Bitcoin's bugaboo

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Sponsored by   September 27, 2018 WE'LL WAIT:  Neither VanEck nor SoilidX was perturbed by the SEC's announcement of a further delay to making a decison on their proposed bitcoin ETF. Speaking to CoinDesk, Gabor Gurbacs, the director of digital asset strategy for VanEck, stated that he is undeterred by this move by the SEC. Echoing his sentiments, the CEO of SolidX, Dan Gallancy, said that this decision had no effect on his outlook over the proposal. What sets this proposal apart, from the nine others that the SEC rejected only to later review, is the fact that this ETF would hold a repository of actual bitcoins unlike the others which had proposed to hold bitcoin futures. Now it's all a waiting game as the SEC's current deadline to come to a decision on the proposal is 180 days after filing. Which will be right before Christmas, unless the agency files one last extension. Full Story DEEPER DIVE: Running more than 400 pages, the Bitmain IPO prospectus has given the crypto community a wealth of new information to digest about one of the industry's most powerful companies. According to the document, the manufacturing of cryptocurrency mining equipment has been highly profitable for the company, which logged a 328 percent compound annual growth rate in sales from its start in 2015. Notably, the prospectus reveals that profit growth has lagged revenue growth, implying that the company is incurring higher manufacturing costs or it is re-investing money in the business. Looking at the numbers, we see that both explanations are plausible. The document also notes that "the fluctuation of certain cryptocurrencies caused the anticipated selling price of certain mining hardware below their cost." Full Story THE APOSTATE: Angus Champion de Crespigny, a former EY consultant who advised enterprises on blockchains, discusses his thoughts on permissioned ledgers, once widely touted as the way forward for business. In a CoinDesk op-ed today, he explains how his outlook on permissioned blockchains has changed, and questions if at all they provide a real business benefit. The way de Crespigny sees it, most people in the business world seem to define blockchain quite like they define distributed databases. And if there isn’t a difference in the way it’s defined, blockchain shouldn’t be its own concept at all. He goes on to explain three other major factors to consider when thinking about permissioned blockchains: differentiation, process impact, and necessity. Full Story Recently, a bug affecting Bitcoin Core versions 0.14.0 to 0.16.2 was discovered after lying unseen for two years. It could have been exploited to print more bitcoins than the 21 million fixed supply, and the worst case scenario was runaway inflation. The bug was fixed in version 0.16.3 released on September 18. However, the bitcoin community is not updating in lock step. About 30 percent of nodes are running the new version while the overwhelming majority, at 70 percent, are not and are thus vulnerable. Bitcoin Core developer Luke Dashjr suggests that any Bitcoin Core implementation before 0.16.3 is at risk of disrupting the network. It’s important to note that not all nodes publicly disclose information. The actual percentage of nodes that have updated could be higher or lower. For more research insights check out the CoinDesk Research section here. SPONSOR SECTION   Get an in-depth look at the economics of the bitcoin marketplace from CME Group's leading economists. Explore parallels to commodity markets' inelastic supply, dig into the impacts of demand for bitcoin, and see how CME Bitcoin futures help facilitate access and risk management to this rapidly developing asset class. Access paper.    HANGING IN THERE: Bitcoin's battle to cross over into bullish territory is proving to be quite difficult.. If the cryptocurrency can stay above $6,300, then it has a chance, technical analysis indicates. Full Story BEST OF THE BEST: FORTUNE: This piece profiles the "first billion dollar company to come out the bitcoin boom," Coinbase and its CEO Brian Armstrong. In what can be looked at as a constant adrenaline rush, life as an employee at Coinbase is described as "risky," with criminals looking for the location of cryptowallets. Armstrong got into the crypto space in 2009, like many others, after reading Satoshi Nakamoto's white paper describing the theory behind bitcoins and blockchains. Wanting to simplify the process of acquiring bitcoin, Armstrong dreamt up Coinbase, now one of the space's bona fide unicorns. THE REST: THE BLAZE: Amid a tense atmosphere regarding the upcoming mid-term elections, this conservative-leaning news outlet reports that West Virginia has rolled out a blockchain-based app for absentee voting. State Secretary Mac Warner spearheaded this project to "fix the problem" that West Virginians living out of state faced each election season. But some security experts were quite skeptical of "moblie voting," with one saying, paper ballots are “absolutely the safest way” to be assured of election results." WALL STREET JOURNAL: The business newspaper frames the Bitmain IPO as "one of the first major instances where the traditional capital markets and the newer cryptocurrency world will collide." The Journal also notes that this IPO comes at a rough time for both the cryptocurrency and public equity markets. "For a company of this size like Bitmain, it's probably going to get a better valuation on a huge deal like this in the traditional markets than in an ICO, especially in today's market," one asset manager is quoted as saying. BLOOMBERG: On a slightly disturbing note, Bloomberg reports that crypto exchanges could possibly be "offering incentives that encourage users to inflate volumes" of their transactions. This comes after BitForex reported transaction volumes comprable to that of London's Stock Exchange. Claiming no foul play, BitForex explained that it engages in so-called transaction mining to increase its volumes, although Bloomberg notes this practice is also looked down upon.   We've launched our first-ever podcast, "Late Confirmation," a digest of top stories in the blockchain world, delivered daily from the team at CoinDesk and sponsored by the Oxford Blockchain Programme. Listen to Latest Episode and Subscribe   WHO WON #CRYPTOTWITTER   ConsenSys Jobs Blockchain Jobs Circle Jobs BitGo Jobs Copyright © 2018 CoinDesk. All rights reserved. Our mailing address is: 250 Park Avenue South New York, NY, 10003, US Want to change how you receive these emails? You can update your preferences or unsubscribe from this list

#91: What’s behind the stablecoin rush

Circular logic

Chain Letter Blockchains, cryptocurrencies, and why they matter 09.27: Circular logic Welcome to Chain Letter! Great to have you. On Thursdays we take a closer look at a key concept in world of blockchains and crypto-assets. Feel free to suggest topics that you think we should touch on in the future. Will cryptocurrencies ever become much more than speculative assets? If they do, the key will be a new kind of digital coin that is engineered to maintain a steady price—at least, that’s what a growing number of developers in the crypto world seem to believe. We’re in the midst of a “Cambrian explosion” of such projects, says Garrick Hileman, head of research at Blockchain, a cryptocurrency services firm. According to a survey Hileman published this week, the number of what are called stablecoins has grown from a just a handful to nearly 60 in the past 18 months, and more than a dozen more are expected to launch in the near future. Hileman says the stablecoin rush speaks to a growing understanding that the volatility of cryptocurrencies like Bitcoin and Ethereum “is going to pose a problem” for some of the most sought-after blockchain applications, like payments, lending, and insurance. And he says it reflects the hypothesis that non-volatile digital coins can form an “infrastructure layer” that could vastly expand the global cryptocurrency user base. Cryptocurrency oftens gets cast as a new form of money that will benefit people who don’t have access to a bank account or a stable national currency. Another popular prediction among crypto-enthusiasts is that smart contracts, blockchain-stored computer programs that automatically move cryptocurrency between users according to agreed upon conditions, will revolutionize the way we do business online. But payment applications have so far failed to gain much traction, and a fair amount of last year’s exuberance about the future of smart contract-powered decentralized applications—dapps, if you prefer—has been replaced by uncertainty over whether Ethereum and similar platforms can live up to the hype. Ethereum and other currencies have swung wildly in price, and that could well be one factor crypto payment-based applications haven’t seen wider adoption. If the goal is to expand the user base, though, it’s important to be clear about what we mean by “stablecoin.” The term can be used to refer to a few very different concepts. Tether, a popular stablecoin that is supposedly backed by US dollars in a bank account, has been around for years. A useful tool for traders wanting to safely park their gains in other cryptocurrency investments without having to convert back into fiat money, Tether has inspired a number of copycats. According to Hileman’s report, nearly 60 percent of the $350 million that venture capitalists have invested in stablecoin projects has gone toward approaches that don’t rely on banks and thus promise to be more decentralized and accessible. Some use cryptocurrency instead of fiat money as collateral, relying on smart contracts to manage the collateral’s volatility. But most of this funding has backed yet-to-launch coins commonly described as “algorithmic central banks.” Such a coin wouldn’t use collateral at all, and would instead use software to increase and decrease its supply in order to maintain its price. Critics doubt that these more complicated stablecoins can hold their pegs in the long run. The systems also raise complicated new legal questions, especially given that many rely on an element of market manipulation to maintain price stability, says Hileman. “It is very early days, not just on the technology side but on the regulatory side,” he says. “Trying to make too many predictions about where this will wind up is hazardous at this stage.” Are you a thought leader, innovator, and executive looking to make your opinion heard? We're now accepting applications to the MIT Technology Review Global Panel. Learn how to share your expertise and opinions today. Loose Change Fill your pockets with these newsy tidbits. • The Chinese crypto-mining chipmaker Bitmain has filed for an initial public offering in Hong Kong. (Reuters) • Google has adjusted its ban on cryptocurrency-related advertising, and will now let “regulated” cryptocurrency exchanges in Japan and the US to place ads on its sites. (Bloomberg) • Japanese financial services company SBI is testing a crypto-token called “S Coin” for retail payments. (ETHNews) • In a closely-watched decision, a US federal judge has ruled that an obscure cryptocurrency called My Big Coin is a commodity, clarifying the Commodity Futures Trading Commission’s authority to police cryptocurrency fraud. (Reuters) • Circle, the cryptocurrency investment platform backed by Goldman Sachs and Bitmain, has released its own fiat-backed stablecoin. (CoinDesk) The Money Quote “What keeps coming up in my mind is that this isn’t the Wild West, this is a lot of people trying to figure out how to comply, and I think this is the challenge that we don’t hear about in the media.” —An unnamed representative of the US Chamber of Commerce, to members of Congress during a meeting this week focused on cryptocurrency regulation. (Finance Magnates) We hope you enjoyed today's tour of what's new in the world of blockchains and cryptocurrencies. Send us some feedback, or follow me @mike_orcutt. Know someone who might enjoy reading Chain Letter? Was this forwarded to you, and you'd like to see more? Discover where tech, business, and culture converge. Attend EmTech Digital March 25-26, 2019 San Francisco View this in a browser You received this newsletter because you subscribed with the email address: contacto1745.send-mail@blogger.com edit preferences   |   unsubscribe   |   follow us      MIT Technology Review One Main Street Cambridge, MA 02142

Mining to the moon

September 27, 2018

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QUOTE OF THE DAY

"Don't be afraid to be a loner but be sure that you are correct in your judgment."

- Walter Schloss

MARKET

COIN	PRICE	24H
BTC	$6,525.704455	+0.1%
ETH	$218.877756	+1.49%
XRP	$0.523857	-5.15%
BCH	$574.625559	+28.08%
EOS	$5.62958	+4.55%

*Information as of 9:30 AM EST

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MINING

Bitmain Reveals Remarkable Growth After Officially Filing for IPO

It's official...Bitmain is going public

According to a document released yesterday, Chinese mining giant Bitmain has officially filed an application to list the company's shares on the Hong Kong Stock Exchange (HKEX).

Prior to listing, Bitmain was required by HKEX to provide the document, called a "draft application", to give investors a detailed business overview.

After reviewing the 438-page document, Bitmain crushed it during the 2017 crypto boom, but can they sustain those profits in the long-run?

Selling the shovels

While most were out searching for gold during the California Gold Rush, some made some healthy profits by selling shovels. Bitmain is 'selling the shovels' (mining equipment) during the crypto boom and it's clear the company is generating healthy profits.

In 2017, Bitmain grew its revenue to a whopping $2.5 billion, up from $277 million in 2016.

And so far this year, the mining firm shows no signs of stopping after it reported this year's revenue through June 30 to be $2.8 billion - already surpassing total 2017 revenue.

It's not all sunshine and rainbows though

Though Bitmain's revenue growth looks promising, 2018 has definitely been a bumpy ride.

Since the crypto market has been on a steady decline following January's peak, Bitmain has likely seen a slump in sales and this caused operating margins to decrease from 48% in 2017 to 36% in the first half of 2018.

Knowing this, Bitmain is likely choosing to hide the firms declining sales by lumping financials of the first quarter and the second quarter of 2018 together.

Clear skies ahead?

Despite the crypto slump, Bitmain still released its new innovative 7nm mining chip earlier this week.

Add in a green crypto market and Bitmain could definitely have some steam going into its IPO, but for now, the firm will need to continue weathering the storm.

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GOVERNMENT

Experts Claim North Korea is Using Crypto to Dodge U.S. Sanctions

North Korea is using crypto behind the U.S.'s back

Two financial experts, Lourdes Miranda and Ross Delston claim that the North Korean government is using cryptocurrencies as a way to evade United States imposed sanctions.

These two experts know what they are talking about. Miranda is a financial crimes investigator specializing in intelligence collection and Delston is an expert witness specializing in anti-money laundering and combating the financing of terrorism.

It is thought that North Korea is using international exchanges to launder money so that they can exploit international financial institutions. According to sanctions, any financial institution that does business with the United States is not allowed to deal with the North Koreans.

According to Priscilla Moriuchi, a former NSA cybersecurity official, North Korea is heavily involved with crypto:

“North Korea has pursued other avenues for obtaining cryptocurrencies as well, including mining of both bitcoin and Monero, ransom paid in bitcoin from the global WannaCry attack in May and even commissioning a cryptocurrency class for North Korean students in November.”

North Korea may be developing its own cryptocurrency

According to Miranda and Delston, North Korea is using popular cryptocurrencies like Bitcoin to dodge sanctions. But, the government is likely creating its own cryptocurrency.

Having its own cryptocurrency would give even more power to the shady nation. While most blockchains are known for being decentralized, centralized blockchains are possible. North Korea would likely maintain control over their blockchain and give themselves permission to alter any records.

Miranda and Delston talked about the power a government controlled crypto would give to North Korea:

“Having their own crypto-currency would also facilitate their ability to open online accounts under the guise of a non-adversarial nation using anonymous communication to conceal the user’s locations and usage on the internet.”

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ETF

VanEck and SolidX Remain Unfazed Despite Last Week's ETF Delay by the SEC

Patiently waiting for their turn

Last week, the U.S. Securities and Exchange Commission announced the second delay of the VanEck-SolidX ETF.

Initially, the application was filed on June 20th and may now have to wait over 6 months before any final decision is made. Even if regulators reach the new December 29th deadline, they still have the ability to further delay the ETF approval into February.

It's a bummer to see the ETF decision delayed once again, but this time, neither VanEck or SolidX were surprised.

No panic at the headquarters

Following the SEC announcement, CoinDesk reached out to both VanEck and SolidX to gather opinions about the matter and both companies remained unfazed in the midst of uncertainty.

Gabor Gurbacs, director of digital asset strategy for VanEck, went so far as to the say the delay was actually "expected" since the SEC "needs time to understand the market better."

Adding to that, Gurbacs holds that the SEC has all the material it needs to make a decision:

"We have answered pretty much every question that was asked and especially the 18 questions ... around liquidity, pricing, market manipulation, it's all part of our application how we address that."

Taking the time to get it right

The SEC is taking its time to get this ETF decision right since it could be a pivotal moment in Bitcoin's future.

To do this, the SEC has asked for the public to comment with any insights, opinions, or research relating to the decision on its website.

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RIPPLE

SBI Ripple Asia gets Green Light from Japanese Regulators

MoneyTap coming in hot

Japanese financial firm SBI Holdings has received regulatory approval to move forward with SBI Ripple Asia, a joint venture with the popular crypto startup Ripple.

Allegedly, SBI Ripple Asia has been in the works since 2017 and is looking to bring its new smartphone app MoneyTap to market soon.

Now that SBI Ripple Asia received permission to handle electronic payments as a new “Electronic Settlement Agency Service Provider”, MoneyTap will soon allow users to send payments on its platform based on distributed ledger technology (DLT).

Things are heating up

In the last week, Ripple's XRP cryptocurrency experienced a 47% gain as positive sentiment grows around the startup's new partnerships and product launches.

Many were impressed by the new partnership with PNC Bank as well as the reveal that Ripple's newest product xRapid may launch within the next month.

Following these announcements, XRP made a dash for second place as it passed Ethereum in market cap for the second time this week, however, it could not sustain the position.

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BITS

• A state-owned commercial bank in China completed the issuance of mortgage-backed securities worth $1.3 billion using a blockchain network.
• A U.S. judge sided with the Commodity and Futures Trading Commission in a cryptocurrency fraud lawsuit, ruling bitcoin is a commodity.
• Japan's Financial Services Agency (FSA) stated that it regrets allowing Zaif to continue its operation after the exchange was given two warnings to drastically improve its system.

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COIN OF THE DAY

Golem (GNT)

Golem is a global, open source, decentralized super computer that anyone can access. It is made up of the combined power of users' machines, from PCs to entire data centers.

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