Daily Archives: August 11, 2018

Singapore VC Firm to Launch $10 Million Crypto Fund, Follows Blockchain Investment Trend

Singapore-based Venture Capital firm Golden Gate Ventures is to launch a $10 million fund targetting crypto and blockchain start-ups that use innovative DLT, in what appears to be a growing investment trend.

Golden Gate Ventures will call the fund LuneX Ventures and will be funded primarily by high net worth individuals. The main focus of LuneX investment will be aimed at early-stage companies such as cryptocurrency exchanges and cybersecurity providers

The LuneX fund becomes the first such fund, set up by a traditional markets company in the region. Head of Growth at Golden Gate, Kenrick Drijkoningen, who is heading the project sees the recent downturn in the cryptocurrency markets as no hurdle to success. He points out:

“Despite the fact that public markets are down, the amount of talent that’s moving into this space is exciting. There are young entrepreneurs who are passionate about this space and want to build an ecosystem.”

One of these is Tushar Aggarwal, host of the Decrypt Asia podcast, who is to collaborate on the new project. Drijkoningen himself points out that the project is planned for the long-term and that the invested capital would be spread through a range of areas including ICO’s and previously-existing cryptos, along with investments into other crypto and blockchain products. Currently, about half a dozen deals are reportedly in the pipeline

The talk of a blockchain revolution, a term cited frequently over the past months, would certainly include such projects as these involve crypto custody and banking. Such blockchain investment funds are growing in popularity as traditional investors seek to make inroads into blockchain and crypto by another route to get ahead of the rush if it happens.

The recent Chinese venture in Nanjing sparked the new term “blockchain revolution” as the country appears to have ramped up its support for blockchain technologies with a CNY 10 billion (USD 1.48 billion) investment fund, focusing primarily on the public blockchain projects. The new fund was announced and reported to be formed by the district government of Jiangbei — new area in Nanjing city and the Beijing-based Zhongguancun Blockchain Industry Alliance, a cooperative alliance between blockchain companies and government research institutes.

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Survey: 50% of Americans Would Give Bitcoin a Try

A poll by analytics firm Harris Insights and cryptocurrency startup Gem has come up with some interesting results, one of which indicates that out of 2000 who participated in the survey,  50% of Americans would like to try out Bitcoin.

Another suggested that Americans with lower incomes are more likely to buy the flagship currency. Millennials came high up on the list of investors as numerous surveys conducted over the past year have already shown. Micah Winkelspecht of Gem commented on the “millennial factor”:

“We find that younger people with less income are more willing to put money in crypto. […] My guess is that crypto is of the digital age. And the younger generation is of the digital age and used to doing everything on the internet.”

The number of investors from lower incomes almost doubled that buying in the higher income bracket. Those Americans owning some cryptocurrencies earning between $50,000 and $74,900 per year was 11 percent, dropping to just six percent amongst higher earners of over $100,000 per year.

Bitcoin News has published a number of reports this year which illustrate the tendency of Millennials to withdraw from traditional finance options towards digital currencies such as Bitcoin. Kari Paul of MarketWatch commented recently:

“Over 82% of millennials say their investment decisions were influenced by the Great Recession when $14 trillion in wealth was lost…Millennials regard the stock market with skepticism. People between the ages of 18 and 39 are less likely to invest money in the stock market than are other generations, studies show.”

Across the Atlantic, in the UK, another recent survey suggested that far more education was needed about cryptocurrencies. The survey revealed that although up to 3 million people have invested in Bitcoin in the country through online trading platforms, many went in with virtually no knowledge about virtual currencies citing 2.5 million investors making commitments without fully understanding cryptocurrency.

An interesting survey finding has suggested that in the UK, in fact, as many as 31% would be happy to have at least some portion of their earnings paid in Bitcoin. Of the 1,000 respondents, 37% said that they would go for between 1-20% in digital pay and the rest in fiat.

The polls alone are not the whole picture, but when examined together do begin to show current cryptocurrency trends, most of which are favourable for the industry at this time of crypto volatility, given that they have all been conducted in recent months.

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tZero to Receive Largest Recorded Investment for Blockchain Startup

Chinese private equity firm GSR Capital has confirmed it signed a letter of intent to invest USD 270 million in blockchain startup up tZero, making it the largest recorded investment to such a company, according to Forbes.

Atypical investment structure

The USD 270 million investment came with an 18% stake in tZero, a platform for trading blockchain-issued securities, with GSR confirming it will spend another USD 104.55 million for approximately 10% of the platform’s parent company Overstock’s shares. Additionally, the private equity firm has pledged another USD 30 million in tZero’s initial coin offering (ICO).

This funding would bring the aggregate investment past USD 404 million, pushing tZero’s company valuation to USD 1.5 billion, surpassing its parent Overstock.com (USD 1.07 billion) despite the flagship product not even having been launched yet.

Independent letters of intent were configured and signed by all parties to secure the deal.

Sonny Wu, GSR Capital’s chairman and founder, told Forbes that his company has a long-term view on scaling the platform globally. This investment is GSR Capital’s first public blockchain venture, with its previous history focused on electric vehicles and clean energy.

tZero executive chairman and CEO of Overstock.com, Patrick Byrne, said that the money would be used to open more tokenized securities exchanges internationally for uses such as his SEC-licensed US platform. He envisions tZero’s token to be listed on each of these exchanges.

Byrne noted that raising capital from the businesses home in the US was proving challenging, hence they had to look further abroad. He told Forbes, “US capital is, to be honest, they’re gun shy on this whole blockchain issue… I’m sorry to say the US is not the leading country in the world.”

Hitting into US economics harder, Byrne said that he started the venture to undo what he called the ”original sin” of Wall Street – separating the trade of a stock and its settlement. tZero’s tokenized securities are designed to enable real-time, transparent lending of securities.

Such sentiments have led Byrne to be called the ”scourge of Wall Street” by those whose practices he criticizes, but this does not trouble him. Instead, he believes that the significant investments to tZero show that the tides are turning on traditional Wall Street practices.

 

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African Crypto Movement Learns from Past to Push Forward

An examination of Google Trends this year illustrates how the African continent is waking up to cryptocurrency-related products and exploring the sector for innovative opportunities.

The popularity of Bitcoin in Africa continues to grow, enabled by the presence of a greater number of cryptocurrency exchange platforms. There are benefits to cryptocurrency ownership unique to the continent of Africa, many devolving from the widespread unstable economic conditions.

Google searches reveal that Ghana, Nigeria and South Africa are frantically searching online when it comes down to cryptocurrency and Bitcoin.

The M-pesa mobile money platform that started over 10 years ago as a Vodaphone pilot scheme for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania, is now an African giant. It is convenience that has made a massive impact in these countries, allowing users to deposit, withdraw, transfer money and pay for goods and services from their mobile phone.

So big has the company become it has now reached South Africa and further afield in Afghanistan, India, Romania and Albania.

The mobile phone has become Africa’s most significant innovation, connecting people across the continent in remote regions, also providing a host of innovative apps, thereby making more conventional and expensive forms of communication obsolete. Africa’s early steps in the cryptocurrency space, with crypto users doing their business through P2P networks, avoiding the limitations of banks and exchanges, neither of which many people have access to, show that the mobile phone is key.

Michael Kimani, the chairperson of the Blockchain Association of Kenya, draws a comparison to the early days of M-pesa to the current movement towards crypto and P2P solutions as users innovate to circumnavigate the drawbacks of trading. In the pre-M-Pesa period, people would trade airtime between themselves to escape inflated telecoms charges. He feels similar is happening now with crypto trading. He argues:

“These informal networks, resemble the airtime currency informal networks of pre-2006 that powered remittance payment networks before M-Pesa became a thing.”

A further accelerant could be just around the corner with last month’s launch of an African-focused cryptocurrency exchange called Coindirect. Co-founder Stephen Young says that Africa has unique problems and these must be considered in any startup plan for cryptocurrency adoption on the continent. He feels that current exchanges don’t take these into consideration.

In terms of African fiat currencies, Young identifies their systemic volatility, insecurity and lack of governance as factors that the crypto space need to take on board: He argues:

“If Africans are to benefit from the cryptocurrency revolution we need make it easier to buy, store and trade cryptocurrencies. As Africans, it is our responsibility to help build the infrastructure and we need to be a part of the revolution.”

The South African exchange allows users to buy, convert, store, send or sell more than 40 cryptocurrencies, combining a peer-to-peer marketplace, wallets and an exchange to allow customers to access cryptocurrencies from their local currency.

 

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Colorado Governor Democrat Candidate Lists Blockchain on Policy Issues

The US State of Colorado has a Democratic candidate who has positioned blockchain technology policies as a key component of his campaign in the upcoming gubernatorial elections.

Early adopter

Democratic nominee Jared Polis has held a bullish stance on bitcoin and blockchain for quite some time. In 2014, the congressman was an early crypto-evangelist. At the time he was making satirical arguments to ban the US dollar as a response to a Senator who was calling for bitcoin to be banned outright.

The entrepreneur turned politician has a distinctive modern-technology background; being an early adopter of the internet he founded American Information Systems, a dial-up internet service provider in the mid 90’s. Additionally, he has founded several cyber-businesses and was reported to have received USD 2,500 in Bitcoin campaign donations in 2014.

Now the pro-blockchain nominee has declared his intentions to turn Colorado into a “national hub for blockchain innovation in business and government”.

Polis said, “It’s still the early days in the evolution of blockchain, but we should take the opportunity to get out ahead. I’m thrilled to have worked with blockchain leaders to implement this bold, innovative vision that will make Colorado the best place in the country to start or grow a blockchain company.”

Blockchain policy highlights

The candidate believes that the security, transparency and efficiency of blockchain technologies can bring even higher standards to governance and election systems. Another part of the blockchain policy includes the implementation of new legislation that protects cryptocurrencies that can be used to buy goods or services.

Another policy is the integration of blockchain solutions to the energy grid, with hopes of making energy cheaper and more reliable for the state; he also wishes to digitize government records through the blockchain and boost transparency, allowing public access to Colorado contracts and expenditures.

Finally, Polis will collaborate with various financial, public and governmental entities, lawmakers and local communities, pushing the advancement of blockchain technology.

Blockchain pioneer

Polis is also a founder of the Congressional Blockchain Caucus, a bipartisan platform for both industry and government to study and research blockchain technology. The caucus is presently attempting to push the ‘Cryptocurrency Tax Fairness Act of 2017‘ into law.

At a recent event in Boulder, Polis said that if the act is passed, it would make everyday cryptocurrency purchases easier. He said, “…we’re going to continue to fight to pass that into law to make it easier for people to not have to worry about tax liability or paperwork simply for using their currency of choice.”

At the event, he also bullishly compared to the boom of the internet to blockchain saying, “It’s clear that blockchain-based technologies and cryptocurrencies have great potential to truly transform our 21st-century economy probably in the greatest way since the internet did.”

 

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World Bank Mandates First Ever Blockchain Bond

The World Bank has mandated the Commonwealth Bank of Australia (CBA) to authorize the world’s first blockchain bond. The foreign bond issued in Australian dollars has been dubbed bond-i, an acronym for Blockchain Offered New Debt Instrument, as well as a reference to Sydney’s Bondi Beach.

bond-i

A joint press release from the World Bank and the CBA describes bond-i as the first of its kind to be fully managed with blockchain technology. The bonds will be entirely created, allocated and transferred using distributed ledger technology to secure every transaction.

Noting the benefits of applying blockchain technology to bonds, the two organizations wrote in the press release that blockchain is capable of streamlining the processes of a number of debt capital market intermediaries and agents. Several benefits of this are listed, including simplifying raising capital and trading securities, improving the efficiency of operations and augmenting oversight of regulations.

Arunma Oteh, World Bank Treasurer, said: ”We believe that emerging technologies, equally offer transformative, yet prudent possibilities for us to continue to innovate, respond to investor needs and strengthen markets.”

The World Bank and CBA have built a private, Ethereum-based blockchain platform on which bonds will be issued and distributed. The CBA said that they were open to using alternative blockchain networks as the space continues to evolve.

Sophie Gilder, Head of Blockchain Innovation Labs at the CBA said that bond-i is a significant step in unlocking the revolutionary potential of blockchain in financial services and markets.

Investor interest in bond-i has already been strong, according to the World Bank, although it plans further consultations with investors prior to launching the transaction.

The World Bank will run its operations for the bond from Washington, DC, with the institution already responsible for issuing between USD 50-60 billion annually in bonds for sustainable development.

 

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Has Yale Found the Two Most Significant Bitcoin Price Indicators?

Connecticut-based Yale University has produced another insightful Bitcoin theory, this time claiming to have found the most significant predictors for the value of Bitcoin.

The momentum effect

The momentum effect describes the usual course of the price that tends to move in the same general direction that it has been. For example, if Bitcoin has seen a significant increase of around 20% in one week, the theory suggests that historical market evidence indicates that upward trend to continue at least one more week.

In short, if you are looking to call the next movements in the market, check to see what the latest trend has been and this can be the best indicator for a cryptocurrency’s next movements.

Investor attention

Investor attention refers to the measure of hype or fear, uncertainty and despair (FUD) surrounding cryptocurrency. Significant price increases are preluded by a spike in the number of search engine increases and media attention, with Google in particular cited as a strong predictor for the forthcoming price changes. According to the research, a jump in the number of times Bitcoin is Googled can consistently predict a price increase several weeks beforehand.

Ripple and Ethereum show similar trends in line with Google searches, although with different timelines.

An increase of negative cryptocurrency searches that incorporate terms such as hacks or crime can also be an indicator for prices, this time showing that the price will soon drop.

Market sentiment

The Yale economists behind the research acknowledge in the paper that the price of cryptocurrencies cannot be predicted by the same methods of the stock market or precious metals, noting that what drives cryptocurrency prices is unique to the market itself. They outline that this is because cryptocurrency is unaffected by macroeconomic or familiar stock market factors.

Instead, the two key predictive tools of investor attention and the momentum effect are ways of gauging market sentiment. Considering that the market remains in its relative infancy, it seems logical sentiment is still such a significant force.

The research was published in a National Bureau of Economic Research working paper by Yale economists Yukun Liu and Aleh Tsyvinski.

 

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