Crypto ₿its: Deer in Headlights, Bitcoin Sign Guy, a Messy Divorce & ICOs Puke

July 14— Issue #4

Crypto its is a weekly curation of links, commentary, tweets and news I’ve seen across the crypto world and thought were interesting. You can follow me on twitter @callmethebear . Not getting Crypto Bits? Click here to subscribe!

News:

Crypto markets this week be like……..

During the financial crisis in 2008 and 2009 when the banks were getting torched, credit spreads were blowing out and no one knew what the f*ck was going on, a widely followed CDS trader at JP Morgan would occasionally blast out a message with this deer in headlight meme to all his contacts. It quickly became an ongoing joke and a welcomed laugh for those times of fear and panic when you are just frozen and surprised and don’t know what to do. Pull backs, sell offs and bloodbaths are all part of the natural behavioral and trading process of greed and fear when investing in any kind of asset…The good news: we’re in this together and I’m here to offer you some weekly commentary and color on whats going down. The even better news: I’m bringing the good old deer in headlights meme back and will be dropping it in your inbox when appropriate, so when things feel awful, hopefully the deer will give you a laugh and put a smile on your face.

Stay calm, this too shall pass…..

Lets cut to the chase. It’s been a terrible week in the crypto markets and an even bigger doozy for tokens as both assets have been heavily for sale as they fester in a negative feedback loop the lower we go. The overall negative sentiment and downward pressure in Ethereum has been primarily driven by profit taking, weak hands and irresponsible ICO teams puking recently raised ETH they were hoarding. With the recent rally from $90 to $400 in a straight line without passing go over the course of May and June, there was very little profit taking and an indecent amount of greed and speculation that had seeped into the price of Ethereum. Always a dangerous combo, all of this was exacerbated by large amounts of ETH supply being artificially taken off the market to fund over a $1 billion in ICOs who hoarded the ETH to speculate on future price increases, instead of converting to fiat dollars responsibly. This toxic combo set off by flash crash 3 weeks ago no doubt needs to be flushed from weak hands and cleared at a level with good two way flow…Even with a 50% pullback from all time highs and likely a little bit more, the future looks bright for ETH and will likely look like a minor speed bump in the bigger picture by the end of the year.

Bitcoin Scaling is headed to a Messy Divorce

While Ethereum sinks under its own weight, Bitcoin is under pressure for totally different reasons. 3 weeks ago it seemed as if the outcome of the Bitcoin scaling issue would give us clarity and allow us as a community to move forward one way or another….3 weeks later the two sides are bickering and fighting worse than ever, egos are bruised, battered and butthurt as both sides continue to dig about what they think is best, threatening the future of Bitcoin with a potentially fatal chain split creating two competing versions of Bitcoin. When I published the very first newsletter, I handicapped a real chain split with two competing coins at less than 5%, as it seemed impossible even with the posturing that any vital members of the Bitcoin community in positions of power would allow something so reckless to happen. But as a I write newsletter #4 and continue to observe both factions sling mud, threaten, create fear and politicize the debate on a daily basis, I see the odds for a chain split resulting with two versions of Bitcoin rise to over 40%. This terrifies me. Bitcoin’s strongest characteristic right now is its brand recognition as a store of value, with it’s finite supply, immutability and predictable inflation curve. If we get two Bitcoins as a result of a bunch of ego maniacs unable to agree on how to move us together as a community than Bitcoin loses the unique qualities and brand recognition that its work so hard to earn. Nevertheless, this will all be over by August 15th but there’s a lot of time between than and now. It’s hard to see a compelling reason to be fully invested in Bitcoin at the moment let alone buying for any particular reason….Barring any unforeseen compromises or resolutions, it would seem that short term Bitcoin will continue to trade heavy and fearful. It would be prudent to reduce risk and have some cash on the sidelines until a more clearer picture of what will happen emerges.

Verizon. Wow just Wow — 14mm accounts left exposed

F&$% Y@# Verizon. If you didn’t get a chance to read my personal hacking story from 2 weeks ago, I highly recommend the read. I detailed my hacking experience and layout the case about how telecom carriers, Verizon in particular were behind the curve in protecting its customers from being hacked.

Fast forward to yesterday and the news that Verizon, through a third party partner it outsources responsibilities to, left over 14mm customer accounts exposed to the entire world on an Amazon server as long as you knew where to look. This included all the identity data they hold on you and in some cases, the password pin and security measures connected to your account. It’s hard to put in words how absolutely disturbing this development is and that no one will hold Verizon accountable. Gotta love the United Corporations of America.

Stuff worth reading

UASF BIP148 Scenarios and Game Theory — Jimmy Song/Medium

The Road to Segwit Activation — UASF, Segwit2x and Segwit Signalling Explained (bitcoin scaling) — Medium

Cryptoassets could correct 75% and still be in a bull market — Chris Burniske/Medium

Former JP Morgan Strategist Tom Lee weighs sees bitcoin going as high as $55,000 — CNBC

Swiss bank is now purchasing and storing bitcoin on behalf of clients — CNBC

Why Bitcoin Is Booming — WSJ

Illegal-Goods Website AlphaBay(7x size Silk Road) Shut Following Law-Enforcement Action — WSJ

Mt. Gox ex-CEO Goes on Trial in Japan for Bitcoin Fraud, admits creating Willy Bot — Investopedia,

Bitcoin To Be Taxed Like Gold In India — CoinTelegraph (i’ll follow up more on this next week)

Return Of The Day Traders — Forbes

Is This It For Ethereum? (short answer NO!) — Trustnodes

This secret trader known only by a number just made nearly $300 million in a month — The Economic Times

Bitcoin and three other investments that look like classic bubbles but actually aren’t — MarketWatch

Nvidia(NVDA) is set to dominate the ‘4th tectonic shift’ in computing — Business Insider

How Bitcoin Technology Could Save Streaming Music Revenue — L.A. Weekly

RELATED:

The following links are part of a 4 piece series entitled “Decentralize or Die” by Michael Krieger. Krieger applies the principles and ideologies of decentralization against the backdrop of the political charged environment many of us find ourselves caught up in today. There is no political theatre involved here, rather a conscious call to action on how we have a perfect opportunity for political decentralization to build better communities and voluntary governing structures.

  • The Center Cannot Hold — Decentralize or Die (Part 1) — Michael Krieger/LBK
  • It’s Time For Local Communities to Take Charge and Experiment — Decentralize or Die (Part 2) — Michael Krieger/LBK
  • A Better Future Requires Higher Levels of Consciousness — Decentralize or Die (Part 3) — Michael Krieger/LBK
  • How to Build a Creative Renaissance — Decentralize or Die (Part 4) — Michael Krieger/LBK

Price Action

BITCOIN (BTC) dropped -$240.43 (-9.53%) with a total volume of over $5.57bn. Trade was driven by mounting fear that Bitcoin is headed to a messy divorce through the upcoming clash of code(and egos) in the long running scaling debate. It is likely that uncertainty will linger though the end of the month and into early August has we brace for either disruption or an upgrade to the core code that will dictate Bitcoin’s future outlook. With price relatively high and perhaps not fully discounting enough of the event risks involved, you can expect Bitcoin to remain choppy.

ETHEREUM (ETH) dropped -$52.92 (-21.68%) over the past week with total volume of $5.45bn, bringing its 30 day price down a whopping -$198.01(-51.4%) after reaching all time highs in mid June. Ethereum, is quite possibly a victim of its own success, as speculative flows, a recent flash crash, network congestion, profit taking and complicated supply technicals have all contributed to short term(albeit much needed) pullback that will clear out weak hands and create a new baseline before resuming its upward trajectory.

LOL

h/t Tuur Demeester

Initial Coin Offerings (ICO’s)

The ICO market was beaten to a bloody pulp this past week highlighted by Bancor trading 50% below its offering price. Bancor, which raised 150mm in just under 2.5hours was the largest ICO raise to date (until EOS raised $185mm and Tezos completing an uncapped ICO yesterday of $250mm), offered buyback protections to investors if the token fell below offering price. Bancor is not alone, virtually every ICO across the board is down between 40–50% over the past week…I love the concept behind many of these ICOs but many of them are devoid an actual product and unless I can play with it or see an active product, it’s hard to understand the value they trade at.

Tezos, which greedily marketed an uncapped ICO, just completed its raise yesterday, pulling in $250mm dollars. The majority of participation in Tezos was funded prior to the past 2 weeks of pain, so it will be interesting to see what kind of follow on demand will be once the token starts trading.

Links I’m reading on tokens

Scam Coins Alert:

  • EROS.Vision — “Eros is a decentralized marketplace to match consenting adults looking for sex and those looking for money”. …in other words, escorts and prostitutes.
  • The whitepaper was plagiarized
  • It appears one of the founders is not a real person

No judgment here but seriously WTF?? What gullible horn dogs gave these guys over $1mm?!?

White papers I’m reading:

  • Kin — A decentralized ecosystem of digital services for daily life (by KIK)

Required Reading:

Noteworthy things this week

Bitcoin Sign Guy. LEGEND

Sitting behind Federal Reserve chair, Janet Yellen during an appearance before a Congressional committee, an attendee, now known as “Bitcoin Sign Guy” held up a “buy bitcoin” sign that quickly went Viral. Posing with the sign and QR code after, Bitcoin Sign guy has received $15,000 in Bitcoin donations as a folk hero in the Bitcoin community.

Watch this Video 👇🏼👇🏼👇🏼👇🏼👇🏼

One of the best things you could do to understand how blockchains enable user empowerment through cryptoeconomics is by watching this recent talk by Ethereum founder Vitalik Buterin: The CryptoEconomic Way.

Twitter Spotlight

I can’t overstate enough how important the point made below by Chris Burniske is. Everyone is watching even if on the sidelines…Significant developer talent, highly skilled entrepreneurs and the brightest minds across the GLOBE are getting involved in blockchain technology en masse. The social impact is HUGE.

Alternative headline alert: Morgan Stanley’s relevance is shrinking due to the emergence of Bitcoin and Blockchain technology.

And for our new feature “Flashback Friday”…..

Back in 2014, @naval & @balajis have been thinking about the rise of tokens and ICOs since at least 2014. 👏🏼👏🏼👏🏼👏🏼👏🏼

That’s it for this week. If you liked what you read, share this with your friends and colleagues. I’m hoping to contribute weekly and if you want to subscribe directly to Crypto Bits, my Bitcoin/Crypto newsletter you can subscribe directly HERE.

-Adam