Wednesday, July 25, 2018

TokenReporter: here's what it takes to get banks on board

The Update

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Quick thought

Way down in the news section (Read to the bottom, it’s there!) is a news item about some hearings that a committee of the US House of Representatives held on cryptocurrencies. In a surprise, there were two opinions expressed. The first was the obvious, “crypto is only good for purchasing illicit goods/acts/tax evasion”. That’s nonsense, of course. The other opinion was that crypto and blockchain have huge benefits when it comes to digital property. One of the speakers offered that at some point, banks won’t want to deal with cash at all.

But I think one of the things that was missed is that moving from cash to crypto is not impossible. In the past, we’ve discussed the idea that central banks which currently issue paper fiat currency could issue their own tokens. If they issued digital currency in a 1:1 value with central bank currency, it might have interesting knock-on effects for auditing, follow-the-money forensics, and also might mean that loss to theft could be eradicated courtesy of the ledger and wallet backups. This idea is anathema to some crypto devotees, who recoil at the idea of legislation, regulation, and the notion of leaving monetary control with a central bank when crypto is about decentralization at the foundation, but I think it’s important to look at the possible future from a number of vantage points. Governments rarely enjoy ceding control, central banks aren’t poised to throw their hands up, so what does a transition to cryptocurrency look like that has current stakeholders on board?

Two token sales to watch 👁️

talao is addressing the $1,500 billion market for work and expertise on demand. There have been other startups addressing the freelancing economy in the past, but none that seem as far along as Talao. This is because Talao have renamed themselves from eMindHub, which has been around for two years, and has both freelancers and clients in the corporate world. By introducing a Talao token, adding a blockchain and wallets, they can store certifications, reviews, and the work itself on the blockchain. They claim to have over 30k people signed up as experts, and there’s a real beta. The whitepaper is a good read.

WatermelonBlock is developing an app that uses IBM’s Watson to gauge the sentiment of the marketplace for cryptocurrencies, and helps you trade without complex fees. The iOS app is meant to be released in Q2 2018, so we have a few more days before that’s up, and an iOS wallet is meant to be released in Q3. Instead of requiring a payment method and subscription fees, they’ll require the user to hold 5000 WatermelonBlock tokens to activate services. Additionally, it will be possible to customize alerts, track sentiment, and build a customized dashboard so that user can have their own control center based on the AI data. The whitepaper is here.

The Good, the Bad, and the Ugly 😊😠👹

😊GOOD: 

Fortune’s “40 Under 40” Ranking Lists Five Crypto/Blockchain Innovators

Blockchain technology has been at the forefront of innovation in majority of contemporary industries. This year the Fortune’s “40 Under 40” ranking of the most influential and inspiring young people in business pays tribute to the top disruptors in blockchain industry. Crypto enthusiasts will no doubt recognize the names.

For the third time, the ranking includes Ethereum co-founder Vitalik Buterin, who also co-founded Bitcoin Magazine. Brian Armstrong, the CEO of Coinbase, makes it to the list for the second time. This year the ranking also includes first-timers such as Pavel Durov, the founder of VKontakte and Telegram, as well as Vlad Teve and Baiji Bhatt, the co-CEOs of brokerage and trading app Robinhood.


😠BAD: 

UPenn Study Shows Most ICO Whitepapers Don’t Deliver on Promises

Academic research conducted by the University of Pennsylvania Law School reveals unsettling news for ICO investors. After analyzing the promises of the fifty top-grossing ICOs of 2017, the study found that most Whitepapers do not deliver on their promises.

The 104-page document “reveals that many ICOs failed even to promise that they would protect investors against insider self-dealing. Fewer still manifested such contracts in code.” Moreover, despite the belief in “trustless trust” underlying the decentralized system, “a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures.”

Dave Hoffman, one of the lead authors, presented the findings in a tweet:

“Of the 50 ICOs:
* of 37 that promised vesting, 80% didn't code it
* of 32 that promised supply restrictions, 25% didn't code it
* of 17 that promised burning, 35% didn't code it
* of 10 with tokens that could be modified (like #Bancor), only 4 disclosed that right in English”


👹
UGLY: 

Citadel Hedge Fund CEO and Billionaire Ken Griffin Slams Bitcoin

At the recent CNBC institutional investor Delivering Alpha Conference, the CEO and founder of the Citadel hedge fund Ken Griffin launched into another scathing attack on cryptocurrency.

"I don’t have a single portfolio manager who has told me we should buy crypto. Not a single portfolio manager,” he boasted. “I have a hard time finding myself wanting to be in the position of being a liquidity provider to a product that I don’t believe in.”

The billionaire believes that cryptocurrencies cannot succeed because there is already a mandatory fiat currency in place. Griffin said, “You have to have US dollars to pay your taxes. You don’t have a choice. … There’s no need for cryptocurrencies. They’re a solution in search of a problem.”

According to Griffin, many young investors respond to the hype around Bitcoin. He advised the millennials not to invest in digital assets, but to invest in companies that will help advance the society, create jobs, and grow the economy.

News 🆕

US Legislature Holds Two Crypto Hearings

This week two U.S. committee hearings took place to discuss the cryptocurrency market. Both hearings presented different tones when describing the industry’s impact. The House Committee on Agriculture’s hearing titled Cryptocurrencies: Oversight of New Assets in the Digital Age was led by Committee Chairman Rep. Michael Conaway. Conaway presented a positive outlook on the digital currency. During the hearing, he said:

“Digital assets like Bitcoin and Ether, but also hundreds of other token-based projects that are being developed, represent a new way for people to interact and exchange in commerce with one another. While digital assets are often thought of as payment systems or digital gold, I believe that promise that token networks hold is more universal and more exciting.”

“For the first time, we have a tool that enables individuals to reliably exchange value in a digital realm without an intermediary. We can have assets that exist, that can be created, exchanged, consumed in a digital form. The promise of being able to secure property rights in a digital space may fundamentally change how people interact with one another. This technology holds the potential to bring enormous benefits to each of us if we’re willing to give it the space to grow.”

The second hearing took place in the House Financial Services Committee and was titled “The Future of Money: Digital Currency.” During the hearing, the head of the US Federal Reserve Jerome Powell stated that the US central bank has no plans of bringing cryptocurrencies under its jurisdiction. Powell voiced his concern that cryptocurrencies pose a significant risk to the investors. He believes the digital currencies lack “intrinsic value” and are only good for money laundering. As a result, they should not be considered real currencies.  

The subcommittee members voiced mixed opinions regarding the potential of issuing a central bank digital currency (CBDC) by a central bank. “It seems likely that the use of cash for transactions will continue to fall and it is worth noting that there is a tipping point at which even if customers seek to use cash, businesses and banks will not want to deal with it,” said Dr. Rodney J. Garratt. He believes that eventually banks will offer some sort of digital alternative, which could be “some form of crypto.”

Rep. Brad Sherman eagerly seized an opportunity to express his consistently anti-crypto sentiment. Sherman boldly advocated prohibiting “US persons from buying or mining cryptocurrency.” According to him, “the only thing crypto is good for is facilitating narcotics transactions, tax evasion, and other illicit activities” and “as a medium of exchange cryptocurrency accomplishes nothing.”

Malta Stock Exchange and OKEx Plan to Create Securities Trading Platform

Malta continues to be at the forefront of crypto innovation. The digital and fintech arm of Malta Stock Exchange Holdings, MSX, will collaborate with the exchange OKEx to create a new institutional grade security-tokens trading platform. This new joint project called OKMSX has the potential to transform the platform. Reportedly, it will operate as an institutional grade security tokens exchange and will be open to clients worldwide.

OKEx moved to Malta back in spring, 2018, encouraged by Maltese government’s progressive approach to cryptocurrencies and its “Blockchain Island” initiative. It is not the only exchange to do so. Binance and BitBay also moved to Malta.

Crypto Exchange Coinbase Forms a Political Action Committee

Coinbase has just become the first crypto industry organization in the USA to form a Political Action Committee (PAC). This news comes from a disclosure published by the U.S. Federal Election Commission that revealed the exchange formed the "Coinbase, Inc. Political Action Committee" in June 2018.

At a time full of uncertainty due to insufficient guidelines and heightened regulatory attention in the crypto market, Coinbase plans to raise money to spend on U.S. elections. This is a smart move, considering a crypto industry PAC could give the industry players a means of enforcing their voices. It could also open the door to politicians who look favorably on the crypto industry.

  

 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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