Bitcoin price falls but doesn’t flatline

Those not looking at the Bitcoin markets lately will either gasp or smile. Bitcoin, down from its all time high of around $19,000, is now floating at $6,785 as of this writing. To many this means that either the Bitcoin experiment is over or, to many more, that it has just begun.

There are plenty of folks who will have been hurt by this crash. I was speaking with a Romanian entrepreneur about his friend who bought BTC on a credit card only to find that he is wildly underwater. The volatility is also frightening to folks who might have gotten in on the last run up only to find themselves back at the start. I pity the poor waiter who a friend saw making Bitcoin trades at $18,000 during his shift. I hope he sold.

But there are no signs that the cryptocurrency train is stopping. Startups around the world are all examining – and doing – ICOs. Plenty of early crypto miners and buyers still have enough cash to play around in all sorts of ways. Bitcoin naysayers like R3 are figuring out that bankers didn’t want to hear “blockchain, not bitcoin” after all once they realized that bitcoin, like their beloved equities and commodities, was just another place for them to play.

And people are still active in the market. That’s important. As this Coindesk analysis notes, the markets will be deeply volatile during this stretch and could remain so as risk-taking buyers snap up coin on the downswing.

Don’t believe me? This is the seven day trading volume for almost all of the exchanges.

Ultimately these moves make up one of the most interesting forms of intergenerational and international wealth transfer we’ve ever seen. Whereas this wealth transfer once came in the form of inheritances and joint ventures, cryptocurrencies enable an almost instantaneous partners ship between the old and young and the near and far. It’s a fascinating economic time and I doubt it will let up any time soon.

Sometimes the price goes up, sometimes it goes down. That’s the best advice any smart person can give anyone in any market. However, the signs point less to a flatline and more to a gut-wrenching EKG full of ups and downs. The patient, however, is not dead yet.

Cryptocurrencies Not a Risk to Stability, Russian Study Concludes

Cryptocurrencies Not a Risk to Stability, Russian Study Concludes

A study has found that despite their volatility, cryptocurrencies do not endanger the financial system and the economy of Russia, as the risks are offset by the highly concentrated ownership of digital assets. Crypto fluctuations are not believed to affect consumption either. Russian residents have controlled cryptocurrency worth between $7.5 and $14 billion in the first quarter of this year, according to estimates published in the report.

Also read: Russian Railways Eyes Crypto for Tickets, Blockchain for Cargo

Coins Compared to Commodities, Less Volatile than Some

Cryptocurrencies Not a Risk to Stability, Russian Study ConcludesThe volatility of cryptocurrency rates is comparable to the price dynamics of foods, considered some of the most volatile commodities. Prices of products like meat, milk, and sugar can actually be much more volatile, according to a new study quoted by Russian media. It concludes that cryptocurrencies are not a threat to Russia’s financial stability.

Crypto volatility can affect the Russian economy much like the depreciation of the ruble, which leads to revaluation of the debt denominated in foreign currency, increased cost of borrowing, inflation expectations, and counterparty risks. The authors have calculated that crypto market fluctuations can increase the interest rate on domestic borrowings by about 1%, but that’s only if the share of virtual currencies in the structure of corporate debt reaches 4 trillion rubles, or at least 6% of the total.

According to the Russian Analytical Credit Rating Agency (ACRA), the high volatility of cryptocurrencies can potentially create risks for the country’s financial stability, but these are balanced by the high concentration of ownership of the digital assets. ACRA estimates that the market value of the cryptocurrency attributable to the Russian economy or controlled by Russian residents has been between $7.5 and 14 billion in the first quarter of 2018. That’s only 1-2% of the M2 money supply in Russia. The global ratio is even lower at 0.5%.

Cryptocurrencies Not a Risk to Stability, Russian Study Concludes

The study is based on statistics measuring the Russian share of the global economy and money supply, as well as data about the structure of the turnover registered on crypto exchanges. The researchers note that it is still quite difficult to accurately estimate the share of cryptocurrencies against the money supply in the country, as the assessment is limited by the opacity of the cryptocurrency markets, the anonymity of crypto users and the use of cryptocurrency in cross-border settlements.

The authors point out that a number of factors can influence the volume of cryptocurrency owned by the residents of a given country. These include the level of development of financial markets and venture investing, the central bank’s policies, the stability of the national fiat currency, the inflation dynamics, and the rigidity of government regulations. They believe that the increase of market capitalization of cryptocurrencies, their acceptance as unit of account, the introduction of liberal regulations for ICOs and crypto payments can stimulate growth in the sector.

Consumption Not Affected by Crypto Fluctuations

The experts at ACRA see very little chance of crypto volatility affecting consumption in Russia. They claim consumption will decrease only by about 1% if cryptocurrency price shocks cause a 6% drop in the volume of liquid savings. In current prices, this corresponds to approximately 1.5 trillion rubles. “However, due to the huge distortion in the distribution of crypto assets, their volatility is not reflected in consumer spending,” notes the report, quoted by Kommersant.

Cryptocurrencies Not a Risk to Stability, Russian Study Concludes

The analysts also say that if the use of cryptocurrency increases in Russia, the Central Bank can employ the same monetary policy instruments it currently applies in regards to foreign currencies. In case crypto markets remain opaque, digital currencies can be treated like foreign cash, and if the bank is successful in tracing crypto transactions, digital coins can be regarded as electronic foreign currency funds.

The Central Bank of Russia has previously opposed the legalization of cryptocurrencies as legal tender and unit of account. The legislation currently under review in Russia’s parliament can change that to a certain extent. It has been reported that some texts allow the use of tokens and coins in settlements, although, unlike the ruble, cryptos will not be considered a mandatory means of payment in the country.

Of the three drafts approved on first reading by the State Duma, the bill “On Digital Rights” deals with crypto payments. The other two, “On Digital Financial Assets” and “On Attracting Investments Using Investment Platforms”, aim to regulate initial coin offerings (ICOs), crypto mining and taxation. The proposed legislation describes cryptocurrencies and tokens as electronic property created with cryptographic tools.

Do you think price volatility hampers the wider adoption of cryptocurrencies? Tell us in the comments section below.

Images courtesy of Shutterstock.

Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from

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Monetizing computing resources on the blockchain

A while back, a blockchain startup approached me with their pitch, a decentralized social media application in which users can earn money by simply doing what they already do on other platforms, such posting updates, photos and videos.

I would have been intrigued had they sent me the message a couple of years ago. But not so much after observing the space for more several years.

Several blockchain applications profess to enable users to monetize various resources, whether it’s their unused storage and CPU power, or the tons of data they generate every day.

Regardless of whether they will succeed to deliver on their promises or not, these projects highlight one of the problems that haunts the centralized internet. Users are seldom rewarded for the great value they bring to platforms such as Facebook, Google and Amazon .

Blockchain applications suggest that decentralized alternatives to current services will give users the chance to collect their fair share of the revenue they generate with their participation in online ecosystems. It’s an enticing proposition since it doesn’t require users to do much more than what they’re already doing: send emails, browse websites, watch ads, keep the computer on…

But what exactly do you earn from monetizing your resources on the internet, and how accessible and reliable are your earning? Here’s what you need to know.

What can you sell?

A handful of blockchain platforms enable you to rent your unused storage, idle CPU cycles, and internet bandwidth with those who are in need. The premise is simple: You list your resources along with your payment terms on the application and get paid in the proprietary crypto-token of the application when others use them. Purchases are arranged, performed and paid peer-to-peer through smart contracts, bits of code that run on blockchain without the need for a centralized application server.

Examples include Golem and iExec, two decentralized marketplaces for computing power. Users can earn the platforms’ proprietary cryptocurrencies, GNT and RLC tokens respectively, by renting their CPU cycles to developers and users who want to run applications on the network. Golem and iExec aim to replace centralized cloud providers such as Amazon and Google, in which the service provider sets the rates and rakes in all the profits.

Storj and Filecoin are two distributed storage networks where users can earn cryptotokens for sharing their free hard drive space with the network. Both platforms are designed to provide infrastructure for various applications such as web hosting and streaming services. Gladius, a decentralized content delivery network (CDN) and DDoS mitigation solution, enables users to monetize their internet bandwidth to serve content from websites and services running on the network.

These applications provide a good opportunity to turn the hours that your computer sits idly in the home or office into a side income.

Other blockchain platforms enable you to monetize your data. An example is Datum, a decentralized marketplace for user data. Datum enables users to earn DAT tokens by choosing to share it with other organizations. Other players in the domain include Streamr, a real-time data-sharing platform geared toward the Internet of Things (IoT). With Streamr, users can earn DATAcoin tokens by sharing the data their connected devices generate with other devices that need it to carry out their functions and companies that use them for analytics and research.

Data is a huge market that is currently dominated by a few big players such as Google and Facebook. These companies hoard user data in their walled-garden silos and use them to make huge profits. Blockchain platforms give users the choice and power to claim their share of that market by giving them back the ownership of their data.

Matchpool is a decentralized social network that enables users to monetize their groups and online communities. Matchpool provides the decentralized equivalent of Facebook groups and provides tools for administrators to earn GUP tokens by setting fees on membership and access to content. And there’s Brave, the blockchain-based browser developed by the former CEO of Mozilla. Brave removes ads from websites and instead gives users the choice to earn Basic Attention Tokens (BAT) by opting to view ads.

How much do you earn?

It’s difficult to measure earnings on blockchain applications because most of them either haven’t launched yet or are in their early stages. Few of the companies I reached out to could provide stable numbers or average figures.

Also, the value of the resource you share on these platforms is often subject to supply-and-demand dynamics. For instance, iExec leaves it to the users to determine the price of their computational resources and doesn’t take any cut from their earnings. If there’s a large demand for decentralized CPU power, you’ll earn more from participating in the network.

Storj, the decentralized storage network, had the most accurate information to share. The platform provides a formula to calculate the monthly earnings of “farmers,” the users who share their free storage space with the network. Storj charges $0.015 per gigabyte of data stored and $0.05 per gigabyte downloaded, 60 percent of which goes to the farmers.

Several factors affect the final earnings, including whether the farmer nodes store primary or mirror copies of data, how long they participate in the network, and how well they perform in terms of up-time, bandwidth and response times. “If someone stored 1TB of data for the entire month, and that entire TB of data was downloaded once that month, they could potentially make $39,” said Philip Hutchins, CTO at Storj Labs. But the current average monthly payment for a Storj farmer node is around $2, according to the network data the company shared.

Storj has also launched partnerships with FileZilla, Microsoft and other companies to build decentralized apps on top of its network, which could increase demand for Storj space.

On Datum, the decentralized data market, users earn between $0.50 and $5 in DAT tokens for each promotional email they opt to open, according to Roger Haenni, the company’s CEO, though he did not share the details of how earnings are calculated. Currently the network supports monetizing email inboxes, but in the future, the company plans to provide users with the option to get paid for sharing various categories of data, such as the location data their phone collects, apps, services and websites they use, data that their smart gadgets collect and others.

That last bit sounds a bit invasive on user privacy. “This [data] is currently widely tracked by cookies from various ad networks,” explains Haenni. “However, the user is not asked to explicitly opt in to share this data nor does he get paid when this data is monetized.” Datum will give the chance to claim the money that’s already being made from their data.

The Datum network currently has 80,000 users, and since the launch of the Datum App in late December, users have collected 1.5 million DAT tokens, amounting to around $75,000.

Gladius, the decentralized CDN, doles out $0.03 in GLA tokens per gigabyte of bandwidth of data streamed through a node (however, the company’s website states that this is an estimate based on favorable market conditions). An internet connection with a 30 mbps upload speed shared with the network for eight hours a day could earn its owner around $49 per month.

What are the costs and risks?

In most cases, you’ve already paid for the resources you’ll be sharing on the blockchain, whether it’s your hard drive space, your CPU or your bandwidth (unless you’re on a metered connection, in which case sharing it would be unwise). However, you’ll have to factor in electricity costs of keeping your computer on, which varied depending on the region you live in.

Social and data-sharing platforms won’t have any extra costs, but you’ll be responsible for keeping the balance between sharing your data and preserving your privacy.

One of the real risks of earning cryptotokens is the constant price fluctuations. The value of what you earn today could double overnight—or drop by half in the same manner. This means you’ll have to choose between holding your tokens or cashing out. 

And there are always the risks of scams and failed projects that will absorb users’ funds and resources only to disappear and leave them out in the cold.

“Resource-sharing projects on top of the blockchain that allow users to control and profit from their own data will be the most profitable and successful projects in the future,” says Jared Tate, blockchain expert and the founder of DigiByte. However, Tate also notes that many of the current resource sharing platforms are PR projects that will never scale. 

“The majority of projects out there won’t be around in 5 years. Most of the projects don’t even have working software, just a white paper and some fancy graphics on a website,” Tate says. Some users evaluate projects by examining the market cap alone, which Tate believes is the absolute worst way to gauge a projects long term viability. “So many market caps are artificially inflated by developer pre-mines or deceptive coin counts,” he warns.


How do you deal with the liquidity problem?

 Another challenge users will have to overcome is what to do with the tokens they earn from monetizing their resources. For instance, if you earn Storj tokens from renting your free hard disk space, the only thing you can do with your earnings is, well, rent storage from other users, which doesn’t make sense since you already had an excess of it to begin with. 

Some platforms have multi-faceted economies that enable users to use their earned tokens for various purposes. For instance, in Flixxo, a decentralized streaming service, users can earn FLIXX tokens by sharing their free disk space and bandwidth to host content on the network. They can then use their earned tokens to consume videos published on the platform. But that is still a limited use case and might not be the problem they want to solve with their earnings.

Digital currencies and tokens have a liquidity problem. There are very few retailers and online services that accept Bitcoin as a method of payment, and even fewer that accept other cryptocurrencies. Users often must find some online exchange which matches buyers and sellers of various digital and fiat currencies. The process is slow and complicated and involves fees at different levels. 

An alternative is Bancor, a decentralized liquidity network built on top of the Ethereum blockchain. Supported by its own token, BNT, Bancor enables users to convert between tokens supported on its network without the need to find a buyer or seller. So, for instance, if you’ve earned an amount of RLC tokens from renting your idle CPU time on iExec, you can instantly trade it on Bancor for, say, MANA, the token that will let you purchase VR experiences on Decentraland. 

Bancor already lists several dozen tokens on its network and plans to add more in the future.

“The aim of this mathematic liquidity solution is to allow the long tail of tokens to emerge, by allowing any user generated currency to be viable on day one without needing to achieve massive trade volume in order to be listed and thus become liquid,” says Galia Benartzi, the co-founder of Bancor. “Great tokens will still rise, bad ones will fail, but all will have a chance to try.”

With at least $1.3 billion invested globally in 2018, VC funding for blockchain blows past 2017 totals

Although bitcoin and blockchain technology may not take up quite as much mental bandwidth for the general public as it did just a few months ago, companies in the space continue to rake in capital from investors.

One of the latest to do so is Circle, which recently announced a $110 million Series E round led by bitcoin mining hardware manufacturer Bitmain. Other participating investors include Tusk VenturesPantera CapitalIDG Capital PartnersGeneral CatalystAccel PartnersDigital Currency GroupBlockchain Capital and Breyer Capital.

This round vaults Circle into an exclusive club of crypto companies that are valued, in U.S. dollars, at $1 billion or more in their most recent venture capital round. According to Crunchbase data, Circle was valued at $2.9 billion pre-money, up from a $420 million pre-money valuation in its Series D round, which closed in May 2016. According to Crunchbase data, only Coinbase and Robinhood — a mobile-first stock-trading platform which recently made a big push into cryptocurrency trading — were in the crypto-unicorn club, which Circle has now joined.

But that’s not the only milestone for the world of venture-backed cryptocurrency and blockchain startups.

Back in February, Crunchbase News predicted that the amount of money raised in old-school venture capital rounds by blockchain and blockchain-adjacent startups in 2018 would surpass the amount raised in 2017. Well, it’s only May, and it looks like the prediction panned out.

In the chart below, you’ll find worldwide venture deal and dollar volume for blockchain and blockchain-adjacent companies. We purposely excluded ICOs, including those that had traditional VCs participate, and instead focused on venture deals: angel, seed, convertible notes, Series A, Series B and so on. The data displayed below is based on reported data in Crunchbase, which may be subject to reporting delays, and is, in some cases, incomplete.

A little more than five months into 2018, reported dollar volume invested in VC rounds raised by blockchain companies surpassed 2017’s totals. Not just that, the nearly $1.3 billion in global dollar volume is greater than the reported funding totals for the 18 months between July 1, 2016 and New Year’s Eve in 2017.

And although Circle’s Series E round certainly helped to bump up funding totals year-to-date, there were many other large funding rounds throughout 2018:

There were, of course, many other large rounds over the past five months. After all, we had to get to $1.3 billion somehow.

All of this is to say that investor interest in the blockchain space shows no immediate signs of slowing down, even as the price of bitcoin, ethereum and other cryptocurrencies hover at less than half of their all-time highs. Considering that regulators are still figuring out how to treat most crypto assets, massive price volatility and dubious real-world utility of the technology, it may surprise some that investors at the riskiest end of the risk capital pool invest as much as they do in blockchain.

Notes on methodology

Like in our February analysis, we first created a list of companies in Crunchbase’s bitcoin, ethereum, blockchaincryptocurrency and virtual currency categories. We added to this list any companies that use those keywords, as well as “digital currency,” “utility token” and “security token” that weren’t previously included in the above categories. After de-duplicating this list, we merged this set of companies with funding rounds data in Crunchbase.

Please note that for some entries in Crunchbase’s round data, the amount of capital raised isn’t known. And, as previously noted, Crunchbase’s data is subject to reporting delays, especially for seed-stage companies. Accordingly, actual funding totals are likely higher than reported here.

BRD crowdraises $32 million to build financial services into a mobile crypto wallet

Crypto wallets can’t remain crypto wallets for long. There is so much competition and so many scammers that value-added features like financial services are de rigueur. BRD knows this quite well and is putting $32 million behind the platform to grow out the features and cryptocurrencies supported on their popular app.

Founded by Aaron Voisine, Adam Traidman, and Aaron Lasher, the company started out as a side product called Bread Wallet. BRD, say the founders, was the first iOS bitcoin wallet in the App Store.

The team has 1.1 million users in 170 countries and 76% of those are iOS. They’ve received 71% of their customers in the past year, a fact that attests to the recent popularity of cryptocurrencies. They have $6 billion of crypto assets under protection.

The team has also partnered with Changelly to help transfer more tokens than Bitcoin and Ethereum – including their own BRD token.

How did they raise the money? By token sale, of course. They ran a $12 million presale and a $20 million crowd sale, resulting in a combine Seed and A round that would make most fintech orgs blush.

The team is most proud of their focus on decentralization.

“We’ve made our name around security, first and foremost. That’s what most the miners and dev crowd know us for, as the most secure way to hold and protect all their cryptoassets,” said Voisine. “The assets themselves are not stored in any centralized system within BRD. A transaction on BRD connects directly to the blockchain and are synced in real-time. There is literally nothing to steal from BRD, since we’re not holding a single asset ourselves… even though we have over $6B USD under protection.”

Further, they are offering BRD Rewards that will let BRD users get discounts and other benefits. This is an effort to “bring a much better balance between fees and utilization.”

“We want to be the service for first-time buyers of crypto. We want to be the most popular onramp for consumers into the crypto economy,” he said.

Lasher feels that his mission is far more interesting than just making an iOS wallet. He sees this as a philosophical change that will bring new understanding of the importance of crypto.

“If sending money globally as easily as an email doesn’t impress you, how about the ability to store your life savings in your head, then walking your family across a war-torn border to safety?” he said.

Ripple is going after startups to build an ecosystem around its XRP cryptocurrency

It’s finally happening. Ripple is making a push to expand the use of the XRP cryptocurrency it created into new verticals and segments beyond the payment and banking space where the company is focused.

XRP is the world’s third-largest cryptocurrency behind only bitcoin, the original breakout artist, and Ethereum, the platform that most developers pomp for. XRP has a total ‘coin market cap’ of $28.7 billion today, according to, and yet it is barely used beyond a handful of pilot customer deployments that Ripple has announced.

That might change soon, however, after Ripple announced a new initiative called Xpring — pronounced ‘Spring’ — which is aimed at bringing entrepreneurs and their businesses over to XRP, both the cryptocurrency and the smart ledger, to build an ecosystem. The project will use a mixture of investment, grants, and incubation to lure companies and expand the use of XRP whilst allowing Ripple to continue to focus on its financial services business.

That’s essential, and even in the short space of six months the need for variety has been clear.

The value of XRP shot up in December and January during a crypto surge which saw bitcoin reach an all-time high of nearly $20,000 per coin. The collective value of XRP was worth more than $128 billion at peak before a market crash in January walked those prices back significantly. Ripple has come under fire for a perceived lack of use for XRP, which has been marketed as a tool for banks but has attracted only cross-border payment services as customers.

Going beyond Ripple

Ripple has hired Ethan Beard, formerly director of Facebook’s developer network and an ex-EIR at Greylock Partners, to lead Xpring and more broadly Ripple’s developer program.

“The goal is to support businesses that we believe would see benefit from building upon the XRP ledger,” Eric van Miltenburg, Ripple SVP of business operations, told TechCrunch in an interview. “Support will come in a variety of ways: investment, incubation, and the potential of acquisition or grants. We’re focused on proven entrepreneurs who can use the ledger and XRP to really address their customers’ problems.”

Van Miltenburg said Ripple has been approached by entrepreneurs and companies wanting to work with XRP “for years,” but nothing came of discussions because Ripple is focused on financial services.

“There’s been enough interaction to say there’s something here [and] now is the time,” he added. “Over the last four to six months [the idea of Xpring] has really crystallized.”

Ethan Beard speaking at LeWeb in 2010 (via Adam Tinworth/Flickr)

If you’ve been keeping an eye on Ripple this year, the launch of the program won’t be a huge surprise.

Aside from the fact that many in the crypto space are pulling together their own funds — whether it be informally as a company, or more broadly across industries like the Ethereum Community Fund — Ripple has quietly upped its investment focus.

Initially, two Ripple executives took part in a $25 million investment in January for Bay Area-based startup Omni then in March CEO Brad Garlinghouse told TechCrunch that Ripple would “certainly partner with companies that are looking to use XRP in lots of different ways” whilst maintaining its focus as a business.

Xpring is that project.

Enter the Bieber… kinda

Van Miltenburg and Beard told TechCrunch that the kind of segments where they see the most potential for XRP are trade finance, gaming, virtual goods, identity, real estate, media and micro-payments.

When I put it to them that XRP is looking for reasons to justify its $28 billion market cap, van Miltenburg claimed that XRP is far less speculative than other cryptocurrencies.

“There’s a use case we have established for it: Ripple is one of the only enterprise solutions on the blockchain that’s out in production. We believe the XRP ledger and the asset has a performance profile that lends it to others,” he said.

He added that Ripple has seen interest from projects that “started on a blockchain that isn’t living up to their needs,” and that Xpring could focus on rehousing would-be blockchain migrants. However, it won’t be investing in ICOs, buying other tokens or hosting ICOs on the XRP blockchain, van Miltenburg said.

Aside from Omni — which said it will “soon” add XRP as currency in its marketplace service — Xpring has pulled in a couple of early names. Scooter Braun, the man best known for managing Justin Bieber, is “pursuing several endeavors that will use XRP to improve artists’ ability to monetize and manage their content.”

Neither van Miltenburg nor Beard could be specific on exactly what Braun is working on — there are already a number of blockchain-based digital rights and music streaming projects in development — but they said he isn’t one to jump on a bandwagon.

Braun said in a canned statement that he is “excited our team is among the first in the entertainment industry to lean into the blockchain movement.”

“This is only the beginning as we will continue to build out more use cases for XRP,” he added.

Other early partners being announced today include Ripple CTO Stefan Thomas who is transitioning out of his role to build micro-payment services using XRP via a new venture called Coil. In addition, Xpring has backed VC firm Blockchain Capital while Michael Arrington, the founder of TechCrunch, raised his latest fund entirely in XRP.

Ripple CEO Brad Garlinghouse previously spoke of plans to partner with companies on XRP (via Christopher Michel/Flickr)

Building an ecosystem

Generally, the plan for exactly how Xpring will work seems fluid at this point.

Beard spoke of the next wave of innovation coming from the blockchain, much like Facebook’s Timeline and social graph helped scale companies like Spotify, Zynga and BuzzFeed from startups into major tech names. He believes that, in turn, Xpring and XRP can help “build new businesses and change how industries function.”

Van Miltenburg was non-committal in terms of goals.

“Our motivation is to ensure that the XRP ledger and digital asset reaches its full potential. We want to see an extremely healthy and robust XRP ecosystem; that benefits Ripple and all others,” he explained.

Ripple is known to incentive its partners with XRP bonuses for signing, but it isn’t talking numbers this time, either the specific incentives that it is giving to high-profile names like Braun, or the overall budget that it has put behind Xpring.

“For the right opportunities, we can be aggressive. There’s no hesitation or reluctance to make big bets with opportunities that require investment,” is all van Miltenburg would say.

You can bet a large chunk of capital (XRP) is supporting Xpring. The current system with hundreds of cryptocurrencies isn’t sustainable, those that make it through will be the ones that offer the most value, and ecosystems could well be a measure of that. XRP, as the third-largest cryptocurrency, has considerable expectations on it which, as the crash earlier this year showed, can wipe out money faster than it made crypto wealth.

You can bet that Xpring, while outside of Ripple’s core financial services focus, will be a very key focus for building a community and ultimately usage for XRP. The question is how the startup community will reach to a different kind of investment option.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

The UK and USA need to extend their “special relationship” to technology development

The UK and the USA have always had an enduring bond, with diplomatic, cultural and economic ties that have remained firm for centuries.

We live in an era of profound change, and are living with technologies set to change things ever faster. If Britain and America work together to develop these technologies for the good of mankind, in a way that is open and free, yet also safe and good for our citizens, we can maintain the global lead our nations have enjoyed in the fields of innovation.

Over past months we have seen some very significant strides forward in this business relationship. All of the biggest US companies have made decisions to invest in the UK. Apple is developing a new HQ in the iconic Battersea Power Station, close to the new US embassy, while Google is building a billion dollar new HQ in the increasingly fashionable King’s Cross. Facebook, Amazon, IBM and Microsoft are all extending their operations, and a multitude of smaller US firms are basing their international headquarters in London.

They are all coming here because as we prepare to leave the EU we are building a forward looking Britain that is open to the wider world, and tech is at the heart of this.

Similarly, there have been major expansions or new investment from British firms into the US. Jaguar Land Rover, the UK’s largest automotive manufacturer, supports more than 9,000 jobs in the USA and have recently opened their new multimillion-dollar corporate North America HQ in New Jersey.  iProov, a leading British provider of biometric facial verification technology, became the first international company to be awarded a contract from the US Department of Homeland Security Science & Technology Directorate’s Silicon Valley Innovation Program last month.

We want to work with our global partners – to share expertise, and encourage investment – as we harness technology for the wider good. And that of course includes our old friend and closest ally, the USA.

We have a great deal to offer.

The UK was recently ranked the most AI ready nation among all the OECD countries. In the past three years, new AI start-ups have been created in the UK on an almost weekly basis.

Recently, UK government and industry together committed over $1 billion to support our AI sector, much of which will go towards entrepreneurs. Funding has been set aside to create a nationwide network of tech incubators, that we’re calling “Tech Nation”, which will support new AI businesses as they get off the ground.

We are also excited by — and I am a firm advocate for — the development of blockchain and similar technologies. The UK is leading the way in many areas where blockchain has the potential to be used, such as Fintech. There are now more people working in UK Fintech than in New York or in Singapore, Hong Kong and Australia combined.

And we are eminent in the development of immersive technologies, like Augmented and Virtual Reality, which look set to radically improve many areas of life in coming years, with applications as varied as flight simulation and surgical training techniques.

There is so much to be gained from close collaboration between our two countries on these new technologies and from sharing our expertise.

Together, we can reap the economic benefits of stealing an early lead in their development. We estimate that AI, for example, if widely adopted, could add $33 billion to the UK economy. But, perhaps most importantly, we can also work together to build a strong regulatory and ethical frameworks for their wider application.

It is the role of governments across the world, the UK and US included, to set frameworks for these decentralised, cross border systems so we can manage their use in a safe and effective way.

Our aim should be to harness the power and capability of technology but always for the benefit of, and in service to the populace.

We in the UK are avowedly pro-tech, always seeking to put its power in the hands of our citizens.

We have all learned valuable lessons from the recent scandals regarding data use, most recently around Facebook’s use of data.

We want to build a system that protects and cherishes the freedom of the Internet while protecting the rights of individuals, and their property, including intellectual property.

We want to see freedom in a framework; where our tech entrepreneurs have the space to innovate, knowing they do so with full public trust. Trust underpins a strong economy, and trust in data underpins a strong digital economy.

So in the UK we are developing a Digital Charter, to agree norms and rules for the online world and put them into practice. Our starting point is that what is unacceptable offline should not be tolerated in the online world. That includes how tech companies treat private citizens and use their data, as well as how people treat each other online.

Important changes like these cannot be agreed by one country alone. It is more important than ever that we work together and find common ground so we can make sure that tech continues to change the world for the better. Based on our mutual love of freedom and individual rights Britain and America have through history risen to challenges together. I firmly believe working together we can build that brighter future.

Ukraine’s Securities Commission Chief Seeks Legalization of Cryptocurrencies as Financial Instruments

Ukraine’s Securities Commission Chief Seeks Legalization of Cryptocurrencies as Financial Instruments

The Chairman of the National Securities and Stock Market Commission of Ukraine has indicated the regulator favors a decision to recognize cryptocurrencies as financial instruments. Timur Khromayev thinks it’s time to take the matter to the country’s Financial Stability Council. The point of no return has been passed, he says.  

Also read: Ukraine to Legalize Crypto Mining as Economic Activity

Beyond the Point of No Return

Ukraine’s securities regulator is expected to raise the question about the status of cryptocurrencies during the next meeting of the Financial Stability Council in Kiev. The chairman of the National Securities and Stock Market Commission of Ukraine, Timur Khromayev, thinks that they should be recognized as financial instruments. A decision to do that would effectively legalize digital coins in the country, although not in all of their possible functions.

Ukraine’s Securities Commission Chief Seeks Legalization of Cryptocurrencies as Financial Instruments“I think it is very timely to consider the recognizing of some crypto units as financial instruments during the upcoming meeting of the Financial Stability Council,” Khromayev wrote on his Facebook page. He also insisted that the body should lay out approaches to regulating crypto-related activities and initiate corresponding legislative procedures.

Timur Khromayev noted the active development of the crypto industry in Ukraine, which, in his words, has already established certain standards and rules for conducting business. He also stressed:

The point of no return is already in the past. The crypto industry is becoming an integral part of economic and financial relations.

Therefore, Khromayev thinks, some adaptation and legal recognition by financial regulators is necessary in order to solve the existing issues. The chairman of the NSSMC proposes to consider crypto assets and operations within the framework of the existing regulations, “based on principle and substance, not form.” He also called for formulating new rules in response to the dynamic development of the industry.

Khromayev thinks that the international community is far from adopting common standards. That’s why he believes that regulations will be determined by national legislations.

No Real Progress towards Regulation Yet

Three pieces of legislation have been introduced in Ukraine’s parliament since last October – the draft law “On the Circulation of Cryptocurrency in Ukraine”, the bill “On Stimulating the Market of Cryptocurrencies and Their Derivatives”, and a supplementary draft amending the Ukrainian tax code to regulate taxation of crypto incomes and profits and introduce some exemptions. No real progress towards adopting the long-awaited legislation has been reported so far.

The point of no return is already in the past. The crypto industry is becoming an integral part of economic and financial relations.

In November 2017, the NSSMC said that the use of the term “cryptocurrency” in the new legislation was “unjustified”. According to the regulator, digital coins are the result of financial engendering and are not currencies. “Therefore, it is more expedient to use the term ‘crypto unit’,” the Commission said.

At the time, NSSMC proposed to legally define digital currencies as either financial instruments, investments assets, or goods. Its representatives noted that under the current Ukrainian legislation, cryptocurrencies could not be accepted as electronic money, foreign currencies, securities, or money surrogates.

In March this year, the executive branch of power in Kiev took steps to legalize crypto mining as an economic activity. Ukraine’s Minister of Economy ordered several ministries, agencies, and the National Bank to prepare the necessary documents to include mining in the state register of economic activities.

Do you think the recognizing of cryptocurrencies as financial instruments could be the first step towards full legalization? Tell us in the comments section below.

Images courtesy of Shutterstock, Yarcube, Wikipedia.

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Reports of institutional crypto desks have been greatly exaggerated

Todays news that Goldman Sachs is opening a Bitcoin trading desk is good news for the crypto economy as a whole. But is it a real shift in perception for crypto at big institutions?

Not likely, said David Gerard, author of Attack of the 50 Foot Blockchain.

“If you look closely at the reports, they haven’t opened a crypto desk yet, nor do they have a date to do so – the news story is that they’ve hired one guy to look into the possibilities,” he said. “The key point is from the original Tearsheet report-‘Goldman maintains that contrary to months-long rumors it has no plans to launch a crypto trading desk.'”

Bitcoin price spiked on the news today and it seems that many believe this is an investigative move rather than one that will change trading patterns.

“My assessment is that while they were waiting for cryptocurrency to validate itself, they were allocating resources and staff into the new sector behind the scenes,” said Coinsource CEO Sheffield Clark.

Crypto programmer Jameson Lopp is skeptical.

“It’s surprising to me given that Goldman Sachs is bearish on BTC,” he said. “Perhaps there was sufficient demand from their clients for bitcoin exposure.”

Many large companies – EY, for example – have built a great deal of hype around blockchain support, garnering them clients and new work. This move by Goldman, if true, is exciting but it is about as indicative of a general move towards crypto assets as the CEO buying a single bitcoin.

“If valuable customers wanted to trade Beanie Babies then you’d expect GS to look into a desk for those too. GS does have various interests in crypto-related businesses already,” said Gerard. “I don’t know of other large investment banks doing this. But I think the future is to approach it carefully and trepidatiously. You can make money off cryptos, but it’s a super-risky market in an incredibly volatile junk-quality asset. So caution is appropriate. The key point is this isn’t some sort of tipping point for real-world acceptance of Bitcoin, as much as Bitcoin fans would like to paint it as one.”

Bitcoin in Brief Tuesday: Wary Giants, Eager Dwarfs

Bitcoin in Brief Tuesday: Wary Giants, Eager Dwarfs

For some obvious reasons, but also irrational fears, big players like China, Russia, and the European Union are wary of cryptos like bitcoin. Centralized control doesn’t square with decentralization. However, often that’s not how their own regions and smaller neighbors feel about cryptocurrencies. In today’s Bitcoin in Brief we cover some recent developments mirroring this divergence of interests. The balance between center and periphery is likely to determine the future of cryptocurrencies in Eurasia and beyond.

Also read: Bitcoin in Brief Monday: Snatching Blockchain, Tracking Bitcoin

Only Cryptoyuan, Only Cryptoruble

China will not allow any cryptocurrency other than a digital yuan, a Chinese entrepreneur recently told Russian media. Huan Zhang’s company, DAEX Blockchain Group, is working on a clearing ecosystem for cryptocurrencies in collaboration with Russian counterparts. She believes the decentralized nature of blockchain technologies and a centralized clearing platform should be balanced well for the crypto market to function properly. “China treats the blockchain in a positive way, but fears cryptocurrencies,” Zhang told Sputink. “The central bank is working on its own digital coin, cryptoyuan, and authorities won’t allow any other cryptocurrency in the country,” she said on the sidelines of the economic forum in Yalta, Crimea.

The Central Bank of Russia is also wary of decentralized cryptocurrencies. On multiple occasions, its representatives have spoken against their uncontrolled circulation and free exchange. The idea of a cryptoruble has its supporters among Russian officials, including in the CBR. For many Russian regions, however, a centralized crypto as a state-issued alternative is simply not good enough. The western exclave of Kaliningrad and Russia’s far-eastern capital Vladivostok, for example, are willing to create offshore zones for businesses working with decentralized cryptocurrencies.

Crypto-Crimea Planned

Bitcoin in Brief Tuesday: Wary Giants, Eager DwarfsThe Autonomous Republic of Crimea, which hosted the Yalta Forum, has been dealing with sanctions since it joined the Russian Federation. Local officials are convinced that a vibrant crypto sector could help the region overcome international isolation and develop economically. They have recently asked for permission to set up a crypto offshore zone, crypto exchange, crypto cluster, and even issue a Crimean crypto. The Russian Cryptocurrency and Blockchain Association is actually working on a “Crypto-Crimea” plan encompassing all proposals.

Forget about China, Think of Hong Kong

Beijing’s crackdown on cryptocurrencies has turned China’s own Special Administrative Region of Hong Kong and the Asian city-state of Singapore into wanted destinations for investors and businesses raising crypto funds. The number of startups launching initial coin offerings (ICOs) in these two territories has sky-rocketed in recent months, according to local fintech entrepreneurs, lawyers, and industry organizations. “Yes, there has been a lot of activity,” said Anson Zeall, chairman of Singapore’s Association of Cryptocurrency Enterprises and Startups. Like many others in the sector, he thinks the increase is related to China’s retreat from ICOs.

Bitcoin in Brief Tuesday: Wary Giants, Eager DwarfsThanks to its independent legal system, Hong Kong has also seen significant ICO growth. As reported by Chinese media, all ICO platforms and Bitcoin exchanges have already exited the Chinese market as a result of official warnings of the risks associated with investing in these projects. Well, others, including Hong Kong, which is part of China, are still willing to accept the risks, supporting innovation and economic growth.

Europe and the Europeans

While United Europe has recently confirmed serious intentions to end anonymity for crypto traders, with a vote in the European parliament last week, crypto exchanges are not turning back on Europeans, not yet. Many trading platforms have decided to move closer to the Old Continent, not too close, though – Switzerland, Gibraltar, Malta, even the exiting UK.

Bitcoin in Brief Tuesday: Wary Giants, Eager DwarfsMaltese authorities are on a crusade to make their island the friendliest jurisdiction for the crypto sector. Proposed regulations are tailored to provide crypto exchanges, brokerages, asset managers, and crypto users with “legal certainty”. Two of the world’s largest cryptocurrency trading platforms have confirmed intentions to relocate operations to Malta. Binance, which announced it is moving to the “Blockchain Island”, recently said it will hire up to 200 people there. Following its decision, the Chinese rival Okex said it’s also coming to island. Other crypto companies have followed in their footsteps, including Berlin-based blockchain firm Neufund and the gaming platform operator Abyss.

Looking to expand beyond Asia, another Chinese exchange, Huobi, is planning to set up an office in London, despite Brexit. “Our statistics show that London is the most active trading scene across Europe,” Chern Chung, Huobi’s senior business development manager for Europe, has been quoted as saying. “Absolutely – London, Britain is the entry point for the European market for us,” Vice-President of Huobi Group Peng Hu confirmed.

Beyond Eurasia

Crypto businesses are often known for swimming against the stream. The crypto exchange Golix, which has recently felt the heat from competition in bitcoin-loving Zimbabwe, has announced plans to expand its operations to neighboring South Africa. In partnership with the local crypto hub Blockstarters, the trading platform wants to increase its network on the continent, tapping into the very active South African market.

Authorities in the regional powerhouse have recently taken steps to tax crypto incomes and transactions, which can curb crypto trade. On the other hand, self-regulation has been mentioned as a solution for the South African crypto sector. So, at the end of the day, Golix might have taken a sound business decision.

Do you agree that the diversity of interests in each country and region helps cryptocurrencies? Share your thoughts in the comments section below.

Images courtesy of Shutterstock.

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Central Bank of Iran Bans Banks from Crypto

Central Bank of Iran Bans Banks from Crypto

Iran’s central bank has issued a statement banning the country’s banks and financial institutions from dealing with cryptocurrencies such as bitcoin, citing money laundering and terrorism financing risks. However, the local crypto community in Iran believes that the ban will not affect them and some exchanges continue to operate normally.

Also read: Russian Regulators Draft Law to Restrict Crypto Mining, Payments, and Token Sales

Banned by Central Bank

Central Bank of Iran Bans Banks from CryptoThe Central Bank of Iran (CBI) has issued a statement on Monday banning the use of cryptocurrencies including bitcoin by banks and financial institutions. This announcement came “amid ongoing debate over how best to regulate the technology,” the AFP elaborated.

According to the CBI, “the government’s money laundering committee had taken the decision in late December and it was now being put into effect,” the news outlet conveyed and quoted the central bank explaining:

All cryptocurrencies have the capacity to be turned into a means for money laundering and financing terrorism and in general can be turned into a means for transferring criminals’ money.

The central bank noted that banks and financial institutions in Iran were informed a few days ago, Mehr News reported.

The ban comes at a tenuous time for the Iranian economy. Between now and May 12, both the EU and the US are expected to decide on a new round of economic sanctions targeting Tehran. This could restore the harsh international controls on Iran that were lifted in the 2015 nuclear treaty between Iran and six major powers, including the US.

Effects of Crypto Community in Iran

Monday’s announcement follows another prohibition recently announced by the central bank, banning foreign fiat currency exchanges.

Central Bank of Iran Bans Banks from Crypto
Mohammad-Javad Azari Jahromi.

The Iranian government has mixed views on cryptocurrency, however. In February, the country’s telecom minister, Mohammad-Javad Azari Jahromi, tweeted the news that his ministry and the CBI are investigating the prospect of running their own initial coin offering (ICO) together. The resulting cryptocurrency would serve as “an experimental model for the country’s banking system,” he believes.

While many people in Iran see cryptocurrencies as a way to overcome problems with international sanctions and the country’s banking system, there are also those who fear “the technology could undermine the country’s already weak banking system and exacerbate capital flight,” the AFP explained.

Central Bank of Iran Bans Banks from Crypto“Iranians working in the fledgling private cryptocurrency market said the ban was unlikely to affect their operations,” the publication further described. A local crypto exchange Coinex has, however, halted activity on its platform in response to the central bank’s action, citing “we always want to make sure we comply with the law,” Hadi Nemati, who works for the exchange, told the news outlet. “But I have seen other crypto exchanges were still working normally,” he clarified, adding:

This ruling referred directly to banks, financial institutions and currency exchangers that work with the central bank…In my opinion, it doesn’t include the general public — it’s not a total ban on cryptocurrencies.

What do you think of the Iranian central bank’s action? Let us know in the comments section below.

Images courtesy of Shutterstock and Mohammad-Javad Azari Jahromi.

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Bank of Japan Turns Back on State-Issued Cryptocurrency

Bank of Japan Turns Back on State-Issued Cryptocurrency

The Bank of Japan has become the latest government financial institution to recognize the risks of state-issued cryptocurrencies. According to its Deputy Governor Masayoshi Amamiya, a national digital coin may jeopardize the traditional financial system established in developed countries. The Japanese central bank has no plans to issue its own crypto, he said.

Also read: “Private Digital Money” Better than State-Issued, Swiss Central Banker Says

Centralized Coin to Hit Financial Stability

Digital currencies issued by central banks may have a large impact on the current financial system, the Deputy Governor of Japan’s central bank Masayoshi Amamiya said during a fintech conference. He told attendees, including representatives of the International Monetary Fund (IMF) and the Japanese Financial Services Authority (FSA), that the Bank of Japan had no immediate plans to mint its own crypto.

Bank of Japan Turns Back on State-Issued Cryptocurrency
Masayoshi Amamiya

Amamiya noted that central banks were established to overcome “the turmoil caused by multiple payment instruments.” That’s why they were assigned the exclusive role to issue “central bank money,” he explained. In the two-tiered modern financial system, private banks provide payment services to the general public and allocate financial resources to the economy through loans and credits. According to the Bank of Japan’s executive, this structure “reflects the wisdom of human beings in history to achieve both efficiency and stability.”

Masayoshi Amamiya shared his concerns that the issuance of central bank digital currencies will grant households and businesses direct access to central bank accounts. “This may have a large impact on the two-tiered currency system and private banks’ financial intermediation”, BOJ’s representative warned. Currently, the central bank allows direct access to its accounts only to a limited number of entities such as private banks, he remarked.

At the same time, Amamiya believes that central banks should always pay attention to ongoing innovation and follow technological advances in order to provide societies with the best financial infrastructure. BOJ fully acknowledges the importance of understanding innovative technologies not only for maintaining stability, but also for seeking their application in the future, the Deputy Governor said.

State Cryptos Rested on the Back Burner

Masayoshi Amamiya’s comments come at a time when a growing number of central banks and financial authorities are turning their backs on centralized, state-sponsored cryptocurrencies. Proposals to issue such digital coins, with or without blockchain, have been made in several countries over the past few months. They have been seen as alternatives to decentralized cryptocurrencies, like bitcoin, that would allow governments to use the technology without losing control over the financial system.

Bank of Japan Turns Back on State-Issued Cryptocurrency
Swiss National Bank

This month a high-ranking representative of the Swiss National Bank expressed concerns similar to those shared by BOJ’s Deputy Governor. Private-sector digital currencies are better and less risky than any version that might be offered by a central bank, according to Andrea Maechler, a member of the SNB’s governing board. “Digital central bank money is not necessary to ensure efficient cashless payments,” she said.

In Maechler’s words, a government-backed cryptocurrency would make it easier for people to withdraw their money, if they felt a bank was in difficulties. “It would deliver scarcely any advantages, but would give rise to incalculable risks,” she warned. Just like her Japanese colleague, Andrea Maechler saw a threat to the “tried and tested” two-tier system.

Initially enthusiastic about the idea of a state-backed cryptocurrency, the Central Bank of Russia has gradually changed its position, too. Plans to introduce a so-called “cryptoruble” have been postponed. Centrobank revealed intentions to study the possibility of issuing a “virtual national currency” last summer. Later, however, its Deputy President Olga Skorobogatova said “the introduction of a national digital currency seems unjustified”. Russia may instead seek consultations with its partners from EAEU and BRICS on creating a common digital coin for international transactions.

Bank of Japan Turns Back on State-Issued CryptocurrencyThe Russian Finance Ministry, which has led efforts to regulate cryptocurrencies, has also indicated a negative stance on the “cryptoruble”. In a letter to President Putin, Minister Anton Siluanov said that a centralized digital coin isn’t possible due to certain features of cryptocurrencies, including the decentralized nature of distributed ledgers. Russia is now heading in a different direction, with 27 digital economy draft laws to be reviewed by the State Duma this year. Two of them aim to legalize initial coin offerings, mining, and possibly regulate digital currency payments.

Do you think centralized cryptocurrencies have any future? Share your thoughts on the subject in the comments section below.  

Images courtesy of Shutterstock, Coin Dance.

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Is venture capital ready for companies with no founders?

Initial coin offerings (ICOs) — a funding mechanism based on the technology behind cryptocurrencies like bitcoin — are a hot new way to launch a startup and they’re forcing investors to look at the startup process anew.

Venture firms like mine understand that ICOs can reinvent how entrepreneurs bring innovations to life, but no one is quite sure how this will play out.

The tech community is so perplexed by the swelling interest in ICOs, notable firms that traditionally compete to invest in the early stages of a company are trying to figure it out together, and often end up co-investing in the ICOs.

Until recently, investors in Silicon Valley were obsessed with finding founders who have a great sense of purpose and a vision for a product or service. All the great companies have been driven by visionary founders, from Bill Hewlett and David Packard, to Bill Gates and Mark Zuckerberg. So early-stage investors spend all their time looking for great founders and helping them build a company behind their instincts and leadership. This has been the model for 50 years.

In many ways, that model has been beneficial to the economy. We’ve built a lot of companies that have had an astounding impact on our lives and employed massive numbers of people. But the model has also created problems. The most formidable companies have accreted tremendous resources and power and are responsible for making profound decisions that affect whole industries and billions of people. Ultimately, all that power now lies in the judgment of a very few people — founders such as Zuckerberg, Amazon’s Jeff Bezos and Google’s Larry Page.

But all this could be about to change. Just like the origins of cryptocurrency were in deep dissatisfaction with hyper-scaled banks, initial coin offerings are in response in part to the lack of transparency and misalignment of interests between companies and consumers.

ICOs won’t just break traditional company models – they may also temper the concentration of power brought on by traditional company models. For instance, a company’s ICO could be set up to encourage responsible innovation that benefits society, and ICO-backed collectives owned and operated by billions of people worldwide could challenge tech monopolies and spread wealth beyond the richest 1 percent.

But first, we have to make ICOs work in an acceptable, repeatable way. Right now, the ICO frenzy seems like a whirlwind of experimentation, and none of the outcomes have had much commercial impact.

ICOs are based on blockchain technology. A key component of blockchain is that it allows two entities (or people) to exchange value without a central authority (like a stock exchange or bank) executing the transaction. The transactions are tracked and carried out in software that runs on computers distributed all over the world. This mechanism is great for issuing a kind of software-based stock called tokens.

These tokens can be embedded with software instructions that dictate the rules of that investment. A token doesn’t have to be a passive share of a company like traditional stock. It might instead include a promise to deliver a service or product, which is similar to the way fundraising campaigns work on Kickstarter. Tokens can govern themselves and track every transaction, so no central stock exchange is necessary and no nation’s government can easily regulate the instruments.

An ICO company might, for instance, decide it will reveal financial information weekly — or annually, or never –depending on how management wants to run the company. Investors get to see those rules and decide whether they like the idea of investing in such a company.

Unlike today’s startups, an ICO can be a completely decentralized way of founding and running an enterprise. A person or collective could set up an ICO and program it with all the parameters that govern the entity – what it will do, how it will operate, and so on – and start a company that builds itself. That’s a more sophisticated version of how Wikipedia became the biggest encyclopedia on the planet: it set up rules for writing and editing, and then the community took over.

Can this work in real life? Pavel Durov, the Russian founder of popular messaging app Telegram, got global press coverage for his $1.7 billion pre-ICO sale to create a cryptocurrency that would become a way for Telegram users to make payments anywhere in the world. But keep in mind that Durov is using his ICO to raise millions for a global project that so far has no product. If he’s successful, the resulting cryptocurrency can become a platform for apps and financial transactions. But whatever this becomes, the rules embedded in the ICO will operate it – not Durov.

Pavel Durov, Telegram CEO

Imagine services or applications built on blockchain that no company or person can dominate. A collective version of Facebook could make users and developers feel more in control, and less subject to Facebook’s whims. You could set your own rules on how much privacy to give up, or how much you’d get paid by every person who listens to the music you post. I’m convinced that at some point, someone will set up a blockchain social network that gets all the rules right and becomes an attractive alternative to Facebook.

As a long-time investor in startups, though, I have concerns about ICOs that I can’t yet resolve. Getting consensus among a large group is harder and slower than a powerful leader issuing orders. Social good is wonderful, but it won’t get anywhere unless the entity can execute and build great products and services – hard to do without a structure and dedicated staff.

The decentralized nature of ICO enterprises seems to often lead to chaos. One company, Tezos, raised $232 million in a 2017 ICO, but now seems to be falling apart. The founding team is fighting among themselves, the ICO participants can’t get access to the tokens they bought, and at least four class-action lawsuits have been filed, most charging Tezos with violating security laws and defrauding those who joined the ICO.

Then again, some run-of-the-mill venture-backed startups end up in similar messes.

I am keen to see early success with the ICO model because I believe it will benefit society. Entrepreneurs in small towns who have crazy ideas would typically find it impossible to even get a meeting with a top-tier VC. ICOs give them a way to get funded by a broader range of individual investors, and that should help spread wealth to more people in more places.

Blockchain today, as many have said, seems a lot like the internet in the early-1990s, when the internet’s rules were evolving and few people understood what it could be used for. Like the internet, blockchain is a free protocol on which all sorts of new products and services will ride. It’s going to drive massive innovation, and as investors, it’s our job to support that innovation and bring it to market. Now we have to figure out how to best do that.

As I orient myself to ICO-based opportunities, I’ve come to realize there are some important questions we have to ask of these new ICO ventures. Is there economic alignment between the company and its investors or token holders? Is the crypto-token model essential for the technology under consideration, or is someone just taking advantage of the cryptocurrency frenzy? Is an ICO raising the right amount of money – or raising a crazy amount of money that will never pay off?

I also think it’s more important than ever to ask if the ICO’s rules are aligned with society’s core values instead of with the motivations of a founder.

And then, odd as it can seem, VCs need to retrain themselves to assess blockchain-based algorithms in the way we’ve long assessed founders. After all, the next time we find ourselves considering an investment in a company that might change the world, we might be examining blockchain code and reading a governing white paper. There won’t even be a founder to talk to.

Is Nasdaq’s Latest Slip Good for Cryptocurrencies?

The Nasdaq continued the fall from its all-time high on March 12, 2018. The Nasdaq is down nearly 10% since the high on a variety of news. The Nasdaq, which tracks tech stocks has suffered under the weight of massive losses in market capitalization by the likes of Facebook, Amazon, and Twitter. The causes, which we’ll … Continued

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Bancor takes on Crypto exchanges with wallet that converts across tokens

With the number for cryptocurrencies passing 1,000, and the craze continuing, things are getting pretty wild out there to say the least. And these cryopto asssets can vary from the tokens issued by some no-name startup all the way up to Ether and the venerable Bitcoin. The trouble is, converting those coins into other currencies which you might actually use, or perhaps into the more fiat-friendly Bitcoin and Ether, has been hard. Users have to use exchanges to convert their cryptocurrencies via exchanges where prices can fluctuate wildly. Since cryptocurrency is the main “application” for blockchain technologies right now, that would mean wallets where they are held effectively becoming a new type of ‘browser’.

This is the thinking behind the launch today of Bancor’s wallet. Bancor was already an open-source protocol for automated token conversions, and had raised approximately $153 million in in ICO last year. It’s new wallet will offer built-in conversion between 75 cryptocurrencies, with more being added each day. This means users will not need to send their cryptocurrencies to exchanges if they wish to acquire other forms of crypto-assets and can instead convert cryptocurrencies directly inside the Bancor Wallet. The wallet is not a native smartphone app, but is optimised for mobile use.

Problems at the major crypto exchanges have been mounting, putting many off joining the crypto world. So it’s likely that many Crypto holders will be tempted by the relative stability of in-wallet conversion, even if they can’t play the arbitrage game so easily.

Instead of converting the currencies by matching buyers and sellers as an exchange does, Bancor’s in-wallet conversions are made against smart contracts. In theory, this gives users transparent and efficient pricing without the spreads and fees associated with exchanges. Users are always in control of their keys and Bancor neither holds nor has access to users funds.

In addition, the Bancor Wallet allows users to purchase tokens with any major credit or debit card and instantly convert them to any token in the Bancor Network, including heavily-traded coins like Ether and EOS.

Galia Benartzi, co-founder of Bancor said in statement: “In the new Internet of value, where anyone can create a currency, digital wallets are becoming the browsers which allow users to navigate the emerging world of decentralized apps. To be useful, users need seamless and secure interfaces to blockchain-based products as well as on-demand conversion between the tokens that power them.

“Money is changing, and digital wallets must be as dynamic as the currencies they hold. Imagine if your coffee shop loyalty points were accepted at any cash register in the world, or your airline miles could buy cellular minutes with the click of a button… Bancor’s new wallet aims to deliver on that promise by offering continuous access to crypto tokens and instant convertibility between virtual assets, unlocking enormous purchasing power for consumers,” she added.

Bancor Wallet users can open accounts using an email address, Telegram, WeChat, or Facebook Messenger .

The Bancor Wallet will only likely to get uptake if it can continue to add integration with tokens and maintain a live status and instant conversions. If it can do that then it may well attract users away from many buggy and controversial exchanges.

Polish bank begins using a blockchain-based document management system

A blockchain company called Coinfirm has announced a partnership with PKO BP, a major Polish bank, to provide blockchain-based document verification using a tool called Trudatum. The project is a an actual implementation of one of the primary benefits of blockchain-based tools, namely its ability to permanently and immutably store data. This announcement brings blockchain implementations out of the realm of proof-of-concept and into the real world.

“Every document recorded in the blockchain (e.g. proof of a transaction, or bank’s terms and conditions for a given product) will be issued in the form of irreversible abbreviation or hash signed with the bank’s private key. This will allow a client to verify remotely if the files he received from a business partner or from the bank are true, or if a modification of the document was attempted,” wrote the Coinfirm team.

Coinfirm founders Paweł Kuskowski, Pawel Aleksander, and Maciej Ziółkowski have experience in cryptocurrency and banking and they bootstrapped the company over the past two years. They also run a blockchain-based AMC/KYC platform for investments that is reaching the break-even point. They entered the world of blockchain after becoming frustrated with banking but the industry sucked them back in.

“Together with Pawel Aleksander we decided to leave the banking world as we saw that the AML process in the financial industry is broken – it’s very arbitrary, takes thousands of people, and has a very low efficiency,” said Kuskowski. “Our early observation of the digital currency space and it’s challenges showed a huge need for AML solutions. Also because of the nature of the ledgers we could create a data driven machine-learning based software as opposed to the people-based process prone to human error and subjectivity that is the standard for the banking industry. Once we understood the blockchain technology better we continued to launch new products that are using it to solve compliance challenges – starting with the Coinfirm AML/KYC Platform, and then Trudatum.”

The Trudatum tool essentially allows PKO BP to create “durable media” – “a digital solution for storing all agreements with clients that is now required by the law.”

“Every document recorded in the blockchain (e.g. proof of a transaction or bank’s terms and conditions for a given product) will be issued in the form of irreversible abbreviation („hash”) signed with the bank’s private key. This will allow a client to verify remotely if the files he received from a business partner or from the bank are true or if a modification of the document was attempted,” said Kuskowski.

For their part, PKO BP is pleased with the pilot project, making it one of the first European banks to publicly admit that they’re using a blockchain tool for document management.

“Coinfirm is one of the startups that we discovered thanks to the ‘Let’s Fintech with PKO Bank Polski’ acceleration process,” said Adam Marciniak, a Vice President at PKO BP. “It already has considerable experience in blockchain technology acquired in several countries. Last year we started tests of the Trudatum platform developed by Coinfirm. As tests in the banking environment were highly satisfying, we decided to cooperate more closely. We believe that together we will be able to carry out a pioneering operation of implementing blockchain technology into the Polish banking sector.”

Ethereum falls after rumors of a powerful mining chip surface

Rumors of a new ASIC mining rig from Bitmain have driven Ethereum prices well below their one-week high of $585. An ASIC – or Application-specific integrated circuit – in the cryptocurrency world is a chip that designers create for the specific purpose of mining a single currency. Early Bitcoin ASICs, for example, drove adoption up and then, in some eyes, centralized Bitcoin mining in a few hands, thereby thwarting the decentralized ethos of die-hard cryptocurrency fans.

According to a CNBC report, analyst Christopher Rolland visited China where he unearthed rumors of a new ASIC chip dedicated to Ethereum mining.

“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC [application-specific integrated circuit] for mining Ethereum, and is readying the supply chain for shipments in 2Q18,” analyst Christopher Rolland wrote in a note to clients Monday. “While Bitmain is likely to be the largest ASIC vendor (currently 70-80% of Bitcoin mining ASICs) and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development.”

Historically users have mined Ethereum using GPUs which, in turn, led to the unavailability of GPUs for gaming and graphics. However, an ASIC would change the mining equation entirely, resulting in a certain amount of centralization as big players – including Bitmain – created higher barrier to entry for casual miners.

“Ethereum is of the most profitable coins available for GPU mining,” said Mikhail Avady, founder of “It’s going to affect a lot of the market. Without understanding the hash power of these Bitmain machines we can’t tell if it will make GPUs obsolete or not.”

“It can be seen as an attack on the network. It’s a centralization problem,” he said.

Avady points out that there is a constant debate among cryptocurrency aficionados regarding ASICs and their effect on the market. Some are expecting a move to more mineable coins including Monero and ZCash.

“What would be bad is if there was only one Ethereum ASIC manufacturer,” he said. “But with Samsung and a couple other players getting into the game it won’t be bad for long.”

There is also concern over ICO launches and actual utility of Ethereum-based smart contract tokens. “The price of ETH is becoming consolidated as people become more realistic about blockchain technology,” said Sky Guo, CEO of Cypherium. “People are looking for higher quality blockchain projects. I believe a rebound in ETH’s price will come soon as panic surrounding regulations begins to fade.”

Saga is the thinking person’s cryptocurrency

As we enter the third age of crypto – the first being Satoshi’s White Paper phase and the second being the exchange phase – we find ourselves in a maze of twisty tokens, all different. Enter Saga.

Created by Israeli VC Ido Sadeh Man and investor Moshe Hogeg, Saga a token connected to a cash reserve and can initially only be owned by accredited and identified investors, creating a sort of hybrid non-anonymous cryptocurrency that should appeal to the risk-averse.

The team sees three kinds of cryptocurrencies in the future.

“Hyper-volatile currencies, which lack a monetary policy, are usually anonymous,” said Hogeg. “Stablecoins are pegged to other assets thus preventing their organic growth and major players in this space are opaque concerning their funds. Saga’s economy model is designed to allow growth. Participants are obliged to undergo a Know Your Customer process, assuring Saga’s economy is compatible with traditional financial institutions.”

In other words, buying Saga is like buying into a “stable currency,” a goal that has thus far been elusive in the cryptocurrency industry. “Creating a currency is about striking a delicate balance between prospect and stability. Saga aims to provide a moderate, sensible middle way,” the team wrote. “When designing the funding scheme, we decided not to conduct an ICO. We are happy to find ourselves addressing the public, asking for trust – only when we have value to show for it – once the Saga currency is ready and launched.”

The team has raised a $30 million “seed round” from personal funds, Mangrove Capital Partners, and Lightspeed Venture Partners .

They also have a deep-thinking back bench with Jacob A. Frenkel, PhD, chairman of JPMorgan Chase International, and Prof. Emin Gün Sirer, a blockchain researcher, on the advisory. They’ve also added Nobel Laureate in Economics, Prof. Myron Scholes, just in case.

“Technology is not enough,” said Hogeg. “The design of a currency requires a broad, interdisciplinary effort. While technology provides the tools, the essence resides in solid monetary policy. Saga has assembled a team of world leaders, combining expertise from several fields: Economics, Mathematics, the Humanities and Social Sciences, to establish the new currency.”

They will launch the currency in Q4 2018. Saga’s currency will be connected to a reserve and “Saga’s smart contract adjusts the money supply to meet market demand. Therefore, the reserve acts as a buffer, limiting the impact of market fluctuations,” he said.

“In practice, when the economy expands, the contract increases SGA supply, slowing price appreciation. Conversely, when Saga’s economy shrinks, the contract reduces the money supply, thereby curbing any large drops in SGA price.”

A stable cryptocurrency has always been a dream for the average crypto investor and maybe there have been plenty of brain – and brainless – solutions. While creating reserve variable fractional reserve-backed cryptocurrencies is nothing new in theory, putting it into practice is far harder. Saga, which prides itself on not being a technology company but instead a more multi-disciplinary solution, may be poised to crack the code.