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Cambridge Global Crypto Benchmarking Examines Bitcoin State of Play

Cambridge Global Crypto Benchmarking Examines Bitcoin State of Play

University of Cambridge Judge Business School has published the second of its annual reports which examine the cryptoconomy.

It’s been a huge year following the first report, with Bitcoin reaching such grand heights offering a pre- Christmas surprise for 2017 investors, to the travails of pre-Christmas 2018, which has investors not knowing whether to hold or sell.

The comprehensive 96-page report, which examines, among other subjects, cryptocurrency mining, exchanges, storage, and payments, may make sobering reading for enthusiasts and more active traders this Christmas as the picture it paints is certainly “real”, allowing no space for the hype which often surrounds cryptocurrency. The 2nd  Global Cryptoasset Benchmarking Study, as it’s been named, has some positive historical facts for investors in its pages but also has warnings for those entering the space, as well as facts that would be welcomed by industry professionals.

Less encouraging perhaps is the fact that around two-thirds of specialized custodial exchanges do not have a refund procedure in the case of customer funds getting lost or stolen; a message that might not be so warmly appreciated. More encouragingly, it has been estimated that crypto businesses are improving and doing a solid job of asset storage with over 80% of funds now being held in cold storage, out of sight and protected from hackers.

The report also revealed that 80% of crypto firms have become cagey when it comes to divulging the results of security audits; not good news for investors who would like to know exactly how companies entrusted with their assets actually operate.

This is not the first of such in-depth reports by a major university, or by academics, which examines cryptocurrency, and the development of its support infrastructure, to have been conducted, although most current research is focused on DLT.

Many universities now run courses, up to a Masters degree, on the subject of cryptocurrency and associated technology.

Judge Business School is a provider of management education and is consistently ranked as one of the world’s top business schools, with the Cambridge MBA program ranked among the top in the world by Bloomberg, the Financial Times, Business Insider, US News & World Report and Forbes Magazine.

 

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Reddit Founder Claims Crypto Market Needs a Crash Before Take Off

Reddit founder Alexis Ohanian has remarked in an interview with CNBC that he believes that a crash in the cryptocurrency market as seen over the past few days is needed in order for the market to stabilize and mature over time.

The Reddit entrepreneur feels that focus on software development and infrastructure within the cryptocurrency industry are important factors in building a stable future. He also suggested that the falls in cryptocurrency prices would have the effect of sifting out the undesirables in the industry from the genuine contributors, and those in for making quick money.

The Reddit founder feels that innovations being created now will have longevity and although blockchain pitches he has received may be fewer in number, Ohanian claims that they have more potential than those he was receiving in 2017.

Over the last few days, Bitcoin has suffered its biggest losses in over eight months. Although, after falling to USD 5,202 on 15 November, after a little price correction, trading picked up today at $5552.17 (time of writing). The newly hard forked BCH has fallen by 15% and is trading at $387.41. Brian Kelly, the founder, and chief executive officer of BKCM, has blamed the hard fork for the crypto market crash. Mati Greenspan from eToro says he saw it coming:

“The movement we saw today seemed to be the run-of-the-mill volatility surrounding Bitcoin and a breakout that’s been weeks coming….It’s difficult to say where it ends. No one can really predict.”

Forbes contributor Clem Chambers noted a correlation to the spike in the bond market:

“The obvious culprit causing this dump is Bitcoin Cash, the ‘wannabe’ Bitcoin usurper, which forked from Bitcoin last year. It is forking again and there are competing forks and all sorts of conniptions are expected. It sounds plausible this is causing the move but the fact the bond market spiked at the same time suggests something else is going on to me.”

Stephen Innes who heads up trading at Asia Pacific of Oanda Corporation suggested that the crash was an even worse scenario than he had anticipated and that pre-BCH online chat had the effect of creating doubt and uncertainty among investors.

Ohanian sticks with his view that the crash is necessary, arguing that during hard times people start to focus on the essentials.

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Leaving Silicon Valley for Blockchain

In a recent duo of interviews conducted by Forbes, two ex-Silicon Valley engineers shared why they left their ‘dream jobs’ to pursue a future in blockchain as a growing number of workers do the same.

Startups are eager to hook employees from the big-name Silicon Valley tech companies to boost their industry standing and tempt investors. This, combined with a growing amount of interest in the blockchain space since the 2017 Bitcoin boom, will only increase the trend towards blockchain companies.

Maximilian Wang, an ex-Facebook engineer turned blockchain CEO

It was in 2017 when Wang first heard about blockchain. As an engineer with Facebook Inc., he tried telling his colleagues about the technology but most of them apparently dismissed it as a scam. It became a passion for him to studiously examine blockchain whitepapers in his own time. He learned whatever he could teach himself, so when the right project came along, he would be prepared for it.

”The hardest part was not when you saw an opportunity to make money and you needed to figure out how to get that opportunity… What made it hard was that after seeing everything happened in the world outside, at the end of the day, you still had to come back to reality and try your best to focus on your work [at Facebook],” Wang told Forbes.

Eventually, the right project did come along for him: Bgogo, a digital asset exchange that claims to be the first of its kind with a supernode listing authority. Wang wants to take it right to the top, with ambitions to make it the JPMorgan Chase of the blockchain world.

Qi Zhou left Facebook and Google to develop his own blockchain

Zhou was inspired by Google’s own Bigtable data storage system and saw a way that the underlying technology of sharding could also be done with blockchain.

”When I see an opportunity there, why can’t I go after it,” he told Forbes. Zhou’s project QuarkChain is a  high-capacity peer-to-peer transactional system.

Will blockchain meet Silicon Valley?

As blockchain becomes more far-reaching, it becomes inevitable that its share of the space in the valley will increase. However, it is likely that Google and Facebook will continue to lose engineers such as Zhou and Wang because the foundations of their corporations are so far opposed to the decentralized ideology behind blockchain.

 

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Forbes Crypto Market Data Website Launches

American business magazine Forbes launched the beta version of its cryptocurrency data website on Wednesday, looking to give investors an in-depth look into markets, tokens, and blockchain projects.

Forbes CryptoMarkets says it will attempt to bring “real-time pricing and volume information on several thousand cryptocurrencies and an initial five cryptocurrency indices worldwide,” right now just in English, but adding Chinese, Japanese, French, Vietnamese, Russian and Korean language options in the future.

The crypto portal will also offer a live feed of related news from a number of media outlets alongside its own editorial submissions from Forbes’ contributors. Additional deep-dives into coins, exchanges, trading volumes and other aspects of the market will also be offered.

CEO of Forbes Media, Mike Federle, said that the CryptoMarket ”represents a natural extension of our powerful brand into a new venture that promises to deliver immense value to investors, traders and market watchers.”

As a well established and internationally respected news outlet, Forbes’ commitment to the cryptocurrency industry through this project is sure to benefit its perceived legitimacy among readers.

Behind the website

According to Forbes, its new crypto feature comes as the result of a collaboration with investment firm NewCity Capital and Swiss blockchain company Trade.io.

The latter hit the headlines Sunday after a platform hack resulted in the loss of 50 million native TIO tokens, valued at USD11 million at the time of the incident. A blog entry posted Tuesday reads that the security breach was  ”effectively contained,”with Trade.io forking the token Wednesday night, replacing it with TIOx.

Whether the security breach will severely damage the reputation of the company in the long term, or to what effect this will have on Forbes CryptoMarket, is yet to be seen.

While the original token was listed on multiple exchange sites, TIOx will be exclusive to the trade.io exchange.

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Forbes Signs Agreement with Blockchain-Based Publishing Platform

Renowned business media outlet Forbes is now in partnership with Civil, a blockchain-based platform for journalism. The move, if successful, will see Civil-approved journalists view their content on Forbes which has over 12o million readers around the globe. The collaboration, however, is limited to blockchain and cryptocurrency-related news only.

According to Civil co-founder Matt Coolidge, Forbes will be integrating the blockchain’s publishing platform into its content management system. The integration will be complete in a few months and the start of 2019 will see journalists upload their news and contents to the Civil network, with automatic mirror uploads to the Forbes website.

Coolidge said that Forbes will also “experiment with new methods of reader engagement”.

The announcement was made on US-based news outlet Axios and Forbes will eventually allow other news to be published on the blockchain too. Forbes will be using this opportunity to use decentralized solutions, helping its wide contributor network. The news giant will use smart contracts to allow journalists to have their published articles to be shared with other platforms, including Medium and LinkedIn.

This is not the only foray of the decentralized platform into traditional news channels. Civil already has a partnership with Associated Press (AP). The worldwide media agency will be using blockchain and Civil for intellectual rights, content tracking (including usage) and even clamp down on fake and altered news through supporting ethical journalism. AP will be storing its content on the Civil platform under an agreed trial, allowing other news agencies to access the reports.

The partnerships signal multiple penetration of blockchain-based platforms into renowned mainstream news outlets.

 

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Ripple’s Chris Larsen First Crypto Personality on Forbes 400 Rich List

Chris Larsen, co-founder of Ripple, is the first person from the cryptocurrency space to be on the Forbes 400 list. He is at the very bottom of the list, ranked #383 in a tie with 18 other billionaires.

The Forbes 400 is a list of the 400 richest people in America, a list so exclusive that a third of billionaires in the United States were not wealthy enough to make the list. The Ripple token, XRP, is the third-ranked cryptocurrency by market capitalization at this time with a market cap of USD 20 billion.

Larsen owns XRP 5.19 billion, and his place on the list has been fluctuating wildly due to changes in XRP’s price. As of this writing on 8 October 2018, five days since the Forbes 400 was compiled, XRP has gone up to USD 0.50, which would mean Larsen has USD 2.6 billion and is actually ranked #316. Earlier in 2018, when XRP hit its all-time record of USD 3.75, Larsen had USD 19.46 billion, which would have put him at #25 on the Forbes 400, practically tied with SpaceX and Tesla Founder Elon Musk.

That being said, Larsen couldn’t cash out all of his XRP at once even if he wanted to, which makes his position on the list somewhat controversial. As seen with Ripple’s other co-founder Jed McCaleb, co-founders have restrictions in selling off their holdings since sudden and large liquidations would damage the Ripple ecosystem.

Notably absent from the list is Satoshi Nakamoto, since his identity is unknown, and there is no way to know if he is even in the United States. Some estimates say Satoshi mined BTC 1 million, which are still clearly sitting in wallets believed to be his, which would give him a net worth of USD 6.7 billion as of 8 October, which would put him at #78 on the Forbes 400. During the rally to USD 20,000, Satoshi’s Bitcoin was worth as much as USD 20 billion briefly, which would put him at #23, richer than Elon Musk.

At the very top of the Forbes 400 is Jeff Bezos, the founder of Amazon, who has an all-time record USD 160 billion. This is more than the entire Bitcoin market cap, which is USD 115 billion. Jeff Bezos broke Bill Gates’ 24-year streak at the top of the Forbes 400.

 

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Crypto Hedge Funds Face Tax Uncertainty

With US government scrutiny focusing in on cryptocurrencies, hedge funds face tense uncertainty due to the unclear tax regulations regarding digital currency assets.

Trying to play by the rules

With billions of dollars on the line, cryptocurrency hedge fund managers face a challenge when trying to fully comply with tax laws just as individual investors do. Their jobs required them to maximize profits while minimizing liabilities, but with few guidelines regulating their holdings, there is a lack of direction for this to take place in a fully legal manner.

The US Internal Revenue Service (IRS) is attempting to keep up with the pace of innovation with regulations, last month announcing that the large business and international division would focus on cryptocurrency audits in the coming year. Bigger tax bills and penalties have been threatened by the government department when the rules come in.

Clay Littlefield, a tax attorney for Alston & Bird in Charlotte, North Carolina, told Forbes that there is indeed a lot of uncertainty considering how the IRS will treat cryptocurrencies in the near future. Littlefield acknowledged that while there is plenty of analogies that can be placed on circumstances, there is not a lot of solid legal framework for investors to reference.

Why the lack of clarity?

There are several key factors that have contributed to this uncertain climate. Most crucially, regulatory bodies such as the IRS have been slow in laying out their full positions on digital currency.

Karl Walli, senior counsel at the Treasury Department’s office of tax policy earlier this year told tax professionals there is a ”long list” of issues the IRS needs to address, adding that planned new tax laws would increase the efficiency of comprehending all these problems. Walli said: “There’s no way in this environment that we’re going to be able to put out guidance on the majority of those issues.”

In 2014, the IRS settled on considering crypto as property, not currency, meaning that investors, miners and those earning wages in Bitcoin would be required to report profits and losses as is required with property. The market was dominated at this time by small investors; hedge funds trading in cryptocurrency has created problematic issues for the concept of crypto as property which has yet to be addressed.

Ultimately, funds may well end up owing more in taxes than their current estimations, dependent on the IRS’s decision.  David Shakow, professor emeritus at the University of Pennsylvania Law School assumes that the lack of guidance right now may well provide a solid defense for hedge funds, regardless of future implementations.

For now, however, offshore tax havens such as the Cayman Islands have begun to attract big investors looking to avoid the necessity of following the unclear US tax regulation, although operations investing in cryptocurrencies for a foreign investor have not yet been legitimized by the IRS as non-taxable by the US.

 

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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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Economic Turmoil In Pakistan Could Free Up Cryptocurrency Adoption

Soon to be prime minister, former Pakistan cricketer Imran Khan will be challenged to address the country’s current economic woes, which some have predicted may increase cryptocurrency usage.

An economic crisis is predicted in Pakistan on the eve of a major shift in the political landscape. The Pakistani rupee has depreciated 15 percent against the US dollar in recent months and the country’s net international reserves are now in negative figures. Meanwhile, the demand for dollars for imports exceeds Pakistan’s capacity to earn them through exports.

Amongst this turbulent financial climate, according to Forbes, LocalBitcoins trading volumes are on the increase which is reportedly a reflection of the cryptocurrency markets on the whole in Pakistan, partly fuelled by economic uncertainty and a increased confidence in Bitcoin.

Although Khan’s position is all but sealed, Gareth Leather, the senior Asia economist at Capital Economics suggests it matters very little who actually takes the reigns:

“Whichever party wins Pakistan’s upcoming general election will take over an economy on the brink of a balance of payments crisis. Growth is likely to slow sharply regardless of who wins Wednesday’s election.”

The fact that Pakistan’s Central Bank is curbing access for many Pakistani citizens to US dollars and pressuring fiat currencies means that over time cryptocurrencies will appear more attractive in the way that they have in many other countries with failing economies, such as Venezuela.

One of Pakistan’s first privately generated cryptocurrencies was Pakcoin which has been accepted as a mode of payment in various institutions since its conception over two years ago. In fact, it is said to be the first digital currency accepted by any Asian hospital. Ten retailers now use it in the country so that their customers can pay for goods and services using crypto.

To date, Pakistan has warned banks against ICO’s and cryptocurrencies in general with a statement to that effect in April of this year.

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Former Oxford Grad becomes UK’s First Bitcoin Billionaire at $3.6 Billion

An Oxford graduate living in Hong Kong has been identified as Britain’s youngest Bitcoin billionaire at the age of only 34, according to the Mail Online.

Ex-student Ben Delo founded crypto company BitMex, a trading platform created by a selection of finance, trading, and web-development experts, in 2014 and has subsequently amassed a fortune of $3.6 billion along with his co-founders.

Delo, who studied maths and computer science at Worcester College, Oxford and graduated in 2005 with a first-class degree, said that he worked 18 hour days to build up his platform renting out spare bedrooms on Airbnb and creating a space in his living room to make extra money.

After a spell in the City of London, he moved to Hong Kong to take a position with JP Morgan prior, to starting up his platform with Samuel Reed, a computer programmer.

Like something from a Howard Hughes biography, Delo certainly hasn’t let things go to his head though, reportedly living a frugal life in Hong Kong with his wife Pan Pan Wong, to the extent that he and his wife use food vouchers to buy food at McDonald’s. His aim is to be a Bill Gates style philanthropist donating most of his wealth to worthy causes.

There are other young entrepreneurs who are rapidly following in Delo’s footsteps who may not be a billionaire just yet but are well on the way.

At only 23 Charlie Shrem owns Evr, one of Manhattans most famous gastropubs, renowned for being one of the first establishments to accept Bitcoin for food and drink in New York. He is also a BitAngel, an investment group created to invest in Bitcoin startups.  Shrem made his initial fortune buying thousands of bitcoins at $20 each in 2011 and is thought to be worth $450 million.

At the young age of 24 Vitalik Buterin, co-founder of Ethereum has a net worth conservatively estimated to be around $450 million, although, in a recent interview with Forbes, Buterin stated that he now owned less than 0.4% of the company.

At the top of the Bitcoin Billionaires club would be the enigmatic creator and developer of Bitcoin who reportedly owns an estimated 1.1 million bitcoins.

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