Welcome to Cryptoinvestor Weekly. The first and original newsletter for professional and institutional crypto investors.
Before getting directly into this week’s issue, we’ll start out with some . . .
News From Nomics
We’re still “heads down” working towards the public launch of our MVP (which we pushed back two weeks to ensure everything is squeaky clean when things go live).
There’s not much to publicly report this week, although a lot is happening behind the scenes. We can’t wait to show you what we’ve been working on for the last several months.
On to the newsletter . . .
Issue 15 of Cryptoinvestor Weekly
Despite it’s rising price and adoption, 2017 saw Bitcoin proclaimed dead a record number of times (93 times to be exact). And so far, 2018 is on pace to surpass 2017’s Bitcoin obituary count. Yet this movement rages on.
One of the most compelling developments of late is the decentralization of services and utilities we use to interact and transact with our favorite cryptoassets.
We aren’t likely to see a decentralized service overtake GDAX, Coinbase, Binance, or Bittrex anytime soon — much less a decentralized Twitter, Facebook, or fully functional bank. But the migration away from our ecosystem’s weakest link — centralized exchanges — is well underway. (Indeed, centralized exchanges are frequently hacked and have notoriously poor support, reliability and uptime … and often block new signups for months at a time).=
At the heart of this movement away from centralized exchanges and towards decentralized exchanges (DEXs) is the 0X Project, whose protocol facilitated over $13M in trades on decentralized exchanges last Tuesday (January 9th, 2018) and whose token is up almost 400% in the last month. (Listeners to Episode 2 of the Flippening podcast might recall that $ZRX was Kyle Samani of Multicoin Capital’s highest conviction investment).
While 2018 won’t see the death of centralized exchanges — this year will likely birth better, highly regulated exchanges that will be forced to compete with increased competition from Wall Street — this will likely be the year that DEXs become a viable second option for retail investors (but likely not large institutional investors).
In particular, these DEXs will appeal to retail investors seeking:
- Anonymity for tax and privacy purposes
- Non-custodial exchange (i.e. they won’t want exchanges to hold their cryptoassets)
- An alternative to sketchy markets rife with wash trades, fake trades, and other kinds of manipulation
Right now, the 0x project only facilitates the exchange of cryptoassets built on the Ethereum blockchain. But in the not too distant future, atomic swaps, the lightning network, and interoperability protocols like Polkadot, Cosmos, Lamden, and Metronome will enable the 0x Protocol, and other protocols built to facilitate decentralized exchange, to coordinate cross-chain exchanges.
These are exciting times indeed.
Which brings us to . . .
This Week’s #1 Pick (Our Most Recommended Resource)
Distributed ledger technologies have blockchain explorers and DEX protocols will all likely have something like this (I’m not sure what to call it yet).
The 0x Tracker reports trade volume, fess, and maker/taker breakdowns both in the aggregate and for individual DEXs.
If you want to watch the momentum build around decentralized exchange and witness a possible Flippening in near real time, this website will serve you well.
Roundup Of The Rest
This episode is a compilation of the best audio clip highlights, talks, and discussions from Consensus: Invest.
If you didn’t attend Consensus: Invest, or you haven’t heard of it, it was the very first conference for institutional investors focused on cryptoassets, and it happened at the end of 2017 in New York City.
In this episode, we’ve recapped Consensus Invest and compiled our favorite audio clips and discussions from the event. This episode is the next best thing to attending in person.
- Thoughts on a talk about cryptocurrency as a new asset class.
- The evolution of Bitcoin and how it has been used since its inception.
- Our take on a fascinating panel about cryptocurrency taxation.
- Some compelling existential bear cases for the cryptocurrency space.
- How institutions can gain exposure to the cryptocurrency asset class.
- What the general vibe was in the hallway of this event.
- How much the event has changed in the last year and a half.
Despite increasing mainstream adoption, the world of cryptoasset investing is still the wild west and is likely to remain unregulated and subject to manipulation for the foreseeable future. Few phenomenon epitomize the dark underbelly of cryptoinvesting than Pump and Dump groups, most of which take place on “secret” (I use that term loosely) Telegram groups.
From The Article:
Pump & dump (P&D) schemes are a common occurrence in the cryptocurrency world.
They most often happen in Telegram or Discord (chat programs) groups in which several thousand people buy a specific sh*tcoin (a crypto token without a value or future) at the same time in an attempt to artificially inflate its value. This value increase is called the pump while the selling of this now expensive token to naïve bystanders is the dump phase.
In this article, we’ll take a look at the anatomy of one such smaller P&D group.
New groups are popping up daily, but they’re rarely legit. Most often they’re actually outer rims of already established groups – a secondary layer more intended for the dumping phase.
Although it’s received relatively little media attention, Mastercard has created and made available a Blockchain API for payments and even smart contracts. Indeed, the war for the world’s financial system won’t be between traditional fintech and distributed ledgers. It will be between centralized blockchain and decentralized blockchain.
While the newsletter linked to above doesn’t sound all that sexy at first, it’s made for some of the best reading I’ve done in a while. The newsletter tracks posts on reddit, twitter, blog/medium comment threads from the founders of many significant cryptocurrency projects.
If you want to know what founders are really thinking, don’t look to highly edited and self-censored press releases, interviews, and roadmap announcements. Instead, looks at how they respond on-the-fly during sometimes heated debates.
These are deep cuts, and this is one of my favorite newsletters right now.
From The Article:
Two U.S. companies shelved proposals to launch bitcoin exchange-traded funds, citing ongoing concerns by the Securities and Exchange Commission (SEC), filings showed on Monday.
Staff at the regulatory agency “expressed concerns regarding the liquidity and valuation” of futures contracts based on the digital asset, according to one of the filings.
The move adds a new hurdle to the bid by Wall Street firms to capitalize on investor interest in cryptocurrencies, and it opens a rare public divergence between two financial regulatory agencies over how to regulate them.
The world will likely never hear from Satoshi Nakamoto again. The next best thing we have is Vitalik. When he speaks, it’s unwise not to listen. Especially since Ethereum is in the process of its most significant development since the publication of the Ethereum white paper (i.e. a move away from proof of work security to proof of stake).
From The Show Notes:
The 23-year-old whiz dives into who blockchains will someday help, how we transition from Ethereum for digital cats to higher social impact, and why even big companies like JPMorgan, Microsoft, and BP are using Ethereum. He also walks through some important technical challenges Ethereum faces with scaling and the shift from a proof-of-work consensus algorithm to proof of stake. And he reveals why he isn’t a big believer in on-chain governance. Plus, he talks about his worries and gives us his predictions for 2018.
From The Article:
CoinMarketCap, perhaps the go-to source for cryptocurrency market data, has sparked an uproar after it moved to exclude South Korean exchanges from its price average calculations.
The unannounced move to remove data from Bithumb, Coinone and Korbit from its average calculations sparked confusion given that its front-page suggests a broad decline in the cryptocurrency market, including what appeared to be a near-30% fall in the price of XRP.
The overall market cap of the market – one measure by which traders assess the ecosystem – dropped sharply once the change went into effect, which appears to have taken place just before 5 a.m. UTC.
Wherever there’s lots of money being made quickly, there’s douchebaggery. See the quote below.
From The Article:
There’s an actual house called the Crypto Castle, and the king is Jeremy Gardner, 25, a rakish young investor with a hedge fund who has become the de facto tour guide for crypto newcomers.
Early one afternoon, he opened a bottle of rosé while he charged half a dozen external batteries so he wouldn’t have to ever plug in his phone in Ibiza, Spain, the next week.
“I do I.C.O.s. It’s my thing,” he said. He wore a pink button-front and pink pants.
A half-unpacked suitcase in Jeremy Gardner’s bedroom at the Crypto Castle in San Francisco.
About eight people live in the Crypto Castle on any given night, and some of Mr. Gardner’s tenants brought out snacks (Cheez-Its and a jar of Nutella). One of the bedrooms has a stripper pole. Mr. Gardner leaned back into the sofa and rested his feet on the table. He recently did an I.C.O. for a start-up after-party. “You can I.C.O. anything,” he said. He runs Distributed, a 180-page magazine about cryptocurrency that comes out about once a year. He is now raising $75 million for his hedge fund, Ausum Ventures (pronounced “awesome”). He said his closest friends are moving to Puerto Rico to get around paying taxes.
From The Article:
“In 2018 we’re doubling down on blockchain,” says Gil Beyda, managing director of Comcast Ventures, the investment arm of one of the world’s largest media and telecom companies.
For the venture capital arm of Comcast, an investment in blockchain isn’t opportunistic, Beyda insists. “Just to be clear, if bitcoin were at $15 instead of $15,000 we would still be committing to this,” he said.
Comcast Ventures has been looking at blockchain technology for months, driven by Comcast and NBCUniversal’s long-standing interest in applications across several of the company’s business units.
In fact, internal experiments are already underway around advanced advertising alongside Disney and Cox Communications that will be used to match data sets without sharing consumer data. Other experiments are underway looking at applications around royalty tracking and energy, Beyda says.
“A lot of folks are trying to figure out how do you apply this consensus-driven immutable decentralized infrastructure and decentralized distributed applications,” Beyda says. “We have real-world applications inside Comcast where folks are trying to solve real-world problems with blockchain.”
The best roundup of Bitcoin stats for 2017. Everyone talks about price and whether or not we’re in a bubble, but there’s a lot more going on. This gives a much more complete and compelling picture.
From The Article:
[Billionaire] Mike Novogratz, the Wall Street trader who became one of bitcoin’s most outspoken champions, is starting a merchant bank dedicated to cryptocurrencies and blockchain-based ventures. And he intends to take it public.
The former macro manager laid out a series of transactions in a statement Tuesday that would, if successful, raise $200 million and, through a holding company, list shares of his Galaxy Digital LP on Canada’s TSX Venture Exchange. He said Galaxy is building a “best-in-class, full service, institutional-quality merchant banking business in the cryptocurrency and blockchain space” and will be active in four areas: trading, principal investing, asset management and advisory work.
The move comes less than a month after Novogratz shelved plans to start a crypto hedge fund. According to a person familiar with his efforts, Novogratz also had been laying the groundwork for Galaxy for months. The fund, had he continued with it, would have sat inside Galaxy’s asset-management unit.
A merchant bank is among the most ambitious concepts to emerge from the speculative frenzy that has characterized the cryptocurrency market. While Novogratz last year described the runup in bitcoin, ether, ripple and other so-called tokens as the “biggest bubble of our lifetimes,” he also has said he believes blockchain — the computer code that underpins all cryptocurrencies — will reshape finance just as the internet did communication.
From The Article:
Encrypted messaging startup Telegram plans to launch its own blockchain platform and native cryptocurrency, powering payments on its chat app and beyond. According to multiple sources which have spoken to TechCrunch, the “Telegram Open Network” (TON) will be a new, ‘third generation’ blockchain with superior capabilities, after Bitcoin and, later, Ethereum paved the way.
The launch will be funded with an enormous Initial Coin Offering, with forthcoming private pre-sales ranging into the hundreds of millions, potentially making it one of the largest ICOs to date. Demand is driven by the fact that rather than the ICO coming from a fresh startup, Telegram is a well-established messaging platform used around the world.
Adopting a homegrown cryptocurrency could give Telegram’s payment system enormous independence from any government or bank — something Co-founder and CEO Pavel Durov is known to covet after investors took over his last company, Russian social network VK. Durov has not responded to TechCrunch’s several attempts to contact him regarding this story.
What’s important to note about this is that this is an internal test and MoneyGram customers will not be using XRP as currency. In the proposed scenario, MoneyGram will use XRP to move money but end-users won’t buy or own Ripple in conjunction with this service.
From The Article:
Ripple, a blockchain company and rival to bitcoin, on Thursday announced a tie-up with Dallas-based money transfer giant MoneyGram.
The move is significant because the arrangement involves the use of XRP, Ripple’s digital currency, which has recently soared in value but also faced questions about its practical uses.
The partnership will see MoneyGram pilot the use of XRP through a new Ripple service, called xRapid, designed to provide liquidity to financial institutions.
While many cryptocurrency projects have gone to great lengths to avoid being categorized as a security (for regulatory reasons), this article by University of Oregon Professor Stephen Mckeon takes a deep dive into what the tokenization of traditional securities might look like.
In this article he explores (1) the driving force behind traditional asset tokenization, (2) traditional asset token use cases, (3) challenges for traditional asset tokenization, and (4) the impact of traditional asset tokenization on protocol tokens.
From The Article:
Overstock.com just got a hefty chunk of change from one of the biggest names in finance, and CEO Patrick Byrne says much of it will fund the company’s blockchain work.
The company disclosed in a Securities and Exchange Commission (SEC) filing this week that the holder of a warrant had exercised its right to buy $100 million worth of shares. Although the filing did not identify this investor, Byrne told CoinDesk it was the Quantum Fund, managed by billionaire George Soros.
Of the $100 million Overstock received, Byrne said he anticipates $20 million will fund DeSoto Inc., the blockchain property rights joint venture he is working on in partnership with economist Hernando DeSoto.
As for the other $80 million, Byrne said he intends to invest the funds across Overstock’s flagship e-commerce platform (which accepts bitcoin for payments) and the other blockchain ventures that are part of its Medici Ventures subsidiary.
From The Article:
Kodak is today announcing a partnership with Wenn Digital to create a “photo-centric cryptocurrency” that will “empower photographers and agencies to take greater control in image rights management.” Because why not. It’s 2018.
The company’s stock jumped 44 percent on the news and is currently trading at $4.30, up 37.60% on the day.
This is an extremely well-done cryptoasset chart explorer for technical investors. The UI is “no frills” but the analysis is solid and lots of work went into this.
Numerai describes itself as “a new kind of hedge fund built by a network of data scientists.” The fund seeks to literally manage all of the money in the world.
From Token Summit’s recent event in San Francisco, here’s an overview of Numerai.
Final Thoughts: What You Can Do To Help
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See you next week!