Kvě 18

US Securities and Exchange Commission Launches ‘HoweyCoins’ ICO

· May 17, 2018 · 8:00 pm

In a surprising turn of events, the US Securities and Exchange Commission has launched its own initial coin offering dubbed HoweyCoins.


‘A Hot Investment Opportunity’

Anyone looking for a hot new initial coin offering (ICO) should look no further than the US Securities and Exchange Commission’s brand new token sale for HoweyCoins. States the regulatory authority in an official press release:

If you’ve ever been tempted to buy into a hot investment opportunity linked with luxury travel, the Securities and Exchange Commission has a deal for you.

Check out the SEC’s Office of Investor Education and Advocacy’s mock initial coin offering (ICO) website that touts an all too good to be true investment opportunity. But please don’t expect the SEC to fly you anywhere exotic—because the offer isn’t real.

Unsurprisingly, the SEC isn’t actually launching its own token sale. Rather, the independent agency of the United States federal government has set up a mock website in order to educate investors about the perils of investing in fraudulent ICOs.

Clicking “Buy Coins Now” on HoweyCoins.com — a tongue-in-cheek reference to a landmark US Supreme Court decision in 1946 — will not actually sell you coins, but rather offer tools and advice from the SEC and other financial regulators.

The website has reportedly been set up to protect regular investors, and “features several of the enticements that are common to fraudulent offerings, including a white paper with a complex yet vague explanation of the investment opportunity, promises of guaranteed returns, and a countdown clock that shows time is quickly running out on the deal of a lifetime.”

The SEC’s Office of Investor Education and Advocacy’s Chief Counsel, Owen Donley — aka HoweyCoins’ Josh Hinze — explains:

Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals. But fraudulent sites also often have red flags that can be dead giveaways if you know what to look for.

Likewise, SEC Chairman Jay Clayton states:

The rapid growth of the ‘ICO’ market, and its widespread promotion as a new investment opportunity, has provided fertile ground for bad actors to take advantage of our Main Street investors. We embrace new technologies, but we also want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of fraud. Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws. I encourage investors to do their diligence and ask questions.

HoweyCoins.com does indeed look a lot like the vast majority of websites offering ICOs and may be interpreted as a clever and funny way to educate investors against fraudulent schemes — as opposed to simply providing bullet points on a government website.

What do you think of the SEC’s new mock ICO? Do you think this is a positive move in the education of investors against fraudulent ICOs and bad actors in the cryptocurrency space? Be sure to let us know in the comments below! 


Images courtesy of Shutterstock

Show comments

Share
Dub 27

Crypto Arbitrage Trading – The Pursuit of Happiness

· April 27, 2018 · 5:00 pm

Arbitrage exists as a result of market inefficiencies and would therefore not exist if all markets were perfectly efficient. How does one capitalize on this market phenomenon?


A trader who, in 1970, pioneered a computerized trading system once said:

The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.

This is, of course, Ed Seykota, a former commodities trader. A lot has changed since he first introduced this system, with the onset of blackbox and algorithmic and high-frequency trading, it is harder than ever for point and click traders to make money.

The market has evolved and the inefficiencies that it suffered from in the 70s are unlikely to return. However, while the capital and debt markets are now highly efficient and, for the most part, very liquid, the same cannot be said for cryptocurrency markets. For one, the dissemination of information to the trading community is highly inefficient. The systems that aggregate volume and other data from various exchanges are still in their infancy and most importantly, the size of the trading community is growing every day.

Trading

Nobody Knows If a Stock Is Going to Go Up, Down, Sideways or in Circles

Those that have seen the film “Wolf Of Wall Street” will remember the scene with Matthew McConaughey and Leonardo DiCaprio, where Matthew McConaughey goes on to say “Nobody knows if a stock is going to go up, down, sideways or in circles.”

Is trading an art, a science, or is it no different than gambling and simply requires a degree of luck? Whatever camp you side on, crypto markets provide a unique opportunity to make very good returns on your investment. You don’t always have to be a trend follower or a contrarian, the smart way to approach crypto trading is by applying arbitrage models. The problem, of course, is standardizing the API data from the exchanges. While it is not an impossible task, it can be very laborious and requires a great amount of checking to ensure consistency between the different data feeds.

Despite the fact that the cryptocurrency markets are trading with extremely high-volume levels, they are not nearly as liquid as we might think. This market is still highly fragmented in a web of exchanges under very different jurisdictions. The liquidity is spread through various more or less trustworthy exchanges all over the world. The emergence of more trustworthy regulated exchanges has boosted the overall liquidity but has not yet delivered the desired effect of lowering spreads and slippage costs. Furthermore, increasing liquidity would definitely encourage significant institutional investments and promote mainstream adoption.

Arbitrage

Trading Edge

Volatility is something that has discouraged this much sought after mainstream adoption. This measure is related to uncertainty with regard to the extent of price changes. High volatility is evidenced in sharp and unpredictable price swings, while assets with low volatility will see little or minimal fluctuation in prices over a short-term horizon.

There are various strategies one can follow to capitalize on the potential arbitrage opportunities that currently exist across crypto markets. No one can tell for sure how long these opportunities will remain available, as the broader adoption of these assets by the general public will invariably reduce bid/ask spreads and increase trading volumes. However, for now, one can simply make comparisons between different exchanges to understand the magnitude of potential returns on capital.

The following numbers should be taken as an indication, these are not fixed levels and are subject to change. The price of Bitcoin on HitBTC is 2.55% higher than the price of the same asset on Exmo. Nowhere in capital markets can such discrepancy occur with what is said to be a leading asset in the digital economy and the spread on altcoins can sometimes be even greater.

There are different ways to trade the same markets, directional, technical, contrarian, fundamental – or you can utilize a combination of the above and create a strategy that works for you.

What do you think of market structure and is regulatory uncertainty to blame for such fragmented markets? Let us know in the comments below.


Images courtesy of Pxhere and Shutterstock.

Show comments

Share
Dub 04

India Becoming the ICO-Marketing Hub for Crypto Platforms

· April 4, 2018 · 3:00 pm

India may be most well known for its Taj Mahal and Golden Temple. However, it is gaining a reputation in the crypto community as a place to find an extremely affordable provider of marketing services.


Marketing can be expensive, whether in-house services or outsourcing. In the fast-moving crypto world, it will also help in determining how successful your ICO will be. This in itself is a multi-billion-dollar industry, with, according to The Times of India, almost $3 billion being raised last year.

Having similar features as the good old crowdfunding business model, ICOs first rely on making their target market aware of their platform’s services before getting them to part with their hard-earned cash or crypto. This is where the marketing part comes in, and it also seems that this is where Indian marketing agencies are coming in too.

A Different Way of Marketing

More and more crypto platforms are outsourcing their ICO-marketing needs to predominantly Indian agencies. Not only do they offer a cheaper choice, these firms are also using apps like Telegram and crypto-industry-specific platforms to market these ICOs. This is quite significant as it means that these start-ups won’t have to deal with the recent bans by Google and social media giants, Facebook and Twitter.

However, even without the bans, Salim Ali does not believe that these big corporations are the way to go anyway. Ali is the CEO of Loyakk, a “blockchain-powered enterprise relationship management platform”, with an upcoming ICO. He said:

Facebook and Google AdWords hardly generate demand (for ICOs). Only a person new to the space would be googling about it.

Growing Business

Growing Business

Karnika Yashwant is the CEO of Key Difference Media, a Chennai-based marketing agency. He had this to say:

Two or three months ago, there were only a few platforms that helped in advertising. Now, a company going for an ICO will have a few hundred proposals from new marketing companies that are sprouting in India.

Yashwant has provided marketing services for 14 ICOs, most of which were led by European clients.

Saving Money

In addition to crypto community groups on Telegram,  ICO clients usually also choose to advertise through a range of crypto websites. In the case of the latter, Yashwant added:

For a banner in a cryptomedia website, you’d have to dish out $10,000 a week.

This is a hefty sum, but usually payable in fiat or virtual currency. However, even though an ICO could net millions, platform founders could be looking to save money in the initial stages, which could be why the more affordable option of Indian agencies could be so alluring.

What do you think of crypto platforms using cheaper Indian marketing agencies for their ICOs? Let us know in the comments below!


Images courtesy of Shutterstock, DepositPhotos

Show comments

Share
Lis 04

The Large Numbers Effect: Cryptofunds Are Spreading

· November 4, 2017 · 1:30 pm

People have already made fortunes from crypto fever and cryptofunds, and many more will make money as well. But not everyone.


The Cryptofund Lifeline

Like any rapidly developing market, the cryptocurrency industry provides opportunities, but there are only a few who can really use them. A significant share of the cryptocurrency market is owned by the those who mined it but have no idea how to handle it. Almost all of these people are at risk of ultimately losing their Bitcoin or Ethereum.

Cryptofunds help people survive in this market. For a Blockchain neophyte, such institutions are a throwback. Today, a company doesn’t need any ‘linings’ to raise money transparently and distribute profit.

Indeed, the structure of these kind of organizations is reminiscent of conventional venture funds. But they do work and are indispensable for the new economy.

The Cryptofund Lifeline

Financial Bridges

Market expertise is the main product of any cryptofund. Funds form a team of professional traders and analysts, i.e. of those who are considered useless by the majority of Blockchain partisans in new economy.

Blockchain is characterized by transparent transactions, but it doesn’t necessarily mean the same for a business owner or a business model. Only experienced professionals can separate the wheat from the chaff and find reliable tools in a stack of hollow shells.

Cryptofunds play an important role in the cryptoeconomy. Among other things, they support new projects that create products and develop a Blockchain ecosystem. They also provide money to those who would probably never get a bank loan or investments from venture funds. It’s not necessarily because their projects are bad, but because neither banks nor VCs know how to work with blockchain projects and it’s doubtful that they’ll learn to do so anytime in the near future.

Meanwhile, a cryptofund’s global role is to raise money within the unregulated economy; it’s a bridge for institutional investors.

Explosive cryptocurrency growth attracts investors longing for risk, but it doesn’t mean they have enough money, and institutional investors will never take a risk without funds’ expertise. Truly large-scale projects can’t survive without big money and long-term finance, and the cryptoeconomy isn’t yet able to set up a strong bond with the conventional economy.

I would emphasize that we’re talking about the future. Right now, the market is still too small for major investors, but current growth rates will not keep them away for long. And until then, individual investors are the main source of money along with growing cryptocurrency rates which inflate funds’ value with no external sources.

Financial Bridges

Strong And Weak Spots

There are several other growth drivers for cryptofunds, apart from the desire of cryptocurrency owners to make their money work:

Low setup and management costs. The difference from conventional funds is immense. Executives can easily take all the profit, while the cryptoeconomy has avoided this for the moment.

Near-instant entry and exit. Thus, many players buy discounted tokens at pre-sales and then sell part of them on the stock market after fund’s listing. There’s nothing wrong with that – it’s standard behavior for speculators and long-term investors.

Openness, transparency and tokenization of cryptofunds are their integral features as explained by technology platforms. No auditor or disclosure could give you such transparency and publicity.

It may seem that this way money flow should be unstoppable and without any restrictions (shutupandtakemymoney!). ICO evangelists think the same way, but in real life, there are some restrictions that hamper the development of cryptofunds and cryptotools.

Lack of trust in the system. Technology transparency means nothing if you don’t understand its principles. Many find it hard to believe that some ephemeral 0 and 1 somewhere on the internet can guarantee something. In several years people will still have no good understanding of the basics of the cryptoeconomy, but they’ll get used to it. And that’s already something.

There is no legal bridge to the traditional economy. Major players are simply afraid to enter the sphere with a legal gray area. It’s also a question of time – state grindstones run slow but hard.

Limited access to liquidity. Due to the legal vacuum, there are no reliable cryptocurrency exchanges at the moment. The existing ones are dangerous, slow and have almost no obligation to their clients. And reputation doesn’t seem to matter a lot in the cryptoeconomy yet.

Technical issues of tokenization. A platform defines cyber resilience, security and productivity. It’s essential to choose the right one, even though this is really difficult.

Smart contracts. Smart contracts can either lead to success or ruin the whole business. In this sphere, developers are in high demand, and as a result, they are overloaded with work, extremely expensive and work very slowly.

Strong And Weak Spots

In Need Of Change

The first three problems are long term one and will be resolved as the cryptoeconomy develops. But the latter ones can be tackled by active players.

The market desperately needs a simple, legal, technology-based and out-of-the-box solution for cryptofunds. The company that can deliver it will not only have a chance to beat out the competition but to boost the development of the cryptoeconomy, producing benefits for everyone involved as well.

This article was written by Vladimir Smerkis, Co-founder of Tokenbox and Token Fund.

What do you think about cryptofunds and the cryptoinvesting process in 2017? Let us know in the comments below!


Images courtesy of Shutterstock, Pexels

Share