Day: July 22, 2018

China’s Bitcoin nouveau riche are taking their profits overseas in search of the perfect real estate opportunity, according to Coindesk.

It appears that California and the UK, notably London, are on top of successful Chinese entrepreneurs’ hit list of favorite locations for an investment in property or second residence. This choice is reported to be motivated by innovative fintech activity in these areas. Other popular locations are Hong Kong and Dubai.

Hong Kong is attractive due to its flexibility regarding taxes and documentation, compared to some other overseas countries according to the South China Morning Post, and the amount of real estate purchased in the territory by Chinese investors has been on the increase for a number of years.

The latest group of property purchasers appears to include increasing numbers of early Bitcoin adopters. In California, a startup which connects estate agents to buyers has seen that Chinese interest is particularly strong in cities such as Los Angeles, San Francisco, and New York.

CEO Roy Dekel claims that such Chinese Bitcoin entrepreneurs often convert their money into cash before investing in real estate rather than attempt direct Bitcoin purchases, observing that the ultra-wealthy Chinese have used this source as a diversification of investment. He did indicate that there was another group of what he called “blockchain enthusiasts” who are attracting sellers who are happy to take direct crypto payments from international home buyers.

One such Bitcoin early adopter is ex-beef salesman Guo Honcai, who sold 500 Bitcoin earlier this year and spent the funds on a mansion in Los Gatos, a 90-minute drive from San Francisco, California, with plenty of space for his Bitcoin purchased Rolls to sit in the driveway.

“It’s very normal to sell Bitcoin in the U.S. After selling Bitcoin, you can just buy anything you want,” Guo explained.

Buyers such as Guo not paying directly in digital currency usually avoid banks in order to obtain their foreign currencies. However, Natalia Karayaneva, CEO of crypto real estate platform Propy, suggests that the numbers of those paying directly with crypto are increasing, and include purchases across the whole spectrum of real estate:

“The requests we have from them start at $50,000 or $100,000 up … the latest one was $3 to $4 million for Silicon Valley,” adding:

“We’re seeing that more and more people are willing to buy properties with cryptocurrencies because it’s getting easier to get their money out of the country using bitcoin, rather than establishing a bank account based in Hong Kong and getting their money out of the country using business channels.”

The New York Times recently reported that the Chinese housing market has tightened and is now “like a casino” with exorbitant prices. Karayaneva agreed that the Chinese market was now moving overseas as “…their own property market is going crazy.”

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Crypto markets slightly fluctuate in a mix of red and green, Bitcoin reclaims the $7,500 barrier

Arthur Hayes, the CEO of the Bitcoin Mercantile Exchange (BitMEX) which is recording billions of dollars in daily trading volume, thinks there will be extreme volatility in the Bitcoin market during the rest of 2018. He believes that the July 2018 Bitcoin rally which started with a price rise from USD 6,200 to USD 7,500 will be similar to the April-May 2018 rally where Bitcoin prices rose from USD 6,500 to USD 10,000. He says this is a strong rally with good volume and Bitcoin’s price could rise to the USD 8,000-10,000 range, but thinks Bitcoin will crash after that. Arthur Hayes says, “I would like to see us test USD 5,000 to really see if we put a bottom in”.

At the beginning of July 2018, Arthur Hayes said Bitcoin will hit USD 50,000 by the end of 2018, but not before bottoming around USD 3,000-5,000. It appears that based on the recent rally he has revised his expected bottom price significantly upwards. Regardless, Arthur Hayes is painting a picture of extreme volatility in the Bitcoin market.

BitMEX thrives on volatility, since if the market moves quickly they can liquidate trader’s accounts who made the wrong bets. For example, during a 15 minute period when Bitcoin’s price rose from USD 6,800 to USD 7,250 BitMEX liquidated USD 230 million of short positions. Arthur Hayes stresses that “for every long, there is a short, so there’s not an imbalance of shorts persay”. Without actual data, this statement might be debatable, since Bitcoin’s market has been persistently declining throughout most of 2018, which might have induced traders into the habit of shorting more often than going long.

Regardless, the more Bitcoin price volatility, the more opportunity to make money for traders on BitMEX and BitMEX itself. So perhaps it is not surprising that Arthur Hayes is calling for incredible volatility in either direction, since that will motivate BitMEX traders to enter into both long and short positions, which will increase BitMEX’s volume.

Arthur Hayes expects volumes on cryptocurrency exchanges worldwide to pickup as the ongoing rally gains steam, and as people come back from summer vacation. He says BitMEX has seen increasing volume during the 2018 bear market when normal crypto exchanges saw major volume declines. This is despite BitMEX not being available to traders in the United States.

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Bitcoin futures contract trading volume on the Chicago Mercantile Exchange (CME) is up 93% from Q1 to Q2 in 2018, with average contracts traded per day increasing from 1,854 to 3,577. Each contract is equivalent to 5 bitcoins, so in Q2 an average of 17,885 bitcoins were transacted per day on the CME futures market, making 536,550 bitcoins worth of future contracts traded per month. This is a sign of increasing institutional investment, since Bitcoin futures contracts are the only regulated Bitcoin investment product available on the stock exchange.

Bitcoin futures average daily volume in Q2 grew 93% over previous quarter, while open interest surpassed 2,400 contracts, a 58% increase. Learn more about trading #Bitcoin futures: https://t.co/adjWVWXBPQ pic.twitter.com/UQWC3nGGrI

— CMEGroup (@CMEGroup) July 20, 2018

It is difficult to calculate USD volume from these figures since the USD price of Bitcoin is fluctuating all the time, but generally, this corresponds to anywhere between USD 100 million and USD 150 million of daily trading volume. This puts the CME Bitcoin futures exchange among the top crypto exchanges in the world; there are only 13 crypto exchanges with daily trading volume in excess of USD 100 million listed on CoinMarketCap as of this writing on 22 July 2018.

According to the most recent data, over 7,000 Bitcoin futures contracts have been traded per day on a couple of days this past week, corresponding to over 35,000 Bitcoins (USD 259 million) of daily trading volume. It seems the recent Bitcoin rally has led to a spike in Bitcoin futures contracts trading volume. On 25 April 2018 a record USD 497 million of Bitcoin futures contracts were traded on CME, in addition to USD 168 million of Bitcoin futures contracts on CBOE.

The CME and CBOE Bitcoin futures contract exchanges are not listed on CoinMarketCap since they trade futures contracts instead of actual Bitcoin. A futures contract is an agreement to buy or sell an asset at a predetermined price at a specified time in the future. Currently, on CME there are Bitcoin futures contracts for each month from July through December 2018 available.

It has previously been argued that the Bitcoin futures markets are having a negative impact on Bitcoin’s price since they can be used as a mechanism for short selling, which is a way traders can profit from betting on Bitcoin’s price going down. CBOE responded that Bitcoin futures contracts volumes are so low that they probably don’t impact the overall Bitcoin price. Now since Bitcoin futures trading volume is rapidly rising and rivaling top crypto exchanges, perhaps futures markets may begin to measurably influence Bitcoin’s price.

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Cryptocurrency companies active in the world of cloud mining always face an uphill struggle. It is evident things are not looking all that great as of right now. HashFlare, one of the bigger cloud mining providers as of right now, has confirmed that it will not resume Bitcoin mining for the time being.

HashFlare Calls It Quits, for Now

The profitability of Bitcoin mining extends to both regular companies and cloud mining providers. Whenever this profitability drops below a certain threshold, something needs to change. As long as the Bitcoin price does not recover any of its lost value, cloud mining will be unprofitable.

HashFlare acknowledges that things are not headed in the right direction. The company has struggled to meet investors’ expectations as the threshold for payments has been lower than the maintenance fees for the mining equipment. This has been the case for 28 days in a row, and it’s forced the company to make a very unpopular decision.

As of this week, HashFlare has halted all SHA-256 mining hardware and the associated contracts. This means anyone who has invested in this particular cloud mining company will not be getting their money back in the near future. Although the contracts have been suspended for now, they may be resumed in the future. HashFlare says it’s hopeful the cryptocurrency market stabilizes in the coming weeks.

This decision comes at a very peculiar time. The Bitcoin price has seen a remarkable uptrend over the past week, and that momentum is not necessarily being taken into account by HashFlare at this stage. Deciding to end Bitcoin cloud mining payouts shortly after a bull run will rub a lot of people the wrong way, for obvious reasons.

Reaction to the decision by HashFlare has been anything but positive. Since there are no plans to refund clients at this stage, and no desire by the company to reallocate their contracts to other cryptocurrencies, HashFlare has a lot to answer for. It could have certainly handled its business a lot better in this regard, as it decided not to pursue alternative options in case something like this happened.

This further confirms how fragile the cryptocurrency cloud mining industry really is. It’s heavily dependent on the goodwill of service providers, as well as the price of the Bitcoin or altcoins being mined. There is never a good reason to buy cloud mining contracts over buying cryptocurrency directly, and this development is another reminder of that.

A study issued by the European Parliament Committee on Economic and Monetary Affairs suggest that gov’t issued cryptocurrencies could be a “remedy” for a lack of competition policy in the crypto sector

Asia-based asset manager focusing on family offices reveals plans to launch crypto-custody service in Hong Kong

Sentiment regarding the cryptocurrency market took a large shift this past week, as Bitcoin rallied 15% due to a series of positive technical and fundamental indicators.

IBM To Use Stellar-Based Stablecoin For Faster Financial Payments

IBM, one of the largest technology firms in the world, has just announced that it will be exploring the utilization of a Stellar-based token for cross-border payments.  The token in question was created by asset management firm Stronghold and was fittingly named Stronghold USD, which is a stablecoin that is pegged to the value of the U.S. dollar.

Unlike other stablecoin projects like Tether, prospective Stronghold USD users will make a deposit to the Nevada-based Prime Trust bank, with Stronghold issuing tokens on a 1:1 ratio. Additionally, this project was created with institutions in mind, rather than consumers, making the aforementioned stablecoin a much better choice for IBM in comparison with something like Tether or TrueUSD.

Tammy Camp, the founder and CEO of Stronghold, explained the use cases of the token more in-depth, stating:

“The token allows folks to do payments, foreign exchange between companies in a very seamless and frictionless and more secure way. It enables people to be able to trade that token with other assets and other tokens as well.”

Despite The Bear Market, Greyscale Investments Sees An Influx of Institutional Capital

Grayscale Investments, a digital asset focused investment firm, recently revealed that it had received an influx of institutional investment and interest, despite market woes.

Grayscale, which is headed by cryptocurrency expert and long-time investor Barry Silbert, released a report that cited that it had received just around $250 million from investors, looking to invest into Greyscale’s array of investment products. Although this is an impressive figure by itself, Silbert noted that 56% of the aforementioned figure was generated from institutional investors, potentially noting that these firms see a good entry point at current prices.

July 16: CEO of BlackRock says there is ZERO institutional interest in crypto

July 18: @GrayscaleInvest publishes the 1H 2018 Digital Asset Investment Report, which highlights that 56% of $250 mm raised to date came from institutional investorshttps://t.co/H1ZuHEOP79

— Barry Silbert (@barrysilbert) July 18, 2018

Bithumb To Expand Into New Asian Markets

Bithumb, a popular Korean exchange, has announced that it has plans to expand into the Japanese and Thai markets within the upcoming months. The exchange is currently working on obtaining the required regulatory approval from the local governments, namely the Japanese Financial Services Agency and the Thai Securities and Exchange Commission.

The Thai Bithumb branch is the furthest in development, with its parent company creating a webpage for the platform, along with allocating 3 million Thai Baht (~$90,000 U.S.) to the newly-opened subsidiary.

It is expected for Bithumb Thai to launch by the end of October, while Bithumb Japan is expected to open its doors early next year, despite harsh regulation imposed by regulators. The exchange will not be any ordinary platform, with ZDNet Korea noting that Bithumb “plans to set up an exchange that supports the largest number of coins (cryptocurrencies) in Japan.”

Tom Lee And Barry Silbert Call For Bitcoin To Continue Upwards

CNBC’s “Fast Money” show hosted industry leaders Tom Lee and Barry Silbert this week, with the two stating that they hold positive sentiment regarding Bitcoin’s price.

Barry Silbert, who is a long-time cryptocurrency investor and the aforementioned founder of Grayscale Investments, expects an influx of institutional “dry powder,” or highly liquid assets, in the near future. Silbert also stated that the bears have “run out of energy,” and have no more Bitcoin to sell, therefore resulting in less selling pressure placed upon prices.

The Bitcoin proponent later pointed out that the criticisms placed upon the industry by regulatory bodies don’t hold any value, and come unwarranted. He said:

“So I started buying Bitcoin in 2012 when the price was ten dollars and I’ve gone through now two 80 percent corrections, and this was a 65 percent correction. It’s the same old criticisms… Its just (that) they’re uninformed because everybody on this desk, anyone who spends the time to look into what is this asset class, why is it important, why does it have so much potential comes out of it being a believer.”

Tom Lee, the head of research at market analysis firm Fundstrat, also pointed out that fundamentals and technical indicators are starting to turn bullish once again, expecting for the world’s foremost cryptocurrency to head upwards from here.

Crypto Experts Hold Bullish Price Predictions

Arthur Hayes, the co-founder and CEO of the BitMEX exchange, tripled-down on his $50,000 price prediction, while also making an appearance on the CNBC show that seems to cover cryptocurrencies each and every day. Despite stating that he believes the market hasn’t “seen the worst” yet, expecting for Bitcoin to bottom at $5,000, he is betting that the cryptocurrency market will return to a bullish state as we move into the second half of the year.

Hayes noted:

“I don’t actually think we’ve seen the worst. I would like to see us test $5,000 to really see if we put a bottom in. But come back in Q3, Q4, I think is when the party is going to start again.”

Bitcoin Holds Weekly Gains, As Altcoins Slightly Pullback 

On Tuesday, Bitcoin saw an astonishing run-up, easily surpassing the heavily contested resistance levels at $6,800 and $7,000. Altcoins quickly followed, with a majority of the cryptocurrency market posting ~8-9% gains on that day alone. Many attributed this run-up to a series of positive news that was released prior to the run-up, namely discussion regarding institutional involvement, with this variety of investment being held as the primary catalyst for the expected bull-run of 2018.

Additionally, as Tom Lee stated on CNBC, the technical indicators were starting to become more favorable as discerned by a variety of analysts.

Since then, many altcoins experienced a slight pullback, with Bitcoin’s market dominance rising from 43% to 45%. Bitcoin has continued to hold the gains it made earlier this week, with the cryptocurrency sitting at around $7,450.

It has become apparent that the sentiment surrounding the cryptocurrency market is starting to change, with an onslaught of positive news coming from all corners of the industry. Arthur Hayes put it best when he said:

“But come back in Q3, Q4, I think that is when the party is going to start again.”

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The Ethereum community has never shown any favor toward the EIP-999 proposal. This proposal was made to bail out Parity after losing $250 million due to a smart contract bug. Ethereum community members clearly rejected this proposal, yet some people are claiming it will still be implemented.

EIP-999 Is Not Happening

Ever since Parity’s smart contract exploit occurred, its team has been looking for ways to recover the funds. Since this money cannot be moved or returned to its owners, it is essentially lost in the void. That is quite annoying to deal with, for rather obvious reasons. Resolving this situation has been very problematic, and various solutions have been proposed.

One of the potential solutions comes in the form of the EIP-999 proposal. Although dubbed an Ethereum Improvement Proposal, it is so controversial that it would ultimately cause Ethereum to hard fork again. The community was able to weigh in on this proposal and share their views. The community was clearly not in favor of this idea, as they voted against it in rather lopsided fashion.

Once the voting results came in, the EIP-999 proposal was marked “closed”, meaning it would not see any further implementation. The team is still looking into other ways to recover the frozen funds, although it remains unclear how that will work. The bug discovered within the smart contract itself cannot be mended in any convenient manner, and it poses quite a few headaches.

For some reason, some people are still claiming that the EIP-999 proposal will be implemented. It is evident this confusion needs to be addressed sooner rather than later. EIP-999 will not become part of Ethereum’s code in the foreseeable future, which can only be considered a good thing.

It is unclear why people would purposefully state that EIP-999 has been approved by the Ethereum developers when that is clearly not the case. While it is true that Ethereum may have a bit of a controversial history when it comes to bailouts and hard forks, one can only hope the developers learned from their mistake involving The DAO.

For the Parity team, there is still a lot of work ahead. The team still must come up with a viable way of bailing out affected users and recovering the frozen funds, without causing the Ethereum protocol to undergo a major change. Whether or not that is even possible remains to be determined.

HashFlare was one of the most popular services offering Bitcoin cloud mining until they abruptly terminated all Bitcoin mining contracts on 20 July 2018. Apparently, there is a clause in their terms of service that if maintenance and electricity fees become higher than mining revenue then they have the right to permanently terminate mining contracts. HashFlare claims that as of 18 July 2018, Bitcoin mining had been unprofitable for 28 consecutive days and they began disabling SHA-256 mining hardware on that day. And now, they are claiming that all of their mining equipment is shutoff and obsolete for the time being.

This has caused intense outrage among users who have lost their contracts, one user claimed they purchased Bitcoin mining contracts 8 months ago and continually re-invested, and now they have received nothing in the end. Further, it is said that HashFlare was still selling Bitcoin mining contracts all the way up to the time they terminated all the existing contracts, during the 28 day period that mining was supposedly unprofitable, which raises suspicions of an exit scam.

HashFlare shutdown their service based on their maintenance fee of USD 0.0035 per 10 GH/s per day. A top of the line Bitcoin miner like the ASICminer 8 Nano Pro consumes USD 0.0017 of electricity per 10 GH/s per day and generated USD 0.0022 of profits per day. However, smaller and older Bitcoin miners like the Bitmain Antminer S9 consume USD 0.0033 of electricity per 10 GH/s per day, close to HashFlare’s maintenance fee, and when accounting for overhead costs like rent, staff, and initial purchase costs then perhaps HashFlare’s maintenance fee is quite fair. It depends on the mining equipment they use, which is undisclosed.

There are plenty of Bitmain Antminers that are unprofitable at current Bitcoin prices, which illustrates the hardship the Bitcoin mining industry has been experiencing during the crypto bear market of 2018. Bitcoin prices have declined from near USD 20,000 in December 2017 to less than USD 6,000 at points during June 2018. This has caused many of the less efficient Bitcoin mining rigs to consume more electricity than the Bitcoin they produce. Even with the recent Bitcoin rally from USD 6,200 to USD 7,500 this remains the case, and it would take a much larger rally to make some of the less efficient rigs profitable again. According to HashFlare’s terms of service, they would not be obligated to honor contracts if the Bitcoin market rises and their rigs become profitable again.

Regardless of mining profitability calculations which indicate that HashFlare might be telling the truth, one HashFlare user has issued a death threat “I would like to leave a message for the owner of the hashflare, you can even rob me, but my mission will be to send this thief to hell, you stole was man, not child, in less than 1 month the world press will disclose the death of the owner of hashflare”.

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A Bank of Canada study finds that a “dishonest” miner is unlikely to cheat by double spending due to a need for “deep pockets”

There has been a growing demand among cryptocurrency enthusiasts for wallet solutions which support multiple currencies. Guarda may become a big player in this regard, as it offers quite a bit of functionality. It supports plenty of currencies and tokens, and goes well beyond traditional wallet services.

The Guarda Wallet Service

Over the years, web-based cryptocurrency wallets have come and gone in droves. Very few of these services have tended to stick around for more than a year. In the case of Guarda, the team has become a relatively big contender, mainly because of its active collaborations with various cryptocurrency teams and developers. As such, it is a very potent platform which is not just about storing one’s cryptocurrency portfolio.

Under the Hood

The Guarda web wallet supports many currencies. Ranging from Bitcoin to EOS and ERC20 tokens to Qtum, the list is quite large. However, this ecosystem is about much more than just a web wallet. Guarda also offers an instant exchange for the various currencies it supports, and there are no limitations as to how users can perform their trading.

More importantly, Guarda’s instant exchange maintains user privacy at all times by not requiring an account. There’s also an option to buy supported cryptocurrencies using Visa or Mastercard payment cards. This makes the concept of buying cryptocurrency a lot more accessible, which is something the industry direly needs at this stage.

For those users who are looking for more wallet solutions, mobile and desktop support is also available. It is evident that the Guarda team has been trying to create an all-encompassing and convenient cryptocurrency solution for both novice and advanced users alike. Having more options at one’s disposal can only be considered a good thing, especially when it comes to multi-currency support.

The Road Ahead

As is always the case, solutions such as Guarda need to keep evolving. Although there is a lot of functionality to enjoy already, adding new features remains critical. Supporting additional coins, assets, and tokens is another aspect which should not be overlooked. All in all, Guarda is a worthy choice for those users who prefer an all-in-one solution which respects user privacy.