Zuckerberg Testifies to Clarify Libra; ETH Futures ‘likely’ in 2020; Google’s Quantum Supremacy or Quantum Flop
Weekly Market Update 10/24 — Market drops
Weekly Market Recap
Oct 24- Crypto assets dropped ~6.4% this week, bringing the total crypto market cap to $206bn. The Crescent Crypto Market Index (CCMIX) was down 7.0%, while BTC lost 7.0% over the same period. The CCSMART and CCDARK were the only indices to underperform Bitcoin, with a -7.3 and -10.5% move respectiveley. The CCALT index outperformed all other indices down 6.8% over the last seven days.
Bitcoin vs. CCMIX vs. CCALT vs. CCDARK vs. CCSMART
Oct 18th — Oct 24th, 2019
Market Index Constituent Performance
Oct 18th — Oct 24th, 2019
- BTC performed in the middle of the pack this week, with every constituent ending in the red. Bitcoin was down 7.3%.
- The CCMIX ended the week on par with BTC supported by BCH and XLM. The index was dragged down by ETH, LTC, and XRP.
- CCSMART underperformed Bitcoin, generating returns of -7.3% and -7% respectively. This is primarily due to ETH’s poor performance.
- After XRP led the surge last week gaining more than 8%. the constituent faltered this week down 7.4%
- ETH was the worst performer this week, even after a 7% drop last week. ETH ended down 8.3%.
- Bitcoin dominance declined to 65.7% of the total crypto market cap, down from 66% last week.
Mark Zuckerberg testified yesterday before he U.S House committee to address concerns around the legality of Facebook’s planned cryptocurrency, Libra. Notably, when members of Congress questioned Zuckerberg about Facebook’s involvement in Libra with regards Facebook’s poor reputation in protecting user privacy and combating misinformation. Zuckerberg noted that they will only proceed with their involement in the Libra association if all regulatory approvals are recieved and they agree with the objectives of the larger association. “If I feel like Facebook can’t be a part of it, then Facebook won’t be a part of it.” Zuckerberg stressed the fact that Libra is not trying to build a currency but rather a payment system, however, they have not “locked down how this is going to work.” Throughout the hearing, topics ranged from anti-vax, political interference, and cryptocurrencies. Congress, for the most part, seemed uninformed and more focused on theatrics and grandstanding. Zuckerberg never took their bait, and made good counterpoints re: competing with China’s proposed digital currency.
Why Does This Matter?
These hearings illuminate the regulatory climate around the general crypto ecosystem, even if Libra is highly different than Bitcoin. You have congressmen and congresswomen with bifurcated views on the issue, with some like Patrick McHenry with a more open mindset. He stated, ‘“maybe it’s not about Libra, not about housing ads, not about Facebook at all. It’s about that larger question. And fair or not fair, you’re here to answer for the digital age.” If nothing else, this entire ordeal is indicative of the importance of decentralization in a crypto network. As Warren Davidson (R-OH) put it, “Hard to subpoena Satoshi Nakamoto.” Amazingly, at no point were other stablecoins mentioned: Tether, Gemini Dollar, USDC, TrueUSD, etc. In our opinion, the conversation was less focused on the merits and use of “stable” digital currencies; it was more of a political event for lightly informed congressmen to flex for their constituents as “tough” against Facebook and Zuckerberg — one of the richest men in the world. All of the activity does not bode well for “big tech” in the larger political environment. In 2008, we saw Obama rally against “fat cat bankers” and in 2016 there was bipartisan disdain for big pharma. 2020’s circus could narrow in on big tech platforms at large.
The commodity Futures Trading OCmission Chairman Heath Tabet stated that he sees Ethereum futures contracts sometime in 2020. “I’d say it is likely that you would see a futures contract in the next six months to a year…The volume to which it’ll trade, no idea, that’s where the markets decide, but my guess is now that we’ve provided at least … a little bit more clarity on [ether’s eligibility for futures contracts], my guess is market participants will consider that.” Tabet declared Ether a commodity earlier this month, which further supports this statement. With that said a spokesman of the CME said: “has no plans to introduce additional cryptocurrency futures.”
Why Does This Matter?
While Tarbet said he can see it happening, this is dependent on the application and the facility willing to offer an Ether futures contract. Tabet stated, “Now in the past, most people have not been self-certifying, they’ve been coming to us particularly if they’re creating an entirely new exchange and DCO [derivatives clearing organization] so it’ll depend I think in large part on who wants to have it on their trading platform. Is it one of our existing exchanges that’s been working with the CFTC for years or is it an entirely new platform that wants to specialize in it?” Regulated Bitcoin futures was a large milestone in the digital asset industry, and for a second asset to follow suit would simply solidify the institutionalization of digital assets.
Google recently published the results of their study in the Nature article, Quantum Supremacy Using a Programmable Superconducting Processor. Per the article, “We developed a new 54-qubit processor, named “Sycamore”, that is comprised of fast, high-fidelity quantum logic gates, to perform the benchmark testing. Our machine performed the target computation in 200 seconds, and from measurements, in our experiment, we determined that it would take the world’s fastest supercomputer 10,000 years to produce similar output.” Google states that The Sycamore quantum computer is a fully programmable and can run general-purpose quantum algorithms. IBM wrote a rebuttal article claiming that this experiment was a “Quantum flop”. Jonathan Dowling, a professor at Louisiana State University, says IBM appears to have some merit.
Why Does This Matter?
Google claims that “we also now have the first widely useful quantum algorithm for computer science applications: certifiable quantum randomness. Randomness is an important resource in computer science, and quantum randomness is the gold standard, especially if the numbers can be self-checked (certified) to come from a quantum computer.” Satoshi has some prescient quotes on the quantum issue, “SHA-256 is very strong. It’s not like the incremental step from MD5 to SHA1. It can last several decades unless there’s some massive breakthrough attack…If SHA-256 became completely broken, I think we could come to some agreement about what the honest block chain was before the trouble started, lock that in and continue from there with a new hash function.” As of now, Google’s quantum computer can not be utilized to attack the bitcoin network, and even if so, quantum-resistant hash functions are in development (social consensus can move towards this).