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Mike Novogratz Increases Galaxy Digital Shares Stake to 80%

Mike Novogratz Increases Galaxy Digital Shares Stake to 80%

Chief executive officer and founder of merchant bank Galaxy Digital, Mike Novogratz, has increased his portion of shares in the firm to nearly 80%.

Unpeterbed by Galaxy Digital‘s 19% loss in share value over 2018, Novogratz has reportedly purchased an additional 7.5 million ordinary shares in the company worth around USD 4.8 million. This represents 2.7% of the aggregate shares in the company, bringing his total stake in the stock to 79.3%.

Since New York-based Galaxy Digital Holdings Ltd. was first listed on Canada’s TSX Venture Exchange in August 2018, the cryptocurrency bear market influenced their poor market performance as the bank places a heavy focus on cryptocurrency and blockchain technologies. Ex-Goldman Sachs’ partner Novogratz, however, has continued to insist the market direction will change in 2019, predicting institutional investors will bring ”new highs” to Bitcoin’s price.

Novogratz’s move has succeeded in boosting the price of Galaxy Digital shares for now at least, with their value up 36% at the time of press, reaching USD 1.36 according to MarketWatch.

The ex-hedge fund manager of the Fortress Investment Group has been a longtime proponent of cryptocurrency, with around 20% of his net worth said to be distributed between Bitcoin and Ethereum.

 

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Top Ethereum Whales Increase Share by 80%

Top Ethereum Wales Increase Share by 80% This Year

It would seem that the top actively trading Ethereum whales have been taking advantage of the cryptocurrency’s poor performance this year, as data shows they have increased their holdings four-fold since 2017; this is the highest accumulation by annum recorded.

A study conducted by blockchain research institute Diar using data from TokenAnalyst reviewed over 5,200 Ethereum addresses, finding that the top holders by scale have accrued a massive 80% increase in their holdings. The aggregate Ethereum portfolios of these investors now account for over USD 2.3 billion, nearly 20% of that in circulation.

In January 2017, these whales owned just ETH 5 million, meaning there has been a four-fold increase to date.

Fewer whales, more concentration

The study also shows that there has been around a 30% drop in the number of whale addresses compared to the start of the year, with Ethereum becoming increasingly concentrated in those at the top.

The big investors carry a net positive figure in trading, meaning they are still investing at higher rates than they are cashing out. Around USD 1 billion has been sent to the top addresses so far this year, increasing Ethereum balances by 270% compared to the last quarter – levels this high have not been seen in nearly two years.

A struggling token market is suggested to be the cause in Ethereum hoarding as it is the cryptocurrency pair of choice for most tokens. Backing this up, the data indicates that wallets belonging to cryptocurrency exchanges have seen a spike in Ethereum activity from traders, as they presumably exit the token market.

Last month, the top exchanges recorded around USD 470,000 in Ethereum withdrawals, compared to deposits which reached over USD 1.8 billion.

Ethereum co-founder Vitalik Buterin was awarded an honorary PhD last week from the University of Basel for his contributions to blockchain.

 

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Ohio Blockchain Backers Pooling $100 Million to Fund Startups

Ohio Blockchain Backers Pooling 0 Million to Fund Startups

Several funders in the Midwestern US state of Ohio are to be backing early-stage blockchain startups to the tune of USD 100 million.

Great strides

As reported by local news outlet Cleveland.com, several investment fund firms based in Ohio, including local accelerator and venture fund JumpStart, are to be pooling their resources and investing USD 100 million into blockchain startups that give focus to utilizing the tech for business or government purposes.

According to JumpStart CEO Ray Leach, who made the announcement on Sunday, 2 December, there is to be an additional USD 200 million poured in over the next three years by the funding teams. Ohio is home to “Opportunity Zones”, areas with tax incentives for investors to encourage economic growth in underdeveloped and poorer neighborhoods, something of which the fund hopes to leverage over this course. In order to receive funding, a company must take advantage of one of these zones.

Another local venture firm named FlashStart also announced a pre-seed fund of USD 6 million for blockchain startups.

On the chain

Currently, Ohio’s desires to become a leader in blockchain technology within the United States is off to a winning start. Recently, the state became the first to accept Bitcoin for tax payments, which can be done via OhioCrypto.com and there are plans to add more crypto payment options in the future.

Around the same time, Cleveland city launched a blockchain initiative for the promotion of the local industry. Home to a number of blockchain projects including blockchain voting application startup Votem, the affectionately named Blockland Cleveland conference will further bolster the presence of blockchain technology in Ohio.

In early November, Ohio bore its bullish horns against the United States Securities and Exchange Commission (SEC) when the state congressman, Warren Davidson, pressed against the crypto-skeptical regulatory body with a bipartisan bill designed to challenge the SEC’s laws in relation to cryptocurrencies issued via initial coin offerings (ICOs). The bill would reclassify digital assets as “products” instead of the current classification for ICO issued tokens, which are presently deemed as securities.

In addition to this, Ohio state proposed another bill (Bill 300) that would legally legitimize smart contracts and the storage of records on a blockchain.

Ohio, much like many other jurisdictions who are seeking to tap blockchain, is building the necessary infrastructure to seed a healthy local blockchain ecosystem similar to that of Seoul in South Korea or certain parts of China. These incremental steps that test the ambivalent waters of this nascent industry are becoming lighthouses for others also seeking to join the race.

 

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SEC Boss Unwavering on the Woes of Crypto Investments

SEC Boss Unwavering On The Woes of Crypto Investments

In an interview with columnist Andrew Ross Sorkin of the Times Talk on 29 November, the Chairman of the US Securities and Exchange Commission (SEC) Jay Clayton has expressed an unyielding stance towards the perceptions of the cryptocurrency markets. Clayton emphasized the lack of safeguards in this emerging market structure – hence his skepticism, however, he was for a balance that involved protecting the interests of investors.

The interview lasted for about an hour, and few minutes into the interview, when Andrew asked Sorkin where he has landed with the whole regulation process, Clayton responded saying:

“There are two rule sets for the securities market, one for the offering and sale of securities, and the other for the trading of securities. Our rules have stood the test of time very well and we should not change them to adapt to technology. Technology ought to be able to fit within our rules”.

Despite his view of the technology as having “promise for adding efficiency to our [capital] marketplace”, he is worried about the investors’ protection aspects of the rules currently governing the capital markets being not readily applicable to the cryptocurrency market.

In explaining the difference between a currency and a commodity, Clayton made it clear that Bitcoin is considered a currency because it’s widely distributed and its distribution was not controlled by a single entity. It’s used as a medium of exchange, and you’re not looking to the efforts of others to increase your return. In the case of a commodity, they generally have a use other than a medium of exchange, which he inferred Bitcoin had none.

A baffling response emerged from Clayton when he was asked in line with Managing Director and Chairwoman of the International Monetary Fund Christine Lagarde’s public opinion of cryptocurrencies in the future as being backed by governments and whether current token offerings would then be validated or will be phased out due to a regulated version. Clayton responded, “we’ll see.”

During the discussion, Clayton revealed to Sorkin how the agency had been trying so hard to educate investors on the dangers of investing in the cryptocurrency and similar markets. He essentially maintained that there are risks involved when participating in such investments. Clayton said:

“We tried to get the word out that although the trading looks like the trading you would see on Nasdaq or on the New York Stock Exchange, these markets do not have the same kinds of safeguards for you. We’ve worked for […] seventy years to try to prevent manipulation in those [traditional] markets, to try and prevent people from taking advantage of the small player.”

In the long-term, Clayton’s view on a regulated cryptocurrency market will hinge on the permanent use case, but right now, he perceives this is currently unclear as there are lots of successes and failures as with any new emerging technology.

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What is the Insurance Protocol for a Decentralized Exchange?

As experts predict, the next Bitcoin bull run will be prompted by an influx of institutional investors. Blockchain companies are fighting to create the best custodial solutions that will entice these investors into this new asset class. One thing is certain, what they are looking for is insurance to cover their assets, just like what is obtainable in mainstream finance.

The cryptocurrency insurance industry is quickly growing, yet there is a substantial lack of transparency over who is insured, to what extent, and by whom. Estimates put the total amount of available cryptocurrency insurance at USD 6 billion; not a lot when considering that the top three exchanges handle over USD 1 billion in trades a day, let alone the total market cap of around USD 140 billion.

Bitcoin News spoke with Derek Jones, co-founder of new decentralized cryptocurrency exchange UnitedCoin. Like every insurance policyholder it seems, there was a lot of information that non-disclosure agreements kept him from sharing. He could not for one, share who his insurance provider is or whether they had previously paid out claims for cryptocurrency exchanges.

Jones was able to explain how exactly UnitedCoin’s insurance policy works, which is particularly valuable information in understanding how peer-to-peer transactions can be covered by insurance policies.

“We insure all the investments that are in hot wallets. The way the exchange works is that 98% of funds are actually in cold storage and the 2% of funds that are actually in hot wallets are completely insured,” Jones explained to Bitcoin News. The hot wallets are insured up to USD 100 million, but they are looking to increase this amount. With the current insurance policy model and its limitations, cold storage is the only way that they can right now guarantee security for investors.

While Jones admittedly did not know of any insurance policies that have been paid out to any cryptocurrency exchange after a hack, apparently, the majority of companies that suffered security breaches did not have cold storage practices in place, which he says is one of the larger issues that jeopardizes security.

As a victim of the Cryptsy exchange hack, Jones’ view is that nobody should invest in a cryptocurrency exchange that does not have insurance.  ”To be honest, I don’t know why you would use an exchange that is not insured unless you are very comfortable with the fact that you could lose all your money.”

UnitedCoin also has FDIC insurance in the US which covers fiat currency, and insured accounts in Europe. The cryptocurrency is stored in cold storage and whenever there are transactions taking place on the platform, the money that is being sent back and forth is in a token form. That tokenization is what represents all of the actual transactions. However, when someone wants to withdraw funds, it is taken from the cold storage.

Jones’ father’s former bank holds the record in the US for a newly formed bank reaching USD one billion in assets the fastest. The record when he started was five years, and they achieved it in 18 months.

Influenced by some of his policies that did not only insure profits but also reduced fees for users, Jones was inspired to create a new revenue model for his exchange. ”With crypto, I saw that there was something else we can do. Because transactions create a lot of revenue for you as a company, people who are supporting the network should benefit from that revenue. We take 20% of those net revenues each month and divide it amongst members.”

He noted that this is similar to the actions of American Express.

The platform’s native token UNIT launches with the IMO, an initial members launch. Potential members are required to go through a know-your-customer (KYC) process to register.

 

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“Maybe Crazy” Youtuber Cancels House Purchase to Buy Crypto

In a recent YouTube video published yesterday, YouTuber Louis Thomas announced that he planned to cancel his purchase of a house as his first property, using the funds instead to buy cryptocurrency.

In the video titled Maybe I’m Crazy – Just Cancelled Home Purchase to Buy Crypto Instead, Thomas revealed that after many months of processing his application for the purchase of a landed property, the final step was left with the receipt of his bank’s approval – and the payment for which he was ready to make.

However, his decision to pay was altered when he noticed yesterday’s significant drop in the price of Bitcoin, touching its lowest levels this year at USD 5,435 (Bitfinex). The YouTuber admits that this dip in Bitcoin and other altcoins informed his decision in favor of the purchase of cryptocurrencies instead of a home.

“This is real”, he confessed. Thomas went on to say that he understood what he was doing with his life, his money, his responsibility, regardless of the future consequence. He did admit, though, that he is holding off on investing in crypto until prices drop further.

Having reviewed his history online, it appears his decision was drawn from personal insight. His video contents on the subject of cryptocurrency and its volatility to his 96,000 followers on YouTube reveal a depth of knowledge about the cryptocurrency market

The Youtuber received largely positive reactions on the comments section of his YouTube channel, with many saying that they believed he was making the best decision.

Thomas isn’t the first to tempt fate with cryptocurrencies. Bitcoin News previously covered the story of Didi Taihuttu, the man who sold everything he owned to go all in on Bitcoin.

 

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Canada Gets First Bitcoin-Backed Loan Service for Businesses, Consumers

Ledn Inc has become the first company to offer Canadian dollar loans to businesses or individuals accepting Bitcoin as collateral.

Founded by Bitcoin bull Mauricio Di Bartolomeo, Ledn is attempting to fill a gap in the market for Canadian citizens who need to borrow money but are unable to do so for whatever reason through the traditional banking sector. Bitcoin is a relatively popular investment choice for Canadians, with around 5% of the population reportedly owning the cryptocurrency.

The first of these loans have already been issued to Bylls, a Bitcoin payment processor operated by Satoshi Portal. Francis Pouliot, CEO of Satoshi Portal, explained that as a self-funded blockchain startup with profits in Bitcoin, it was never able to leverage capital for reinvestment as fiat-earning companies can. Using its Bitcoin funds as collateral for a loan means that the company does not have to sell its coins for new investment money. Using Bitcoin also to receive fiat credit also means it can avoid some of the price volatility of the cryptocurrency market.

There are some risks to this alternative loan method, however. One of these is custody issues; with no third party cryptocurrency custody service operating in Canada, Ledn is relying on cold wallets to store the funds which should theoretically make it impossible for hackers to gain access. If the loan recipient sends the Bitcoin to the wrong address they could also lose this money.

Market volatility means that margin calls are also a risk in the process, with assets potentially losing or gaining significantly in the space of hours, leading to difficulties between the two parties in terms of how much collateral needs to be sent. A sharp drop in the Bitcoin market could mean that the borrower no longer has enough to provide Ledn to get its loan.

Unchained Capital is a firm in the US that offers similar cryptocurrency-backed loans, although its target client is market investors.

Despite issues of volatility and custody, these emerging loans are offering a whole new way to do finance, recognizing cryptocurrency as a tangible asset that can be used and trusted. It brings a lot of potential for blockchain startups looking for funding but turned away from traditional loans because they do not operate primarily in fiat.

 

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Blockchain Has 3-5 Years to Maturity, Russian Bank Executive

The CEO of Russia’s largest banking conglomerate, Sberbank has questioned whether governments will embrace new decentralized models while giving blockchain around 3-5 years before it is mature enough to be ready for mass adoption.

Despite Herman Gref saying that the nascent blockchain technology is not developed enough for proper use yet, he has faith in the ability of the underlying ideology of the technology to usher in much-needed changes in both commerce and communities.

Local news outlet RIA Novosti quotes Gref, ”the philosophy embodied in [blockchain] could drastically change approaches in many areas. Improving this technology could bring huge value both to business and society.”

He gave blockchain between 3 and 5 years to reach a level of maturity where it will be ”ready” for industry implementation.

His comments correlate with a recent poll of executives who claim that implementing blockchain in enterprises has been ”harder than expected.” They cited scalability as a significant part of the challenge, with close to half of poll respondents struggling to process high volumes of transactions on the blockchain network quickly.

Decentralized currency

Gref said that as he sees it, governments on a global scale do not look likely to accept any decentralized model of currency, such as cryptocurrencies like Bitcoin. However, he believes that in around 10 years opinions might change in favor of a decentralized money supply, although even this he says in an ”optimistic” time frame.

The CEO called on governments to find a middle ground in regulating cryptocurrencies in a manner that could prevent illicit activities, but also not stifle innovation or kill cryptocurrencies altogether. Any ban on crypto usage could also damage the blockchain industry, he said.

Russia-based Sberbank as an institution has taken a positive stance in both blockchain and cryptocurrencies. In June, Sberbank took the central bank’s ”regulatory sandbox” as an opportunity to begin testing options for investors looking for opportunities in cryptocurrency.

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Mike Novogratz: Institutional Investments in Bitcoin During Q1 2019 to Bring New Highs

Notorious Bitcoin bull and seasoned investor Mike Novogratz no longer stands by his USD 10K Bitcoin price prediction for 2018, instead suggesting that institutional investors may push it to that total early next year.

Novogratz’s comments came in a Bloomberg Television interview where he defended his previous prediction, saying the cryptocurrency process has been a learning curve with everything taking ”longer than expected.”

He compared the whole crypto ecosystem to a fourth grader being expected to materialize into a graduate. One of the issues Novogratz pointed to is the need for internal committees and testing to solve custody problems that leave investors ”screwed” if anything illicit happens to their assets.

The conversation turned to Fidelity Investment’s announcement of a ”world-class custody solution,” to quote Novogratz, aimed at institutional investors. Considering cryptocurrencies as bare financial instruments, this class of investors has been held back from entering the market due to uncertainty surrounding the storage of cryptographic keys that allow access to the assets

Fidelity is offering them insurance that they can place their bets with cryptocurrency knowing that they won’t lose their money in an illicit way.

Combined with Goldman Sachs’ crypto custody solutions in the works, Novogratz believes that ”slowly but surely institutional investors are becoming more comfortable with the whole asset class.” As he reasons it, the institutional flow of capital can be expected in Q1 of 2019, or early Q2.

Being a Bitcoin trader himself, Novogratz has shared that right now, he is going long. In defense of Bitcoin’s mid-week stumble last week, he argued that it is still a young asset that certainly is not without volatility. Meanwhile, he stands firm on his belief that it is a valuable store of value, particularly in countries facing economic crises such as Iran and Venezuela.

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Bitcoin an Exotic New Asset Class

Bitcoin represents a difficult categorization effort by traditional financial organizations, resulting in some seeing this exotic new asset class as much as a hybrid of a currency as it is an investment.

The Commodities Future Trading Commission (CFTC) has declared Bitcoin a commodity, the Internal Revenue Service (IRS) has declared Bitcoin to be property, the Securities and Exchange Commission (SEC) polices the Bitcoin market like it’s a security, yet Bitcoin is mainly used as a currency.

Bitcoin was originally designed by Satoshi Nakamoto to be the first cryptographically secure and blockchain-based currency, and is regarded as the first cryptocurrency. Bitcoin is cryptographically secure and not even the most powerful supercomputer can hack it, so no Bitcoin transaction or wallet can be hacked, unless the password of the wallet software is compromised.

Bitcoin can be sent instantly anywhere in the world, making it an excellent choice for international finance. There is no waiting time like there is with banks when sending large amounts of money, and the fees for Bitcoin are usually extremely low. As of September 2018, someone could send as much Bitcoin as they want, whether it be USD 1 or USD 10 billion, for a fee less than USD 1. No fiat payment network in the world can compare to Bitcoin in terms of fee efficiency.

Perhaps most importantly, Bitcoin is decentralized, so transactions and accounts can never be frozen or seized. This is unlike every fiat payment service in the world, which can easily be seized or frozen. Additionally, Bitcoin transactions are immutable, meaning they can’t be reversed, making it safer for merchants than anything else.

Due to Bitcoin’s advantages over fiat currency, in addition to its 99.999% or so uptime over the course of nine years, in addition to global infrastructure and demand, people are buying and holding Bitcoin as an investment since they expect it to gain value relative to fiat long term.

There is one more very important factor when it comes to investment. Bitcoin is decentralized and coded so it can’t be printed at will or manipulated. There is a fixed supply of 21 million Bitcoins once mining is complete, ensuring a lack of money printing, unlike fiat currencies run by central banks which can be printed at will. Central banks have other powerful mechanisms besides money printing to control their fiat’s value, such as interbank interest rate modification and the issuing of debt denominated in their respective fiats.

Central banks have been manipulating their fiat currencies, mostly by issuing debt and money printing, as leverage to balance their national budgets. Bitcoin does not have this problem since it is not run by any individual, entity, or nation. Bitcoin is not being abused to balance budgets, unlike fiat.

Due to this, fiat currencies are experiencing tremendous inflation long term. This makes Bitcoin appear to be an ideal investment choice as a safe harbor to weather the global fiat inflation crisis.

Eventually, perhaps Bitcoin will mature and become the prime global currency, and be used mostly as a currency rather than an investment at that point. But for the foreseeable future, Bitcoin is an exotic asset that is both a currency and an investment, which leaves government regulatory agencies confused and in conflict over how to regulate it.

 

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