Meet Crypto’s New Best Friend: Fiat

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Monero Compliance Workgroup Says XMR Exempt From Funds Travel Rule

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The Boom of Crypto Lending and DeFi – Another Bubble?

Written by: Nick Mantoni, who is a market analyst and a cryptocurrency writer with 3 years of experience of working on blockchain startups as a PR and event manager. His studies have been covered by such media outlets like Forbes, Finance Magnates, and Hackernoon and CCN.com.


The innovative cryptocurrency market suddenly recovered after last year’s price collapse of most cryptoassets, as seen in the MVIS CryptoCompare Digital Assets 100 Index.

In trying to avoid fixing losses in the midst of a crypto winter, some holders borrowed funds secured by digital assets or deposited coins to lend them to get a small but passive income with somewhat minimal risk.

The decentralized finance (DeFi) sphere where this is happening is now rapidly gaining popularity. It comprises open-source projects and is designed to make the world of finance open and free with the help of blockchain and smart contracts.

Unstoppable Growth

According to estimates by the brokerage dealer, Genesis Global Trading in the third quarter of this year, the volume of issued crypto loans increased to $870 million. Compared to the same period the year before, this indicator grew 3.5 times, and the total volume of issued loans now exceeds the $3 billion mark.

Researcher Jack Purdy has noted that the volume of loans issued by the Celsius Network alone since the beginning of the year has doubled. Celsius is but one of the many platforms in the DeFi space letting users earn interest on their cryptocurrency holdings.

DeFi and a New Stage in the Popularity of Ethereum

The DeFi services market has been growing and developing rapidly, thereby expanding the list of supported assets and enriching them with additional functions. A year ago, total value locked in DeFi was only close to $200 million. Now, this figure has exceeded $689 million.

Vlad Miller, CEO of Ethereum Express, a specialized platform for the multi-thousand-strong community of crypto experts and enthusiasts, said:

Over the past year, the decentralized finance segment has grown more than 3 times – from ~ 900 thousand ETH to ~ 3.3 million ETH ($ 599 million). DeFi’s prospects are incredibly huge: previously inaccessible investment opportunities are opening up. A variety of financial instruments will generate more demand and facilitate the mass adoption of cryptocurrency – to borrow money or invest it at a percentage, the user does not need an identity card, it is enough to have only a crypto wallet.

How Decentralized Is DeFi?

Despite the rapid growth of the sector and the expansion of the asset range involved in it, seemingly decentralized DeFi services are influenced by large players, including Namely, Polychain Capital, and a16z.

According to CoinDesk, on November 18, 150 unique addresses voted for the proposal to switch Maker to a multi-collateral system. However, at that time, 80,000 MKR estimated to be worth $662 each belonged to only five addresses, which accounted for more than 50% of voters.

In light of such an oligopoly, the participation of small players in the voting process is symbolic, and the process itself appears to be virtually devoid of real decentralization and represents only an imitation of democracy.

CoinShares chief strategy officer Meltem Demirors even believes that in its current form, the DeFi ecosystem consists mainly of “centralized products and services.” Their advantage is only in more advanced user experience compared to blockchain protocols:

We hope that over time, the elimination of intermediaries will become possible.

Another ICO-Like Bubble?

It is likely the development of crypto lending and DeFi will trigger an increase in demand for coins used as collateral. Those who urgently need money, but have no desire to sell digital assets at a low price, will be most actively borrowing through these services.

Borrowers will include residents and companies from countries with high bank interest rates, cryptocurrency traders, as well as those who are trying to hide their financial activity from a state.

The crypto-loan market is now considered a $5 billion industry that, according to Bloomberg, is now being actively studied by former Wall Street traders seeking to learn a new field.

During one of the latest Youtube blockchain podcasts, Wings representatives said:

The market really got signs of a bubble. But we all know that cryptocurrencies are markets that gamblers love. This can really get the attention of regulators. In any country, loan activity and earnings on this loan are always regulated.

However, let’s not forget that cryptocurrencies are not in some kind of parallel universe. This area is inevitably subject to economic laws and credit cycles, where there is not only revival and expansion, but also depression and stagnation.

Crypto lending, including DeFi, is becoming a popular alternative to bureaucratic traditional finance, where the profitability of instruments falls amid extremely low-interest rates.

DeFi gives finance flexibility and its users the ability to earn a small percentage in a bear market, as well as borrow funds at an acceptable rate. In addition, decentralized markets for synthetic assets are steadily developing, opening up new opportunities for traders.

Nevertheless, there are risks in any field, and lending services are no exception. Until now, there are no 100% decentralized DeFi-applications, and the influence of large players is felt during the voting for assets to secure loans, which are “surprisingly coincidental” in the Coinbase listing.

Be that as it may, this segment is still underdeveloped and not so large. Its advantages over the traditional banking system with expensive loans and low-yield deposits are undeniable. This means that there is a potential for market growth.

Featured image by Markus Spiske on Unsplash.

US Fed to Print $425B for New Year’s — 3 Times Bitcoin’s Market Cap

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Bitcoin is This Decade’s Best Investable Asset

Bitcoin has had its share of unnerving time periods – but over the last decade, it has been one of the best investable assets. Appearing as a “black swan”, BTC reached extraordinary valuations.


Bitcoin Became a ‘Wild Card’ for Personal Finance

Acquiring $1 worth of BTC in 2010 would translate into more than $90,000 today, even after the correction from peak prices.

To compare, even after an extremely successful decade for stocks, $1 invested in big indices of US equities would have reached $3.46.

Of course, not everyone can sell at peak valuations without crashing the price, and stock indexes are historically less volatile and more liquid. But bitcoin is a wild card for personal finance, helping build wealth for small-scale investors facing both risky markets and stagnated real income.

BTC Investment Offset Worldwide Economic Risk, Sluggish Stocks

Bitcoin investment is not limited to US-based persons and caused a boom of investments in Korea and other Asian countries. Relatively stagnant stock returns caused buyers to adopt crypto assets, moving beyond BTC and into the zone of much riskier assets.

It is possible that other asset classes have reached significant growth in nominal terms in the past decade. The years after 2009 arrived with significant quantitative easing, which boosted asset valuations. The accusations of “bubble” were mentioned multiple times, but those were called for multiple asset classes, from real estate to stock valuations.

The next decade may arrive with slightly slower growth, but most indicators also point to a recession being avoided in 2020. BTC, so far, has not faced a recession and has existed in an environment of investment exuberance.

As for BTC, its fame arrived relatively late in the decade, gaining traction after 2016 and peaking in 2017.

From then onward, despite the correction, the bitcoin ecosystem has grown and the presence of the asset was established. With mainstream futures markets and exchange-traded products in Europe, BTC is starting to look less like an Internet meme, and more like an asset class to compete with mainstream markets.

Despite crashes, bitcoin has posted higher lows each year, finally gaining enough liquidity and support from futures markets to go through periods of relative stability.

BTC also built a business around the activity of mining, using up spare hydroelectric power to essentially build a new type of value. December 2019 is considered the final stretch of the decade for bitcoin, at least since the start of its trading. BTC trades at 00, on slowing volumes ahead of the holidays.

What do you think about bitcoin’s performance this decade? Share your thoughts in the comments section below!


 

43% of Investors Interested in Bitcoin Are Women: Grayscale Survey

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Crypto Tidbits: Bitcoin Mining Still China-Centric, Ethereum Istanbul Live, Banks Use Blockchain For Bonds

Another week, another round of Crypto Tidbits. Bitcoin, again, saw an effectively flat week, losing a few percent in the past seven days (which isn’t much in the grand scheme of things), according to the latest data from Coin360. Altcoins have posted similar results, with a majority of cryptocurrencies shedding a percent or two, just around how much BTC lost.

This comes as analysts have started to get bullish on the cryptocurrency, citing fundamental developments such as increasing adoption, bullish macro tailwinds, the halving, and so on and so forth.

Despite the market lull seen over the past week, which analysts say will be preceding a large breakout in some direction, the industry has continued to chug along.

Bitcoin & Crypto Tidbits

  • Bitcoin Mining Remains Centralized in China: According to a recent report from Reuters, a recent report from CoinShares has confirmed that Chinese Bitcoin miners control two-thirds of the network’s computational output, “a growing share that is likely to benefit the country’s miners.” This 66% figure is purportedly up from 60% in June, which marked the top of the recent bull run, and is actually the most centralized CoinShares has seen Bitcoin since it began tracking geographic ties to the network’s hash rate some two years ago. CoinShares’ head of research, Chris Bendiksen, attributed this trend to the growth in ASIC deployment, specifically citing the IPO of Chinese miner Canaan and other companies in the region that have recently released new chips. The fact that China’s share of the Bitcoin hash rate is up from 60% in June also implies that the recent 50% decrease in the Bitcoin price has forced more expensive miners, who operate in countries like the U.S. and Canada, to temporarily pause their operations.
  • European Central Bank Wants in On Digital Currency Game: Bitcoin may be falling, but central banks still want in on digital currencies. On Thursday, the newly-instated President of the European Central Bank, former Chair and Managing Director of the International Monetary Fund Christine Lagarde, said that one of her initial mandates will be to focus on the development of stablecoins. She said:

    “My personal conviction is that, given the developments we are seeing, not so much in the Bitcoin segment but in the stablecoins projects, and we only know of one at the moment but there are others being explored and underway at the moment. We’d better be ahead of the curve.”

  • Ethereum Istanbul Goes Live: On Saturday, Ethereum developers rolled out the latest iteration of the software, “Istanbul.” Istanbul introduces six new Ethereum Improvement Protocols (EIPs), which are focused on reducing network spam, allowing for interoperability with ZCash and private and scaling technologies, and making the network more secure. The upgrade allows for the implementation of so-called ‘ZK Rollups,” which will allow for “Layer 2 scaling on Ethereum supporting upwards of 3000tps (larger than Visa), while maintaining decentralization and privacy. This is a big win for ETH-based stablecoins, [like USD Coin (USDC)],” Circle’s Jeremy Allaire wrote on the matter.
  • Bakkt Launches Two New Bitcoin Products: This week, prominent cryptocurrency startup Bakkt, whose chief executive officer recently assumed a seat on the U.S. Senate, launched two Bitcoin derivatives products this week: BTC options for its futures contracts, and cash-settled futures for the Singaporean/Asian market.
  • Chinese Bank Uses Blockchain: According to an article from Chinese business news site Sina Finance released on Friday last week, the Bank of China — one of the biggest state-owned commercial banks in China not to be confused with the central bank of the People’s Bank of China — recently completed the issuance of a 20 billion yuan (just around $2.8 billion U.S. dollars) worth of small enterprise and micro-enterprise bonds via blockchain.
  • Bitcoin Giant BitMEX Sued for $300 Million By Early Investor: According to a recent report from Bloomberg, Frank Amato and RGB Coin Ltd, who claim to be the first seed investors in BitMEX in 2015, have sued the exchange for $300 million. Their claim is that the exchange, now one of the most prominent Bitcoin startups and exchanges in existence, did not grant them equity after their initial $30,000 investment, now valued at over $50 million.
Featured Image from Shutterstock

Could Bitcoin Price Press Higher as PlusToken Liquidations Slow?

Over the past few months, the crypto industry has been awash with news about the PlusToken Bitcoin scam, which allowed scammers to accrue billions worth of digital assets over the course of a year-long operation.

For some context, PlusToken was a cryptocurrency “wallet” and storage solution that gave users returns on their deposits and also gave refers rewards, acting much like a classic Ponzi scheme but with a cryptocurrency backdrop.

Earlier this year, a number of ringleaders of the operation were arrested in Vanuatu, though a few individuals remain missing abroad. While few in the West have heard of the scheme, for it was operated mainly out of China, data indicates that the firm stole upwards of $3 billion of cryptocurrencies, mainly Bitcoin, at its peak.

And according to analyses by on-chain analyst Ergo, the remaining ringleaders of PlusToken have likely been selling “a little over 1,100 BTC per day” via mixers and exchanges, which is approximately 60% of the daily block rewards issued by the Bitcoin network, and has been for at least the past four months.

If PlusToken and other scams have really been liquidating millions of dollars worth of Bitcoin a day, that would explain why the leading cryptocurrency’s price has bled out by some 50% over the past six months

Data shows, however, that the selling pressure of these coins on the underlying BTC spot market is starting to slow, presenting a potential bullish case heading forward into the end of 2019 and into the start of 2020.

PlusToken Selling Abating, Presenting Bullish Bitcoin Case

Ergo’s latest analysis has found that the PlusToken coin distribution has “dropped off a cliff,” purportedly falling far below 500 coins per day, under half of what was seen just a week or two ago.

In fact, he noted that over the past week, the average coin distribution from Bitcoin wallets purportedly owned by the scammers, has collapsed well under 300 coins per day, which coincides with an uptick in public awareness about the liquidations.

With there now being hundreds of coins fewer being sold on the open market, Bitcoin could start to form an uptrend once again, that’s if you believe that the sales of cryptocurrency by the aforementioned scammers formed the six-month-long downtrend that sent BTC from $14,000 to $7,000.

This isn’t the only trend that should have bulls over the moon, so to speak. Blockchain Capital partner Spencer Bogart, whose firm just reported that it expects BTC to “blow past” its all-time high of $20,000 in 2020, said in a recent interview that the fundamentals are leaning in favor of bulls.

One of Bogart’s first points conveyed to the Bloomberg audience is that Bitcoin remains a very useful network from a transactional standpoint, “processing $1 billion to $3 billion worth of transactions daily,” which is a far cry from when the cryptocurrency was deemed “a joke” just years ago.

He also added that the American public’s sentiment on Bitcoin remains widely positive, implying that long-term buying pressure for the cryptocurrency exists, despite the downturns seen.

Featured Image from Shutterstock

Quadrigacx Founder Dead or Alive? Request for Exhumation and Autopsy Filed

Quadrigacx Founder Dead or Alive? Request for Exhumation and Autopsy Filed

Quadrigacx Founder Dead or Alive? Request for Exhumation and Autopsy Filed

It has been a year since the founder of now-defunct crypto exchange Quadrigacx supposedly died in India. However, some 76,000 victims are still out of millions of dollars. A court-appointed lawyer representing them has now requested an exhumation and post-mortem autopsy in Canada of the dead body, highlighting the need to know if Gerald Cotten is in fact deceased.

Also read: Regulatory Roundup – Bitcoin Futures Fund Approved, India’s RBI-Backed Digital Currency

Exhumation and Post-Mortem Autopsy

Law firm Miller Thomson has sent a letter to the Royal Canadian Mounted Police regarding Gerald Cotten, the late founder and CEO of bankrupt Quadrigacx crypto exchange. The firm was appointed by the Supreme Court of Nova Scotia as representative counsel on behalf of users affected by the shutdown of the exchange. In its letter dated Dec. 13, the law firm wrote:

The purpose of this letter is to request, on behalf of the affected users, that the Royal Canadian Mounted Police (the ‘RCMP’), conduct an exhumation and post-mortem autopsy on the body of Gerald Cotten.

The letter explains that the aim of the request is “to confirm both its identity and the cause of death given the questionable circumstances surrounding Mr. Cotten’s death and the significant losses of affected users.”

Quadrigacx Founder Dead or Alive? Request for Exhumation and Autopsy Filed

Along with the letter, the law firm sent some background material to the police consisting of publicly available information on the history of the exchange, the supposedly dead founder, and other related materials. The firm emphasized:

In our view, further highlight the need for certainty around the question of whether Mr. Cotten is in fact deceased … Representative counsel respectfully requests that this process be completed by Spring of 2020, given decomposition concerns.

Suspicious Circumstances

Since the reported death of Cotten in December 2018 due to complications relating to Crohn’s disease while on honeymoon with his wife in Jaipur, India, there has been much speculation about what actually happened. Many people believe that the 30-year-old is not dead as circumstantial evidence continues to rack up against him. A Vanity Fair article published on Nov. 22 points out a number of theories and evidence surrounding the case, including the exchange’s co-founder, Michael Patryn, turning out to be a convicted fraudster.

Quadrigacx Founder Dead or Alive? Request for Exhumation and Autopsy Filed
Gerald Cotten, supposedly dead founder of bankrupt Quadrigacx crypto exchange

Cotten’s death was announced a month after he presumably died while his exchange continued to accept customer funds. The private hospital in India misspelled his name and the doctor later said that they were not sure about the diagnosis. By the time his death was made public, about 76,000 individuals could not access their funds totaling approximately $190 million. Cotten was also supposedly the only person with the private keys to the exchange’s cold wallets. However, court-appointed monitor Ernst & Young and several blockchain investigators found that the exchange’s crypto wallets were empty, and some funds were transferred to Cotten’s personal accounts or other exchanges. The company began bankruptcy proceedings in Nova Scotia in April, which were moved to Toronto earlier this year.

Both Canada’s tax authorities and the U.S. Federal Bureau of Investigation (FBI) are investigating Quadrigacx. On June 2, the FBI posted a notice on its website seeking victims in the investigation. Some people interviewed by the RCMP and the FBI said they got the impression that the agencies believe that Cotten might not be dead, explained the Vanity Fair article. One of the witnesses questioned by both agencies said:

They asked me about 20 times if he was alive … They always end our conversations with that question.

Do you think Gerald Cotten is alive? What do you think happened with Quadrigacx? Let us know in the comments section below.


Images courtesy of Shutterstock and Global News.


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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.