Dub 20

Binance CFO Talks About His ‘Exciting’ Journey in Exclusive Interview

It was the last hour of the final day at Paris Blockchain Week Summit. The charismatic Binance CFO Wei Zhao had been speaking back to back. Yet, despite the time and the fact that he must have repeated himself over and over for two solid days, he seemed undeterred. Wearing jeans and a Binance hoodie, he bounded up to meet me, vigorously shaking my hand, clearly enjoying being the man of the moment.


If this were a celebrity party, Binance would be the VIP guest. Changpeng Zhao (CZ)’s creation seems unstoppable. Every project wants to be on Binance, from regular token listings to holding IEOs on the Binance LaunchPad. The Binance Chain has just launched, its native BNB token is climbing in price, and the company has the power to influence the entire community and delist tokens at will.

Binance Won’t Be Leaving Malta Any Time Soon

Minister for Digital Affairs Cedric O later said in a press conference that one of their goals was attracting Binance to France. Yet Zhao confessed to me that he had no idea the French had pushed forward new regulation until now.

With a rather high taxation rate for crypto companies at 30 percent, regulations around ICOs (that no one’s doing anymore) and a lot less flexibility than Malta, it looks unlikely that Binance will move to France anytime soon. Although I wasn’t privy to any backroom chats.

binance cfo wei zhao

My interview was with Wei Zhao, the man partially responsible for Binance’s epic growth. “I help companies to scale and to grow,” he tells me. Binance now has over 400 people in 30 countries. That’s “a decent sized organization.”

One thing that I have helped to launch is our fiat to crypto offering. In January, we launched our fiat to crypto, pound to BTC. We’re also doing Singapore. Last year, we launched in Uganda… My approach has been basically to build up our presence in the regulated world and build up more fiat.

Bridging the Traditional Financial World with Crypto

With a background of working in traditional finance, and grooming companies to go public, it’s unsurprising that another major focus of Zhao is institutional investors.

“I worked in Hong Kong, so I’ve been CFO for about four different companies, two of which went public. So, I am quite adept in dealing with bankers, and working with bankers, I am a banker myself. I helped to launch our OTC trading services, Binance off-exchange services. I help bring people from traditional bond traders and that type of trader to cryptocurrency.”

Indeed, the surge in Binance’s OTC trading drove the company’s near $80 million first-quarter profits.

What It’s Like Working at Binance

I ask why he made the leap from traditional finance to crypto. He says he would not have done it for any other company than Binance.

I think we are really different from other companies. Most are just exchanges, but we really fiercely want to make an impact in the world… The journey has been awesome so far and I’m in it for the long haul.

One of the best things about his job? Traveling to different places. “I flew around the world four or five times already,” he laughs.

It does speak to the borderless nature of cryptocurrencies. Yes, it’s a digital business but at the end of the day, it’s still a human business, it’s a very human business. The reason this industry is growing so much is that people in this industry travel so much. Like 10 times more than in any other industry.

There’s nothing like human interaction, face to face human talking about things, that’s how you can really impact change.

Does the Recent Leap in Bitcoin Mean the Bear Market Is Over?

It’s not a decisive “yes” when I ask if the bear market is over. Zhao pauses and leans back in his chair. There’s a short silence before he forms his answer, leading me to believe the opposite may be true. But with the most profitable exchange in crypto, bear market or no, nothing’s stopping Binance. He says:

I think there’s generally a lot more interest across the board despite adverse regulation and other adversities. You see general interest in bitcoin from traditional industries, and the rest of the world is showing interest in projects and I think all of it will contribute to the continued growth of the market. The fact that people are thinking “how is this going to impact my business?” Facebook JPMorgan… it lends credibility to the space.

I ask if companies like JPMorgan and Facebook lending “credibility” is rather ironic, considering how Bitcoin was born. He replies:

You need a push which is driven by guys like Facebook and JPMorgan, that gets people thinking about how that’s going to impact institutions and the market. It lends credibility, mindshare, and shows that our actions are getting noticed, that’s what it takes.

What It’s Like Working with CZ

So, what’s it like working with one of crypto’s biggest personalities? “Awesome, it really is awesome!” he enthuses, “he’s extremely transparent, diligent and extremely honest, he’s also extremely intelligent, and very patient.”

changpeng zhao cz binance

I ask if he was in complete agreement about the recent delisting of Bitcoin SV, to which he nods his head. Presumably, he’s been fielding questions on the subject all day long and his answer is extremely diplomatic.

“We have a very rigorous delisting process, and we also have a regular quarterly review. This quarter a lot of the comments we’ve written out our rationality… I don’t have any other comments on that.”

Finally then, who does Zhao believe that Satoshi Nakamoto is? Clearly, not Craig Wright.

“I think its a community,” he replies. “It’s like ‘I am Bitcoin’, you know that movie? ‘I am bah, blah blah’? It’s like that with Bitcoin. It’s a community. And we’re surviving… I believe that every day that you survive extends your survival… There is a reason why he or she wants to remain anonymous, because it’s not important, it’s a community.”

What do you think of Zhao’s comments? Let us know your thoughts below!


Images via Shutterstock

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Dub 14

It’s ‘Irresponsible’ For Investors Not To Have Any Bitcoin Exposure – Says Xapo CEO

Xapo CEO, Wences Casares, believes that it would be “irresponsible” for any investor not to have at least a one percent position in bitcoin as it could have a bigger impact on the world than the internet. 


Minimal Bitcoin Exposure, Maximum Gains

In an essay published by Kana and Katana back in March 2019, the Xapo chief laid down an argument for Bitcoin to take up one percent of every investment portfolio. According to Casares, a $10 million with a one percent allocation to BTC could yield close to $25 million within seven to ten years.

Casares based his analysis on his forecast that BTC could top $1 million within the stated timeframe. Conversely, if Bitcoin fails, the portfolio would only have lost the original one percent – $100,000.

Wences Casares

According to Casares:

Bitcoin offers a unique opportunity for a non-material exposure to produce a material outcome. It would be irresponsible to have an exposure to Bitcoin that one cannot afford to lose because the risk of losing the principal is very real. But it would be almost as irresponsible to not have any exposure at all.

Investment legend, Biller Miller is a popular example of Casares’ logic. In July 2017, Miller took up a one percent position on BTC. By mid-December 2017, BTC accounted for 50 percent of Miller’s total asset under management, simply because BTC/USD gained almost 700 percent in value during that period.

The 2018 bear market probably, reduced Bitcoin’s proportion with respect to the rest of Miller’s portfolio. However, with BTC price still double what it was in July 2017, Miller’s bitcoin bag is still in the green.

Bitcoin Resembles the Early Internet

For Casares, whose company stores over $10 billion in BTC for clients in Swiss ‘bunkers,’ the signs pointing towards Bitcoin’s long-term success continue to become evident as time passes. For one, the Xapo chief says Bitcoin resembles the early internet in many ways.

Casares highlighted how since the establishment of the Internet, the world has seen little of protocol developments and with more emphasis on creating companies. Bitcoin, according to the Xapo CEO represents a new paradigm-altering protocol that could have even greater ramifications than the Internet.

Coming from a purely technical standpoint, Casares does agree that there exists the possibility that Bitcoin might not necessarily fail, but become obsolete. He says companies could create solutions on a protocol level that appeal more to users than Bitcoin’s current state.

Casares has previously made expressed similar sentiments, describing Bitcoin as an intellectual experiment that could still fail.

However, Bitcoin’s leaderless open-source and borderless approach to both its tech and economics are diminishing this possibility alongside its ever-growing network effect and first-mover advantage.

Meanwhile, there is a growing unease with the policies of governments and central banks that are making BTC become an even more attractive proposition to investors as a hedge.

Forget Altcoins, BTC is the Real Deal

Casares also adds that the other over 2,000 altcoins don’t stand a chance. The Xapo CEO says Bitcoin as a protocol is already on its way to succeeding in ways altcoins can’t.

5 Altcoins with Major Events the week of April 1, 2018 (Gains Likely to Beat BTC Returns!)

Elaborating on the gulf in utility and adoption, Casares noted:

Over 60 million people own Bitcoin and over 1 million people become new owners every month. The other 1,000 cryptocurrencies [that process at least one transaction per day] have less than 5 million owners combined, so Bitcoin will add more users in the next 5 months than those 1,000 cryptocurrencies added in their combined history.

Back in August 2018, Casares declared that altcoins will eventually face a “mass extinction event.” Commentators like Matt Hougan of Bitwise and Barry Silbert of Digital Currency group also believe that most altcoins will not survive the crypto version of the dot-com bubble bursting. After which, most altcoins will go to zero.

Bitcoin’s superiority becomes even more apparent given that its value transfer dwarfs all cryptocurrencies despite having fewer BTC transactions per day than some altcoins.

Should investment portfolios consider taking up a one percent position on Bitcoin? Share your thoughts with us in the comments below.


Image via Twitter (@wences), realidadeconomica.com.ar

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Dub 12

These 4 Cryptocurrencies Saw The Most ‘Adoption’ in 2018

Weiss Crypto Ratings says despite the 2018 bear market, there was a considerable uptick in the usage of altcoins. The rating agency says this trend points to the increasing level of cryptocurrency adoption for many users across the globe.


Cryptocurrency Sees Transactions Soar in 2018

According to a blog post published by the agency on Wednesday (April 10, 2019), four altcoin projects saw massive growth in user adoption throughout 2018. Meanwhile, at the time, market prices were plummeting by an average of 80 percent across the board.

EOS transaction volume grew from 7,000 per day to about 4.6 million per day between February 2018 and March 2019. Tron, also saw its own count increase from 3,000 to 1.9 million during the same period.

The other two cryptocurrency projects identified by Weiss Ratings – BitShares and WAX, saw their numbers grow to 1.1 million and 4.4 million transactions per day, respectively.

In total, these four altcoin projects experienced a 2,700 percent increase in daily transaction count, growing from 433,000 transactions in February 2018 to more than 12.4 million as at March 2019.

According to Weiss Ratings, this increased adoption in the face of bear market conditions parallels the trend observed during the dot-com era. The agency expects that developments in the technology will lead to a greater cryptocurrency adoption in the near future.

Not All Transactions Are Equal

However, it is important to note that high transaction count doesn’t necessarily equate to meaningful value transfer. Moreover, transacting on the aforementioned top-four blockchains, in particular, costs very little. Therefore, it may be a poor metric to gauge mass adoption as most of this activity may not actually be economic in nature and/or performed by real users.

EOS’s daily transaction count, for example, outstrips Bitcoin by as much as 14 times. However, Bitcoin value transferred dwarfs every other existing blockchain.

Earlier this week, cryptocurrency analyst Ceteris Paribus highlighted that while Bitcoin processes 20 times more USD transactions that EOS despite having only about seven percent of the latter’s transaction count. Additionally, Bitcoin’s metrics do not include second-layer transactions via the Lightning Network.

Weiss Ratings does acknowledge this fact, saying:

Of course, not all transactions are qualitatively the same. A $10 million Bitcoin transfer is obviously more important than a simple vote or ‘like’ on Steem.

According to Weiss Ratings, other essential metrics like security, network capacity, and developer activity have also increased over the last 12 months. Coupled with the lower prices, the agency believes that altcoins are on their way to gaining greater traction in the finance and technology industries.

As reported by Bitcoinist, an online Twitter poll by the International Monetary Fund (IMF) revealed that many people Bitcoin and other cryptos will become mainstream within the next five years.

What are your earliest forecast for Bitcoin and other cryptos becoming mainstream? Share your thoughts with us in the comments below.


Images via Weiss Crypto Ratings and Twitter (@ceterispar1bus)

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Dub 11

IMF Poll: Cryptocurrency Payments Will Be Mainstream By 2024

An ongoing poll by the IMF shows that more people believe that cryptocurrency will be the most popular payment means for lunch by 2024.


More People Prefer Crypto

As at press time, more than half of the respondents say they would use cryptocurrency to pay for lunch in five-years’ time. Of the almost 26,000 votes cast, 56 percent chose cryptocurrency, while another 29 percent selected mobile phone payment.

With the continued integration of cryptocurrency payments onto mobile platforms, perhaps some of those 29 percent could pivot to the crypto side. Meanwhile, cash and bank card payments so far have a combined total of 15 percent on the poll.

However, ongoing developments in the virtual currency payment arena mean that the options provided by the IMF aren’t necessarily mutually exclusive.

Case in point, Coinbase on Wednesday (April 10, 2019) announced the launch of their cryptocurrency Visa card. The card allows UK customers to spend Bitcoin, Ethereum, Litecoin, and other cryptocurrencies instantly at every Visa-accepting merchant, i.e. everywhere.

A portion of the company’s blog post announcing the launch reads:

Coinbase Card supports all crypto assets available to buy and sell on the Coinbase platform, meaning they can pay for a meal with bitcoin, or use ethereum to fund their train ticket home.

Bitcoin Accepting Merchants Increasing Globally

Cryptocurrency in many ways is an extension of the cashless trend that continues to take root across the world as consumers aim for greater retail payment convenience.

As previously reported by Bitcoinist, a Kaspersky Labs research showed that 13 percent of people across 22 countries have used Bitcoin (BTC) to make purchases.

There are already restaurants in different parts of the world that accept cryptocurrency as payment for meals. More than 1,500 restaurants in Denmark alone accept Bitcoin. There are also establishments in New Jersey and Nyeri, just outside of Nairobi, Kenya that take crypto as payment for meals.

According to Coinmap, there are more than 14,600 establishments that accept Bitcoin across the world. This figure takes into account cafes and restaurants.

Issues with Cryptocurrency Micropayments

According to a recently published research by DataLight, Bitcoin is already the preferred choice for large value cross-border transfer due to the fee structure. However, the report goes further to predict that Bitcoin will surpass Visa and Mastercard for micropayments within the next decade.

There are a few issues that could potentially emerge in the wake of such a trend. The first is the tax implications attached to making retail payments via Bitcoin given the spotty cryptocurrency taxation in many jurisdictions.

The revelation that the Bakkt lunch could see the arrival of “Bitcoin for Starbucks coffee” did bring up this particular consideration. If laws aren’t created write-off cryptocurrency microtransactions, then tax filing might become onerous for those who pay for lunch with BTC.

Another issue is the incentive for people to spend what is essentially a valuable investment for lunch and other micropayments. In Arnhem, for example, the place dubbed “world’s most Bitcoin-friendly city” has seen a gradual drop in the use of BTC for payments.

Will everyone be paying for lunch with cryptocurrency in 5 years? Share your thoughts below!


Images via Twitter (@IMFNews) and Coinmap.org, Shutterstock

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Dub 07

Litecoin Price Continues to Rip Pre-Halvening, But May Need a Correction

Litecoin (LTC) continues to lead the altcoin market with a recent push to establish an even higher level of support and sustain trading in a new range against Bitcoin (BTC). 


Litecoin’s Weekly Chart

When trading against Bitcoin (BTC), Litecoin (LTC) has respected each level and zone created by a simple Fibonacci Retracement measure.

litecoin weekly fib levels

Chart courtesy of TradingView.

Litecoin broke out in February following news that the altcoin project plans on implementing confidential transactions as some point in the future. This news pushed the BTC valuation of LTC through the 0.236 level, which it respected until pushing up through above the 0.382 level.

With an increased amount of hype slowly building around Litecoin’s block reward halving in August, the BTC price of LTC pushed through 0.5 on recent days — while making an attempt to break straight through to the range between 0.618 and 0.786. However, LTCBTC has found rejection at this level, and it remains probable that Litecoin will need to cool off a bit by consolidating in the lower range.

That said, bullishness and FOMO (fear of missing out) can throw the guidebook out the window. We cannot rule out an impending push from the Litecoin bulls to take the price towards 0.02 satoshis per litecoin.

Litecoin’s Stochastic Weekly RSI

Like its big brother, Bitcoin, Litecoin has been hanging out in overbought territory for far too long — particularly on the weekly timeframe — according to the Stochastic Relative Strength Index indicator.

litecoin weekly stochastic rsi

When it comes to momentum indicators like the Stochastic RSI, the rule applies that what goes up must come down. At some point, LTCBTC will have to come down — but how hard will depend on a variety of factors.

The fact that Litecoin’s halvening event will come at the end of the summer makes us believe that a correction will not be terribly sharp — at least not until we come closer to the block reward halving. Consolidation above 0.016 satoshis would be particularly healthy.

What do you think of the price of Litecoin (LTC) compared to Bitcoin (BTC)? Let us know your thoughts in the comments below! 


Images courtesy of TradingView.

Trade Litecoin(LTC), Bitcoin (BTC), and other cryptocurrencies on online Bitcoin forex broker platform evolve.markets.  

Disclaimer: The views expressed in this article are not intended as investment advice.

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Dub 03

Elon Musk ‘Resigns’ as Dogecoin CEO After Price Soars 30%

Dogecoin has become the unexpected new champion of the sudden cryptocurrency bull market which gripped the industry this week – thanks to Elon Musk.


Musk Pets ‘Pretty Cool’ DOGE

In a series of surprising yet distinctly familiar tweets, Musk, who has hinted at his alleged fondness of Dogecoin, said the meme-based cryptocurrency was his “favorite” and described it as “pretty cool.”

Another post claimed Dogecoin “rules (sic),” while Musk also linked to an article about the current market from fake news outlet The Onion, commenting that “Dogecoin value may vary.”

All appearing April 2, it remains unknown whether Musk had a specific purpose in his advocacy, or whether the episode was simply a delayed reaction to an April Fools Day contribution by Dogecoin itself.

On Monday, developers had published a Twitter survey asking users to name a fictitious ‘CEO’ of the cryptocurrency, itself a long-running community in-joke.

Musk, who ‘competed’ for the position with Ethereum co-founder Vitalik Buterin, Litecoin creator Charlie Lee and Metal Payments CEO Marshall Hayner, easily won the run-off and inherited the title. However, from his Twitter account information, it appears he has already quit.

Three Tweets, One Big Pump

Regardless, the effect on Dogecoin was immediate and decisive: as of press time, the altcoin had made daily gains against the US dollar of almost 35 percent.

DOGE/USD currently trades around $0.0033, its highest since early November.

Elon Musk quickly gained the attention of the cryptocurrency community on Twitter, with traders extrapolating potential endorsement of the wider industry beyond DOGE.

Tuesday’s gains meanwhile were not enough to put DOGE back into the top twenty cryptocurrencies by market cap, with some other well-known assets delivering stronger returns.

Those included Bitcoin Cash, which advanced 45 percent over the past day, and Augur, which managed 34 percent.

When Bitcoin?

While previously publishing pro-DOGE tweets, Musk’s latest entry builds on momentum which has bound him to the crypto world in recent months.

Specifically, since February, a community effort has sought to involve the Tesla CEO in Lightning Torch, a transaction relay on Bitcoin’s Lightning Network.

As Bitcoinist reported, the ongoing event has seen major publicity and participation from figures including Twitter’s CEO Jack Dorsey. Despite pleas, however, Musk has so far refrained from following suit.

Last September, Musk had recruited Dogecoin’s creator, Jackson Palmer, to help him combat the problem of scam bots infecting Twitter, a problem which persists for many.

Palmer provided Musk with a script, revealing they had held offline discussions about the issue.

“…We had a good chat on how (Dorsey) and the Twitter team should definitely automate and fix this problem on their end,” he tweeted.

What do you think about Elon Musk’s Dogecoin propaganda? Let us know in the comments below!


Images via Shutterstock

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Bře 25

Paris Blockchain Week Summit Shows French Regulatory Climate Beginning to Thaw

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France isn’t at the forefront of blockchain adoption–at least, not yet. However, all that could be about to change. Paris Blockchain Week Summit from April 16-17, will be one of Europe’s largest events dedicated to blockchain professionals. It’s also the first of its kind to be held here, backed by the French Ministry of Economy and Finance.


Paris Blockchain Week Takes Place April 13-19

April 2019 won’t only be a good time to visit Paris in full bloom as the thousands of trees that line its famous boulevards burst into shades of pink and white. This year, PBW organizers are dedicating an entire week to furthering the blockchain scene in France.

Just a few weeks after the updated PACTE law to aid innovation in the country, the event will showcase the French regulatory framework, one that takes a lighter, more flexible approach to emerging tech.

Paris is one of the world’s most expensive cities currently. But it’s also now vying for its place as a blockchain hub. One of the goals of the PBW is to encourage international blockchain projects to put down roots here.

Throughout the week there will be a series of events. These include workshops, hackathons, keynotes, and of course, fancy cocktail parties to showcase the country’s fine champagne as well as burgeoning tech scene.

Some of the highlights of the week include a €10k prize for the first team to create an entire blockchain and UI on the Cosmos mainnet. There will also be a gathering of the world’s top French-speaking CEOs, entrepreneurs, and investors organized by FrenchFounders.

The flagship event of the week, however, is the Paris Blockchain Week Summit, which organizers expect to attract some 1,500 attendees.

What to Expect from the Paris Blockchain Week Summit

The Paris Blockchain Week Summit (PBWS) is a two-day long conference taking place at Station F. The event will gather some of the most influential thought-leaders, decision-makers, and movers and shakers in the blockchain space.

Among the speakers are Tezos co-Founder Arthur Breitman, MyEtherWallet’s CEO Kosala Hemachandra, and Ripple’s Global Head of Banking Marjan Delatinne. Ledger’s President Pascal Gauthier will, of course, be delivering a keynote as well, as will eToro’s CEO Yoni Assia.

President at France Blocktech Describes His Way to Success

Speakers on the main stage will discuss EU regulation, decentralized exchanges, stable coins, scalability issues, advances in consensus mechanisms, governance, PoW vs PoS, sharding, the integration of AI in distributed algorithms, and many other topics besides.

With Switzerland, Malta, and even Lichtenstein gathering all the attention, this is Paris’ chance to show the world that the country is open for blockchain business–and that France is a contender in the race.  

France is one of the few G20 countries to have drafted a framework for blockchain entrepreneurs over the last year. Its regulators are open-minded and advised by the likes of industry heavyweights Ledger and La French Tech. France is definitely beginning to show that the climate is thawing for blockchain businesses here.

Cryptocurrency Adoption in France

Some of the largest companies in the industry have come out of France. However, while Bitcoinist reported on the efforts of French protestors and street artist Pascal Boyart to spread the word on Bitcoin, France hasn’t been a major contender so far.

With the Paris Blockchain Week Summit backed by the Ministry of Economy and Finance, as well as the Secretary of State for Digital Affairs, it looks like while other G20 countries are falling behind, France is getting serious.


Images courtesy of Shutterstock

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Bře 21

Switzerland Moves Forward to Fit Cryptocurrency Into Traditional Regulations

 The Federal Assembly of Switzerland has voted in favor of putting cryptocurrency on equal footing as traditional assets.


A Hesitant Vote

99 members of the National Council, Switzerland’s lower house of the Federal Assembly, have supported a motion to put forward proposed regulations by liberal public representative Giovanni Merlini. 83 people voted against, while 10 refrained from voting at all.

The proposed regulations will now have to be considered by the Council of States, which is the Federal Assembly’s upper house. Switzerland’s Federal Assembly is the country’s legislative authority.

Per the proposed regulations, the existing legislation of both administrative and judicial authorities should be adapted and applied to cryptocurrencies as well.

While making his proposition, Merlini argued that:

Cryptocurrencies could be issued to anyone with a decentralized, cryptographic-based peer-to-peer data network. A large part of the cryptocurrencies is completely anonymous, which favored extortion and money laundering.

It’s worth noting that this narrative has little support given Europol’s assessment from late 2018. Reads Europol’s Internet Organized Crime Threat Assessment:

The use of cryptocurrencies by terrorist groups has only involved low-level transactions — their main funding still stems from conventional banking and money remittance services.

Surprising Move?

Merlini’s arguments, as well as the proposed regulations, seem somewhat surprising given the country’s pro-cryptocurrency stance. The country classifies virtual currencies as assets and it has fairly relaxed regulatory burdens and low entry barriers.

In December, the country’s finance minister Ueli Maurer said that instead of coming up with new cryptocurrency-specific regulations, the Federal Assembly will be adapting existing ones to fit the needs of the industry.

Following the motion’s approval, however, Maurer, stated that the proposal has gone further than the scope of the planned regulations.

Former UBS Bankers Raise Funds for Innovative Bank in Zug

Arguments have also been made against the motion, as it had failed to clarify how and if there are measures to be taken to mitigate any risks.

Additional doubts have been raised whether cryptocurrency trading platforms “should be equated with the financial intermediaries and subjected to Switzerland’s Financial market Supervisory Authority (FINMA).

Switzerland’s progress in terms of cryptocurrency adoption, on the other hand, can’t be unnoticed. Earlier this week, Bitcoinist reported that the country’s biggest online retailer started accepting bitcoin for payments on their platform.

What do you think of the latest move by Switzerland to approve regulatory changes proposed by Merlini? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

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Bře 15

Tether’s New Terms of Service Spark Fractional Reserve Concerns

Popular stablecoin Tether has updated its  Terms of Service (TOS) on February 26th, once again raising questions over its dollar peg. 


No One Does it Better Than Tether

Tether 00 has regularly come under suspicion over its claims that it’s 1-to-1 backed by the US Dollar and that it has been used to manipulate Bitcoin prices. In June 2018, Bitcoinist reported on a paper by two researchers at the University of Texas, who claimed to have identified potential evidence of direct price manipulation since November 2017.

tether

In December, however, the rumors about its dollar peg began looking increasingly thin. Bank statements revealed that $2.2 billion was present in Tether’s account at Puerto Rico’s Noble Bank on January 31st in 2018. Data from CoinMarketCap shows that the same amount of Tethers existed back then.

Just a few short months later, the company has once again managed to turn the cryptocurrency community against itself, with a controversial change in its TOS.

Social media users noticed that they had removed the previous claims that Tether was fully backed by US Dollars. Instead, that’s what the site currently says:

Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.

So It Began

Users on different social media platforms, including Reddit and Twitter, quickly took aim at the controversial move.

Popular cryptocurrency commentator IamNomad outlined that there’s a reason for real concerns, saying:

“…without clarification “loans to third parties” and “collaterial” could mean a whole mess of things. Are they being put in some 30d cash bond (ie corporate loan) to get intrest or worse case lending it out on bitfinex margin pool.”

Since then, Tether has issued a formal statement on the matter, outlining that the change in the TOS was communicated directly to customers through a “required active opt in.” The company reassures its users that “Tethers remain completely stable and 100% backed, because Tether’s reserves always equal or exceed the number of issued Tethers.”

It’s Not That Simple, Though

Despite Tether’s announcement, the controversy maintains.

“Slippery language by Tether. “100% backed” <=> “may also include receivables from loans issued.” Imo this is a clear transition from full to fractional reserve banking,” noted Tuur Demeester, founding partner at Adamant Capital.

It’s easy to see why one would be concerned that his Tethers might not be backed by US dollars, but rather than “receivables from loans issued.”

What do you think of Tether’s updated TOS? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

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Bře 07

Litecoin Is Currently Lighting Up The Charts

Litecoin (LTC) underwent something of a rally during the past month, gaining 20 percent in value over the last 48 hours alone. The two biggest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), have also seen significant (but smaller) gains in the past two days. 


Pump up the Volume

Litecoin started its latest ascent on Feb 8, with a price pump from $33 to $43 over 36 hours. At the same time, the 24-hour dollar volume almost tripled. Further mid-February gains saw the price briefly troubling the low-50s, before dropping back to $45.

However, since Tuesday, the price has been rocketing once more — gaining $10 to reach $57. Again, this accompanied a boost in 24-hour volume, which almost doubled in the same period.

Litecoin started the year at around $30 per coin.

Why Now?

According to Forbes, it may have something to do with initiatives in crisis-torn Venezuela. The government last month introduced sanctioned cryptocurrency remittances to the country in an attempt to profit from increasing bitcoin usage.

The scheme allows remittances in bitcoins and litecoins, with resources available in sovereign bolivars once the transaction is confirmed. Whilst the commission listed is not the 15 percent first touted, it is still on a par with cash remittances, at 5.7 percent.

Seems like a great way for Maduro’s government to raise some much-needed funds through crypto. After all, it will just print some banknotes to fulfill the transaction — assuming the paper doesn’t become too expensive.

Anything Else?

Forbes also points to recent partnerships to improve Litecoin’s security and privacy, notably through the potential implementation of Mimblewimble. This protocol, named after a Harry Potter spell, increases fungibility and privacy while remaining scalable.

There is also the impact of August’s upcoming reward-halving event to consider. eToro’s Mati Greenspan, explained:

Litecoin’s strong rally should not come as a surprise; it was high time the fast-paced growth of the community and user base was priced in. Investors may also have one eye on litecoin’s upcoming reward halving event, so it’s likely they’re already pricing in the supply reduction.

Whilst Litecoin (LTC) is still 85 percent down from its all-time high, consolidation of (and building on) recent gains could see it well placed for future movement.

What do you think of Litecoin’s recent price gains? Let us know what you think in the comments below.


Images courtesy of Shutterstock.

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