Introducing Berlin’s Insane Crypto Market
Intro
The wild and free-spirited Berlin has been popping coins like mints over the past five years. While some of the world’s most powerful countries are struggling to “stay clean” by introducing crypto bans and bulletproof regulations, Germany is on the verge of an “overdose”. Blockchain technologies and digital currencies are supporting a growing community of savvy investors and crypto-related startups hunting for ways to make cryptocurrencies accessible to daily consumers.
With Bitcoin being recognized as “Rechnungseinheiten” aka “units of account” since 2013 by the German Ministry of Finance, the digital currency is subject to value-added sales tax; meaning any profit made from trading bitcoins is seen as income; hence, tax deductible.
Berlin is home to some of the world’s most innovative and profitable crypto companies. Co-founded by 21-year old Dominik Schiener, IOTA is the perfect example of a Berlin-based startup trying to fix the massive computing power consumed by Bitcoin (fun fact: Bitcoin consumes as much energy as the whole Ireland in one year). As automation partners with the Internet of Things to reach new dimensions, IOTA aims to leverage the potential of the IoT to make machines pay each other.
When it comes to gambling with digital coins, Berliners have been caught in the trend long before any other European country. In 2013, The Guardian was the first to name the German capital “Europe’s Bitcoin Capital”. Since then, increasingly more businesses have been dying to make cryptocurrency an alternative payment method.
In Berlin, people book holidays, buy cars and apartments, eat and drink at fancy bars and can even pay for education with digital coins like Bitcoin. Several appealing features of Bitcoin make it an attractive payment method. The main one is the Blockchain technology lying at its core — the decentralized factor, immutability, transparency, and security. Regardless, investing in Bitcoin is not meant for the weak — the price has fallen from a whooping $20,000 in December 2017 to $7,6800 in June 2018 ( the time of writing this post).
In the following lines we’ll talk about the main elements that describe Berlin’s insane crypto market.
The meetups & the co-working spaces
Recently launched this year in March, Full Node aims to become Berlin’s top-notch workspace for Blockchain-based and crypto-related companies, startups, freelancers, investors and more. The mission is to build a community where crypto fans can learn, work, grow together with other companies and jump on the mission to frame the thriving Berlinese Blockchain-based future. Blockchain accelerator and ICO fund Catena Capital launches Cryptotank, yet another co-working hub in Berlin that welcomes crypto enthusiasts to join a close-knit Blockchain-based community.
Because there’s a growing need for Berliners to stay updated with everything that’s happening in the crypto-space, there are several meetup groups that people can join to exchange thoughts and ideas with like-minded enthusiasts. Organized by Brian Fabian Crain, co-founder of Epicenter, Blockchain Meetup Berlin brings together workshops, events, and weekly social meetups to encourage networking in the crypto space.
Berlin’s Blockchain Enablers
Berlin is doing a great job at putting Blockchain and its entire ecosystem up on the open market. Its growth depends entirely on the active contribution of stakeholders eager to jump on the mission, too. Better defined as “Enablers”, these stakeholders are contributing to the expansion and growth of Berlin’s Blockchain Ecosystem.
Who are they?
The Blockchain Hub started in 2015 as a Berlin-based community hub. Three years later, it expanded into a network of independent hubs operating from different countries but sharing the same vision: to spread the word on the potential of blockchain technology, decentralization, and smart contracts. As a non-profit organization, The Blockchain Hub centers on organizing different activities, including workshops and Blockchain-based events for crypto fans and beyond.
German-based multinational software corporation SAP jumped on Blockchain in 2017, when it rolled out its own initiative called “Cloud Platform Blockchain Service Initiative”. The company’s goal: to disrupt industries like digital supply-chain management, manufacturing, and the IoT.
Formed in 2017, decentralized German federation Bundesblock jumps on a journey to promote the technology all across Germany, challenging the current status quo of all Blockchain-related activities in the country. Their mission is to fight for innovation-friendly rules and regulations in the global crypto scenario.
The successful startups
According to a recent report, Germany hosted 300 tech companies that raised an astounding 613.8 million EUR in 2017. The fintech scenario is dominated by Berlin, currently serving a 27% of Germany’s fintech industry, followed by Frankfurt with 25% and Munich with 15%.
Berlin-based startup IOTA broke records in 2014 with its unique concept that leverages an innovative distributed ledger powered by the Internet of Things to empower the global community to develop a new shared economy. The IOTA cryptocurrency quickly grew as one of the most powerful cryptocurrencies on the market. Other successful ICOs in Berlin worth mentioning:
Lisk — Lisk makes decentralized applications easy to deploy and develop on the Blockchain using JavaScript. As opposed to the Proof of Word used by Bitcoin or Proof of Stake used by Nxt, Lisk leverages a simplified integration of BitShares’ consensus algorithm, also known as a Delegated Proof of Stake. This way, all LSK token holders can choose mainchain delegates by voting, thus securing the entire network.
During its ICO, the startup raised $6.3 million in just 4 weeks.
BigchainDB — Blockchain database BigchainDB welcomes developers and companies to deploy apps, platforms, and Blockchain-based proof-of-concepts within a decentralized database that supports a variety of industries including supply chain, intellectual property, artificial intelligence, and the IoT.
Bitwala — Rather new to the decentralized startup scenario in Berlin, Bitwala’s mission is to provide a borderless banking solution that blends both fiat and cryptocurrency. The team aims to launch the product at the end of August, following which the ICO will begin.
Herdius — With a goal to become “a state-of-the-art distributed system”, newly launched platform Herdius aims to take the Berlinese crypto scene by storm with its infrastructure layer built on top of all blockchains. The project aims to tackle issues such as interoperability and identity, as well as develop a decentralized crypto asset exchange. Herdius plans to launch their ICO at the end of this year’s Q1.
The Blockchain-based conferences
In the tumultuous crypto scene of Berlin, networking is key. The German capital prides with a jam-packed community of startup founders, investors, advisors, wanna-be entrepreneurs and avid fans of Blockchain technology, each with their own version of the perfect idea for a decentralized startup.
Scattered across the coworking spaces, incubators, public meetups, and secret gatherings, Berlin’s crypto entrepreneurs never miss an opportunity to connect, talk, share ideas, and form collaborations. To bring everyone together in one place, the Blockchain-based conferences have tremendous traction. If you’re looking for a top-notch Blockchain event to attend, this is where you’ll find the creme a la creme of the crypto world.
C3 Crypto Conference
Over 2,500 participants attended this year’s C3 Crypto Conference in Berlin. The 2-day event gathered over 50 international speakers who jumped on stage to talk about their projects, but also about what the future holds for Blockchain technology. Organized by Paranoid Internet, the conference also covered a trade fair, welcoming crypto enthusiasts to gain insights into a variety of topics like crypto exchanges, ICOs, go-to marketing strategies, and a lot more.
The highlight of the conference was the live pitching event, where selected participants joined a dynamic competition to wow the judges with their ICO ideas. Decentralized project TV-Two, was awarded 1st place (25,000 €) for their TV ecosystem that allows users to earn crypto while watching TV.
BlockShow Europe
Powered by CoinTelegraph, the first edition of BlockShow Europe in Berlin gathered over 3,000 attendees, 93 startups and over 90 supporting companies who participated as sponsors. The international conference covered major topics in today’s Blockchain scene, including “Governmental Blockchain Initiatives within the EU (and Beyond)”, “Next-Gen Blockchain: How Innovators Discover New Dimension of Decentralized Solutions”, “Blockchain in Enterprise Environment: Corporate Giants are Stepping In”, and a lot more.
One of the most interesting aspects of the event was the BlockShow Oscar competition. Shelf.network took home a grand prize of 50,000 € for their idea to develop an asset distribution network powered by Blockchain.
CryptoSpace Berlin
Yet another event exclusively dedicated to fans of the crypto world kicks off on July 9, at Vienna House. CryptoSpace Berlin will focus on talks about the benefits and opportunities of the Blockchain, regulation at a national level, cybersecurity concerns, the sharing economy, and a lot more. International speakers will join the conference to talk about their journey building successful Blockchain-based startups in the tech era. Over 1,000 attendees are expected to join CryptoSpace Berlin this July.
2B Blockchain Conference
Last but not least, the 2B Blockchain Conference in Berlin is scheduled for October 18. The upcoming event is dedicated to presenting the latest trends in Blockchain technology, banking, finance, cryptocurrencies, and other innovations. The conference will feature top keynote speakers (to be announced), an exhibition, a rich networking program, promising projects, and more. Over 300 investors, company leaders, top journalists, regulators, and fans of the crypto world will be invited to join open discussions on “Cryptocurrencies ups and downs”, “Token Sales: Good or Evil”, “Regulation in the field: To Be or Not to Be”, and additional Blockchain trends and uses cases.
The friendly rules & regulations
With the United Kingdom leaving the EU, Germany is getting closer and closer to becoming Europe’s FinTech capital. Frankfurt is well-known for its stable finance industry, but Berlin is big, affordable, vibrant, and better equipped to face challenges linked to one technology in particular: Blockchain.
With projects like IOTA and conferences that amass over 3,000 attendees, Berlin has viable chances of becoming “the world’s Blockchain capital”. We’ve talked about ICOs popping up daily and about weekly meetups in the crypto space. But what exactly makes Berlin’s crypto market so insane? The plain answer: friendly rules & regulations.
In 2017, the German Federal Financial Supervisory Authority, aka BaFin, issued an official statement that covered regulation around cryptocurrency tokens and ICOs. At first, it seemed like a warning targeted at investors; but at a closer look, it was an announcement centered on crypto volatility, permitting everyone to trade cryptocurrency at their own risk. In summary, the interpretation of BaFin’s official statement beats other popular jurisdictions like Switzerland, making Germany’s the perfect domicile to pay with digital coins, found ICOs, and engage in crypto trading since:
“cryptocurrency tokens constitute financial instruments (units of account) within the meaning of the German Banking Act (Kreditwesengesetz — KWG).”
What does this mean for the average startup founder and crypto investor? Cryptocurrencies in Germany cannot be harmed by security regulations; putting the country in a better position than the US where digital coins were classified as “securities under the US law”. German regulations on the crypto market are not only softer, but better defined than the Swiss regulations — where, in theory, most of them are securities with a few exceptions for utility tokens made by non-profit corporate structures.
In layman’s terms, in Switzerland there are certain exceptions from the rule. In Germany, all digital coins are “units of accounts” and not securities. Therefore, all crypto exchanges with a physical location in Germany become exchanges of units of account.
What does this mean for an entrepreneur who wants to establish a crypto exchange business? It means you need to get a license; the easiest one to obtain that looks much like a broker’s license. The following 3 criteria must be met:
- You need capital to start your business (25k — 200k € )
- You need to prove that you have the skills to run the business (e.g. having worked for 3+ years in a bank or have had some leading position in a financial institute)
- You need a professional liability insurance policy
The US regulation TheDAO report published by SEC says cryptocurrency exchanges are most likely trading securities that are unregistered; making the practice a criminal offer in the US and you could go to jail for opening a crypto exchange. In Germany, BaFin’s regulation simply makes crypto a Safe Haven for the entire community.
Takeaway
Berlin’s Room 77 is the world’s first bar to accept cryptocurrency as a form of payment. It happened back in 2011 when the owner, Joerg Platzer, agreed to accept Bitcoin in exchange for a beer. The German bar is also home to a monthly event called Bitcoin-Stammtisch, where people gather around to talk crypto.
In 2014, Joerg Platzer said that:
“Bitcoin is still an experiment. That’s why I think it is funny that people demand stability. You can’t demand things from an experiment. Just go and pay with your MasterCard if you want stability.” 4 years later MasterCard jumps on Blockchain, too.
Things have changed a lot in the crypto space over the years; and are still changing. Right now, there are museums, coffee shops, and even clothing stores that accept bitcoin as payment. Berlin’s business ecosystem is ruled by ICOs, crypto investors, traders, and fans of the crypto market. The events, the conferences, the meetups, the Blockchain-based businesses, and ultimately, BaFin’s soft regulations, make the city a Cryptocurrency Mecca worth exploring inside out.
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