Cryptocurrency News Now!: Why Bitcoin Matters

Sunday, August 12, 2018

Why Bitcoin Matters

QUOTE OF THE DAY

“You make your own luck if you stay at it long enough.”

- Naval

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Cheers,
Blockchain Brew Team

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The results will be compiled anonymously and published so you can see how you compare to other Blockchain Brew readers!

MARKET

COIN	PRICE	24H

BTC	$6,293.746668	+2.38%

ETH	$320.285649	+2.77%

XRP	$0.302633	+2.18%

BCH	$568.366392	+2.94%

EOS	$5.066958	+1.77%

*Information as of 9:30 AM EST

BIG IDEA

Why Bitcoin Matters

BIRTH

Many do not understand the full background of how Bitcoin came to be
Bitcoin is the result of decades of research and development by nearly anonymous researchers

NEXT BIG THING

Deniers will one day realize they can no longer ignore Bitcoin and attempt to catch up adopting it, they will wonder why it wasn’t more obvious from the start
This same ignorance happened with computers in 1975 and the Internet in 1993 as is happening with Bitcoin in the present

BITCOIN AT ITS CORE

Bitcoin is the child of computer science and 40 years of cryptographic research by thousands of researchers

There is a computer science problem called the Byzantine Generals Problem, it is defined as:

“[Imagine] a group of generals of the Byzantine army camped with their troops around an enemy city. Communicating only by messenger, the generals must agree upon a common battle plan. However, one or more of them may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that the loyal generals will reach agreement.”

The Bitcoin protocol is the first solution to the Byzantine Generals Problem, allowing us for the first time to send a unique piece of digital property over the internet

VALUE

Bitcoin’s value is derived from two factors:

Volume and velocity of payments running through the ledger
Speculation on future use of the payments system

Speculation has been the most substantial driver thus far, but speculation has driven the price to a point that makes using Bitcoin for payments practical

VALUE TO MERCHANTS

Many say, “why would a merchant accept such a volatile currency?”, the answer is they can use Bitcoin strictly as a payment system
Merchants are able to trade out of Bitcoin upon payment and convert it into any currency they want
The tangible value comes in the savings of Bitcoin fees in comparison to the payment processing fees paid by merchants

TRACEABLE

Another common complaint is that Bitcoin is used by criminals and terrorists to transfer and launder money, this narrative is primarily driven by the media
Bitcoin is pseudonymous not anonymous, every Bitcoin transaction is logged forever and access to everyone
With a public ledger, Bitcoin is far more traceable than cash, gold, or diamonds

NETWORK EFFECT

Bitcoin is a classic network effect, a positive feedback loop, similar to things like the Internet or Facebook, the more users in the network, the more valuable the network becomes

There are four constituents to Bitcoin’s network:

Consumers who spend Bitcoin
Merchants who accept Bitcoin
Miners who secure the network
Developers and entrepreneurs who build the ecosystem

USE CASES

International remittance
- Every year hundreds of billions of dollars are sent across borders, these payments are charged crazy fees (~10%), Bitcoin can do this with a fraction of the fees
Banking the unbanked
- Most countries are without fully modern banking and payment systems, Bitcoin is available to anyone anywhere
Micropayments
- The way the credit and debit systems are today small payments (smaller than $1) are not practical, Bitcoin is indifferent to payment size

This post is a revisit of and inspired by a 2014 blog post by Marc Andreessen.

EXCHANGE

Questions Raised After Man Visits Kucoin Hong Kong Office and Finds Nothing

TRIP TO KUCOIN

Jackson Wong, a crypto investor and analyst, posted a warning article after his recent trip to the Hong Kong address of the popular crypto exchange Kucoin
Wong was skeptical of Kucoin after he found out the crypto exchange has a Hong Kong address but does not have a registered license to trade crypto
In addition, Wong had never heard of Kucoin being in the Hong Kong media before

SUSPICIONS CONFIRMED

When Wong arrived, he found no trace of Kucoin employees or an office reserved for the crypto exchange
Wong did visit an office at the address that was occupied by "Smart Team International Business Ltd." which was close to one of Kucoin's subsidiaries called "Smart Team Secretarial Ltd."
However, when he spoke with another company sharing the same office, they said employees from STIB Ltd. had moved out years before

After his findings, Wong left a warning to all of his readers:

"Since KuCoin is completely in stealth, and you couldn’t find them in their registered ‘office’, nor is there even a single person in their ‘office’, if KuCoin decides to exit scam on us — either by withholding our withdrawals or simply by shutting down their entire exchange and run with our money — we will have absolutely no recourse."

KUCOIN CLARIFIES

In response to Wong's new findings, Kucoin released a clarifying statement about the registered Hong Kong address
In the statement, Kucoin clarified that the crypto exchange is headquartered in Singapore and that the Hong Kong address is merely a mailing address for one of Kucoin's subsidiaries
Kucoin also stated that the crypto exchange now has over 300 employees located in China, the Philippines, Singapore, and Thailand

TAKEAWAY

In the end, regardless of Kucoin having a ghost office or not, crypto should not be left on an exchange

RESEARCH

Study Finds 96 New Crypto Funds Have Been Created in 2018

96 NEW CRYPTO FUNDS

According to Crypto Fund Research, so far in 2018, 96 new crypto funds have sprouted up despite the stubborn bearish market trend
On that note, the number of crypto funds created in 2018 is set to outpace the 156 crypto funds that were created in 2017
In total, there are an estimated 466 crypto funds with over half of that number being founded in the last 18 months

Josh Gnaizda, the founder of Crypto Fund Research, commented on the surprising pace of new crypto fund creation:

"We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand. However, the pace of new fund launches is a bit surprising given the dual headwinds of depressed prices and less than favorable regulatory conditions in many regions."

CAPACITY CONCERNS

Gnaizda also showed worries regarding if the crypto market can handle a growing number of crypto funds
In particular, he will be interested to see how things play out as the crypto market could be entering a prolonged bear market and has no track record of dealing with funds
Still, funds only comprise a small amount of capital in the $200+ billion crypto market with an estimated capital of only $7.1 billion

MORE BREWING

How Crypto Reacted to This Week's SEC Bitcoin ETF Delay
At Bitcoin Cash Birthday Bash, Crypto Embraces the Strange
Facebook’s David Marcus Quits Coinbase to Avoid ‘Appearance’ of Conflict of Interest

COIN OF THE DAY