Token Reporter covers the world of cryptocurrency, token sales, and early stage startup funding. It is edited by John Biggs, formerly of the New York Times, Gizmodo, and TechCrunch.

Saturday, July 7, 2018

TokenReporter: Lambo now?


The Update

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Quick thought

I was minding my own business this week, when I received an email pitch from a group claiming to host a webinar and classes on Bitcoin and cryptocurrency investing with… Glenn Beck.

Now, I know that this is largely playing on the same kinds of fears that Beck’s advertisers used when he hawked Goldlines: there’s an opportunity, rich people or companies are getting richer and putting one over on you, and we’ll show you the ways to get your financial independence and/or save yourself when the apocalypse comes and fiat currency is worthless.

At the same time, I wonder. I wonder about how cryptocurrency and the underlying blockchain gain widespread adoption and understanding. When Bitcoin surged last winter, everyone and their local meteorologist ran TV news affiliate stories on it going to the moon, and people asked, ‘should I buy?’ That was relatively short-lived, as those people all lost interest in bitcoin.

And I wonder, will blockchain reach that same level of awareness that bitcoin briefly held? There are certainly enough applications for it to integrate into the things that power daily life. I’m thinking about the tipping point that makes it inevitable, and trying to decide if we’ve reached it yet. To quote Tiny Tim from Dickens’ masterpiece “A Crypto Carol”, “Lambo bless us, everyone!”

Two token sales to watch 👁️

Repu is a project that sets out to create a blockchain of reputation. Whether it’s for individuals, employees, or businesses, Repu wants to solve the problems they see as “Save time required to place rating and leave feedback. Be objective and unbiased eliminating fake, irrelevant rating/feedback. Employee feedback (e.g. rating a specific employee and a restaurant separately). Fragmentation. Combining social, professional, rating networks into a single unique platform” While it could be the worst mashup of Klout, Yelp, and Amazon reviews combined, I can’t look away. Reputation is a part of identity (identity is, ‘I am who I say I am’, reputation is ‘what people think I am’.) and we have yet to solve the problems of identity. Maybe we should be more optimistic about reputation? The whitepaper is here.

Yumerium is a startup based on the idea that free-to-play games and pay-to-play games aren’t the way of the future. Instead, earn-to-play is the future. While that’s been somewhat available in games like Blizzard’s World of Warcraft, it’s been earn-to-pay-to-play. Here, Yumerium creates the blockchain and their own currency, or other game publisher’s currencies can work within it to record value, use smart contracts, issue token rewards, and more. The whitepaper is not a bad read.

The Good, the Bad, and the Ugly 😊😠👹

😊GOOD: 

Facebook Ends Cryptocurrency Ad Ban

Facebook has just altered its policy and lifted the ban on cryptocurrency ads. Unfortunately, as Product Management Director Rob Leathern informs, the policy update does not extend to “binary options and initial coin offerings.” According to the new rules, advertisers will have to undergo a screening process. Facebook will assess their eligibility based on information about licenses and relevant backgrounds.

The end of Facebook’s ban coincides with the implementation of Google's own restrictive policy. With June 2018, the giant’s New restricted financial products policy goes into effect. Google will no longer allow ads for “Cryptocurrencies and related content (including but not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice).” 


😠BAD: 

FBI Investigates 130 Cryptocurrency-Related Cases

Speaking at the Crypto Evolved conference in New York, FBI agent Kyle Armstrong said the Bureau is currently investigating 130 cases that link the cryptocurrency industry with illegal activities. These “threat-tagged” cases include “human trafficking, illicit drug sales, kidnapping, and ransomware attacks.”

Armstrong stressed, however, that these cases are “a small sliver” of the “thousands” of the agency’s active investigations. The FBI noticed an increase in illegal activities facilitated by crypto payments, notably the extortion schemes. Also, Armstrong pointed to the opioid epidemic in the US and Canada. Illegal marketplaces on the “dark web” often facilitate drug purchases using cryptocurrencies as means of payment.

To further study the use of digital currencies in illegal activities, the House of Representatives unanimously passed HR 6069 just this Monday. This bill is also known as the “Fight Illicit Networks and Detect Trafficking Act.” If signed into law, it will require the Government Accountability Office to study “how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.”


👹
UGLY: 

 Reports Show Cryptojacking is Booming in 2018

According to reports, the instances of cryptojacking have increased significantly in 2018, affecting both governmental institutions as well as tech giants.

Released on June 27, Kaspersky’s report shows a decrease in ransomware targeting netizens by 30 percent and an increase in cryptojacking by 45 percent. This new dynamic brought the number of cryptojacking victims to over 2.7 million. The reasoning behind this astounding popularity of cryptojacking is simple, the report indicates, as it provides hackers with “an inconspicuous, stable and continuous flow of funds.”

Moreover, another report shows that cryptojacking malware rose a staggering 629 percent in the first quarter of 2018 (compared to the previous quarter). The McAfee Labs Threats Report explains that “cybercriminals are warming to the prospect of monetizing infections of user systems without prompting victims to make payments, as is the case with popular ransomware schemes. Compared with well-established cybercrime activities such as data theft and ransomware, cryptojacking is simpler, more straightforward, and less risky.” By all accounts, cryptojacking is not likely to go away anytime soon.

News 🆕

Florida: “Cryptocurrency Chief” Position for Industry Oversight

Florida’s Chief Financial Officer Jimmy Patronis announced his plan to regulate cryptocurrencies in the state through the creation of a new governmental position. The Cryptocurrency Chief’s key functions would be to alert consumers to scams and oversee the development of a regulatory framework.

“Florida can no longer remain on the sidelines when it comes to cryptocurrency,” informs Patronis in a Press Release. “We cannot allow the cryptocurrency industry to expand in Florida unfettered and unchecked with the potential for so many, including our large population of seniors, to be exploited.”

Institutional Investment in Crypto Kicks Off

Even though the price of Bitcoin fell about 20 percent in May, Goldman Sachs-backed start-up Circle reported a 30 percent growth in investment on its OTC Trading Service. Moreover, Circle’s transaction volume per day increased by 15 times compared to a year ago.

The heightened interest of institutional investors is pushing Circle to make improvements. "Circle Trade" is gaining an automated interface so that investors can place orders without talking to a broker.

“Major institutional investors don’t go through a telephone broker,” Circle CEO Jeremy Allaire explains. “They go through an electronic interface. We're maturing this into a more traditional product; it's much faster and a more flexible way to trade.”

On that note, on June 28, the crypto-wallet Blockchain.com announced its institutional platform called Blockchain Principal Strategies (BPS). According to an official post, “BPS provides institutions, family offices, and individual investors unparalleled and tailored access to markets, research, and services on the most trusted digital asset platform worldwide.”

The platform aims to provide security while investing. BPS will offer an over-the-counter (OTC) trading desk with a white-glove trading service managed by experts from Goldman Sachs, Cooley, JP Morgan, and UBS.

Institutional investment environment is slowly maturing as more services enter the market. Earlier in May, Coinbase introduced its own suite of institutional products.

 Disclosure

We will run advertising in the newsletter and if would like to appear at the beginning or end of this newsletter please email joanna@cabalpartners.com We do not expect that we will run a token sale to fund this newsletter but Victor or I may run our own token sales later in the year.

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Token Reporter covers the world of cryptocurrency, token sales, and early stage startup funding. It is edited by John Biggs, formerly of the New York Times, Gizmodo, and TechCrunch.