Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | It’s getting chilly out here. It’s still too early to tell whether the recent prosecutions of two ICO projects by the US Securities and Exchange Commission marked the beginning of an industry-wide slowdown and contraction—the dreaded “crypto winter.” But a number of recent developments won’t help in heading off a cold streak.
First, Intercontinental Exchange, the owner of the New York Stock Exchange, delayed the launch of Bakkt, its much-ballyhooed forthcoming digital currency exchange, until late January 2019. It’s not a huge delay, the project was supposed to launch next month, but in a Medium post explaining the new schedule, CEO Kelly Loeffler said her team needed more time due to the “volume of interest in Bakkt and work required to get all of the pieces in place.” (Related: “Wall Street’s embrace could break Bitcoin”)
Then, Bloomberg reported that US prosecutors have “recently homed in on suspicions that the tangled web involving Bitcoin, Tether and crypto exchange Bitfinex might have been used to illegally move prices.”
So what's new here? We learned in January that US regulators had subpoenaed Bitfinex and Tether. In May, we found out that the US Department of Justice had opened a criminal investigation into whether traders had used cryptocurrency exchanges to manipulate digital coin prices. However, the “homed in on” language here seems much more specific than we’ve seen before. Something appears to have changed. Whatever the story, the Tether/Bitfinex saga, which has already undermined Bitcoin’s public image, shows no signs of letting up.
Meanwhile, cryptocurrency prices continue to plummet, with Bitcoin’s dropping 20% in the last week. That’s led between 600,000 and 800,000 miners to close up shop since mid-November, according to CoinDesk. The Bitcoin network’s total mining power, or hash rate, has fallen by more than 20 percent since the beginning of this month. Bitcoin’s system is designed so that it can get its miners to stick around by changing its economic incentives in response to decreasing mining power. But the precipitous fall-off in price and mining power seems to reflect a profound change in the air—crypto winter or not. | | So, that happened. So much for Craig Wright’s prediction that Bitcoin Cash’s hash wars would take months. It’s already over. On Friday, Calvin Ayre, a billionaire ally of Wright’s, declared in a blog post that his side of the acrimonious hard fork, which calls itself Bitcoin SV (for Satoshi’s vision, in case you’ve forgotten) doesn’t want the Bitcoin Cash name any more. He also called for permanent split of the two chains, saying it would be a win-win since “the definition of winning is fundamentally different to each side.” Bitcoin SV, he wrote, is the “original Bitcoin, not the original Bitcoin Cash (whatever that even means).” Yes, exactly. Whatever that even means. | | Loose Change Fill your pockets with these newsy tidbits. | | | Usage of Bitcoin as a method of retail payment has decreased by 80 percent this year. (Reuters) | | | | The US Federal Election Commission has said it is permissible to mine cryptocurrencies in support of political campaigns. (CoinDesk) | | | | | | | Saudi Arabia is working with the United Arab Emirates to develop a cryptocurrency for bank-to-bank payments. (Finance Magnates) | | | | US investors can now buy blockchain tokens that represent shares in a luxury residence in South Carolina. (Fortune) | | | The Money Quote “I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.” —Patrick Byrne, CEO of Overstock, on why he’s staking his company’s future on blockchain technology despite the down market. Byrne expects to wrap up a deal to sell Overstock’s retail business by February. The centerpiece of the company’s blockchain portfolio is the yet-to-launch tZero, which is supposed to be a platform for trading crypto-tokens that represent traditional securities like stocks and bonds. (Wall Street Journal $) | | | |
