Blockonomi is a fast-growing blog launched in 2017 which aims to cover aspects of Cryptocurrencies, fintech and the blockchain economy. We focus on creating information articles and tutorials to help you gain an understanding of this new technology.
Many cynics say that institutions and other big names in the corporate world aren’t in Bitcoin or crypto assets yet. But, this is quickly being proven not to be the case. In a recent report from local media, it has been claimed that South Korean technology giant may soon integrate digital assets and blockchain into its in-house payments platform.
Samsung Pay May Soon Integrate Digital Assets
Reported by Business Korea last week, Samsung may soon integrate cryptocurrencies in some capacity into its Samsung Pay network, which purportedly sports over ten million active users. Samsung Pay also purportedly constitutes more than 80% of South Korea’s payment market, making it much like the WeChat Pay of the nation.
The outlet chalks this up to the fact that the Seoul-based company recently allocated resources from its blockchain task force to its service business division.
What’s more, the integration of this newfangled technology makes sense. Business Korea explains that if blockchain got thrown into the Samsung Pay mix, it would not only increase the adoption of the service but would make the user experience much more streamlined, especially in terms of fees and transaction times.
Because right now, payment ecosystems like Samsung’s purportedly charge certain fees to “value-added network operators” and “payment gateway operators”. With digital assets, however, intermediaries can be cut out of the equation, thereby making digital payments more of a breeze than before.
The report made no mention of what cryptocurrencies Samsung Pay could support, but it will likely be the firm’s in-house digital asset. For those unaware, sources have recently told CoinDesk Korea that Samsung is working on an iteration of the Ethereum blockchain that will host a company-backed cryptocurrency, fittingly dubbed “Samsung Coin” for now. It has been suggested that this chain will act much like JP Morgan’s Ethereum-esque Quorum.
This latest report from Business Korea comes just weeks after the outlet divulged that one of Samsung’s executives doubled-down on bringing blockchain to handhelds. Per previous reports from Blockonomi, a managing director of Samsung’s Wireless Business Division, Chae Won-Cheol, explained that his team will “lower barriers to new experiences by expanding the number of Galaxy models that support blockchain functions”. It was added that the firm may soon begin development on blockchain-focused applications for identification and “local currencies” through partnerships with local telecom firms, like SK Telecom and KT.
Crypto Adoption Is Happening
Make no mistake, despite what you hear from crypto’s countless cynics, adoption is happening right now. Days after the Samsung news came to light, AT&T revealed that it would be accepting Bitcoin payments for its services through the Atlanta-headquartered BitPay. Per a press release, AT&T is now the first “major U.S. mobile carrier” to provide its millions of customers with the ability to purchase services for cryptocurrency.
Speaking on the matter, Kevin McDorman, vice president of AT&T Communications’ Finance Business Operations unit drawled:
“We’re always looking for ways to improve and expand our services… We have customers who use cryptocurrency, and we are happy we can offer them a way to pay their bills with the method they prefer.”
This comes after Tor began to accept nine cryptocurrencies, Avnet also joined hands with BitPay, and Flexa revealed that it would be making Bitcoin and other cryptocurrencies available to spend in the Amazon-owned Whole Foods.
And all this adoption is what will drive this budding market forward. As Willy Woo postulated in a recent tweet, whenever common Joes and Jills sell Bitcoin to buy a good or service, “thousands more will see it and consider buying a few thousands of BTC as an investment.” As Woo concludes:
“Everyone keeps debating why accept [Bitcoin] as a currency. TLDR; ‘who cares, it’s the marketing exposure it generates.’ It adds to the Bitcoin SoV borg effect.”
Call it the “halving”, “halvening”, or whatever floats your boat, but in one year’s time, Bitcoin (BTC) investors are going to experience a monumental event.
By this time next year — if current estimates are accurate that is — the number of BTC issued each block will fall from 12.5 to 6.25, a reduction of 50%. With this, Bitcoin’s inflation falls in half and falls under the Federal Reserve’s 2% target for the U.S. dollar. Some are sure that this simple dynamic will catalyze a big bout of growth in the cryptocurrency market.
The Impending Halving
The inflation of most assets can be hard to predict. Just look at the Venezuelan Bolivar as a perfect case in point. As Blockonomi reminded readers in a report on Venezuela and crypto-centric charity, if digital assets are built correctly, consumer users of said asset should be able to predict future inflation rates to a tee.
As Kyle Samani of Multicoin Capital explains about Bitcoin:
“The first halvening brought inflation from 40% to 20%. The second from 20% to 10%. The next halvening is going to reduce it from about 3.8% to 1.9%.”
So we can determine what the inflation of Bitcoin will be in ten years, but not the U.S. dollar. For all we know and as some cynics speculate, something like the U.S. dollar may be subject to hyperinflation by the next decade, as a result of fiscal irresponsibility and mismanagement.
This, coupled with the simple laws of supply and demand, have led many in the industry to suggest that the next halving will be entirely bullish for the Bitcoin price. In fact, Bloomberg reports that in a recent Twitter poll, 61% of some 2,500 users believed that BTC will rally into May 2020 and afterward, citing supply and demand economics to back their cheery expectations.
As Tuur Demeester of Adamant Capital points out, Bitcoin’s historical halvings have always kicked off bull markets, acting as milestones in the asset’s cycles.
But how high will Bitcoin head after the halving? According to models created by PlanB, a popular Bitcoin-centric statistician, the next halving will result in BTC moving much higher than it did in 2017’s rally.
PlanB recently determined that the SF ratio of an asset is linked to its market capitalization. As can be seen in the image below, the higher the SF ratio, the higher the value of the asset. The thing is, the correlation between the SF ratio and price is logarithmic.
As it stands, Bitcoin’s current SF ratio is approximately 25, making it understandable that it is valued around the same as silver, which has an SF ratio of 22. With the next halving though, Bitcoin’s SF ratio will begin to approach gold’s SF ratio of 55.
More specifically, BTC’s SF ratio will double from 25 to 50. The model states that Bitcoin hitting a $1 trillion market capitalization after 2020’s halving event, which translates to approximately $55,000 per coin, is entirely possible.
While $55,000 for each BTC seems irrational, PlanB concludes by writing that money from silver, gold, negative interest rate economies, authoritarian and capital control-rife states, billionaires looking for a quantitative easing hedge, and institutional investors will eventually flood into this space.
Some Beg To Differ
Some have been a bit skeptical of this, however. Speaking to Bloomberg, Eric Turner, the director of research at Messari, reminds readers that those relating halvings to price booms are using a sample size of two, making it “hard to assign any statistical significance to the event”. Gil Luria, managing director at DA Davidson & Co., echoed this sentiment, stating:
“Since halving events are known well in advance, it is unlikely that they would have any impact on the price of Bitcoin. There are so many factors that impact the price of Bitcoin, but this should not be one of them.”
Regardless, most seem to be under the impression that in the long run, Bitcoin is going to do just fine.
The price of Litecoin has followed the market’s bullish momentum over the weekend as it increased by around 31%, coming from Friday’s low at $88.6 to $116.154. The price is currently being traded at $114 as it has been stopped out around the resistance levels of today’s high but this might be only a temporary resistance as the price is set to continue its increase.
On the hourly chart, we can see that the price increased above the horizontal resistance level at around $109 and has entered the territory of the upper horizontal range as a breakout has been made both from the lower range and from the corrective structure made from 16th of May which was considered the 4th wave out of the five-wave impulse to the upside.
As we are seeing the development of the 5th wave another increase could be seen for the price of Litecoin as it hasn’t reached the upper horizontal resistance level at $122.3 with whom the interaction could be expected before the completion of the impulsive move.
We could have seen the end of the upward move as the price reached my target and is showing signs of struggle to keep up the upward momentum which we can see from the last couple of hourly candles and the wick from the upper side, indicating that the price encountered strong sellers pressure.
Since we are seeing the completion of the five-wave impulse which started on 29th of April which is the ending wave of the higher degree impulse, very soon we are likely to see the start of the higher degree downturn which would set to propel the price in a downward trajectory to some of the broken significant resistance levels as to establish and retest them for support.
Over the weekend the price of Bitcoin has started increasing again and with strong momentum as a breakout from the corrective triangle has been made.
This breakout momentum is the ending wave of the counts of all degrees which is why after its completion a higher degree correction is likely to take place, but not before further increase as the breakout momentum continues to push the price for another high.
The price exceeded the prior high as a breakout from the corrective structure was made, which validated that we are seeing the development of the 5th wave.
This 5th wave is from the Minute count from the impulsive move from 26th of April which is the 5th wave from the higher degree Minor count.
As it hasn’t developed fully another higher high would be expected before we see a sharp downturn in the market.
The price of Bitcoin was sitting at $7840 at its lowest point on Friday, from where we have seen an increase of 13.58% over the weekend as the price came up to $8905 at its highest point today.
Looking at the hourly chart, you can see that the price came up to the exactly projected levels for the ending of the 5th wave of the Minute count, but that doesn’t mean that the increase is over.
As we have seen a breakout from the ascending triangle and that with strong momentum, the price is now likely to continue moving to the upside as the 5th wave should develop fully.
The 4th wave correction has developed the ascending triangle from which, yesterday a breakout has been made and by looking at the wave structure it appears that It has developed on the first two waves out of the expected five-wave move which is why it is now most likely developing its 4th lower degree one, as we are seeing the yesterday’s momentum slowing down.
If this is true then another wave and I believe the final impulsive move to the upside would now develop after which we are to the higher degree downside move as the impulsive increase which started on 26th of April would.
This increase would be the 5th wave of the higher degree count which is why after its completion it would mean that the 7th of February would end.
The expected downside move would most likely lead the price of Bitcoin back to some of the broken resistance levels on the way up, as to retest them for support and the most significant one is at around $6250.
Bank of Russia, the central bank of the Russian Federation, is set to consider a proposal that, if carried out, would see the institution launch a cryptocurrency backed by reserves of gold.
Confirmed by the bank’s Governor Elvira Nabiullina on May 23rd, the review process will entail the body’s leadership exploring how such a state-sanctioned crypto could be used to facilitate payments settlements between countries, namely among the members of the Eurasian Economic Union (EEU), which Russia has been trying to solidify in recent years.
Speaking to legislators at Russia’s lower parliamentary house, the State Duma, Governor Nabiullina noted this week that the policymakers’ gold-backed crypto proposal was officially on the slate, but she — and perhaps most of her peers in the Bank of Russia’s brass — thought “it is more important to develop settlements in national currencies.”
Indeed, even though the review is notable since it’s coming from one of the world’s largest central banks, Governor Nabiullina and her staff are generally skeptical toward cryptocurrencies and are unlikely to greenlight the Duma’s token plan for the time being accordingly. As the administrator explained on Thursday:
“We are generally opposed to cryptocurrencies being launched into our monetary system. We do not see the possibility that cryptocurrencies could act as monetary surrogates.”
So, in zooming out, the Bank of Russia is simply carrying out its constitutional duties in scrutinizing the Duma’s latest crypto proposal. If it was up to the central bank, such a review likely wouldn’t have taken place any time soon — the institution undoubtedly has its own priorities it would prefer to focus on instead.
However, the episode does mark a milestone of sorts in that it involves a central bank procedurally going through the motions of considering the development of its own cryptocurrency — one of the first times that’s happened in the cryptoeconomy’s fledgling history to date.
It’s not the Duma’s first crypto rodeo, though. The body’s been exploring the creation of a digital ruble — a “cryptoruble” — since last fall. Yet that coin might liquidity rather than stability, as the ruble itself has been rather volatile over the past few years.
A Coin for a Bloc
Chatter around creating a cryptocurrency for the Eurasian Economic Union bloc isn’t new in Russia.
That’s because last December, the nation’s deputy finance minister Alexey Moiseyev declared that his country and the EEU’s four other member states — Armenia, Belarus, Kazakhstan, and Kyrgyzstan — had agreed to negotiate throughout 2019 on the creation of a crypto for the economic union.
At the time, the minister said the project’s “launch could be planned for 2020 or 2021” and called the effort “unavoidable” amid the economic sanctions slapped on Russia in recent years by Western powers, namely America.
The idea for the coin? For Russia and some of its biggest trading partners to develop a cryptocurrency they can use for further economic independence and to de-dollarize their trade activities.
For now, there’s been no word on how the token will be built, i.e. atop what blockchain and with what properties.
A Gold-Backed Token? How About an Oil-Backed One to Boot?
Former Russian energy minister Igor Yusufov has previously proposed an oil-backed cryptocurrency as one way countries like Russia could bypass sanctions.
Last fall, Yusufov said:
“[An] oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years, and to step up exports of oil and natural gas.”
The energy expert currently works in the private sector, so the proposition didn’t come in an official capacity on behalf of the Russian government. However, the comments alone suggest more and more influential Russian figures have started to openly look at cryptocurrencies as viable tech.
A second 2020 U.S. presidential contender has thrown their hat into the cryptoeconomy’s ring … or is rather hoping, at least to start, that stakeholders in America’s nook of the cryptoverse throw their hats into his.
That’s because that candidate, California Representative Eric Swalwell Jr., has started accepting cryptocurrency donations for his 2020 campaign and has signaled support for boosting blockchain innovation in the U.S.
The crypto pivot was announced on May 23rd in conjunction with blockchain startup The White Company. The firm will serve to process all cryptocurrency donations made to the congressman’s campaign, which now accepts bitcoin (BTC), bitcoin cash (BCH), Bitcoin SV (BSV), ether (ETH), Stellar’s lumens (XLM), and the The White Company’s WSD token.
Rep. Swalwell, whose congressional district – his state’s 15th – covers portions of California’s Alameda and Contra Costa counties, declared his candidacy for the Democratic Party’s 2020 presidential nomination last month. He’s entered a stacked contest of more than two dozen prominent Democrats who are also are vying to face off against President Donald Trump in the country’s general election next year.
The young congressman, who’s currently polling near the bottom of that crowded field of challengers nationally, is undoubtedly looking to round up support anywhere he can.
Indeed, candidates like Rep. Swalwell must achieve one percent support in at least three preapproved polls or rake in donations from 65,000 different citizens to qualify for the Democratic Party’s high-profile televised debates next month. To boost his chances of making the cut, Swalwell’s figuratively extended a hand to America’s cryptocurrency users with the hope they’ll do the same in return.
On its cryptocurrency donations landing page, the Swallwell campaign cast the congressman’s support for digital currencies and blockchain in a populist light, saying the technologies can be used to “empower” people:
“Eric is running for President to end gun violence, solve the student debt crisis, and make sure Government serves the people. He supports blockchain technology and the use of cryptocurrency to empower the people […] Help Eric run.”
Notably, Rep. Swalwell’s acceptance of cryptocurrency donations comes on the heels of his fellow 2020 Democratic competitor Andrew Yang recently making a splash in U.S. crypto circles by outlining a pro-blockchain and pro-crypto platform.
Like Rep. Swalwell, Yang Calling for Crypto Clarity
Yang, an entrepreneur by trade whose maverick policy ideas on subjects like universal basic income have led to a meme movement in #YangGang, released his campaign’s positions on the cryptocurrency space last month.
As such, Yang has called for a reversal of the “chilling effect on the US digital asset market” that ambiguous and competing federal policies have created in the country to date, the candidate’s campaign website reads:
“It’s time for the federal government to create clear guidelines as to how cryptocurrencies/digital asset markets will be treated and regulated so that investment can proceed with all relevant information.”
As the first 2020 contender to formally come out with such a favorable and forthright stance on cryptocurrencies, Yang has won over some respect in the cryptoeconomy. Neeraj Agrawal, communications director for crypto advocacy group Coin Center, noted at the time that Yang “seems have come to the right conclusions on how to best address” the issues facing America’s cryptocurrency stakeholders.
Yang has polled as high as three percent nationally in recent weeks, meaning he’s poised to participate in the upcoming presidential debates. Accordingly, Rep. Swalwell is similarly looking to win some respect from crypto users to help him get that much closer to joining Yang on the debate stage, upon which millions will be watching.
Of course, both Yang and Rep. Swalwell are darkhorses going forward. But, if nothing else, they’re helping to push conversations around cryptocurrencies further into the mainstream of America.
The Internet’s innate resilience to centralized information monopolies became evident in the mid-to-late 2000s as the failure of the merged conglomerate TimeWarner and AOL proved. Primarily due to the data-agnostic design of the Internet’s core protocols, its radicalism established that it was not so easily prone to walled gardens and centralization as traditional information mediums.
However, the scale of dominance by content distribution and search platforms and their long-term effects on contemporary culture, social organization, and content freedom have come into question. Additionally, major social media platforms collect mass amounts of personal data on their users, leading to consistent data privacy concerns and CEO’s testifying before Congress.
Recent revelations into Facebook’s planned foray into a payment network only exacerbate concerns over the range of data they will have on users. And the looming issue of censorship from tech giants is gaining momentum.
Coinciding with a Congressional hearing on tech censorship featuring Facebook, Google, and Twitter last month, the conversation of more distributed content distribution has become amplified. Will decentralized content distribution become the future of the web in response to a growing clamor for better privacy and content freedom?
Many projects are working towards that goal, and the history of technology tells us that hotbeds of innovation usually precede a competitive environment born from decentralization.
Centralized Walled Gardens Built to Capture Value and its Adverse Consequences
YouTube and Netflix are largely what they have become today because of the polarizing innovation that BitTorrent produced with P2P file sharing. Eventually, YouTube and Netflix utilized the resulting methods for content streaming that allowed them to capture vast amounts of users and generate massive fortunes in ad revenue.
They are enormously successful with many cultural trends, particularly among younger generations, fueled by their existence. But decentralized content distribution may come to disrupt both of their business models eventually.
While the maxim of ‘decentralization everything’ that is sometimes preached in cryptocurrency corners is often at odds with reality, decentralization can provide some exceptionally positive externalities when applied in the right context. For example, narrowing streams of information through a few platforms (i.e., YouTube, Google, and Netflix) limits creativity.
YouTube can, and has, censored content that is disagreeable with their advertisers, and Netflix curates all content that is presented to its audience. Even Google, once a leading proponent of an open Internet, is covertly working on a censored search engine for the Chinese government — codenamed Project Dragonfly.
Confining content in such ways may not seem highly impactful in the short-term, but in the long-run, it can stifle innovation and creativity. Take the example of the rise of independent film making. Even though major studio films like Avengers still dominate box office sales, independent films that come out of film festivals such as Sundance can become financial success stories, and are increasingly prevalent in Academy Awards.
That was previously not the case, where studio conglomerates owned the distributors and theatres and had the final say on what was produced and released — with minimal penetration by independent films. It took the U.S. government’s breakup of the Hollywood studio monopoly in the 1940s before independent films could experiment with new, and controversial, types of content that weren’t restricted to a code of moral rules set by the Hollywood monopoly.
Today, it is only natural that users will converge on major platforms for sharing social media, music, and video content, but decentralization matters once the ‘Master Switch’ reveals that it is a looming possibility for that type of information medium — once critical streams of information become concentrated in the hands of a few.
The primary advantages of BitTorrent were that it was censorship-resistant, the precise type of goal that Bitcoin achieves with value. When it comes to content today, the various forms of content (i.e., news, search, videos, etc.) are limited to a group of major providers, and they are becoming more prone to censorship than before. More profoundly, they often share similar ideologies, those that are predisposed towards increasingly closed systems.
Where the cost of the model that BitTorrent disrupted was clear (i.e., paying for file sharing), the price for content distribution today is hidden in subtle privacy intrusions and a growing proclivity for censorship. Compound that with the repeal of net neutrality and it is clear that the Internet is trending away from its original open vision towards a more closed system.
It only seems fitting that the desire for more decentralized content distribution will gather steam in the coming years following the increasing sentiment towards privacy and more unrestricted creativity.
Platforms and Initiatives Innovating at The Edge
Many products of innovation are discovered by accident, so the resulting distribution of content dispersion on the Internet will likely be a confluence of developments. However, some early signs are indicative of a shaping environment for more decentralized content distribution.
For example, IPFS is still a young project aimed at replacing HTTP of the web but offers a much more censorship-resistant medium for content creation and storage. The protocol decouples content from origin servers, making the content more resilient to access, widely available, and much cheaper to disseminate.
Directly citing the limitations of the Internet’s centralization, IPFS details:
“The Internet has been one of the great equalizers in human history and a real accelerator of innovation. But the increasing consolidation of control is a threat to that. IPFS remains true to the original vision of the open and flat web, but delivers the technology which makes that vision a reality.”
IPFS can distribute web pages and web apps akin to how Bitcoin’s nodes are decentralized, making content more resistant to censorship via offline access and removing central points of failure.
Similarly, projects like ENS Domains, Ethereum-based domain names, can provide much-needed protection against web censorship for polarizing web pages and content on the Internet. Since the domains are controlled directly by users in a crypto wallet, they are not in the hands of major domain registrars like GoDaddy who is an intermediary party subject to outside influence — whether that be government, organizational, or public media mob interference.
Distributed content distribution is also congruent with cryptocurrencies, which can complement such systems with paywalls outside the influence of monetary censorship — even enabling new content monetization models, such as with micropayments.
All you need to view the potential for improved monetization initiatives is the desire of highly polarizing (and successful) individuals to seek it out. For example, PewDiePie recently switched over his live streaming from YouTube to blockchain-based content platform DLive. Citing better support for creators concerning revenue share, PewDiePie’s switch mirrors sentiments by those content creators who are affected by censorship or may simply be attracted to P2P content platforms for better revenue.
Similarly, LBRY is an open-source and community-driven product focusing on censorship-resistance of content. Based on a flexible pay-per-stream model, LBRY is based on a blockchain and integrated with a native cryptocurrency payment mechanism where content creators receive revenue without intermediaries directly from viewers. They are not subject to arbitrary censorship stemming from advertiser partialities, a critical advantage over centralized content platforms like YouTube.
Eventually, monetization models based on micropayments may usurp the advertising model that has dominated over the last decade.
How the future distribution of content will play out is uncertain, but the history of information monopolies tells us that innovation in the fields of cryptography, blockchains, and new hypermedia protocols should provide the foundation for a new web infrastructure — one where content becomes reminiscent of BitTorrent and what Bitcoin is currently doing.
Major social media and content platforms still dominate today, but the Internet’s radical data-agnostic model may once again fuel a hotbed of decentralized competition deriving from the emerging preference for better digital privacy. All it takes is a spark of user apprehension on the current direction of the Internet coupled with the type of platforms that can help attract mainstream users.
Natural processes often trend towards decentralization, so perhaps the unique structure of the Internet’s core protocols will allow it to consistently evolve past the obstacles that have historically consigned different mediums of information to extended periods of centralization.
The price of Litecoin fell yesterday inside the support zone around $85 where it found support and caused the price to switch trends in an impulsive manner. This could be an indication that another increase in the form of the 5th wave has started developing to the upside.
The price hasn’t gone below $85 before turning sharply the other way which means that it hasn’t entered the territory of the 2nd wave and implicates that we are likely to see another increase to the upside.
If the price started developing the 5th wave it is set to exceed to go above last Thursday’s high at $106.23.
From yesterday’s low at $85.35 the price of Litecoin has increased by 12.39% as it came up today to $95.92 at its highest point around which the price is currently being traded. The price increased impulsively and parabolically which indicates strong bullish presence.
Looking at the hourly chart, you can see that the price came up to the level of the prior high made over the weekend and ended on Monday’s open after it fell inside the territory of the horizontal support range.
This could indicate that strong support is present at the $85 level area below which it is considered as the territory of the 2nd wave out of the five-wave impulse to the upside.
As of last Thursday, we’ve seen the end of the 3rd impulse wave, the downside movement which followed was likely the 4th and has ended yesterday on the interaction with the 1st waves ending point vicinity.
Considering the momentum seen afterward the movement which followed is the 5th wave. If this is true, then we are now going to see the price of Litecoin exceeding the last Thursday’s high at $106.23.
The price could go only to the significant horizontal resistance at $109.35 before the completion of the five-wave move as the interaction with the level hasn’t been made on the previous increase which would only be 3.2% more than the last Thursday’s high before the end of the impulsive increase.
As we are most likely now seeing the development of the 5th wave, after it ends I would be expecting a higher degree downturn in trend for the price of Litecoin.
On Wednesday, Mark Yusko, founder, and partner at Morgan Creek Capital Management, made an appearance at CNBC: Fast Money, where he laid out his claim that Bitcoin is a much better investment option than traditional stocks as of this point.
Yusko is actually quite popular in the stock industry, particularly for correctly predicting the sell-off in stock that occurred in 2018. In this interview, he expressed his belief that the stock market is already witnessing another bear market, and things could get considerably worse as time goes on.
As a result, he went on to endorse Bitcoin (BTC) as a surer investment portfolio at the moment.
Speaking on his conclusion, he added, “I even wear my Bitcoin tie today for you guys. I was on this show back in December when it was $3100, and you said, ‘What do you think?’ I said, ‘Look. We’ve issued the Morgan Creek Digital crypto challenge, we will take Bitcoin over the next 10 years, starting on January 1st, and we will take anybody who wants to take the other side.’ It was a $1 million charity bet, just like the Buffett style bet. We got no takers.”
Pomp’s Bold Claim Pays Off
The bet that Yusko was referring to is the “Buffett Bet 2.0,” which was issued by Anthony “Pomp” Pompliano, his partner at Morgan Creek Capital, last year. While speaking with CNBC in December, Pompliano announced the challenge, saying that he was willing to wager $1 million on the fact that Morgan Creek’s basket of digital assets would outperform the S&P 500 over ten years, starting from January 1, 2019.
He famously invited anyone who was willing to stand on the other side of such a bet, saying that it would most likely be someone bullish on the S&P 500, or who believes that cryptocurrencies are worthless.
Yusko’s Right Again
In the latest interview, Yusko went on to point out that not taking that bet turned out to be the best thing for any would-be takers, as “while BTC is already up over 100 percent this year, the S&P is only up 14 percent.” Yusko’s comments were surely not wrong.
BTC held a price of $3,744 as of January 1, while its unit price at press time is pegged at $7,601. That’s an increase of 103 percent (according to data from CoinMarketCap).
On the flip side, the S&P 50 closed at 2,510 points on January 1, while the closing value as at May 22 was 2,856, marking a growth rate of 13.8 percent since the turn of the year (per data from the CNBC Index). If you thought about betting against Pomp, you’d be pretty much in the hole already.
After pointing out this disparity, Yusko added, “I think going forward from here, even over the next year, over the next 10 years, it’s not going to be close. Bitcoin is a great diversifying asset, it has a very low correlation, it should be in anybody’s portfolio.”
Morgan Creek’s Crypto-Loving Partners
Pompliano recently had to come out to make a point about cryptocurrencies. Last Tuesday, he was a guest on CNBC’s Squawk Box, where he engaged in a somewhat heated argument with Kevin O’Leary, chairman of investment firm O’Shares ETFs
O’Leary wasted no time in trashing Bitcoin, going as far as calling is “garbage” and “useless.” Despite the noticeable uptick in its prices last week, Bitcoin didn’t seem to impress the investor. He questioned the value of Bitcoin, claiming that it is “basically a digital game” without any intrinsic value.
In his defense, Pompliano pointed out that that Bitcoin was going through a bit of a rough start, just as it is with every other disruptive technology in the world. He added that currencies work with a “belief system,” and BTC is functioning as money.
“So, for the US dollar, the only reason you and I use it is because we believe it has value. So I give you a dollar, and you give me a good or service in exchange. Bitcoin has value because the two people who exchange it believe it has value. And what we’re seeing is the volume, look at people using it,” he confirmed.
Grayscale Investments has been on a roll as of late. After recording massive volumes for its Bitcoin Trust and launching a media campaign that told Americans to “drop gold, buy Bitcoin,” the branch of crypto conglomerate Digital Currency Group was revealed to have received approval to make advancements in the Ethereum (ETH) investment ecosystem.
Meet ETHE, Bitcoin Trust’s Ether Counterpart
In a press release obtained by Blockonomi on Thursday, Grayscale has just received a regulatory stamp of approval from the Financial Industry Regulatory Authority (FINRA) to offer shares in its Ethereum Trust publicly.
It was stated that the product allows investors to gain “exposure to the price movement of ETH through a traditional investment vehicle without the challenges of buying, storing, and safekeeping”. Once the product launches in a few weeks, it will trade under “ETHE” on the OTCQX market. In a comment conveyed to Bloomberg, Michael Sonnenshein of Grayscale remarked, “The secondary market really opens up the opportunity for any and all investors.”
The thing is, this vehicle may not be entirely friendly to mom and pop investors. In a recent thread, Larry Cermak, the director of research, at The Block, pointed out that Grayscale’s products are inherently biased towards institutional clients.
The analyst wrote, “Only qualified accredited investors can invest directly in GBTC with a minimum investment of $50,000.” For those unaware, accredited investors are those with a net worth (minus your primary home) of over $1 million (a small percentage of the population, even in the U.S.) and/or those that have earned a taxable income of over $200,000 per year. Very few investors fit these requirements.
The data would corroborate the fact that Grayscale’s vehicles aren’t all too friendly to common Joes and Jills. In May, Grayscale released its “Digital Asset Investment Report” for Q1 of 2019.
According to the report, Grayscale pulled in over $42.7 million over the first three months of this year. This isn’t a hefty sum per se, what makes this notable is that over 73% of the $42.7 million came from institutional investors, half of which were an unnamed group of hedge funds.
So, it is clear that despite this news, it is likely that the firm’s inflows will still mostly be sourced from institutional players. But, this may be just a sign of the times.
Regardless, with this move, it seems that Grayscale is trying to replicate the success that its Bitcoin Trust has seen, which has become a go-to BTC-backed product for institutional players. The thing is, the Bitcoin Trust, which trades under GBTC on over-the-counter markets, often trades at over 30% BTC’s spot price, implying a premium that could be detrimental to investors.
Ethereum Gets Another Bona Fide
Anyhow, this only adds to Ethereum’s recent success. As Blockonomi reported earlier this month, a “senior official” that has knowledge of the U.S. Commodity Futures Trading Commission (CFTC) claims that they are entirely amicable towards Ethereum. He/she explained that “we can get comfortable with an Ether derivative being under our jurisdiction,” confirming that like Bitcoin, ETH is a non-security.
This hasn’t been the only good bit of news for Ethereum though. In late-April, rumors revealed that Samsung, one of the world’s largest technology shops, has intentions to build an Ethereum-based blockchain that will host its own token.
And more recently, Bosch, a German engineering giant, revealed that it is trialing an Ethereum-based smart contract system. Speaking to Decrypt, a firm spokesperson was stated that the firm has been working with the blockchain, yet scant details were exposed. It is important to note that blockchain has been proposed as a way to promote the growth of the Internet of Things, which is likely what Bosch is going for.