Monday, November 12, 2018

Register for Our Crypto Sentiment Survey on November 14

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LIVE WEBINAR | WEDNESDAY NOV 14TH AT 11:00AM EST

Crypto Sentiment Survey in 2018

CoinDesk and MarketWatch have partnered to compare the views of crypto investors to traditional investors regarding an identical survey to our respective audiences. The question? What were the respective audience's opinions and feelings about crypto? We wanted to see just how similar or different the two audiences were when looking at bitcoin and the overall crypto asset class overall.

Join CoinDesk and MarketWatch for a free webinar on November 14th at 11:00AM EST for an analysis on the findings. The webinar and report were sponsored by Zion Trades.

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Speakers

Nolan Bauerle
Director of Research
CoinDesk

Andy Neary
Customer Intelligence Director
Dow Jones

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Hashrate war

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FORK FIGHT: While traders may be in favor of Bitcoin ABC, one of the likely coins to result from this week's upcoming bitcoin cash hard fork, the hash power seems to rest with the competing Bitcoin SV implementation.

Data from Coin Dance shows that mining pools which have publicly declared support for Bitcoin SV control roughly 73 percent of the current bitcoin cash network hash power, well more than the 18 percent of hash power that Bitcoin ABC may have.

This contrasts starkly with price movements: according to data from Poloniex, the price of Bitcoin ABC is almost four times that of Bitcoin SV, based on pre-fork trading launched last week. Full Story

LESSONS LEARNED: What could drive a developer to build an uncensorable ethereum storage technology? A seven-year legal fight, that’s what.

Daniel Nagy, who previously fought a lengthy legal battle for hosting a node on an early file-sharing network, took the insights he picked up along the way to develop Swarm – a hotly anticipated storage layer for ethereum.

Focusing on systems architecture and privacy-preserving cryptography, his vision is to build the tech to make an attack so expensive that the legal system would be forced to update itself in response.

According to Nagy, that's because a fully robust network, "can actually inform decision making, even to the point of how law is interpreted by judges and enforcers." Full Story

RESEARCH CHAIN: A new patent application from IBM claims the process of conducting scientific research could benefit from blockchain.

Authored by a team at IBM's Watson Research Center, the filing offers a vision for dynamic collaboration – one where researchers can track their work across institutional borders. It could be thought of as an elaborate software changelog, but for science. Or, as the filing puts it, a system that provides "a tamper resistant log of scientific research."

Specifically, the blockchain system would comprise of a first block of research data and a second block with an analysis of that data, thus representing a log of the research. Summary and correction blocks can also be added, representing post-analysis of the original analysis, says IBM.

The innovation marks another non-financial application of distributed-ledger technology, which IBM has championed in recent months. Full Story

CoinDesk Research tracks many different metrics in the crypto economy. Network interest is important in determining the activity occurring within a blockchain’s internal ecosystem.

With the bitcoin cash (BCH) hard fork due Nov. 15, we observed the node types on Monday, Nov. 12 to asses the levels of support for each implementation.

Bitcoin ABC has the highest share at 48 percent, followed by Bitcoin Unlimited at 35.7 percent. Bitprim and Bitcoin SV are just about tied for third place, with 7.3 and 7.1 percent, respectively.

So what's on offer?

Bitcoin ABC adds smart contract features
Bitcoin SV does not, and will raise the block size to 128MB
Bitcoin Unlimited is a compromise between the two

Note: Node type share doesn’t exactly mirror sentiment. For example, hash rate has tended to lean towards the Bitcoin SV community in the recent weeks. Also, various businesses in the space will have a role in determining which potential coin becomes dominant.

For more research insights, check out the CoinDesk Research section here.

(Data sourced from coin.dance)

Jay Clayton
Chairman of the SEC

Kelly Loeffler
CEO of Bakkt

Dr. Mohamed A. El-Erian
Chief Economic Advisor at Allianz

Jeffrey Sprecher
Chairman of the New York Stock Exchange & Chairman and CEO of
Intercontinental Exchange, Inc.

HINT OF GAINS? Bitcoin defended a trendline connecting October lows yesterday, neutralizing the immediate bearish outlook. A recovery rally could gather steam if prices manage to cross the inverse head-and-shoulders neckline resistance of $6,390. Full Story

BEST OF THE BEST

BLOOMBERG: Early bitcoin developer Jeff Garzik – who joined the first cryptocurrency project as far back as July 2010 – is proud of bitcoin, even if it didn’t quite go in the direction originally planned, according to a feature by Bloomberg.

“It hasn’t evolved in the direction of high-volume payments, which is something we thought about in the very early days ... But on the store-of-value side it’s unquestionably a success," he said in the piece.

Once on the team, Garzik quickly became the third-biggest contributor to bitcoin's code after its pseudonymous creator Satoshi Nakamoto and fellow dev Gavin Andresen. In the years following, he claims he gave away bitcoin worth over $100 million at today's prices, in order to encourage other developers to help with the work.

Notably, Garzik also suggests that Nakamoto may have been a man called Dave Kleiman – a U.S. sheriff’s officer turned computer forensics expert. “It matches his coding style, this gentleman was self taught. And the bitcoin coder was someone who was very, very smart, but not a classically trained software engineer,” he said.

THE REST

FINANCIAL TIMES: The Bank of Canada's blockchain-based securities settlement project, Project Jasper, is facing delays – not because of issues with the tech, but due to regulatory hurdles, suggests an article from the FT.

The central bank has already completed three phases of the project, but its leaders say that there are many more questions to answer before practical benefits can arrive.

“It’s less and less about the technology. ... It’s more about the regulatory, the legal, the monetary policy issues,” Andrew McCormack, vice-president of payments and technology at Payments Canada, was quoted as saying.

For example, brokers needed digital cash in order to pay for securities within the blockchain pilot, and the most straightforward option was to give them access to funds issued by the central bank. However, doing that, said McCormack, would have “crossed the chasm and literally broke our own bylaws and, in actual fact, laws.”

Even so, the Bank of Canada isn’t yet considering making regulatory changes in order to smooth the path to DLT, the article says.

VENTUREBEAT: Universities shouldn’t rush to offer blockchain-related courses without finding out how to avoid the pitfalls first, says a piece from VentureBeat.

With student demand for blockchain training rocketing, educational institutions are rushing to offer courses and big-name partnerships. But without thorough preparation, universities could end up teaching teaching something that is likely to go obsolete very quickly and, in the meantime, “saddle students with debt,” the author says.

With the field full of misinformation, a lack of established texts and protocols that are evolving at a rapid space, credible data is sparse. As such, the author suggests three pillars to help universities avoid the possible pitfalls in blockchain education: focus on core concepts, determine actual industry needs and enforce expiration dates for curricula.

WHO WON #CRYPTOTWITTER

Consensus: Invest Keynotes

Jay Clayton
Chairman of the Securities and Exchange Commission

Dr. Mohamed A. El-Erian
Chief Economic Advisor at Allianz

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📰 CoinSheet 📰 - Quick update to yesterday's email

November 11, 2018

Tooo many t-shirts

I might have been a little too aggressive with yesterday's t-shirt offer. I didn't realize you folks could be bribed so easily.

The t-shirt offer is no longer available if you've signed up after this email was sent.

WTF are you talking about?

Here is the TL;DR from yesterday's email:

I'm bringing on a partner to run the newsletter (Kunyi Li, smart dude, good friend, first employee at Blocktower Capital, etc...)

Newsletter is getting a revamp, you're going to get:

Coverage of critical crypto events
Access to a Telegram channel
Macro market sentiment
Exclusive guest posts

And we're going to begin charging a small subscription fee.

For being an OG reader you can subscribe with a lifetime 50% off discount to our subscription plan which will cost you $5/month.

Offer expires end of day Monday.

To subscribe go to: https://coinsheet.substack.com/subscribe

In my original email I said you have 7-days to subscribe, but that was an arbitrary number, I decided to chance it based on email open rates.

Answering questions from yesterday

Getting tons of the same question. This should cut about 70% of them.

If you're a Patron / previous Patron who emailed me:

You're going to get your free year subscription added automatically.

There is nothing you need to do on your part.

If you're a student or you can't pay and you emailed me:

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CZ's Confidence 😎

November 12, 2018

Binance CEO Makes Reassuring Remarks About State of Cryptocurrency Market

Cryptocurrency market is healthy

Binance CEO Changpeng Zhao (CZ) recently spoke in a CNBC interview with Ran Neuner to talk about the state of the cryptocurrency market. Even as the entire market is down about 70% from its all-time high, CZ had nothing but positive remarks about the cryptocurrency market.

Binance has reportedly taken a massive hit from this bear market. CZ shared that Binance volumes are down significantly:

"Compared to January [of 2018], we are probably down 90 percent. So we only have one-tenth of the trading volume compared to what we had in January. But, compared to like a year or two years ago, we're still trading at huge volumes. Business is still okay, we are still profitable, and we are still a very healthy business."

While volumes are down substantially, Binance is doing well according to other business metrics:

"Right now we are still signing up a steady amount of new users every day so from what we are seeing, it's very healthy actually. The number of new users and the amount of crypto we hold are increasing very steadily. So if you look our cold wallets, the amount of BTC we hold, we have just seen an increase in people depositing Bitcoin to our exchange."

Volumes are actually twice what is reported

CZ also mentioned that the volume numbers reported on sites like CoinMarketCap don't tell the whole story. The CEO estimates that the real volumes are actually about twice as much.

The discrepancy between what is reported and the actual volume is due to over-the-counter (OTC) trading. This is when cryptocurrencies are traded outside of exchanges like Binance. OTC trading is commonly performed by institutional investors.

CZ commented on this, telling CNBC:

"What I've heard is the OTC market is at least as large as the live recorded volumes [on exchanges]. So that is at least 50 percent of volumes that is not being reported on CoinMarketCap. But we're not heading to that business, so we don't know the real volumes."

TAX

Traders are Skipping Taxes with a Lending Loophole

Skirting taxes

Currently, the U.S. government holds that every crypto-to-crypto trade counts as a taxable event. That means a lot of tracking for traders frequently moving between currencies.

However, according to VentureBeat, some traders are taking advantage of a loophole that circles around blockchain-based lending platforms.

To illustrate the loophole, VentureBeat used an example:

"Say you own $30,000 worth of Bitcoin, purchased eight months ago and you're aching to move into Stellar. Normally, you'd need to sell some Bitcoin to buy Stellar, but that would trigger short-term capital gains (it's been less than a year since you bought your Bitcoin). With the lending loophole, you avoid taxes by taking out a loan against your Bitcoin to buy Stellar."

Don't try this at home

Though this works in theory since the interest on the loan is less than the tax penalty you would have incurred, it may not work out so favorable if things turn sour.

For example, if both Bitcoin and Stellar dump significantly during the duration of your loan, you would actually owe the lending platform money since there could be a "margin call price" - a feature that asks for more money than the original Bitcoin you gave if the price falls too low.

Is this popular?

According to popular blockchain-based lending platform BlockFi, it is. However, the lending platform is also widely used for many other purposes such as general living expenses, travel expenses, business expenses, debt payments, and real estate purchases.

Still, regardless of what the tax book says, we don't recommend traders take on more risk with a loan to chase the moon.

MINING

Massive Mining Operation Goes Live in Canada

Mining north of the border

Bitcoin mining firm DMG Blockchain Solution has opened up a mining facility in British Columbia, Canada. The plan for this facility was originally announced in July.

The plant was supposed to be opened in September but was delayed a couple of months.

The facility is 27,000 square feet and will run at a maximum capacity of 85 megawatts. It is powered purely from a hydroelectric generator. This is notable as a lot of mining facilities disrupt the local power grid causing issues with the local government. Apparently, DMG's facility will run completely independent from the local grid.

Canada the new mining frontier?

China is home to a majority of Bitcoin miners, but that seems to be changing. Due to regulatory issues in China and opportunities arising elsewhere, miners are leaving the country at the same time new non-Chinese operations are popping up.

Canada has become one of the most preferred locations for cryptocurrency mining facilities due to cheap hydroelectric power. Also, the colder temperatures of the climate help to limit cooling costs.

The country's government has become a little wary of too many miners opening shop in their country with fears that they will take power from its citizens. To combat this potential issue, some areas of Canada have increased the price of electricity for miners and established the right to shut off their power if the city grid is at maximum capacity.

KNOW THE NUMBERS

Bitcoin ATMs Worldwide Set to Pass 4,000

According to Coin ATM Radar, a Bitcoin ATM tracker tool, the number of Bitcoin ATMs worldwide is set to pass 4,000 this week.

Despite the bear market, Bitcoin ATMs are actually being installed at an all-time high rate of 6.58 Bitcoin ATMs/day.

While 4,000 is still a measly number compared to the estimated 3,000,000 fiat ATMs around the world, Bitcoin ATMs have reached over 75 different countries and have attracted over 40 different producers in their short lifespan.

BITS

But wait, there's more...

The CFTC fined a Bitcoin trader $1.1 million after he defrauded investors to repay stolen cryptocurrencies to his former employee.
Japan's GMO Internet reported a 'historical Q3 performance' for its crypto-related businesses.
A new patent application from IBM reveals the computing giant is looking to tackle issues in scientific research with blockchain.

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