Bitcoin price looks shaky after dropping below $9.3K support but still remains in a general uptrend since March even if another pullback occurs.
The price of Bitcoin (BTC), the top-ranked cryptocurrency by market capitalization, has seen a spike towards $10,500 before the halving took place on May 11. However, the price of Bitcoin has been having problems since the halving and is currently showing more signs of weakness.
On the other hand, altcoins have been starting to show signs of life with the BTC market dominance index sliding from 67% to 65% after the halving. Is the momentum now shifting towards altcoins from Bitcoin as the most anticipated event is behind us?
Crypto market daily performance. Source: Coin360
Bitcoin price is hovering inside a wide range as volatility drops
The price of Bitcoin is stuck inside a wide range as the next chart shows. The resistance area in the red zone between $9,800 and $10,100. At the same time, the price is finding support in the $8,250-8,500 area.
Additionally, BTC is moving above the 100-day and 200-day moving averages (MA), a bullish sign for the markets.
BTC USD 1-day chart. Source: TradingView
As the halving hype is slowly fading and the market goes back to its daily rhythm, the price of Bitcoin is also stabilizing. Is that unusual?
No, that’s normal. The halving was such a big event for Bitcoin that the hype on social media can create unsustainable price rallies and drops around the event.
BTC USD 2016 halving 1-day chart. Source: TradingView
The previous halving shows a similar structure. The price of Bitcoin moved significantly in the run-up to the event, then a pre-halving crash occurred and a new range was established. Throughout the month, the price of Bitcoin consolidated inside a range.
Afterward, one more drop occurred and the market continued its upward momentum while holding the 200-MA as support until the peak in December 2017.
Bitcoin fails to break $10,000 and drops out of the rising wedge
BTC USD 4-hour chart. Source: TradingView
As the 4-hour chart is showing, the price of Bitcoin lost the rising wedge structure and broke down. In other words, another failure breaking through the $10,000 psychological barrier.
Alongside the drop, the price lost the support at $9,300. Recent moves have also confirmed this level as resistance as well. However, support was found at $8,900 as the chart is showing.
What’s next? Is the upwards momentum over? Or is the market simply returning back to normal with altcoins gaining more attention?
Total market cap holds above 200-day MA
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
The total market capitalization is still holding the 100-day and 200-day MAs as support, which is crucial for further upwards momentum.
However, the market cap itself is currently consolidating after a 120% surge in a matter of eight weeks. What’s the crucial level to hold? It’s the grey box at $220-225 billion.
If that level remains support, the total market cap will be in prime position for a surge toward $300+ billion, possibly even $360 billion. However, losing that key level can see a fast drop.
The significance of this level lies in the fact that it’s both the 100-day and 200-day MA acting as support confluent with a strong horizontal support level, which served as support throughout 2018.
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
Thus, not only will $220-225 billion level holding as support be a strong signal for further upwards momentum, but it would also make the March 12 crash one big shakeout for the entire cryptocurrency market.
Finally, the volume indicator is showing an increase in volume. This is another strong signal as this would suggest more accumulation.
Altcoin market capitalization still lagging behind
Total altcoin market capitalization cryptocurrency 1-day chart. Source: TradingView
The total altcoin market capitalization chart shows a strong support/resistance flip of $70 billion, a level that’s also confluent with the 100-day and 200-day MAs as support. This is important as the market cap didn’t lose these MAs during the previous crypto bull market cycle.
However, as Bitcoin had significant support in 2018 at the $6,000 level, the total market capitalization had done the same with $220-225 billion. But now, the total market cap is again holding the $220-225 billion level as support while the price of Bitcoin is now 50% higher.
The altcoins by themselves are also lagging heavily as $113 billion is the 2018 support level comparable with the $6,000 level for Bitcoin.
Total altcoin market capitalization 1-day chart. Source: TradingView
The chart above shows that altcoins have been lagging in general. Is that a bad thing? No, Bitcoin is a first mover and also peaked first in December 2017, after which the altcoins followed.
Right now, Bitcoin had its first run pre-halving towards $10,200. But the volume is now also increasing for altcoins. This means that demand and interest are increasing potentially setting the stage for altcoins to finally catch up.
The bullish scenario for Bitcoin
BTC USD bullish scenario 4-hour chart. Source: TradingView
The grey zone (with a potential wick towards $8,950) needs to hold. After that, a breakout of $9,300 is required to eventually push the price toward $9,600 or higher.
If such a move occurs, a retest of the range high between $9,800-10,100 is likely as the next step. As this level has been tested many times already, the resistance level should be weaker as a rule.
In that regard, if this scenario plays out, a breakout to the upside could see the price of Bitcoin potentially run toward $11,000 or $11,500.
The bearish scenario for Bitcoin
BTC USD bearish scenario 4-hour chart. Source: TradingView
However, once the price of Bitcoin isn’t able to break through the $9,300 barrier, retests of the lows should be expected. Levels to test would be $8,800 (already tested once already), but, more importantly, $8,200-8,500 support of the current range.
Nevertheless, this would still not be catastrophic for Bitcoin in general. The structure would still remain in an upward trajectory since March 12. The price has been making higher highs and higher lows since then, which is by definition a strong upward trend. Consolidation is, in fact, healthy for the market if new highs are to be established.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
The centralized financial system has compromised itself several times during the last two decades alone, and now it’s time for a serious change!
Did you notice the song that Christian Bale’s character was jamming out to in his office when his partner came in to pull the money in The Big Short? Well, it happens to be my favorite metal band of all time: Metallica. And that song is called “Master of Puppets.” It’s almost ironic that as I was writing this article on the real truth behind what’s currently happening with the collapse of our financial and economic markets and calling it “Master of Puppets” — well, this movie scene popped in my mind.
Yes, The Big Short is about the big 2008 financial crisis caused mainly by none other than the United States Federal Reserve. Spoiler alert! This will be one of the last times you read about any type of “correlation” here in this article.
Master of Puppets is Metallica’s third album, released in 1986, and it is probably the greatest metal album of all time. I still listen to it almost weekly. It’s great for working out or getting pumped up before a business meeting.
Anyways, back to the master. The curtain has been removed and the truth revealed: money is created out of thin air, and the banks and Wall Street are bathing in it.
To be very clear, there was a major and historical financial crisis by orders of magnitude already about to explode, and the COVID-19 pandemic just brought the economy to its knees a tiny bit quicker.
At a crucial intersection of events in time that couldn't have been more bluntly shoved in your face, 16 million people in the U.S. lost their jobs (and it's almost 36.5 million now.) And like a drunk driver recklessly running a red light at an intersection, the Dow Jones Industrial Average had the highest gains since 1938. All while the Fed was printing 4 trillion U.S. dollars out of thin air.
Where's the correlation? Whoever can find it will prove reincarnation exists, as they must be J. P. Morgan himself, reincarnated in the flesh — only 100 years even more crafty and conniving. And the government and the Federal Reserve say Bitcoin (BTC) is backed by thin air?
Our economy and the Federal Reserve is built on sticks (debt), and remember what happened to that little piggy that didn’t use bricks? Let’s hope the strings become severed from the puppet master and like a bungee cord slap back into its face with the inertia and momentum of more than 150 years of control, lies and manipulation.
The amount of truth that’s starting to become available and acknowledged by the general public about our governments and financial institutions is alarming, and hopefully this will be a stepping point into a new paradigm or, what I like to say, a “new world order.”
The Fed and the government’s economic strategy is just putting an already used Band-Aid (quantitative easing and debt monetization) on a gunshot wound. It’s not fixing the real problem. And for obvious reasons.
The U.S. has for years substantially spent trillions of dollars more than it brings in. To date, the debt owed by the federal government is over $25 trillion. Even more unfathomable to see, with some very complicated calculations, is that it’s looking like an estimated, or near, amount of $100 trillion will need to be printed (out of thin air), or what the Fed likes to call "increase the monetary base,” in order to bail out and keep institutions afloat.
This would then create the ripple effect of causing global economies to reach hyperinflation such as has been never seen before. That's called a lose-lose (or no-win) situation caused by none other than our government, the banking system, Wall Street and their combined mismanagement of our economies.
Understanding economics and monetary policies can be complicated for many, even myself, but it’s not complicated enough where I will not speak up and just sit here as the blind sheep being led by the wolf in sheep’s clothing to my bitter end.
To clarify, as it's important: Bitcoin will never be a replacement for a nation’s central bank currency or new digital currency that's in development now. It’s more the digital gold of the 21st century and onward.
But most importantly, and much like the U.S. fighting for its freedom and control from an unfair controlling centralized system such as England, it was the first to step in thousands of years of oppression to launch a revolution.
Like Joan of Arc or Che Guevara, who became martyrs for the better of society, Bitcoin itself has taken the beating from its first inception — including being declared a national security issue — but it was so powerful in igniting a revolution that it withstood all the hardships and persecution that the governments and central banks cast upon it. So, what it serves to be is the Medal of Honor for this new paradigm shift of the people’s money, leading the future of money with a more transparent, fair and peer-to-peer monetary system.
The more we talk about this, the more people may eventually get it — I hope. The general public should really try to understand this. It’s all credits and debts and leveraged positions and margins.
Remember that incredible luncheon scene in The Wolf of Wall Street where Matthew McConaughey’s super Wall Street broker character educates a young and hungry rookie broker, played by Leonardo DiCaprio, breaking down how the real system works? Matthew McConaughey, with a straight face and twist of sarcasm, says, “Fugayzi, fugazi. It's a wazzy, it's a woozy. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart. It’s not f------ real.”
Just so you know: This system doesn’t just apply to brokering trades on the stock market. It applies to all the banking, monetary and financial systems around the world.
Fairy dust old money is just a hierarchically controlled propaganda belief system.
Blockchain-based new money is the P2P, fair and transparent people’s-money.
That's exactly right. Thank you, Martin Scorsese and your screenwriters, for this brilliantly creative scene. Yet it’s fair to say that this part of the scene was definitely outshined by the more memorable “rookie numbers” part.
Maybe they were so caught up in the genius writing and humor from Scorsese and these two brilliant actors that they missed it. I know I almost fell out of my chair laughing.
So, as the banker artistically creates his leveraged position out of thin air, like abstract images flow out of the tip of Dali’s paintbrush — or Scorsese's brain to film — I ask you: Does art imitate life, or does life imitate art?
Finally, the cat is out of the bag, though unfortunately only hindsight is 20/20, and time will tell what changes actually occur after this mess. Hopefully it’s different this time.
As says the famous "possible quote" of Henry Ford (most people don’t know the real facts behind that quote) that was paraphrased by congressperson Charles Binderup on March 19, 1937, in the House of Representatives:
“It is perhaps well enough that the people of the nation do not know or understand our banking and monetary system, for if they did I believe there would be a revolution before tomorrow morning.”
Want to know how the banking system really works? Here it goes:
You don't deposit cash at a bank. You actually just lend it to the bank, and when you go to draw on that account, you are just creating a transaction inputted on a digital ledger. You are not actually drawing out your original money. The banks then charge you fees to actually lend them money as well in the form of monthly account fees, overdraft fees and all the other small print fees that sneak in.
When the bank deposits money in your account in the form of a credit — for instance, if you buy a house — it's not an actual credit, it's really a debt that it repackages and calls a mortgage by leveraging its position and creating a profit margin for the services of lending you part of your own money back that you originally gave it, as well as all its other customers’ money. There is only one form of real money in this transaction, and that is the money that you originally gave the bank. It’s basically holding a lien over you and on your new house with the money you and its other customers let it borrow, which it turned around and let you borrow again and charged fees on it. All it did was “artistically” create a leveraged position and profit margin by creating a credit and debt out of thin air.
The stark reality is that there really is no money. This centralized system is just conjured up credit, debt and margin entries on a centralized ledger that’s agreed upon (consensus) by a centralized group of participants.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
A new crypto documentary promises to tell the story of how cryptocurrency can affect social change across the African continent.
Another week, another cryptocurrency documentary review... Although Banking on Africa: The Bitcoin Revolution, released May 22, promises something a little different.
For a start, amongst the usual crypto-101 and industry-overview fare, a focus on how Bitcoin and cryptocurrency is transforming the African continent feels like a breath of fresh air. After all, wasn’t “banking the unbanked” one of the nobler use-cases for Bitcoin, before it became all about the price?
In addition, most documentaries don’t have an accompanying in-depth 37-page report, allowing viewers to dive deeper into “The State of Cryptocurrency in Africa” and follow up on the topics covered in the film.
Both the report and the documentary are supported by cryptocurrency platform, Luno, which has a strong presence in Africa, having originally headquartered in Cape Town.
This left me wondering whether I was about to watch an overly long promo-piece, when I attended the virtual premiere earlier this week. However, they did send takeaway pizza, so who’s gonna complain?
Life-changing stories of crypto in Africa
The film opens with Lorien Gamaroff, founder of the blockchain-based social outreach project Uziso, standing outside a Soweto school in the dark.
He is about to unveil a project which enables donors from around the world to support such schools by sending funds to cryptocurrency-enabled smart electricity meters.
It also features the story of Alakanani Itireleng, Africa’s original Bitcoin Lady, who discovered Bitcoin when trying to help her terminally ill son, and set up Botswana’s SatoshiCentre to spread the word of Bitcoin in Africa after he sadly passed away.
Strong theme left me wanting more
So far, so promising. Exploring how Bitcoin and cryptocurrency can enact actual social change in African communities desperate for the opportunity to improve their living conditions is a strong theme.
Unfortunately, for me personally, the film doesn’t explore this theme deeply enough. The threads featuring Gamaroff and Itireleng are spread across the film’s 47 minute run-time. But they are interspersed with more general comment, explaining Bitcoin and cryptocurrency in relation to traditional financial systems, and the benefits it can bring.
Sure, this is delivered by crypto personalities from Southern Africa, and gives an African perspective on the subject, exploring why the continent is well-suited to best realize the potential of the technology... but in general terms, this isn’t that different from elsewhere in the world.
Don’t blame the player...
This isn't the fault of the film, but of the niche nature of the cryptocurrency world itself.
While those who follow the industry (our readers included), are often passionate about it, this is still only a tiny fraction of the population. Certainly not enough to rely on to create a sizable audience for your latest film, for example.
For the majority of people, crypto is still an often impenetrable and confusing subject, so such entry level explanations are still necessary in the attempt to attract a mass audience.
To be fair, the film achieves this balance well, but leaves me wanting to discover more of the individual projects which are changing Africa for the better. Yes, the report has such information, but a majority of viewers probably won’t even realize that report exists.
I have no hesitation in recommending this film, which is available now on Amazon Prime video to rent or buy (and free for Prime subscribers).
But where many cryptocurrency-related documentaries have felt overly long, I genuinely wish there was another half hour or so of this, giving some more practical examples of how crypto can change the Africa continent, and the world.
NB: To its credit, despite funding the film, Luno has stayed out of the filmmaking process entirely. The film promotes cryptocurrency, promotes Africa, but never once promotes Luno... to which I doff my hat.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
As Telegram learned, regulators in the U.S. are a major barrier to new projects looking for funding anywhere in the world.
The United States Securities and Exchange Commission’s vigor in pursuing initial coin offerings, or ICOs, has become a major boogeyman within the crypto community.
Most recently, the case against Telegram ended with that company abandoning its planned open network and Gram tokens, which raised $1.7 billion. The question before the crypto community is now: Have we witnessed the death of the ICO?
The answer is yes, in that, with all due fear of predictions, we will never see the likes of 2017’s ICO boom again. That vision of an ICO is indeed dead.
This is not the end for new tokens. But, until laws change comprehensively, the massive capital raise that leads to a token that trades freely seems like a thing of the past.
Bird’s-eye view of SEC registration
The SEC came out of two landmark laws passed at the height of the Great Depression. The commission has substantial power over the sale of securities — a broad category of investments that generally entail either stake in an entity or debt to it. They are distinct from commodities, which will be described later. One of the SEC’s most significant powers is seemingly simple: Anyone offering securities to the U.S. public must register that offering with the SEC.
SEC registration requires a company disclose a great deal of its financial information, as well as decision-making power to the public. Not surprisingly, many companies don’t want to. Not that long ago, the assumption was that SEC registration had nothing to do with crypto. That has changed in the past three years.
Since cryptocurrencies don’t fall more obviously into the rest of the potential definitions of securities, their classification depends on the much-contested term “investment contracts.” What exactly constitutes an investment contract is determined by the Howey Test, a critical result of the ruling in SEC v. W.J. Howey Co. (1946) that remains the basis of the definition of a security today:
“For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”
The point is that investment contracts entail an investor handing over their money to another entity and, depending on that entity’s work, to see profits. Commodities, on the other hand, derive their value from the market. Different laws govern their trade.
The assumption is that there is no entity that has an overwhelming control over a commodity like oil, so there is no way to register a responsible entity. Royal Dutch Shell, however, has to register with the SEC to sell stock in the U.S., meaning that critical information about their operations is publicly available to anyone, even non-investors.
The guiding principle is that if a firm is going to raise money from public trading, they have to be more transparent than you can reasonably expect of smaller enterprises. In exchange for that transparency, publicly traded companies get access to a lot more capital. Understandably, the SEC’s interest in crypto expanded along with the bottom lines that ICOs were generating.
Brief history of the SEC’s role in crypto: Early years
In the early years of the Bitcoin network, the SEC was slow to involve itself. It was an arcane region of the internet that remained a novelty. The SEC largely either considered it no threat to investors or didn’t know what to do with it.
The SEC’s first Bitcoin-linked prosecution was in 2013. The commission charged Trendon Shavers with running a ponzi scheme promising huge returns based on a unique BTC investment strategy that didn’t exist. At the same time, the regulator issued a general warning to investors against such schemes using virtual currencies.
Fraud that they are, Ponzi schemes fall to the SEC to prosecute because they entail false promises of work from a third party. Shavers’ scheme was not that new. The point of contention in the Shavers case was whether an investment received in Bitcoin could even be considered “money” per the Howey Test. The court found it could, setting a critical precedent.
A new era of SEC scrutiny after the DAO report
The issue of ICOs remained unsettled for years, however. The DAO’s 2016 meltdown during its ICO, in which users invested ETH in exchange for DAO tokens, changed things. The event, which also gave birth to the Ethereum Classic hard fork, also compelled the SEC to issue the DAO Report of July 25, 2017. This report confirmed that The report confirmed that the SEC would not prosecute Slock.it, the firm largely responsible for the DAO. But, crucially, it also determined that the DAO was indeed an unregistered securities offering and, next time, the SEC would not be so merciful.
"Anybody who had been touting [a new token] before the DAO report was ok," said attorney John Berry, who left the SEC’s enforcement division in 2019.
Those ICOs that came before the DAO report benefited from some grandfathering in, remaining unscathed if they are demonstrably decentralized. Most regulators accept Bitcoin as a commodity, and if the current CFTC chairman gets his way, Ether seems set to get the same treatment, despite its ICO.
"No, Ethereum can't happen again today, because the first part of the Ethereum story, the capital raise, was a security," Philip Moustakis, a founding member of the Cyber Unit within the SEC’s enforcement division, explained to Cointelegraph.
Since the DAO report, the question has been how a new token can come into being that operates like Bitcoin or even Ether. Despite the anonymity of Satoshi Nakamoto, both of those networks owe their early years to core groups of developers who, were they to operate in the same fashion in 2020, might well face the wrath of the SEC.
On the flip side, Peter Van Valkenburgh of Coin Center told Cointelegraph that:
"I think you could still do Bitcoin. From the beginning of our advocacy in this space, we usually have at least one sentence saying, if you really want to build good decentralized networks, Satoshi was able to build one without a pre-sale."
He did, however, agree that a project like Ethereum, which held an ICO, would be more problematic were that ICO to happen today.
As an example of a pre-DAO token that is still having trouble with the SEC, Ripple Labs remains busy denying that they were responsible for XRP, a token they retain an overwhelming stake in. One Ripple executive compared the relationship with Chevron’s to oil — a clear attempt to paint XRP as a commodity rather than an investment in Ripple Labs.
But what about the aftermath? Let’s examine some high-profile encounters between new tokens and the SEC.
Block.one and EOS — $4 billion netted relatively peacefully
An interesting case study is that of block.one and EOS. Block.one, a firm that produces open-source software, was the driving force behind the EOS ICO. Netting $4 billion in total, it remains the largest ever. In addition, it is an interesting case study both because the year-long ICO began just a month before the SEC issued the DAO report, and the firm included an advisory on the site for its ICO against U.S.-based investors participating.
The SEC went on to investigate the EOS ICO, but would end up settling with block.one for $24 million. Whether it was just timing with the DAO report, or that the EOS Tokens were non-transferrable after the purchase period, or the fact that the purchase agreement’s explicit prohibitions on investors from the U.S. or China, the SEC didn’t seem to think it had a strong case.
"The fact that the SEC settled for $24 million — I think that indicates that the SEC saw some risk in their position," said John Berry. Relative to the capital raised during the ICO, $24 million is peanuts, the kind of expense that a company would gladly chalk up as an opportunity cost. However, it doesn’t provide any security to current projects. Block.one came away from the encounter relatively unscathed, but the SEC did not commit to a public reason.
"I would caution those in the industry against modeling their ICOs after Block.one's," said Philip Moustakis. "To me there's no clear message to take away from Block.one. At best, we're reading tea leaves."
Moreover, the settlement with the SEC is not the end of block.one’s potential liability for securities law violations. Starting in April, multiple class action lawsuits alleging that block.one violated both federal and state securities law in their ICO. These are still in their early stages, but show that the firm is not entirely out of the woods.
In the same vein as EOS, the ICO for Tezos (XTZ) predated the DAO Report. At $200 million, it was, at the time, the largest in history. Though the SEC never filed any formal action against the firm, a class action representing U.S.-based investors in the project accused the Tezos Foundation and affiliate Dynamic Ledger Solutions of violations of securities laws. The class is currently finalizing a settlement for some $25 million. The same case brought to light that the SEC is investigating the project on the same charges, and the class-action settlement would not necessarily protect the foundation from further SEC pursuit.
The SAFT Framework to appease the SEC
Over the course of 2017, lawyers in the space worked to conceptualize a new framework, a “Simple Agreement for Future Tokens,” or SAFT. Several heavy hitters in the industry released a white paper in October. As the EOS project had done, the SAFT Framework conceptualized a distinction between the initial sale of rights to tokens and the distributions of the tokens themselves.
The first leg would be securities, sold only to “Accredited Investors” using the SEC’s Regulation D to exempt the firm from full registration as a publicly traded company — a step EOS had not taken. That money would go to a registered centralized entity, who could use it to build out the network on which the tokens would operate in a manner free of that central entity. The early accredited buyers would be able to sell their tokens to the general public, even in America, as freely as they can Bitcoin. In theory.
The SEC never formally endorsed the SAFT Framework. However, statements from Chairman Jay Clayton near the end of 2018 indicated support for the concept that virtual currencies can go from being securities to not being securities. In June of the same year, William Hinman, head of the SEC’s fintech office FinHub, made similar comments.
However, the SAFT framework has seen mixed results, and recent events suggest that the SEC is capricious when it comes to firms making the switch from initial funding round to token issuance.
Canadian messaging app Kik got in trouble for using a SAFT in an ICO in September 2017 and remains locked in a deathmatch with the SEC. However, part of their issue was that the app itself was failing, so its Kin token struck many as a lifeboat on a sinking ship rather than an earnest project. Kik had also already had issues with the SEC’s Canadian equivalent.
Often held up as the great success story of the SAFT era, Protocol Labs managed to raise $257 million in an ICO for Filecoin shortly after the DAO report. The firm touted its eagerness to comply with the SEC and decentralize so that Filecoin’s network can operate independently, as a mechanism to provide peer-to-peer file storage. Though by all accounts the SEC is content with Protocol Labs, the firm has yet to launch its network, the most recent estimate being for Q3.
The launch of a mainnet will be the critical test, as Telegram found out. Telegram, the most high-profile project to use the SAFT Framework, is also the most spectacular failure and will very possibly be the last.
Telegram and the failure of the SAFT framework
Last week, Telegram announced that it was backing out of its planned Telegram Open Network. As mentioned earlier, the ICO for TON’s native Gram tokens raised $1.7 billion before the SEC filed an emergency action stopping their distribution in October.
The Telegram case has been brief and heated. The firm tried to follow the SAFT Framework by registering its purchase agreements — NOT the Gram tokens — under a Reg. D exemption. This was effectively a promise to sell those contracts exclusively to accredited investors. The disagreement really starts here.
Per the SAFT Framework, Telegram was hoping that the SEC would accept that the Gram itself was not a security. For its part, Telegram agrees that they had made every effort to keep the SEC involved so as to avoid exactly this sort of action. The SEC’s counterargument was that the Grams were still securities, largely because Telegram had no luck convincing either the commission or the judge that the network, TON, was actually complete.
The state of TON is critical for the “third party” prong of the Howey Test. If the network is still dependent on Telegram’s development, the argument goes, the Gram tokens still constituted an investment in the company’s work.
The issue is that Telegram was verifiably working with regulators throughout the process. It’s spooky for potential future companies looking to raise capital to fund projects that a project with the technical and financial backing of TON wasn’t able to appease regulators and will have to give back a sum of money that puts Telegram itself in jeopardy.
"The Judge basically presumes there would be a crime before there was a crime and is therefore intervening in a way that sends a bad signal to other projects," said Kristin Smith of the Blockchain Association, which wrote multiple amicus curiae briefs defending Telegram in the case. "From our perspective at the Blockchain Association, this is why we need to have an additional regulator and/or legislative solution that provides a legal pathway."
What Telegram represents is the collapse of a project backed by the Pavel and Nikolai Durov, two brothers who had already launched two massive online platforms (in addition to Telegram, the Russian social media platform, VKontakte). Moreover, TON seemed well-intentioned and it was clearly well-funded, though Telegram has only offered to return some of the funds invested. The fact that the SEC stopped it in its tracks will be ominous to all future prospective issuers. It’s a new era, and the case is still in court.
In his letter announcing the end of Telegram’s involvement in TON, Pavel Durov concluded by wishing future projects luck:
“You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed.”
Right now, nobody is sure how to take up that mantle. In a fascinating development, TON’s open-source version launched shortly before Telegram withdrew its involvement. While Telegram may be hard-pressed to reimburse investors, the functioning of the independent network without Telegram could very well play to their advantage in the court case. The SEC’s argument presumes that the network is dependent on Telegram’s work as a third party. The commission might still maintain that the network was not functional enough to be considered independent as of its original launch date. But if TON works now without Telegram’s active involvement, that certainly strengthens their argument that they were building a project that would leave the confines of the Howey Test.
On the other hand, if the open-source network falls apart, it could prove the SEC’s argument that Grams were indeed investments into Telegram and needed to be treated as securities independent of the initial purchase agreements all along.
Is everything a security by default?
A critical question that still stands is what new projects would be immune to classification as securities.
Speaking with Cointelegraph back in October, U.S. Representative Warren Davidson (R-OH) commented wryly on the position that the SEC has put new projects in:
“They’re literally told if you want to launch a token, whatever you think you want to do with it, come check with the SEC first. [...] And you can grovel. If you grovel well enough, then we’ll give you a no-action letter. You have hundreds of companies waiting on no-action letters. They’ve approved two. You can’t raise capital while you’re waiting for that.”
Philip Moustakis explained that the SAFT framework had underestimated the scrutiny that the SEC would apply to tokens the firms hoped to issue as non-securities:
"Just because there's some distance in time between the sale of SAFT and the sale of a token doesn't mean that the SEC isn't going to consider that token separately as a security. [...] All of what I just said is based on the model of ICOs from 2017, 2018, in which each token represents a share in the issuer, and that is the original sin that needs to be addressed."
For their part, the SEC’s fintech wing, FinHub, declined to comment on whether it's possible to hold an ICO within the US without assuming it classifies as a security and also declined to direct Cointelegraph to anyone internally willing to go on the record about recent actions, instead deferring to the same two no-action letters that Davidson referenced back in October — TurnKey Jet and Pocketful of Quarters.
Two utility tokens in closed circuits have passed the Howie Test as non-securities
Respectively from April and July of 2019, TurnKey Jet and Pocketful of Quarters are the only two to have made the cut of no-action recommendations to the commission.
In TurnKey Jet’s case, the commission noted that it is selling tokens so that buyers can buy plane tickets for the same price outside of bank hours — no expectation of profits, and no wallets outside of TurnKey’s system, so the tokens are fairly locked into their value of $1 and occupy a specific role of convenience for a single airline.
Similarly, Pocketful of Quarters operates a gaming platform that offered users unlimited access to tokens at fixed prices. Those tokens, however, had no usage outside of the dedicated platform Pocketful of Quarters had the platform built out without funds from the sale of tokens.
Neither of these ICOs presents any sort of functional cryptocurrency. Instead, they are relatively pedestrian tokens, solving issues of convenience within closed and fairly limited systems.
Utility tokens like these fit more cleanly into Jay Clayton’s analogy of the Broadway ticket that people can trade but which gives you access to just a single show. A classic cryptocurrency that people use as payment for services that do not derive directly from the issuer is a more threatening endeavor. Moreover, the SEC didn’t issue any formal feedback on the matter, so they can retract or reverse any tentative guidance to be derived from these no-action letters.
What about staying out of the U.S.?
One tricky element of digital assets is their ability to cross borders freely. The U.S. SEC plays a major role in global financial regulations due to the size of the country’s economy and investment market.
When it comes to cryptocurrencies, the SEC has claimed potential jurisdiction over any token that could make its way to U.S. investors — given the technological savvy of many in the crypto world, difficult to avoid. EOS, in fact, tried. Many of the people most interested in these investment opportunities are those most capable of operating via VPNs and other technology that fudges geographical origins.
Telegram, in its response to the court’s preliminary injunction barring distribution of Grams, argued that only $424.5 million of the $1.7 billion they had raised was from U.S. investors. They wanted to distribute the remaining Grams, even offering the safeguard of “configuring the TON digital wallet to preclude U.S.-based addresses.”
The court may have reasoned that this was too little, too late. They may also have been sceptical of Telegram’s claims, given that they never believed TON to be complete anyway.
Arguably the most famous example of regulators shutting down a nascent cryptocurrency was Libra, which Congress attacked directly, without the SEC needing to file anything. Much to the annoyance of the House of Representatives Financial Services Committee, Libra set up shop in Switzerland rather than the U.S. And despite the elaborate schema of the Libra Association — which sought to distribute responsibility for the authority through an international union of companies and away from U.S.-registered company Facebook — Congress seemed pretty well-equipped to put the clamp on the project by treating it as a Facebook project and bringing CEO Mark Zuckerberg in to testify. Despite recent updates to the white paper, many still want to label Libra a security.
Why not just register as security tokens?
Not surprisingly, Security Token Offerings, or STOs, have taken on a more visible role. Functioning as professed securities, they use technologies learned from crypto including blockchain to provide quicker, reliable global trading of assets that fall cleanly within the SEC’s basket of what constitutes a security.
Blockstack, for example, sold $23 million worth of its STX tokens after filing a Reg. A+ exemption, a process that reportedly cost the firm millions. No SAFT. STX are functional tokens and remain securities.
To all appearances, Blockstack’s approach seems to be working, in the sense that the SEC has not taken any action against the firm. However, registration as a security limits a token’s trading options.
Muneeb Ali, CEO of Blockstack, weighed in on the challenge STX faces.:
“Internationally in several jurisdictions, it is clearly treated as a utility token — it already trades on Binance, for example. And we got legal opinions from those jurisdictions because the regulations are different and currently there's no U.S. exchange for us. But the fact that U.S. exchanges — either a regulated exchange needs to exist, no license has been given out from the SEC yet for such regulated ATSs [Alternative Trading Systems] or an exchange — or you achieve sufficient decentralization to the point that even in the U.S., it is clearly a utility and not a security.”
Blockstack’s clear aim is to continue decentralizing its token so that it metamorphizes out of the cocoon of security status. Unfortunately, there’s no clear template for doing so within the SEC’s current framework. This presents curious hypotheticals.
"Imagine if the company, say Blockstack, decided to dissolve, but the network continued to run, because it's open-source," Coin Center’s Peter Van Valkenburgh theorized on the current state of security tokens. "At that point it's sort of ridiculous. Who is there to file disclosures?"
Many at the SEC are interested in such transitions. In 2018, William Hinman of the SEC’s FinHub commented:
“If the network on which the token or coin is to function is sufficiently decentralized — where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts — the assets may not represent an investment contract.”
Earlier this year, after the Telegram case had begun, SEC Commissioner Hester Peirce began championing a safe harbor for projects looking to decentralize, but the COVID-19 pandemic seems to have completely wiped that proposal off the commission’s radar for now.
Given, however, that the conversation surrounding COVID-19 response has shifted from emergency action to longer-term financial action, we may be about to witness new motions to encourage companies to build and seek capital. For example, the SEC recently loosened its crowdfunding requirements.
"After the last financial crisis, there was the JOBS Act," said Kristin Smith, regarding Peirce’s safe harbor. "A couple of months from now, I think that's going to be a very live and active conversation."
The Death of the ICO?
Projects will continue to form, and if they don’t ask for money they don’t have to worry about this question. As Coin Center’s Peter Van Valkenburgh told Cointelegraph recently:
“Since the beginning of our advocacy in this space, we usually have at least one sentence saying, ‘if you really want to build good decentralized networks, Satoshi was able to build one without a pre-sale.’"
Projects looking for funding, however, are looking at a rough path ahead. Institutional financial players have been examining blockchain technology more intently for private usages, but we’re looking at a new era.
We’ll have to watch out for whether Blockstack can turn its STX into non-securities, or Filecoin can launch its network without an SEC run-in, or even what happens to Telegram and Libra. Without a major change in laws, it’s hard to envision a new major project coming about and transfiguring an ICO into an accepted public currency like Bitcoin, given regulatory hawkishness.
Though this isn’t the end of new crypto projects, the window of time when you could ask for funds to start a new coin and watch it leave your stable seems to be closed. But that’s not to say it won’t open again.
Bugs, management issues and competitors: What challenges is Ethereum facing before its anticipated proof-of-stake upgrade?
The launch of Ethereum (ETH) 2.0 may be delayed yet again after developers rescheduled the network’s proof-of-stake algorithm upgrade for June 2020, as reported by Cointelegraph on May 15. Taking into account all of the factors surrounding the highly anticipated launch, the statements made by the development team can be construed as an almost official promise. Or, as the devs themselves say, “carefully” optimistic, meaning that the critical update is still not in sight.
The main reason for the note of this careful optimism is the presence of multiple bugs in the system that the Ethereum team is striving to fix while other platforms are successfully launching their proof-of-stake networks. Why is it taking so long for Ethereum to implement its final upgrade phase before becoming truly scalable, and can this delay mean that Ethereum 2.0 is losing the scalability race?
Tinkering with bugs
The true scalability of Ethereum is constantly encountering hurdles along the way to becoming a full-fledged and viable system capable of overtaking the market with its unlimited product offering on an entirely new scope. However, bug fixing has seemingly slowed down the progress of development as other projects race to launch staking and overtake Ethereum.
The Ethereum 2.0 launch had initially been scheduled for January 2020, but the phase of finding and fixing code vulnerabilities is a long and laborious process for any project, and it’s not always possible to evaluate the time needed for these tasks. Routines such as security audits, fuzzing, detecting and fixing bugs can take months or even have no end, as the code itself is an infinite stream that can never be perfected.
It’s more complicated to plan and execute a large volume of technical work on a blockchain when it comes to new technologies such as sharding, according to Rongjian Lan, chief technology officer at blockchain startup Harmony. He told Cointelegraph:
“The coordination and data consistency between shards requires extremely careful protocol design to make the whole system secure and stable. There are also significantly more corner cases to consider which don’t exist in a non-sharded blockchain, mostly thanks to new elements such as crosslinks, cross-shard transactions and resharding. Eth 2.0 needs to build all these on top of the legacy Eth 1.0, which brings additional compatibility issues into the picture.”
Since it is the clients who are responsible for storing the data on a blockchain and validating blocks, it is important that they are fully synchronized. Most of the seven individual clients currently under development for Ethereum 2.0 are working on optimizing Schlesi — the first Ethereum 2.0 multi-client test network that simulates the core network environment. After successful trials of Schlesi, Ethereum developers decided to move forward with the launch of a more formal test network, with several clients scheduled for June 2020.
There are seven client implementations of ETH 2.0 currently available: The Ethereum Foundation Trinity, Prysm Labs Prysmatic, Sigma Prime Lighthouse, Status Nimbus, Lodestar ChainSafe, Teku PegaSys and Cortex Nethermind.
The so-called “first specification” approach was adopted by the development team to create the basis on which each client will be able to operate. The amount of work involved was colossal, as the approach foresees first the completion of the entire draft of the protocol, followed by the implementation process itself. This “multi-client paradigm” is causing delays, as human resources seem to be insufficient for ensuring optimal development, according to project lead Danny Ryan.
The fact is that having multiple clients is critical to maintaining a high level of network security, and the development team seems to be unwilling to compromise security for optimal launch timing. Even if that means breaking a few promises and postponing the launch.
In an effort to speed up polishing the system, the bug bounty program offers hunters anywhere from $1,000 to $20,000 for critical errors capable of breaking the chain. The bounty program is running in parallel with the audit of the Phase 0 specification, which is being conducted to make sure the network can pass to the next stage of its development in preparation for launch.
Complex structure and management problems
Apart from the bugs, there are also management problems that are pushing the launch date further due to human factors. The Ethereum blockchain may seem like a single entity, but it is, in fact, run by several development and administration teams. Some of them have been acquired from independent organizations.
To shed some light on the way the entire network operates, it is necessary to understand that several teams (dubbed clients), work on sharding, others are engaged in conducting security audits and some are working on Casper PoS. On the one hand, this labor distribution approach would allow for efficient delegation, but on the other, it also complicates systematic development on a larger scale, throwing smaller tasks to the background. The lack of proper management and synchronization among the teams might, therefore, contribute to the regular delays.
The management process is getting harder as more people, organizations and software are getting involved in the development of the platform. Lane Rettig, one of the self-identified core developers, noted the need for both technical and social scalability, adding that “the coordination problem is getting harder.” As with technical scalability, the social scalability under proper management must also come to ensure smooth and streamlined operations.
Possible divisions within the entire structure can also lead to high personnel turnover, further slowing the development process due to in lengthy onboarding. “We don’t have enough people to actually help us out on these things,” stated Jameson Hudson of the Ethereum Foundation, referring to the lack of blockchain developers working on the most technological tasks at the Devcon4 conference.
Taking into account the challenges faced by the development team, it is vital for the testnet to remain fully operational for at least two months to be liable for the official launch. Currently, two clients are working on the Schlesi network — Lighthouse from Sigma Prime and Prysm from Prysmatic Labs. The Teku and Nimbus clients also synchronized with Schlesi and will soon launch their validators on the test network.
Competitors winning the race
While Ethereum developers are fixing bugs, the prize for the first running PoS consensus may well be grabbed by their competitors.
There are several large projects inching closer to the finish line — EOS, Harmony (ONE), Zilliqa (ZIL), Tezos (XTZ), Cosmos (ATOM), Algorand (ALGO) and Qtum (QTUM) — all with viable and operational products either working on pure PoS or delegated PoS.
The successfully operating networks launched by these projects demonstrate their ability to achieve in one year what takes years for Ethereum. For example, Silicon Valley’s Harmony has recently launched its staking, becoming the first sharded PoS blockchain that managed to implement two technologies simultaneously. Notably, these technologies are yet to be implemented on the main network by the Ethereum developers.
On May 19, the Harmony team reported that it had upgraded its mainnet, which is currently supporting hundreds of nodes in multiple shards. The developers claim that they managed to outstrip Ethereum not only in terms of sharding and staking but also by way of network performance, reaching a transaction processing fee of $0.000001 on the mainnet and 118,000 transactions per second in testnet.
However, with new solutions rapidly emerging in the blockchain market, Ethereum still remains the pioneer and the main contributor to the development of sharding and staking technologies. Given the hundreds of thousands of transactions made on the network every day, the postponement of an upgrade as significant as Ethereum 2.0 — aimed at making blockchain use smooth and secure — may merely be the lesser evil.
DaveH (NEM Group)
I am posting this on behalf of @kaiyzen and the development team from a couple of updates on other platforms
Symbol 0.9.5.1 was released in the last few hours as per the published plan.
Any questions please ask them here or on the Slack thread
Update thread from Slack (22 May)(https://nem2.slack.com/archives/C9E7N7H1N/p1590202632085800 4):
—- slack message content below—–
The 0.9.5.1 server build was released a bit ago and new test network launch
An initial set of api nodes that can be used as endpoints is:
The faucets can be found at:
Initial set up for explorer is here:
For those interested in testing out running a test network node you can find the latest at:
NOTE: as usual with a update like this it is recommended to wipe your development/test node environment if you have been doing anything with < 0.9.5.1 version(s)
About NEM Foundation
The NEM Foundation is registered in Singapore and is operating globally. It was launched to promote NEM’s blockchain technology worldwide, an out-of-the-box enterprise-grade blockchain platform which launched in March 2015. NEM has industry leading blockchain features that include: multisignature account contracts, customizable assets, a naming system, encrypted messaging, and an Eigentrust++ reputation system. It is one of the most well-funded and successful blockchain technology projects in the cryptocurrency industry.
Stay connected with NEM:
The post NEM Symbol 0.9.5.1 Release Announcement appeared first on Coin News 24/7 | All Crypto news sorted for all Coins.
Bitcoin’s recovery to $10,000 is currently hindered by resistance at the 20-MA and with a holiday weekend coming up traders brace for volatility.
Since dropping below the ascending channel trendline to $8,815 on May 21, Bitcoin (BTC) price has recovered 4.78%. BTC/USD continues to meet resistance at the 20-day moving average, obstructing traders’ desire to push the price above $9,300.
Crypto market weekly price chart. Source: Coin360
In the United States, this weekend includes the Memorial Day holiday, meaning traditional markets will be closed on Monday and the crypto market will be left to its own devices.
Typically trading volume thins on weekends so investors who find time to step away from the family BBQ will be watching to see whether or not larger players exploit the market to push the price of the top-ranked asset on CoinMarketCap in a new direction.
BTC USDT 4-hour chart. Source: TradingView
In the 4-hour chart, we can see Bitcoin’s price marching along the gradient of the ascending channel trendline by painting higher lows. The price continues to meet resistance at the 20-MA of the Bollinger Band indicator but traders will also notice that there is a bull cross on the MACD and the indicator’s histogram has printed a green bar above 0.
The RSI is also below the neutral zone (50), currently angled downward at 45. In situations such as these, purchasing volume is the key signal to watch, and at the time of writing, both buy and sell volume have screeched to a halt. Volume typically precedes price so keeping a close eye on increases in buy or sell volume on the shorter timeframes will be the tell.
The neutral Doji candle also shows buyers and sellers in equal contention on the direction of the price and based on the current setup, Bitcoin could either drop to the lower Bollinger Band arm at $8,865 where there are likely to be buyers.
Alternatively, a surge above the 20-MA would allow the price to run to $9,600 by exploiting the VPVR volume gap created by the swift fall from $9,634 to $8,820 on May 21.
BTC USD 1-month chart. Source: TradingView
On May 22, Cointelegraph contributor filbfilb warned that Bitcoin price only has one week to make a decisive move that will define whether Bitcoin makes a decisive move that favors bulls or bears. filbfilb posted the above chart and explained that:
The monthly chart of Bitcoin clearly demonstrates that Bitcoin has a long-term challenge to overcome, which is reclaiming the $10K handle. But more specifically, it must record a $9,300 monthly close that has eluded Bitcoin for the last 10 months, which sets the tone for the current price action.
Bitcoin daily price chart. Source: Coin360
As Bitcoin mounted a slow recovery on Friday, many altcoins took advantage of the sideways trading by pulling off strong double-digit rallies.
According to CoinMarketCap, the overall cryptocurrency market cap now stands at $257.9 billion and Bitcoin’s dominance rate is 66.1%.
Cryptocurrency healthcare startup Solve.Care announced a blockchain remote medicine platform.
Cryptocurrency healthcare startup, Solve.Care, recently launched a blockchain remote medicine platform.
According to an announcement sent to Cointelegraph on May 22, Solve.Care announced a new marketplace that allows users to consult medical practitioners anywhere in the world. It’s called the Global Telehealth Exchange, or GTHE.
GTHE is meant to also provide physicians with a way to engage in telemedicine by publishing their profiles, rates, availability, and then accepting appointments. The system was designed with openness in mind, so third-party telehealth solutions will be able to use its registry.
The service will be accessible through the Care.Wallet healthcare management system and will be available for users in select countries later this year.
On-chain medical record-keeping
After obtaining permission from the user, doctors who provide their services through the platform will be able to review the patient’s past medical records. This is meant to avoid conducting the same assessments multiple times. It also helps to prevent doctors from performing unnecessary medical tests.
All the medical records and transactions — all carried out in the SOLVE token — on the platform are stored on-chain to ensure that the data is tamper-proof. Solve.Care CEO, Pradeep Goel, explained why telemedicine is now more important than ever before:
“The Covid-19 pandemic has severely tested the way healthcare systems are organized and delivered from a number of perspectives. Now, more and more patients are reluctant to visit their doctors due to the pandemic. Medical practitioners who are not primarily involved in treating Covid-19 cases have experienced a significant drop in patient appointments. The launch of Global Telehealth Exchange is geared towards remedying this imbalance.”
United Arab Emirate startup, in5, is also attempting to leverage blockchain technology to alleviate the effects of the pandemic. They are designing decentralized systems that the firm believes will help contain the coronavirus.
A Daegu-based university has made a deal with the Korea Artificial Intelligence Association to build a blockchain campus.
South Korea’s Suseong University reached a deal on May 22 with the Korea Artificial Intelligence Association, or KORAIA, to create a blockchain and AI campus in Daegu.
According to the announcement published by local media outlet Money Today, the Daegu-based university plans to teach about AI, big data, and cloud-based technology in the brand-new department. They intend to begin accepting students by 2021.
COVID-19 crisis as a potential for blockchain adoption growing
Kim Kun-woo, director of the Planning and Coordination Division of the university, praised the announcement. He stated that the world is “rapidly” changing to a blockchain and AI-based society due to the global COVID-19 crisis.
The announcement also says that several Daegu-based blockchain companies have agreed to provide training and work experience programs within the campus.
The university will implement user-friendly services that allow cohesion between university education and academic administration, hand in hand with experts in each field.
South Korea keeps cheering up the blockchain industry
The South Korean government continues to maintain a positive stance towards the development of the country’s blockchain industry.
Cointelegraph reported on April 17 that the Vice Minister of Strategy and Finance, Koo Yun-cheol, said that the blockchain market represents a “golden opportunity” for South Korea, calling for private sector companies to exploit this potential.
Two South Korean ministries announced their support for the country’s blockchain industry on March 17, with plans to allocate up to $3.2 million in funding to local startups to encourage the use of such technology.
Citing the increase in illicit crypto-related activities, the provincial government of Sichuan moves to stamp out 10% of the global Bitcoin hashrate.
The government of China’s Sichuan province moves to stamp out Bitcoin (BTC) mining activity, citing that growing cryptocurrency prices have led to the escalation of illegal activity under the guise of mining.
Sichuan — 10% of the global hashrate
According to estimates from Cambridge University, Sichuan is responsible for almost 10% of the global hashrate. In fact, this single Chinese province mines more Bitcoins than the entirety of the U.S. or Russia.
China: Bitcoin Mining Map. Source: Cambridge University.
Apparently, Sichuan was previously trying to attract the miners in order to combat the economic downturn and employment brought about by the COVID-19 pandemic. Instead, allegedly, “illegal fundraising” and multi-level-marketing schemes flourished.
It’s not clear whether these recent issues will in effect stamp out mining in Sichuan. China’s crypto community has been flourishing despite governmental constraints. As Christopher Bendiksen, head of research at CoinShares, told Cointelegraph:
“I don't think Bitcoin miners in China have ever been, you know, quote unquote, comfortable. If what you mean is that they feel safe and certain about their right of ownership. And, you know, the idea that the government just won't show up one day and take all the stuff. I really doubt that they've ever felt comfortable with that. Now, it's probably worse than ever.”
However, what would happen if this time around, the authorities took their directives seriously and moved with full force to stamp out all the Bitcoin mining in Sichuan? Who would pick the slack?
Philip Salter, head of operations at Genesis Mining, the company that emphasizes that it does not do any mining in China, told Cointelgeraph:
“The thing with China is that China has cheap production costs, the CapEx is very low. Everything is cheap and fast in China. But the operating costs are <...> not so low because most of the country's fueled by coal and coal is the most expensive energy source. So actually, the operating costs are not so good in China.”
Probably, the more profitable and stable miners would be able to move their equipment to other Chinese provinces. It could also add fire to the latest pro-Western trend in the industry. Even China’s giant Bitmain has been operating a 50 megawatt farm in Texas. Bitcoin mining in Texas has been burgeoning thanks to the low electricity prices and friendly local officials.
With the halving already putting a lot of pressure on miners, leading to the reduced hashrate, this latest stress test will probe Bitcoin’s resilience once again.
After graduating from task force to select committee this week, the blockchain crew within Wyoming’s state legislature held their first meeting today.
On May 22, Wyoming’s Select Committee on Blockchain, Financial Technology and Digital Innovation technology convened in full for the first time, albeit virtually.
Initially announced on May 17, the new select committee evolved from the previous Blockchain Task Force.
Task force to select committee: What has changed?
In today’s meeting, Chairman Chris Rothfuss commented on the committee’s new powers:
“This is a select committee that is able to sponsor its own legislation. In the past, it was a task force that was not able to.”
However, like a task force, a select committee has a limited timespan.
Speaking before the committee via Zoom were leaders of Wyoming’s Division of Banking and Secretary of State, as well as industry players like Marco Santori, who recently joined Kraken as chief legal officer.
The meeting broadly focused on digital property rights, but committee members saw broader goals, especially amid the COVID-19 pandemic. Representative Jared Olsen expressed interest in: “Anything that we can do as our emergency orders come out, to allow us to interact and interface with our government more easily”
Wyoming’s role in crypto regulation
Wyoming is the least populous of the 50 states, but plays an outsized role in crypto regulation. Albert Forkner Commissioner of the Division of Banking commented on Wyoming’s role in the United States:
“At times Wyoming is a flyover state, and a lot of times I prefer that, because it gets us off the radar of federal bureaucracy.”
In the field of crypto, Wyoming has led United States regulators. Last spring, the state formally recognized cryptocurrencies as money — a contentious debate, federally.
The state also featured in Cointelegraph’s August rankings of most welcoming in the country.
Institutional interest in Bitcoin is experiencing an unprecedented surge, with GBTC alone swallowing up 17% of newly mined Bitcoins.
Both data and first-hand accounts from industry insiders indicates that an interest in Bitcoin (BTC) from institutional investors is accelerating at a rapid pace. This has led some to conclude that the “perfect storm” is about to hit the market.
GBTC BTC Holding & Assets Under Management. Source: Cointelegraph, Grayscale.
Price is not a factor
Grayscale Bitcoin Trust, or GBTC, an exchange traded vehicle backed with Bitcoins, has been growing steadily in size over the past several years. However, in the last couple of months, its growth has begun to accelerate. Interestingly, the fluctuation in the price of the underlying asset does not seem to affect this growth pattern. This makes sense, considering that investors have a minimum lockup period of six months.
Daily Change in GBTC BTC Holdings & BTC Price Change. Source: Cointelegraph, Grayscale.
Grayscale may swallow up 550k BTC by 2021
What makes GBTC an important driver of the market dynamics is not only the fact that, according to its spokesperson, over 90% of the inflows come from the institutional players:
“Since inception, 90% of inflows into our family of products comes from institutional investors”.
But also, its holdings diminish the circulating supply of Bitcoin, as its assets are locked away in Coinbase vaults. As of today, GBTC has taken 350,000 BTC out of the circulating supply. This represents 2% of Bitcoin’s circulating supply, not taking into account the number of lost coins.
Daily BTC Issuance & GBTC Consumption. Source: Cointelegraph, Grayscale.
Since 2019, GBTC has consumed 100,375.93 BTC, which is 17% of all the Bitcoins mined during this time period.
GBTC 100-day BTC Acquisitions & Forecast. Source: Cointelegraph, Grayscale.
In the last three months, the pace at which institutional investors have been investing into GBTC has tripled. If this trend continues, then in another three months, it will be holding 400, 000 BTC, and in another 6 ½ months after that — March 2021, it will accumulate around 550,000 BTC or 3% of the total supply.
Furthermore, if this forecast comes to fruition, it will imply that GBTC will be gauging up 75% of all newly mined Bitcoins during this timeframe.
Lending platforms can’t satisfy institutional glut
It is not clear whether this trend was spurred by the halving, but the metric itself is confirmed by other sources. Alex Mashinsky, CEO of Celsius, the crypto lending platforms that currently holds 55,000 BTC, told Cointelegraph:
“We now have over 260 of them [institutional borrowers] and we did close $10B in loans since launch. The price of BTC does not matter, what matters is volatility of prices going up and down.”
He also added that he could easily lend out another 100,000 BTC if he had it; this is despite the fact that Celsius charges 5 to 12 percent annual interest rate.
Zac Prince, CEO of BlockFi, another crypto lending platform, although the company does not disclose its data publicly, told Cointelegraph that he expects the surge in institutional interest to continue:
“The volatility that characterizes it as a risky investment by some in normal market conditions, has now empowered it to recover faster than any other asset following the initial markets-wide downswing in March – it’s now up 94% since March 16th and continues to climb. We expect to continue to see institutional interest in this asset rise steeply in the next few years accompanied by wider mainstream consumer adoption.”
It’s important to note that unlike Grayscale, platforms like Celsius and BlockFi, probably do not drive the price up, as they do not take their Bitcoins out of circulation; on the contrary, they foster market liquidity.
Another improvement to the supply side of the equation is expected to come from the purging of the mining industry. With inefficient miners leaving the network, the remaining ones will become more profitable and will be able to sell less of their Bitcoins to sustain the operations, reducing the supply.
Matt D’Souza, CEO of Blockware Solutions and who also manages a Bitcoin hedge fund, told Cointelegraph:
“Most funds and hodlers, they're not shorting really. All of them are long. Most funds are long only. My fund is long only. I'm managing a 15 million and I'd say we're a decent sized fund. <...> I had a call, MultiCoin two days ago. I had a call with BlockTower last week. So I'm in discussion with all the other funds. And it's everyone for the most part is long-only on Bitcoin.”
He believes that the combination of the central banks injecting trillions of dollars into the economy and the diminishing issuance of new Bitcoins because of the halving is creating a “perfect storm”:
“You inject two trillion. Maybe they're going to have to inject more based on how the economy is. <...> A lot of money is going to get injected. And it's creating a perfect storm for Bitcoin.”
Bloomberg analyst, Mike McGlone, believes that the mainstream adoption will lead to the SEC’s approval of a Bitcoin electronically traded fund, or ETF, in the near future:
“Futures open interest, represents increasing mainstream adoption and indicates the likelihood of an ETF futures on U.S.- listed exchange.”
If this trend continues, data seems to suggest that Bitcoin’s price could appreciate in the next 12-18 months. As D’Souza summarized it:
“What moves price is net fiat in a net fiat out every day. Bitcoin is trading a couple billion in volume that doesn't move price.”
A UK-based cybersecurity firm unveiled new details of Ragnar Locker ransomware attack that uses a VirtualBox app.
A new study warns of a new ransomware attack method that runs a virtual machine on target computers in order to infect them with the ransomware. This may play the attack beyond the reach of the computer’s local antivirus software.
According to the UK-based cybersecurity firm Sophos, the Ragnar Locker attack is quite selective when choosing its victims. Ragnar’s targets tend to be companies rather than individual users.
Almost 1,850 BTC in ransom demanded in a single attack
Ragnar Locker asks victims for large amounts of money to decrypt their files. It also threatens to release sensitive data if users do not pay the ransom.
Sophos gave the example of the network of Energias de Portugal, who stole ten terabytes of sensitive data, demanding payment of 1,850 Bitcoin (BTC) in order not to filter the data. 1,850 BTC is worth roughly $11 million as of press time.
The modus operandi of ransomware is to take advantage of vulnerabilities in the Windows remote desktop app, where they obtain administrator-level access to the computer.
With the necessary permissions granted, attackers configure the virtual machine to interact with the files. They then proceed to boot up the virtual machine, running a stripped-down version of Windows XP called “Micro XP v0.82.”
Ransomware tactics are getting more “insidious and extreme”
Speaking with Cointelegraph, Brett Callow, threat analyst at malware lab Emsisoft, provided more details on Ragnar Locker:
“The operators have recently been observed to launch the ransomware from within a virtual machine to avoid detection by security products. Like other ransomware groups, Ragnar Locker steals data and uses the threat of its release as additional leverage to extort payment. Should the company not pay, the stolen data is published on the group’s Tor site.”
Callow claims that the tactics deployed by ransomware groups are becoming ever more “insidious and extreme”, considering that the ransomware gangs behind Ragnar Locker now threaten to sell the data to the victim’s competitors or use it to attack their customers and business partners.
The threat specialist from Emsisoft adds the following:
“Companies in this situation have no good options available to them. Even if the ransom is paid, they simply have a pinky-promise made by a bad faith actor that the stolen data will be deleted and not misused.”
Recent ransomware attacks
On May 10, Cointelegraph reported on a study by Group-IB that revealed another type of ransomware that uses banking trojans to attack governments and companies, raising the red flags among the cybersecurity community and the FBI.
A ransomware gang called REvil also recently threatened to release almost 1TB of private legal secrets from the world’s biggest music and movie stars, such as Lady Gaga, Elton John, Robert DeNiro, Madonna, among others.