Token Report by New Alchemy Newsletter Issue #4: Storm Delay
Please hold for decentralization.
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The price volatility index for Bitcoin has kept ticking upwards since its low in June (~2.5%), trending closer to the levels seen in the bull market of December 2017 (>5%). Keep in mind, the total crypto market capitalization is roughly double what it was then (~$275mil vs. ~$140mil). So, expect to see some huge intraday figures, such as: “Crypto Market Loses $9 Billion in Hours as Tokens Drop 10% on Average”(Aug 17).
Crypto traders have more than just the statistical kind of “volatility” to contend with. Depending on which cryptocurrency exchanges and wallet services they use, their day-to-day crypto experience can be made volatile by the technical or legal challenges those third-party companies face.
Take, for instance, these two crypto exchanges which have ceased processing USD withdrawals for the past several days due to “major operational changes” concerning their banking: Bitstamp, and OkCoin. Besides traditional banking troubles, sometimes exchanges must halt trading for central trading pairs (such as Bitcoin to USD) because of “insufficient liquidity” on their order book, as did Coinbase Pro last week.
When this occurs, some customers become distressed, and those who cannot afford a delay must find convoluted channels involving disparate cryptocurrencies and other exchanges. This spontaneous trading activity, or other events, can have unintended consequences, for instance:
Earlier this month, after a sudden “90% devaluation of VEN tokens” and a concurrent spike in the cost of Tether ($USDT) for VEN, those events led to a glitch on the third-party data service Coin Market Cap which caused their display price of Bitcoin to become $1,000 higher than in actuality.
Many price ticker apps and automated trading systems utilize Coin Market Cap’s free API, so a glitch like this can very easily lead to investor losses.
In some crypto emergency situations, similar to when a storm knocks out your power lines, there is only one company (or literally one person) which can fix the technical reason for the issue.
Active cryptocurrency traders and passive holders should always be aware of the procedures and assurances made by the exchanges or wallets services they use, and do everything they can to limit their exposure to risks like withdrawals being halted on an exchange, or support for a cryptocurrency being rescinded by a wallet app.
The bright side is that new kinds of cryptocurrency exchanges and new investor services at existing cryptocurrency exchanges are launching at an increasing pace. More investor choices, less problems.
1 Short Read:
Why would you want to own 0.00001% of a building?
Last week, Galen Moore answered some of the skepticism surrounding Security Tokens by outlining two immediate benefits of managing securities using a blockchain: Liquidity, and fractional ownership.
In this new article, we’ll describe what opportunities these two attributes of tokenization present to the real estate industry:
News Blocks
Interesting topic nodes for tokenization and
cryptocurrency on the ledger this week:
Crypto Docket
As our newsletter predicted in April, legal storms have arrived for some parts of the tokenization and blockchain tech industry, such as:
Cryptocurrency investor robbed via his cellphone account sues AT&T for $224 million over loss
CNBC
Playboy Sues Cryptocurrency Company for Breach of Contract — CCN
Conversely, in Dubai, “The Dubai International Financial Centre (DIFC) Courts has partnered with Smart Dubai to create the world’s first Court of Blockchain.”
DLT Partnerships
In the past several days, there have been some notable announcements of an enterprise or municipal partnership with tokenization and blockchain technology services, such as:
NTT Docomo selects VeChain to be among the first batch of partners for the 5G Open Partner Program
LG Electronics signed a $300,000 CAD contract with Graph Blockchain for a “private DLT for global logistics program
The Jamaica Stock Exchange selected Blockstation to help “enable investors to trade blockchain tokens”
The Red Cross is experimenting with a crypto-donations service developed by Horizon State
Transaction-Fee Mining
Following in Binance (BNB)’s footsteps, many crypto exchanges in 2018 have adopted a “trans-fee mining model,”which is NOT technically similar to blockchain mining. It is simply the practice of reimbursing users for trading fees with a “utility token” specific to the exchange, to incentivize (and in some sense, subsidize) more trading.
This business model, also called negative fees, has come under scrutiny due to the auspiciously large daily trade volumes of some of the exchanges which have adopted it (such as BitForex).
This uncertainty has led to some third party data services (such as Coin Market Cap) altering their rankings and listing requirements.
Picks and Shovels
Nvidia posted $3.12 in revenue for Q2 last week, but also lowered their guidance for Q3, citing the “fall of cryptocurrency-driven demand for Geforce video card products.”
Users on Twitter have noticed an increase on cryptocurrency mining rigs being sold on second-hand, such as on Craigslist.
Meanwhile, the leader in manufacturing specific hardware for blockchain mining, Bitmain, is considering an IPO. Token Daily shared an English translated version of a deck they shared with investors.
The deck cites a recent study by Frost and Sullivan, which details large opportunities in “AI, blockchain, cloud computing and Internet of Things” for ASICs and GPUs.
Want more news? We’ve rounded it up for you
Check out this month’s Token Report by New Alchemy Reading List for a download on opinions, developments, and research affecting the tokenization industry and cryptocurrency market:
New Alchemy is a leading blockchain strategy and technology group specializing in tokenized solutions for the most innovative companies worldwide. Token Report is a part of New Alchemy’s market research team, focused on providing independent data insights and research on digital currency markets. Get in touch with us at Hello@NewAlchemy.io.
Have questions about this newsletter?
Reach out: @KyleSGibson / kyle.gibson@newalchemy.io
