Cryptocurrency News Now!: It's all about the plumbing 🚰

Monday, April 22, 2019

It's all about the plumbing 🚰

April 22, 2019	View in browser

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Today's top reads

Lay foundation, get capital
Flash bots
Enterprise on ethereum
Crypto's candidate
The benefits of getting sued

This week's poll: Do you hold money on exchanges?
Click to answer: Yes, it's easier and cheaper for me No, not your keys, not your crypto

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Market update

COIN	PRICE	7-DAY
BTC	$5,314.72	+ 3.47%
ETH	$171.49	+ 3.49%
XRP	$0.325	- 0.08%
BCH	$291.25	- 5.15%
EOS	$5.23	- 4.53%

1. Lay foundation, get capital

There's the market and then there's the plumbing. Or rather, the startups that help develop the crypto market despite staying clear of the volatile assets themselves.

You know these firms well. The "plumbing" in crypto spans across exchanges, mining gear manufacturers, second layer solutions, custodians, and more.

Besides being extremely important in laying the foundation for the rest of the crypto market, these firms are also getting the lion's share of venture capitalist's wallets.

Here's why: VC firms would rather avoid direct investment into digital assets because of tightening regulation worries and security lapses - not to mention the associated volatility.

But outside of plumbing firms sweeping up investor money, here's some other 2019 blockchain investment trends you should know:

It's a strong start for corporate. So far in the first (almost) four months of the year, corporate investors have poured $850 million into crypto and blockchain startups. That puts 2019 investments in the running to overtake 2018's massive $2.4 billion record year.
Venture capital flows have cooled. In contrast to their corporate counterparts, VC firms have cooled off in 2019 with only about $1.12 billion invested compared to last year's whopping $5.58 billion.
Eyes are looking past trade finance. According to Linklaters fintech leader Richard Hay, investors are looking past trading as a use case. That means less excitement for new exchanges, but more money for transformative developments like blockchain debt issuance.

The bottom line: 2019 crypto startup capital is on the search for deeper applications - a.k.a. ones that can push the entire industry to new boundaries.

2. Flash bots

Cornell Tech is calling them Flash Boys 2.0. In a new report released by the university, researchers uncovered a special subset of arbitrage bots that are profiting off of ordinary users on decentralized exchanges using front running techniques - the same ones that Michael Lewis exposed Wall Street for in 2014.

The payout? Well, after only tracking six decentralized exchanges, the researchers found that about 500 bots stack up to $20,000 per day from the nefarious activities.

But the problem could be much bigger. Since decentralized exchanges only account for a fraction of the industry's trading volume, the researchers believe the problem could actually be in the billions of dollars if their numbers are extrapolated to include centralized exchanges as well.

Side note: To see if consist profits were possible like their numbers were saying, the researchers built their own bot that was so good, they received buyout offers.

3. Enterprise on ethereum

The 'Billion Dollar Babies' have a common toy. In a new report released by Forbes, over 50% of billion dollar firms using blockchain are building applications with Ethereum.

Why Ethereum? It's plug and play. In other words, it's easier for businesses to build and integrate their new applications with an existing solution like Ethereum than to create their own private blockchain.

Not to mention public blockchains could help businesses:

Speed up business processes
Increase transparency
Potentially save billions of dollars

And it just got easier. Last Tuesday, Big Four firm Ernst and Young announced its new Nightfall protocol to help businesses build better applications on the Ethereum blockchain - without any permission restrictions whatsoever.

Consider it a donation...a million dollar donation that took over a year and 200+ EY blockchain engineers to build.

4. Crypto's candidate

Crypto has a 2020 presidential candidate. While he shares similar beliefs about healthcare, environmental, and economic policies as his fellow Democratic party members, Andrew Yang also cares about something else: adoption of cryptocurrencies.

Yang's campaign policies page reads:

"Investment in cryptocurrencies and digital assets has far outpaced our regulatory frameworks in the US. We should let investors, companies, and individuals know what the landscape and treatment will be moving forward to support innovation and development. The blockchain has vast potential."

That's a broad statement though. More specifically, Yang wants to:

Define what a token is, and when it is a security
Provide for consumer protections in the space
Define which federal agencies have regulatory power over the crypto/digital assets space
Clarify the tax implications of owning, selling, and trading digital assets

Does Yang have your vote? Depends on what you care about most. All we know is that out of all the 2020 presidential candidates, Yang is looking to be the most pro-crypto.

5. The benefits of getting sued

So you're getting sued. That means unwanted time spent in court, stressful circumstances, and (potential) financial losses - all of which are negative outcomes.

Of course, unless you're Peter McCormack. According to data from hive.one, the popular crypto podcaster actually saw an increase in "influencer score" across all communities - Ethereum, XRP, and Bitcoin - after standing up to Craig Wright and Calvin Ayre's recent crusade.

The reason? Hive.one thinks it's because of a concept called 'being the hero.' Basically, McCormack took on personal risk for the benefit of the group and that is a proven way to boost one's influence.

Long story short: McCormack's move to fight Craig Wright has rallied troops from all walks of crypto to support his cause.

6. You should also know

Coinbase took home an estimated $520 million in revenue in 2018 after generating $923 million the year prior.
Binance, Kraken, and ShapeShift all delisted Bitcoin SV following Craig Wright and Calvin Ayre's lawsuit extravaganza.
Binance is planning to conduct a mainnet swap for BNB on April 23rd to introduce the world to Binance Chain.
Monero had its fifth anniversary and the community hosted a number of events to celebrate.

7. Bears in hibernation

From last week's poll, 62% of respondents answered that they believe the bear market is over.

If true, it would mark the end of the fourth Bitcoin bear market in the cryptocurrency's short lifetime. It would also mean this drop wasn't exactly the worst of them.

Ranked from longest to shortest, here are the other three major Bitcoin bear markets that shook the crypto industry:

November 29, 2013 - Jan 7th, 2015 (415 days)
January 11, 2012 - July 11, 2012 (185 days)
August 7, 2012 - December 6th, 2012 (111 days)