Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

One of the cryptocurrency world's more tenured fund managers is launching two new products aimed at bringing the emerging asset class mainstream.

Revealed exclusively to CoinDesk, Tim Enneking's Crypto Asset Management is today releasing a new product called CAMCrypto30 – a cryptocurrency index designed to mirror the 30 largest cryptocurrencies by market capitalization. In addition, the firm also announced a new, investable share class for the fund, which will track the cryptocurrencies listed in the index.

If successful, the index could one day be used as a shorthand for discussing cryptocurrency market movements, providing a reference point akin to an equity index. As indices are standard for traditional asset classes, this would allow investors to better analyze and track performance relative to other asset classes in their portfolios.

Index tracking products, such as the new share class, are designed to allow investors to gain broad exposure to an asset class while diversifying their holdings within it.

CAMCrypto30, which was constructed to resemble the Russell 2000 and FTSE 100 indices, is weighted by market cap.

Enneking told CoinDesk:

"We've used those two indices as our model because they are the closest to what seems to be appropriate in the crypto space. Not only is there no real index – there is certainly no investable index."

Unpacking the product

So, what's available today? For one, the index itself, which is separate from the investment vehicle, now has its own website.

An embeddable widget has also been made public for third-party websites to track CAMCrypto30 index data. (Notably, the index will be rebalanced monthly to better track the fast-moving cryptocurrency world, instead of being rebalanced quarterly, as is more typical with equity indices).

Otherwise, investors in the Crypto Asset Management fund are now able to participate in three separate fund classes, each of which provides exposure to a different type of investment.

The new index-tracking I-Class joins two other existing cryptocurrency fund classes: an L-Class, which is used to generate exposure to short-term lending rates, and a T-Class, which is a trading class.

All three classes are issued by two open-ended funds: a U.S.-based master fund, which is structured as a Delaware LLC, and a Cayman Islands-based feeder fund, primarily for international investors. The former, called Crypto Asset Management LLC, is open to accredited investors in the U.S., and is subject to a $25,000 minimum investment.

All Class-I shares, which track CAMCrypto30, have a fee structure of 2.5 percent on funds committed, but fees are not charged on returns, since there is no discretionary management involved in tracking the index.

 

David Ogden
Entrpreneur

David Ogden Cryptocurrency Entrepreneur

 

Author: Ash Bennington

David

Is Investing in Bitcoin and Other Cryptocurrencies Worth the Gamble

Is Investing in Bitcoin and Other Cryptocurrencies Worth the Gamble

Is Investing in Bitcoin and Other Cryptocurrencies Worth the Gamble

The Technology Behind Cryptocurrencies

 

The creation of Bitcoin back in 2008 fueled the exponential growth of the cryptocurrency ecosystem, facilitating the creation of a rich diversity of coins and applications that many would deem revolutionary. Those who invested in cheap coins at the outset are reaping huge returns on their capitals, dwarfing the average returns one can acquire in the stock markets. Think about it; if you had bought $1,000 worth of Bitcoin in 2010, you’d be worth a staggering $35 million now. The possibility of earning colossal returns has attracted many to the arena, and this begs a crucial question: Is the hype on cryptocurrencies warranted or it is just a game of Russian Roulette?

The birth of Bitcoin – the first digital cryptocurrency that is decentralized by design – gave rise to a technology with the potential to redefine the very fabric of our status quo. This technology is called the Blockchain, which underpins Bitcoin’s protocol.

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” — Leon Luow, Nobel Peace Prize nominee

Blockchain is essentially a distributed, digital ledger where every transaction is broadcasted publicly and recorded chronologically. The database is ever growing, expanding in tandem with the amount of transactions made on the network. The decentralized nature of Blockchain technology ensures that transactions are immutable and thus immune to change, offering full transparency for each and every transaction. Add to that the traits of increased security, higher efficiency, error-resistant and reduced transaction costs, it leaves no doubt as to why many are excited about Blockchain’s possible use cases. The utility of Blockchain technology is endless, with an ever-growing list of governments, industries and companies looking to further explore its usage.

Hotbed for Money Making

The birth of a revolutionary technology would always entail those looking to capitalize on its profitability. Blockchain is no different. Investors, traders and speculators can get in on the action by buying cryptocurrencies, which are digital currencies manifesting as variant applications of the Blockchain technology. There are over 900 coins available, with each offering a slightly different approach to solving a range of problems. Many early adopters have made a great sum of money, by buying the coins cheaply at its outset and realizing them much later on. Based on the statistics provided by ICOSTATS, the return on capital of 40 cryptocurrencies since their inception stands at a staggering 6703%! In order for you to earn similar rates of returns in the stock market, it will take you approximately 957 years.

These stellar returns inevitably attract many who are looking to earn multiples over their capital. Given the extreme technicality of cryptocurrencies and the underlying Blockchain technology, many do not fully understand the fundamentals of what they’re investing in. The immaturity of the current infrastructure – stemming from the relative infancy of the cryptocurrency industry — results in an inefficient price discovery mechanism, thereby creating an extremely volatile market environment. This poses huge risks for those looking to invest in a comprehensive list of coins.

Simply entering the market with the hopes of massive short-term gains without understanding the coins and their technology is akin to playing a deadly game of Russian Roulette. The radical volatility of the coins’ prices may significantly put your capital at risk. Just to draw a picture, Bitcoin’s price lost 40% of its value in a matter of days in December 2013, and at the start of this year, Bitcoin lost approximately 34% of its value in a week. While this can spell doom for many, there are those that find gratification by profiting from the intense gyration of prices.

The Verdict?

Nine years after Bitcoin kickstarted the technological revolution, the ecosystem centered around Blockchain technology has flourished and is looking ever so promising. New coins solving real world problems are launched at a tremendous pace, with new functionalities and applications pushing the boundaries of this nascent technology. With increasing user adoption and a keen interest by nations and corporations, it is only a matter of time before Blockchain technology becomes ubiquitous in our lives.

A flip side of this emergent technology is the great risks associated with investing in cryptocurrencies, especially for those with a short-term horizon and an absence of understanding in the coins they have invested in. Truly, the extraordinary volatility unique to cryptocurrencies creates a superficial impression of high stakes gambling in the eyes of many. Armed with the right understanding and knowledge of Blockchain technology, you would begin to appreciate its innate beauty.

 

David Ogden
Entrepreneur

DAvid Ogden Cryptocurrency Entrepreneur

 

Author: Aziz Bin Zainuddin

David

Fidelity now allows clients to see digital currencies on its website

Fidelity now allows clients to see digital currencies on its website

Fidelity now allows clients to see digital currencies on its website

Fidelity Investments has started allowing clients to use its website to view their holdings of bitcoin and other cryptocurrencies held through digital wallet provider Coinbase.

Fidelity Investments has started allowing clients to use its website to view their holdings of bitcoin and other cryptocurrencies held through digital wallet provider Coinbase, the company said on Wednesday.

The initiative, previously tested with the Boston-based money manager's employees, is a rare example of an established financial services company warming up to cryptocurrencies.

Starting Wednesday, most Fidelity clients will be able to authorize Coinbase, one of the largest crypto-currency exchanges in the United States, to provide the fund manager with data on their holdings.

Through the experiment, the company said it aims to learn more about digital currencies, which have been proliferating since the creation of Bitcoin, the oldest and most valuable of these assets.

Coinbase enables users to buy and trade Bitcoin as well as competitor virtual currencies Ethereum and Litecoin.

"This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them," Hadley Stern, senior vice president and managing director at Fidelity Labs, the company's innovation unit, said in an interview.

Bitcoin hit a record high on Tuesday, with one unit of bitcoin trading at above $3,400 on Coinbase.

The currency's rise in value is not a driving force behind the initiative, Stern said, noting that the integration is part of Fidelity's wider efforts around cryptocurrencies and their underlying technology blockchain.

Many large financial institutions around the world have been investing in blockchain over the past two years, in the hopes that it can help them slash costs and simplify some processes. Blockchain is a shared ledger of transactions maintained by a network of computers on the internet rather than a central authority.

However, most established financial firms have shied away from associating themselves with bitcoin and cryptocurrencies, because the sector remains largely unregulated.

Fidelity's Chief Executive Officer Abigail Johnson announced the company's intention to launch the Coinbase integration at an industry conference in May.

At the time Johnson also revealed that Fidelity had been accepting bitcoin payments in its cafeteria, but said the experiment had highlighted the technology's flaws as a means of payments.

"But I am still a believer – and it's no accident that I'm one of the few standing before you today from a large financial services firm that hasn't given up on digital currencies," Johnson said at the time.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Source: Reuters

 

David

Changes in European regulations may impact Bitcoin

Changes in European regulations may impact Bitcoin

Changes in European regulations may impact Bitcoin

Some researches were stating that nearly a half of the bitcoin transaction is somehow related to various gambling activities. The reasons behind this are quite simple, the bitcoin provides a greater anonymity for the players and low transaction costs. However, the popularity of the bitcoin in the iGaming sector seem to become even greater this year.

Considering the fact that Poland, the Netherlands, Czech Republic and a few other major European markets are making it unfavourable for the operators to serve the customers via a locally regulated company and illegal to operate without one, the bitcoin casinos may become the best possible substitution in such markets. You may already see some of the popular Bitcoin casinos being listed at the various rating websites. While these websites are still listed in the bitcoin category, BTC casinos may soon take the largest slice of the market share. Let’s check a few European countries one by one to see the possible arguments.
 

Over 250 domains are banned in Poland

Polish government has set a deadline to ban all of the domains of the unregulated gambling companies by the 1st of July 2017. Now over 30 days have passed since then and we can conclude that this practice has been quite effective in terms of cleaning up the Polish market. Until now, it was announced that such gambling giants as 888 casino and poker, Pinnacle betting, Bet365, William Hill and other well known betting and casino operators have stepped out from Poland. Historically, some of the countries were putting such harsh restrictions on the gambling operators that only the richest ones could stay, yet this is not the case in Poland. The government has simply put a very high tax rate (12% on turnover), which already makes it quite risky for any gambling company to operate. And as a cherry on top, the Polish Ministry of Finance requires a company to apply for the local license with its locally established entity that employs local staff too. As a result, only a few unregulated operators are continuing serving the Polish players by offering their services while some subdomains.

We can clearly see an opportunity here for the bitcoin. While the number of competitors have decreased dramatically, generating profits is still not so easy for the locally regulated companies. Also, regulated companies are less likely to compensate their affiliates well or even at all. This is where bitcoin casinos and betting operators may take action and serve Polish customers with having no fears of being blocked by the payment system provider.
 

Czech Republic taxes the highest

Similar to Poland, Czech Republic has introduced a way to the gambling operators to get regulated and has required Internet Service Providers to ban the IPs of the unregulated entities. Instead of taxing the turnover, Czech Republic has decided to implement two types of taxation. Firstly, each of the games that uses randomly generated way of identifying a winner will be taxed at the 35% from the grosh gaming revenue. Even though such a tax rate is already one of the highest in Europe, Czech authorities will still charge a 19% income tax on top of that.

Again, most of the online gambling operators have decided to quit their operations. Needless to say, the bitcoin casinos and betting companies will be able to serve the clients in Czech republic without any local regulation, and this way they could save up quite a lot when compared to the regulated companies.

 

Summing it up

The EU governments are looking into tightening the screws in the iGaming sector. Ultimately, the government has two preventing measures in its disposal: blocking the operator’s IP address and requiring the payment systems to block the operator’s accounts. While the first block can be easily bypassed by various subdomains, avoiding the block on the deposits may be very challenging for the gambling companies that use fiat currencies. However, the bitcoin here seems to be the ultimately answer, and such a large forecasted demand on the cryptocurrencies may send the Bitcoin to the new heights.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Nick James

David

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

We’ve come a long way in the eight years since Bitcoin’s original release. Back in 2009, when the pseudonymous Satoshi Nakamoto launched the cryptographically verified digital asset, it was just a curiosity. With time, though, new uses have been found for it, from buying drugs, to transferring money near-instantaneously across the globe. Its value has peaked and troughed to reach considerable worth today – right now, a single Bitcoin is worth almost $2,800, close to its record high of $2,964.
 

The success of Bitcoin has inspired many imitators. That includes the classics, like Litecoin and Dogecoin, along with more contemporary and serious alternatives, like Ethereum and Zcash. They’re all subtly different, and often more volatile, than their Bitcoin foundation.

 

There’s now more than 900 cryptocurrencies in the wild. While many of them hog attention with their potential for larger earnings on less upfront investment, differing features, or philosophy, their futures still rest in the hands of that cryptocurrency created way back in 2009.
 

They are all built off the same core technology as Bitcoin, and susceptible to the same whims of human nature.
 

Bitcoin: The foundation and face of cryptocurrency empires

 

“Bitcoin underpins and backs up the entire crypto economy. When Bitcoin falls, the rest fall, when Bitcoin rises, the rest rise,” the host of the Bitcoin News Show, Vortex, told Digital Trends. “The alt coins are simply an extension of Bitcoin, most of them are even based on its source code.”
 

“Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique.”

There’s many “alt coins,” most with a unique spin. Some use different cryptographic hash functions, others build in smart contracting functionality, while others look to be more centralized. Yet at their core, they are all built around similar technology to Bitcoin, which is partly why their pasts and futures have been, and are, so dependent on the first mainstream cryptocurrency.
 

“Bitcoin will remain the digital gold that backs up the entire crypto-economy,” Vortex told us. “Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique. It was created anonymously with no pre-mine, no intent for profit, no attachment to any corporation, and essentially donated to the community by its founder.”
 

Although there have been some stumbling blocks over the years, with minor changes required to keep Bitcoin functioning as it should, it’s organic growth, and the lack of a desire to drive profit for its creators, that make Bitcoin so unique.

A quick look at the value charts shows that Bitcoin is leaps and bounds ahead of the competition. Its value was, at the time this article was published, four times greater than the nearest competition. That suggests a confidence in the long-standing currency that is far grander than its contemporaries.

Part of that comes from its very value, which makes large fluctuations in its worth less likely. It’s a sturdier investment than many other currencies – though that doesn’t mean it isn’t susceptible to fluctuation. Its price today is close to double what it was at the start of the year.

Bitcoin also acts as the face of the industry. It’s the original, most publicized, and close to a household name. That means first time investors are likely to consider it over other, more obscure investments. In turn, this popularity gives Bitcoin influence over its competitors. When the world sees Bitcoin doing well, other currencies usually benefits, too.

 

“The entire cryptocurrency market often moves up or down based on what’s happening with Bitcoin,” said Stewart Dennis, CEO of cryptocurrency email system Bitbounce. “If Bitcoin’s value continues to appreciate, that bodes well for the future of other currencies.”

A fork in the road?

 

Predicting the future appreciation of Bitcoin is difficult. As we have seen over the past couple of years, it can tumble back down following major world events. China’s decision to ban financial institutions from using Bitcoin in 2013 saw the currency nearly halve in value over a few weeks. Hacks of major Bitcoin exchange services, and speculative bubbles, have led to other temporary downturns in its fortunes.

Of course, there’s always the competition looking to use one of these disruptions to make an attempt on the crown. The latest is Bitcoin Cash, a “hard-fork” from Bitcoin, designed to offer larger capacity than its predecessor to reduce transaction fees. Does it stand to find success as an alternative top-tier currency where others have failed?

“Anyone at any time can fork Bitcoin as it is open source,” Vortex told us, dismissively. “This is what Litecoin and many other coins did. They forked Bitcoin, tweaked a few things, and called it something else.”

The only difference with Bitcoin Cash, he claims, is that it’s the first currency to attempt to use the original Bitcoin name. Although Bitcoin Cash has quickly become one of the more valuable cryptocurrencies ($400 at the time of writing), Vortex points out that it does not have much support.

“It only has two developers [and] is highly centralized and controlled. The core [Bitcoin] developers want nothing to do with it,” he said.

For the sake of argument, though, let’s assume Bitcoin Cash is successful, or some major calamity caused Bitcoin to fail and fall from grace. What would happen to the market then?

“If Bitcoin were to fall, faith in crypto itself would be lost for many years, at least as a store of value,” Vortex told us. “As a currency however, it would still flourish. Gold is what made and broke nations for thousands of years. Digital gold, or Bitcoin, is what will make or break nations for the next thousand years.”
 

Others, like BitBounce’s CEO, believe that the market itself would recover much more quickly, and that some other coin that would pick up the reins where Bitcoin left off.

“A [Bitcoin] calamity would cause other cryptocurrencies to lose significant value in the short-term,” he said. “But in the medium to long term, it could create an opening for currencies such as Ether to become the most valuable cryptocurrency.”
 

Predicting the future with Bitcoin’s past

Although Bitcoin’s future remains a little uncertain, we can draw something from its past. As the cryptocurrency with the greatest longevity and the most proven track record, we use it to get an idea of what may happen to its younger competitors as they grow and mature.

At the time of writing, Ethereum is one of the more popular, vogue currencies, and in terms of its market capital, is second only to Bitcoin, even if it does trail it by a significant margin. Though it has suffered a recent downturn in value, it reached a new high less than a month ago, peaking just shy of $400 per Ether.

If we look at a graph of its growth and fall and compare that to Bitcoin’s earliest peaks in 2013, the similarities are hard to ignore. The only difference is that Ether has yet to recover in quite the same manner as Bitcoin. While there are no guarantees of such a thing happening, Bitbounce’s Dennis believes it will soon.

“Bitcoin has repeatedly appreciated to an all-time high and then corrected to a lower price for a while, before eventually reaching an even greater high. I see similar trends with other younger currencies,” he told DigitalTrends.
 

Indeed, Dennis sees those currencies one day even eclipsing that of Bitcoin.

“Bitcoin is still important because it started everything and has the widest adoption. However, Bitcoin’s dominance has been fading. Before too long, I expect other currencies to become even more valuable, and have greater adoption than Bitcoin.”

Vortex, however, disagrees. While he believes that Bitcoin will continue to underpin cryptocurrencies and even worldwide economies in the forseeable future, the outcome of other currencies is far less certain.
 

“Nothing is predictable,” he said, but reiterated that Bitcoin’s fortunes will be reflected in those of others currencies.

While he does see that any sort of success in Bitcoin cash would be a potential indicator for more hard-fork currencies being created in the future, “that trick only works a few times” and will ultimately just bring more attention to the original currency that started it all. Bitcoin.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Jon Martindale

David

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum might revolutionize business and technology, or it may be merely a transitional platform displaced by other blockchain technologies.

The world of Ethereum, to be sure, has an element of the eccentric.

Ethereum is a technology started 24 months ago by a 21-year-old college dropout, Vitalik Buterin. Among the facts listed on his slender bio: in 2011 he won third place in a high school programing competition. Yet Ethereum is now supported by JP Morgan Chase and a bevy of tech titans. The market cap of its currency, Ether, hovers around $20 billion – down from its $37 billion cap a month ago.

There are Ethereum cryptocurrency miners who rent Boeing 747s to rush delivery of the super-charged graphic cards they need for their rigs. Ethereum is promoted by the Ethereum Enterprise Alliance, which sounds like a group Spock himself would have enjoyed.

Ethereum advocates herald it a “world computer.” This decentralized peer-to-peer platform – serving finance, retail, even the arts – will partner with cloud computing to launch technology’s next era. They claim the platform’s smart contracts (self-executing code that needs no human assistance) provides rocket fuel for business transactions.

The word Ethereum drives from the Latin root ether, meaning “the upper pure, bright air.” In olden times one inhaled ether before surgery to enter a painless dreamscape.

Funny, but Ethereum may fade like a burst of ether. The challenges it faces are wildly complex, from technical to legal to competitive. And those are just the known problems; no telling what unknown obstacles will arise.

Yet deep pockets don’t seem worried: the pile of money pouring into Ethereum is considerably larger than the Swiss Alps. (And the Swiss city of Zug is adopting an Ethereum-based ID verification system.)

So is Ethereum enabling a new era in tech, or is it a flight of fancy no stronger than a whiff of ether?

 

Ethereum and Blockchain

Ethereum is built on blockchain, a technology that reputable tech experts claim could become “bigger than cloud computing.”

A blockchain is a shared digital ledger that, in theory, cannot be hacked. Using an open source peer-to-peer network that connects countless servers worldwide, a blockchain enables cryptographically secure exchanges between network members. In a radical step forward, these secure transactions don’t require a central authority or third party verification.

Blockchain allows secure transactions for Bitcoin, the cybercurrency launched in 2009. Bitcoin is itself revolutionary: it’s a currency not backed by a nation state.

America backs the dollar; the European Union supports the Euro. But Bitcoin is supported solely by investor demand. Its value is driven by speculation, as reflected in this year’s wild price gyrations.

Yet while Bitcoin’s value shifts with the wind, the buy-sell transactions are secure – a blockchain network ensures this. (Digital wallets are hackable; but this is separate technology from blockchain).

Ethereum leverages blockchain with advanced tools like smart contracts, as mentioned above. This autonomous code collects payment in Ether, the platform’s currency.

Offering vast potential, Ethereum runs decentralized applications. Known as DApps, these programs are hosted across a broad blockchain network. When huge corporations’ servers go down – even the mighty Amazon has outages – customers suffer. But DApps are hosted on so many nodes that an outage is highly unlikely.
 

With the combined tools of smart contracts and DApps, the Ethereum platform allows a next-gen business structure: the decentralized autonomous organization (DAO). A DAO is self-running “company” or organization that can conduct business with minimal human involvement. Or a DAO extends the capability of human staffers.

Looking ahead, certainly Ethereum will enhanced by artificial intelligence, though AI is not part of Ethereum itself. So think of it: a securely-networked platform, conducting business on its own, powered by AI that allows it to adapt independently.

The Ethereum (Virtual) Goldrush

Ethereum’s ginormous potential is largely untapped. So, like the Internet in 1994, a mixed crowd of small time dreamers and big corporations is hustling to grab real estate.

In February 2017 a group of companies formed the Enterprise Ethereum Alliance. Members include Intel, Samsung, Toyota, Merck, Deloitte, and Mitsubishi. The Alliance has working groups delving into insurance, healthcare, supply chains, advertising and the legal industry.

Microsoft, an Alliance founding member, includes Ethereum in its Azure cloud platform – and Microsoft’s cloud is its most important business thrust. Azure offers Ethereum Blockchain as a Service.

These large companies will have plenty of start-ups to fuel the ecosystem.

LO3, an energy startup, uses Ethereum smart contracts to enable a market for locally generated solar energy. Golem has built a platform to rent the computing power of connected users’ machines. Basic Attention Token, created by Brendan Eich, co-founder of Mozilla, aims to disrupt online advertising.

In the arts, the DJ who scored the 2016 Grammy for Best Remixed Recording has released the first album distributed on the Ethereum platform. He released it in partnership with Ujo Music, which uses Ethereum to create what it calls a “modern music supply chain.” Ujo Music is owned by Consensys, which bills itself as a “venture production studio,” primarily based on Ethereum.

Fintech startup BAAB is constructing a banking operation. Ethlance is an employment-listing site that pays participants in Ether. Swarm City offers an ecommerce operation developed on Ethereum.

Ethereum is a perfect fit for the red hot Internet of Things sector. All those zillions of blinking devices out on the edge need smart contracts to collect payment for services. Chronicled lists an open source registry for IOT devices on the Ethereum platform.

Ethereum’s Dark Side

Not surprising given that Ethereum is a mere two years old, its founding chaos still swirls. In a May 2016 crowdsale, The DAO, a decentralized autonomous venture fund on Ethereum, raised a jaw-dropping $150 million. But – whoops! – in June 2016 The DAO was hacked and someone made off with $50 million.

In an attempt to defeat the hackers, Ethereum forked in two, with one version now called Ethereum Classic. In late 2016 there were two more forks in an effort to protect against attacks.

None of this inspires confidence. Famed investor Howard Marks, head of Oaktree Capitol, opined in a newsletter that digital currencies like Bitcoin and Ether are “nothing more than a fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.”

Marks’s comments, however, don’t acknowledge that Ethereum is much more than a cybercurrency. Moreover, in July 2017 the Securities and Exchange Commission ruled that ICOs (initial coin offerings, the blockchain equivalent to IPOs), are securities, and so are subject to federal securities laws. This oversight should lend legitimacy to Ethereum.

Still, Ethereum faces legions of inspired hackers. A cool $32 million of Ether was heisted due to a bug in wallet.sol, a multi-signature smart contract app. During an ICO organized by startup CoinDash, hackers lifted at least $10 million.

Also troubling, the nascent technology of smart contracts offers a morass of legal questions. What if there’s a glitch in the code that causes financial loss? Beta releases of software are famous for bugs. Must a company compensate to the tune of millions for a few errant lines of code?

Do existing regulations cover all – or any – of this?

It’s likely that we’ll see court cases about Ethereum’s legal issues. Certainly there are enough uncertainties to fill a future class in law school.

Ethereum and the Great Unknown

Beyond legal and security challenges, Ethereum could at some point face an existential threat from competing technology.

The Darwinian ethic in technology winnows most sectors, sometimes to a 500-pound gorilla (like Windows on the desktop), or a few top competitors (like AWS-Azure in public cloud). Investment flocks to the winners, while the also-rans become that era’s Betamax.

Blockchain itself will certainly become a foundational building block. But whether Ethereum as a platform for blockchain’s power will thrive long term remains an open question.

First, there’s a massive rush to create new cybercurrencies – there were 900 at recent count, and probably 950 by the time you finish this sentence. Ether could get lost in the crowd.

For instance, start-up Ripple launched cybercurrency XRP, which in July 2017 saw its value leap from the prior quarter by 1,159 percent. As of mid-year 2017 its market cap runs just behind that of Ether and Bitcoin. The Bank of England did a proof of concept with Ripple, and its clients include the Royal Bank of Canada and the Mitsubishi UFJ Financial Group.

Ripple and Ethereum aren’t necessarily competitors. Yet Ripple does tout itself as “the world’s only blockchain solution for global payment,” so it clearly overlaps with Ethereum.

Most significant, Ripple’s surging success shows that this market is still new and highly unpredictable. What’s to prevent a well-funded competitor from expanding their platform so that Ethereum becomes yesterday’s news?

Amazon, which has a habit of dominating every market it enters, announced a partnership with Digital Currency Group to enable Blockchain development.

Hyperledger, an initiative of the Linux Foundation, is another leading blockchain developer. Founded in 2015, its blue chip sponsors include Intel, Accenture, Hitachi, JP Morgan Chase and Cisco. IBM, in partnership with the London Stock Exchange, is using Hyperledger to construct a trading system for shares of private stock in Italian companies.

With projects like that, you might assume that Hyperledger could displace Ethereum. But apparently the two platforms will work in synergy. In April 2017, Hyperledger approved a proposal to develop its first Ethereum-based application, the smart contract app Burrow. And Hyperledger projects will begin to include an Apache-licensed Ethereum Virtual Machine.

As Brian Behlendorf, Hyperledger’s executive director, explained in a blog post, “any positioning of the Hyperledger and Ethereum communities as competitive is incorrect.”

So the future looks promising for Ethereum. With developers on board, a vigorous startup community, VC interest and wide corporate support, it’s a reasonable bet that Ethereum will become a dominant platform.

Perhaps the most balanced view of Ethereum is that it’s an exceptionally promising seedling whose growth contains significant doubt. Yet one thing is certainly true: whatever contender becomes the leader for decentralized applications – Ethereum or a variation – will play a profound role in the future of technology.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrpreneur

 

Author: Sam Quinn

David

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

A new patent application from Mastercard suggests that the global credit card issuer is exploring ways to build refund services for cryptocurrency users.
 

The application, titled "Information Transaction Infrastructure", was published by the the U.S. Patent and Trademark Office (USPTO) on August 3, having been submitted in late January. Vladimir Goloshchuk, who according to LinkedIn previously worked as a senior analyst at Mastercard, is listed as the sole inventor.

 

The application details an infrastructure through which users could verify their identities, which would then be linked to cryptocurrency addresses they elect to disclose.
 

The text of the application points to this being most relevant for situations in which users are submitting payments to merchants from accounts on exchanges, or other services, in which their funds may be held alongside those belonging to others.

 

In the event that a merchant has to send the money back for a refund, they would send it back to an address linked to that user's account – a situation in which the exchange or custody holder might then need to know where those funds are being sourced from and why.
 

To counter this, Mastercard proposes a way for users, through a shared service, to have two kinds of wallets.
 

"The basic principle of the arrangement … is that a user of the shared wallet service has two types of wallet. Firstly, they have a 'public' wallet for on-the-chain publicly visible and verified transactions. The user will make and receive cryptocurrency payments external to the shared wallet service using a public wallet," the application explains, adding:
 

"Using this approach, the refund problem can be addressed – a payment received from the public wallet can be refunded by an equal payment back to the public wallet."
 

The application is the latest from Mastercard, which has filed several patents in the past few years. The company has also developed projects focused on blockchain tech, releasing a set of dedicated APIs last fall.

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Stan Higgings

David

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency.

Most readers have probably heard of Bitcoin, the digital coin that dominates the cryptocurrency market. It has gained notice both because of its skyrocketing value (from less than a cent in early 2010 to around $2,600 currently) and because it is frequently a key player in hacking- and black-market-related stories, from the looting of nearly half a billion dollars in coins from the Mt. Gox exchange in 2014 to the recent demand for payment in Bitcoin in the WannaCry ransomware attack.

But do you know Ethereum, with a total value of coins in circulation of close to $20 billion? Bitcoin Cash, which split off from the original Bitcoin on Aug. 1, lost about half its value within hours, then nearly quadrupled by the next day? Or, rounding out the Big Four, Ripple — whose currency is known as XRP — which shot up to about 40 cents by mid-May from less than a cent at the end of March? (Full disclosure: I owned but unloaded three of these currencies before writing this article.) Then there are over 800 lower-value and often creatively named coins among those listed on Coinmarketcap.com. One can buy FedoraCoin (its jaunty symbol being the Justin Timberlake-approved hat), CannabisCoin (one guess what it looks like) or, to choose one of many bringing up the rear, Quartz, currently priced around three-thousandths of a cent. (Bad news for those who bought it at just under $2 at the end of May.)

After years as a niche market for technologically sophisticated anarchists and libertarians excited about a decentralized financial network not under government control, digital coins may be on the verge of going mainstream. “It’s the wild, wild West,” said Ron Ginn, 35, founder of a private photo-sharing service called Text Event Pics in St. Augustine, Fla., who has taken all his money out of the stock market and put it into Ripple and real estate. “This is like getting to invest in the internet in the ’90s. I’m obviously very bullish, but I expect to make a couple million dollars off very little money. This is the opportunity of a lifetime. Finance is getting its internet.”

Cryptocurrency has understandable appeal to millennials who came of age during the 2008 financial crisis and are now watching the rise of antiglobalist populism threaten the stability of the international economy.
 

“There’s a low cost for entry, you don’t pay a lot of fees and millennials are the most tech-savvy,” said John Guarco, 22, a recent Duke graduate living on Staten Island who, like most of the people interviewed for this article, asked that names of the coins in which he has invested not be published for fear of being targeted by hackers.

Unlike previous generations, many of these greenhorn investors don’t have pensions or 401(k)’s, are mistrustful of socking money away in mutual funds and are fully accustomed to owning digital assets that have no concrete properties. As traditional paths to upper-middle-class stability are being blocked by debt, exorbitant housing costs and a shaky job market, these investors view cryptocurrency not only as a hedge against another Dow Jones crash, but also as the most rational — and even utopian — means of investing their money.

Sebastian Dinges, 33, the director of operations for Cheeky, a company that makes mealtime products, started his first job after college in 2007. Once he had enough money to invest in the stock market, he said, he “wanted to be risky and get a big return.” Within six months, the market crashed.

“So there’s definitely disillusionment,” he said.

The majority of Mr. Dinges’s holdings are now in cryptocurrency. His skepticism of traditional markets is shared by a number of cryptocurrency enthusiasts in his age bracket who have observed the recent political and economic upheavals.

“I do feel we’ve reached a new level where nobody knows what’s going to happen,” said Gabe Wax, 24, who runs the Rare Book Room recording studio in Brooklyn. “The things we’ve been able to rely on aren’t as reliable and we have a president who knows absolutely nothing about how the economy works, and he’s appointed people who have twisted views about how it works. That, more than anything, is what scares me.”

Mr. Wax was still in high school when the 2008 crisis unfolded, but he was paying attention to the headlines. So was Mr. Guarco, who said cryptocurrency was a “safeguard against the volatility in the rest of the world.”

“Investing in cryptocurrencies is a hedge,” he continued. “We’re entering a period of long-term deregulation and tax cuts to the wealthiest. It’s not the best recipe for stability.”

Mr. Wax also invests in cryptocurrency to shore up his finances as a freelancer in the precarious music industry.

“I constantly feel like I’m looking over the edge of a cliff,” he said. “I don’t like the idea of money just sitting in a savings account — with the way inflation works and how low interest rates are, you’re losing money. There’s less money than there’s ever been in the history of recorded music, so that gives me anxiety. It’s weird to say that owning cryptocurrency soothes that anxiety, because it’s counterintuitive, but it does.”

He is far from the only one hoping cryptocurrency will assuage his financial worries. Internet forums and Twitter accounts devoted to the subject abound with speculators who view digital coins as a lottery ticket, forecasting “moonshots” with, perhaps, irrational exuberance. For office drudges, the underemployed or those crushed by college loans, the slim chance that a $100 investment may someday reap close to $100 million — as would have happened with an investment of that amount in Bitcoin in 2010 — is too enticing to pass up.

But there are plenty of dissenters who are less sanguine about the future of cryptocurrency, arguing that we are in the midst of the biggest bubble yet, fueled by speculative trading in Japan and South Korea, and pointing to previous Bitcoin crashes as justification for their skepticism.

Nevertheless, it’s not just twentysomethings in the gig economy who are losing faith in traditional investment tools. Mr. Ginn quit working at Fidelity Investments the day before the market crash in 2008.

“It’s not investing,” he said of his old job. “It’s just sticking money somewhere. The investment advisory industry has to give out watered-down, averaged-out advice. When you get into mutual funds, you lose a lot of the ability to beat the markets.”

Tom Berg, 44, a founder of BloKtek Capital in Northbrook, Ill., which invests in digital currencies and assets, said: “I got out of the stock market years ago. “My personal opinion was I’m not going to fight for 2 or 3 percent. It’s a conservative place.” By contrast, digital currencies — his preferred term to cryptocurrency, which he says carries the stigma of black-market money laundering — have disrupted the internet and created a major opportunity for those willing to jump in early, Mr. Berg believes. “At first it was an internet of information,” he said. “Then it evolved to an internet of things — social media, I can buy this, I can sell stuff. Now it’s the internet of value.”

In his view, cryptocurrency left the “dark ages” six months ago, when it was still the domain of “a lot of people who believed in anarchy.” He thinks that cryptocurrency is a good five years from going mainstream and that the bubble will burst some time after that, at which point he will sell his assets
 

“If my landscaper ever asks me about crypto, that’s the day I get out,” he said.
 

There are some barriers to mass popularity. Investors must have enough familiarity with and trust of the internet to send money through a cryptocurrency exchange, such as Coinbase or Poloniex. Some of the exchanges also have elaborate and slow identity-verification processes, and certain states do not permit users to invest on them yet. But it’s continually getting easier, and various exchanges allow credit cards for speedy purchases.

Once one has bought digital coins, the threat of hacking remains a serious concern. Even users savvy enough to use two-factor authentication on their phones may not have the know-how to set up “cold storage,” or a system of storing coins offline (such as on a computer or dedicated piece of hardware not connected to the internet). There is no Federal Deposit Insurance Corporation insuring lost money; once it’s gone, it’s gone.

Assuming one’s money is protected, there are, of course, the standard risks of investing, amplified by the volatility of cryptocurrency. It’s common for a coin to fluctuate double-digit percentages within a day, often because of “pump-and-dump” techniques from coordinated users trying to manipulate prices in completely unregulated free markets.

For this reason, none of the investors I spoke with engage in short-term trading but instead choose, in the online parlance of cryptocurrency enthusiasts, to “hodl” (“hold on for dear life,” rather than sell off for temporary gains). Mr. Dinges and his wife recently bought a house in Los Angeles, but he didn’t use his Bitcoins to help with the renovations.

“This is a great opportunity to pull it out and put it toward fixing the house,” he said, “but the future potential is not worth it.”

Mr. Berg would agree, advising BloKtek Capital clients to “set it and forget it” and not fall prey to the temptation to make short-term transactions.

“My wife and I use it as our bank account,” he said. “Every paycheck, we put a percentage into long-term holdings. We do not expect to become rich overnight. That’s a way to become very poor in one hour.” (Though his wife works at his company, it bears mentioning here that the vast majority of cryptocurrency investors seem to be male, and their Twitter discourse tends to be less than refined, with insults often lodged at devotees of rival currencies.)

Even those in it for the long haul, however, admit to monitoring the prices compulsively, scratching the gambler’s itch.

“If I have a moment where the price has left my mind, I’ll want to reinsert it,” Mr. Wax, the record producer, said. “I check it as much as any social media. It’s become as distracting as anything else on my phone.”

As he works in the cryptocurrency world, Mr. Berg maintains an even more observant — and most likely exhausting — regimen.

“I’m always watching the markets,” he said. “The saying is, ‘Crypto never sleeps.’ It’s 24/7, it’s global, it doesn’t have a stock market, it doesn’t have a bell.

“I sleep about four hours a day.”

Beyond its potential long-term financial rewards, many holders of cryptocurrency view it as a vehicle for social change. While many coins have no value beyond serving as a potential alternative currency, or began as larks that have since been popularized by speculators (such as Dogecoin, whose logo is an internet-meme dog and which now has a market capitalization of about $200 million), others — namely Ripple and Ethereum — have meaningful real-world utility and are being adopted by banks and financial institutions.

“The financial gain is fun, but it’s really about improving the world, improving the financial system, transparency, cost, increased speed,” Mr. Ginn said. “It’s the double-sided tape for society. When financial markets collapse, the tape rips people apart and you have a system collapse. Finance got away with it in ’08; it almost took the world down, and nothing changed.” In lieu of more stringent government oversight, he believes that Ripple can help “reduce systemic risk.”

That safety-net altruism drives Yoni Saltzman, 24, who designs robotic mechanisms for aerospace and medical applications. Mr. Saltzman has holdings in four different cryptocurrencies and is working with a small team in New York to develop a digital coin it hopes to introduce within a year. “It’s not just about making money,” he said. “We like the idea of not only changing the world, but saving the world.”

This is, of course, the same vaguely idealistic rationale Silicon Valley executives routinely trot out to justify their ventures, not all of which seem especially concerned with the greater good. In the meantime, those who have boarded the crypto-train frequently proselytize to friends and family. Unsurprisingly, they have more luck with their younger peers. Mr. Guarco, the Duke graduate, has persuaded a few friends to take the plunge.

His older relatives, however, unaccustomed to coins that one can’t pluck out of a lint-filled pocket, are a harder sell.

“They usually respond, ‘Crypto-what?’” he said.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Teddy Wayne

David

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency
 

Barely 48 hours since its spin-off from the Bitcoin blockchain, Bitcoin Cash has already surged past other cryptocurrencies to become the third-biggest in terms of market capitalization. How the currency will fare over time is still up for debate, as it still lacks support from several mining pools and major exchanges.
 

UNEXPECTED BOOM

Less than two days after splitting from the main Bitcoin network, Bitcoin Cash [BCC] now ranks third amongst the world’s most valuable cryptocoins. The budding cryptocurrency has reached a market cap of more $7.7 billion as of this writing, overtaking Ripple’s $6.7 billion market cap.

 

With a market cap of a little more than $44 billion, the original Bitcoin currency is leading the market, while Ethereum comes in second at $20.9 billion. In terms of value per coin, Bitcoin Cash is even ahead of Ethereum’s current valuation of $223.54, with a per unit value of $470.27.
 

The surge in Bitcoin Cash comes despite a lack of support from several mining pools and major exchanges like Coinbase and BitMEX. Some Coinbase users are even threatening to sue the exchange for not recognizing the currency.

 

Blockchain Global’s recently re-opened Australian Cryptocurrency Exchange, on the other hand, is confirming Bitcoin Cash trades and claims to have seen a huge demand for the currency. “We are receiving a lot of off-market orders for bitcoin cash — they’re exploding!” venture partner Sebastian Quinn-Watson told Business Insider.
 

A VOLATILE CURRENCY
 

The creation of Bitcoin Cash was the result of an ongoing debate regarding how to scale Bitcoin blockchain transactions, and experts are currently divided on how the split will ultimately play out.

 

For now, this sudden increase in value is understandable. Bitcoin Cash carries all the history of the original Bitcoin platform up until the fork on August 1, which means anyone with Bitcoin now has an equal amount of Bitcoin Cash.

 

Eventually, Bitcoin Cash should be able to stabilize itself for market exchanges, but right now, speculation is causing a surge in initial interest. “People are selling their Bitcoin positions and buying Bitcoin Cash as a proposition that it is the ‘new coin’ that has more value in the future,” explained Quinn-Watson. “It’s a bit speculative.”

 

No one knows for sure how long Bitcoin Cash can sustain this upshot. As with other digital currencies, Bitcoin Cash’s value depends mainly on how much value investors assign to it and how easily it can be used for “real-world” transactions.

 

“There’s no infrastructure available out of the box to support BCC,” Fran Strajnar, co-founder and CEO of Brave New Coin, told CNBC. “The network needs further support and infrastructure needs to be as easy as Bitcoin; otherwise, it’s over for BCC.”

 

David Ogden
Entrepreneur

 

 

Author Dom Galeon

David

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin might be dividing into two separate blockchains, but its downward slide has so far been contained, signaling confidence the biggest cryptocurrency will come out of the split unscathed.

The debate over how to scale bitcoin came to a head Tuesday as some cryptocurrency miners started using software called Bitcoin Cash and splitting a new blockchain off the old one. Blockchain is the technology used for verifying and recording digital currency transactions.

Bitcoin’s price should reflect the split by discounting the new coin, according to Charles Hayter, who runs the cryptocurrency data platform CryptoCompare. He likened it to a stock trading “ex dividend” — when the buyer isn’t entitled to collect a dividend on the shares.
 

After four days of gains, bitcoin was down $157, or 5.4 percent, to $2,729 at 11:05 a.m. in New York. Earlier in the day, the cryptocurrency fell as much as 8.4 percent, its biggest decline since July 25. Bitcoin cash futures rose 19 percent to $331, according to CoinMarketCap.com.

“The price of bitcoin has risen ahead of the split on the expectation that you’ll get that extra cash from bitcoin cash, so it should drop after the split,” Hayter said. “This has happened before in other blockchains. It’s a trading event where there’s number of hoops you have to jump though and people are trying to make a profit.”
 

Bitcoin Cash started gaining traction in the past week, just as miners fended off another split by rallying behind the scaling mechanism known as SegWit2X. Bitcoin Cash wants to increase the block size — the files in which transactions are recorded — while SegWit2X would transfer some of the operating power outside of the main blockchain. In other words, Bitcoin Cash would be one lane with bigger cars, while SegWit2X would be two lanes with smaller cars.

 

The great majority of miners and developers support bitcoin, while ViaBTC, which has almost 6 percent of bitcoin processing power, is the mining pool backing bitcoin cash.

“There’s a role for both of these coins,” said Cathie Wood, the New York-based chief investment officer at ARK Investment Management, which oversees the first exchange-traded fund with indirect exposure to bitcoin. “One is much more natural for store of value and the other one for a means of exchange.”

 

Some are less bullish. Ryan Taylor, chief executive officer of Dash Core, the sixth-biggest cryptocurrency, sees little chance that bitcoin cash will succeed in the long term.

 

“First, Bitcoin Cash has not solved scaling. It has merely kicked the can down the road with slightly larger blocks, but still lacks a credible technology to scale to massively larger numbers of users,” he said in an email. “Second, bitcoin will retain the network of integrated services that make the bitcoin network useful to businesses and consumers.”

 

Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin. Exchanges including Kraken and ViaBTC have said they’ll support both, while others like Coinbase and Poloniex have said they won’t, citing uncertainty that bitcoin cash will have lasting market value.

 

Kraken said that it’s working on crediting accounts with bitcoin cash, and that its site’s login function is down due to heavy traffic. While some miners are already using the Bitcoin Cash program, the real differentiation of the two blockchains will emerge when they mine more than 1 megabyte in one block, Hayter said. Bitcoin’s block limit is 1MB while Bitcoin Cash’s is 8MB.

“I’m not as concerned about this except for the administrative nightmare that some people are going to have to go through or have gone through already pulling out of the various exchanges that weren’t going to support it,” ARK Investment’s Wood said.

 

Bruce Fenton, founder of Atlantic Financial Inc. and a board member at the Bitcoin Foundation, said both currencies should trade heavily Tuesday.

“There are some very large holders who own bitcoin, who don’t like bitcoin and do like bitcoin cash,” he said. “But you also have a lot of people who can’t stand bitcoin cash, and as soon as they have the ability to get those coins they’re going to sell them on the market.”

“It could be a crazy day,” he said.

 

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entreprenuer

 

 

Authors: Camilo Russ & Lily Katz

David