Bitcoin and Bubbles

Over the past year, the use of the word “Bitcoin” has been followed closely by the term “bubble”. You may, at this point, have an idea of what Bitcoin is. You likely, at this point, understand what a bubble feels like; specifically when it crashes. Anyone remember ’87, ’99, ’08?

So let’s get a definition out of the way: a market bubble is defined as a time when assets are traded at prices that far exceed their fundamental value. A bubble can occur in any market. It needs the primary ingredients of hype, capital, and human misbehavior. …


As the blockchain scene becomes normalized, questions still abound regarding how the current financial system can coexist with the new kid on the “block.” Should the old guard of major financial institutions like Goldman Sachs and JP Morgan reject the new blockchain startups, incorporate such firms into their existing frameworks, develop their own systems to compete, or some strange combination of these options? While the long-term answer remains unclear, a number of companies have taken the initiative, deciding to adapt rather than being labelled as outdated.

Santander has taken the approach of incorporating blockchain technology into its current business. The major bank reached across the aisle to Ripple, a payment network and protocol company based in San Francisco. The collaboration which began in 2015 has resulted in a mobile application released earlier this year called One Pay FX that enables expedited cross-border payments. The application is based on xCurrent technology instead of Ripple’s xRapid platform, meaning a large bank is still required to operate in the background. David Schwartz, Ripple’s chief cryptographer, explains this further by stating that xCurrent uses an immutable ‘interledger’ protocol as opposed to the distributed ledger protocol blockchains are characterized by. Overall, Santander’s new application has allowed it to execute cross- border transfers extremely quickly as well as reduce costs. While Santander’s recent move appears a no- brainer, the technology as a whole poses a major risk to the banking industry, slowing adoption. This is because banks still draw a large amount of revenue from the margains that is incurred in money transfers. The move to a distributed ledger will eliminate this source of revenue for banks. Santander’s One Pay FX doesn’t take this full leap, but is a move in a direction that may prove a slippery slope for banks. …


Binance, one of the world’s largest crypto exchanges, announced major moves to set up operations in the European island state of Malta this summer as it continues its global expansion. Binance had stated that it secured both a bank account and partnership with a local Maltese bank. Changpeng Zhao, Binance’s CEO, also announced in an interview with Bloomberg that the company intended to allow trading of the euro on its exchange with its new location in Malta.

Binance currently stands as one of the largest crypto exchanges in the world. Based out of Shanghai, the company has surged to be one of the leaders in the crypto exchange space. As of Q1 of 2018, it had posted $150 million profit, averaged $1.5 billion in daily trading volume, and has increased its user count to 9 million. Binance had, until this announcement, remained steadfast in its identity as a crypto-to-crypto exchange. …


Unfortunately for many of us, summer is winding down. But the same cannot be said for the crypto community. I dare say, its only heating up.

I will begin in mid-2017, when it was announced that there were over 1000 Cryptocurrencies in the world. This was seen by many as an opportune time to raise cash for projects. Many people didn’t understand what they were getting into or what the project’s purpose was. Most invested because it was something new and exciting. Which is never the right reason to do something, especially invest money. If you were one of the “early” investors you may have had some connection to the crypto world via friends or family. Generally, if you were like me, you heard a few things here and there but were investing based on this idea in a white paper. If you were a technologist, you may have had a better understanding of some of the technical pieces but in many cases, you may have been left scratching your head (again, like me). This isn’t true of all crypto projects. Those projects, considered successful, were able to convey their messages clearly, were made up of talented management teams, and their idea proposed to solve some sort of problem the team had identified. …


Binance recently announced major moves as it sets up operations in the European island state of Malta. As of earlier this summer, Binance stated that it has secured both a bank account and partnership with a local bank. Changpeng Zhao, Binance’s CEO, also announced in an interview with Bloomberg that the company intends to allow trading of the euro on its exchange with its new location in Malta.

Binance currently stands as one of the largest crypto exchanges in the world. Based out of Shanghai, the company has surged to be one of the leaders in the crypto exchange space. As of Q1 of 2018, it has posted $150 M profit, averages $1.4 — $1.5 B in daily trading volume, and has increased its user count from 2 M earlier this year to 9 M. However, Binance has remained a crypto-to-crypto exchange, never before offering a way to exchange crypto for a fiat currency. …


It feels like every day we see another hack of a cryptocurrency exchange. One victim to examine is Coinrail, a South Korean exchange, that lost a purported $40 M in various tokens held at the exchange. The heist included the following tokens: $19.5 M tokens from the recent Pundi X ICO, $13.8 M tokens from Aston X, $5.8 M tokens from Dent, and $1.1 M tokens from Tron. Coinrail was been quick to move its remaining holdings (70%) into cold storage. …


The Regulatory Dance…

The Initial Coin Offering (ICO) space in the US continues its ebb and flow as the regulatory framework remains unclear. While other countries like Estonia, Liechtenstein, Switzerland, and Belarus move to establish transparent rules and guidelines, the tango between ICOs and US regulators continues.

One path that has gained traction amongst the ICOs is conducting initial offerings using the Regulation A (or Reg A+ for short) exception. Those in industry refer to this as a “mini-IPO”, with the appeal being it is a way for ICOs to raise capital without being labeled as securities by the SEC. …


The Regulatory Dance…

The Initial Coin Offering (ICO) space in the US continues its ebb and flow as the regulatory framework remains unclear. While other countries like Estonia, Liechtenstein, Switzerland, and Belarus move to establish transparent rules and guidelines, the tango between ICOs and US regulators continues.

One path that has gained traction amongst the ICOs is conducting initial offerings using the Regulation A (or Reg A+ for short) exception. Those in industry refer to this as a “mini-IPO”, with the appeal being it is a way for ICOs to raise capital without being labeled as securities by the SEC. …

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