promise of what the white papers contain.

The blockchain revolution has started and it’s not going to end any time soon.

Crypto Mining Farms

Crypto mining farm

While a number of altcoins look to pin back the rise to power of mining cartels by developing blockchains fuelled by cryptocurrencies that are mined using hybrid consensus algorithms, there remains a large number of blockchains that are run on proof-of-work consensus algorithms that continue to support the existence of mining pools and more importantly and of greater significance, mining farms.

What is a Mining Farm?

In the early years of the cryptomarket, only a handful of cryptocurrencies existed and mining for the likes of Bitcoin was particularly easy, with miners able to use basic desktop computers.

As the price of Bitcoin rallied, mining interest for Bitcoin and other cryptocurrencies has seen a significant rise, with miners having to not only shift away from normal desktops to ASICs hardware but also to build warehouses of hardware created for the sole purpose of mining cryptocurrencies.

Unlike mining with the use of the traditional desktops, which were not created for the mining of cryptocurrencies, these warehouses, better known as mining farms, have no other purpose and run 24/7, 365-days a year.

Outside of the investment into the necessary hardware and land to build a mining farm, the other main cost comes from the electricity required to mine cryptocurrencies.

Mining farms tend to be built in countries that have cooler climates and also lower electricity costs, with mining farms needing to consider the costs associated with, not just running the hardware 24-7, but also ensuring that the hardware doesn’t overheat, the combination of which can have a significant influence on mining profitability.

Farm Mining

While particularly lucrative for mining farms that have been able to capture a sizeable portion of hashrates, mining is key to supporting cryptocurrency blockchains, the mining process ultimately being the validation of transactions on the respective cryptocurrency blockchains.

With the number of transactions anticipated to continue increasing with time as greater adoption takes place, farm mining is likely to be the only viable method of mining to meet the growing volume of transactions.

For blockchains with proof-of-work consensus algorithms, such as Bitcoin, the entire concept of decentralization would be lost without mining and, as mining difficulty increases, more individual miners are pushed out due to rising power consumption and narrowing profit margins.

The shift in the mining landscape has left the mining of cryptocurrencies in the hands of mining farms, which are now considered to have the lowest barriers to entry into the crypto market.

The growth of farm mining is particularly important for blockchains that are run on proof-of-work consensus algorithms, a greater distribution of hash power restoring the ethos of decentralization, by removing the control of blockchain advancement away from the longer-standing mining farms.

The Future

Government regulations and a general animosity towards Bitcoin and the broader cryptomarket has raised questions on whether local power grids will be willing and able to continue supporting the rising consumption of electricity to fuel cryptocurrency mining.

Outside of the animosity is what has become the highly debated impact on the environment, cryptocurrency mining now consuming such large amounts of electricity that the media have begun publishing studies suggesting the Bitcoin mining uses more power than actual mining.

With such concerns and existing government control on the cost of power, mining farms have begun to source their own power, which is independent of community grids that are often either state-owned or subsidized by taxpayer money.

One such mining facility being built in British Columbia is reported to have installed its very own power substation, with 85 megawatts capacity generated from hydroelectricity, the power being generated enough to support a city of 50,000 homes.

Controlling a key cost variable in the mining process certainly makes sense and, with mining farms having generated sizeable income in recent years, particularly over the last 12-18 months, the availability of capital is there to break free from possible state control or influence, those unable to unlikely to be able to compete with the eventual power grid independents.

While managing cost variables is certainly a key step in the process, the other sizeable cost impact is the actual hardware. One can only imagine that there are developers hard at work, with the aim of developing mining hardware that is far more efficient than existing ASICs.