Top Crypto News – 20/04/2018

Square Cash Stock Spikes Due to Analyst’s Bitcoin Trading Optimism


Square Inc (NYSE:SQ), the developer of the mobile payment app Square Cash, has seen its stock price jump up by about 5% on Wednesday. The spike was largely credited to a note by Nomura Instinet analyst Dan Dolev, who offered clients a very optimistic prediction for the effect of adding bitcoin trading by the company ahead of its May 2nd first quarter earnings report.

The ability to buy and sell bitcoin directly on the mobile payments platform has been added to the Square app earlier this year. The analyst said that the additional revenue per user from this could amount to $125 every year. He raised his SQ’s price target to $65, implying a 30% upswing, after the company already saw its stock raise almost 50% year to date.

“Either way, SQ’s fundamentals should keep improving,” Dolev said. “We expect fundamentals to continue to improve helped by SQ’s accelerating share gains and mix shift to large sellers. We continue to expect net yield to expand (from 1.05% in 1Q17 to 1.09%) helped by growing penetration of higher priced products more than offsetting mix shift to larger sellers.”

Bullish CEO

Square Cash Stock Spikes Due to Analyst’s Bitcoin Trading OptimismSquare is headed by Jack Dorsey, who is CEO of both Twitter and the payments platform. Last month he took a very bullish long term stand on bitcoin, predicting it can the world’s single currency in the next ten years.

Explaining how bitcoin could drive Square earnings, Dolev commented: “Will Bitcoin reshape the future of payments as CEO Dorsey often argues, or is it a passing fad? In reality, SQ’s correlation with Bitcoin has been on a downward trend. Plus, the stock is now less correlated with Bitcoin than PYPL, the payment networks or GOOG. Regardless, we estimate that opening Square Cash for Bitcoin trading earlier this year could drive a sizable boost to revenue and profits, driving up to 10% potential upside to adj. EBITDA guidance. This can help offset rising investment costs required to broaden Square’s international presence.”

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Bad Checks: Twitter’s Identity Crisis Is Costing Users More Than Bitcoin


Trust, but verify.

Borrowed from a Russian writer, it’s one of crypto’s most widely embraced slogans, though one that’s becoming even more relevant on social media, where battling factions bent on promoting the next great high-tech investment are now turning the very symbols meant to protect users against them.

Whether it’s an account impersonating the world’s largest exchange or its most widely known tech visionaries, no company or individual is too sacred for a simple takedown that’s spreading like wildfire, propelled by lax verification practices at name-brand social media giants.

Still, it’s perhaps “crypto Twitter” that’s bearing the brunt of the criticism.

Armed with a photo ID, scammers are successfully duping Twitter into giving them a “blue check mark” of authenticity so they can impersonate real individuals and entities, all in an effort to bilk users out of money.

Take “seifsbei,” a verified account associated with freelance film producer and director Seif Elsbei, which was hacked and then posed as the official account of the verge cryptocurrency. The hacker didn’t stop there, later posting messages as crypto exchange Bitfinex and ethereum creator Vitalik Buterin.

The verified account “Protafield” displayed similar bad behavior in early April, briefly changing its name and account details to impersonate crypto exchanges to specifically stage fake ether giveaways.

And these incidents display how crypto Twitter’s current mess isn’t likely to be saved merely by the blue check mark, or any other simple verification process.

“People at home see this as a stamp that Twitter sees this as a good account, which can be very subjective,” said Tim Pastoor, founder of the Netherlands-based digital identity startup

By vetting merely the identity behind the account, and not the intent, when issuing blue check marks, Twitter inadvertently makes scams even more dangerous, he continued.

Speaking to the overall cat-and-mouse game many crypto companies are having to play on Twitter, a Bitfinex representative described curbing such efforts as almost a full-time job.

A spokesperson told CoinDesk:

“We dedicate a lot of resources towards combating illegitimate Twitter accounts and educating our users on how to spot them. However, our impact on certain sites is limited.”

Fickle reputations

There are several patterns that complicate the trouble with crypto Twitter.

For one, scammers have quickly learned to use highly technical language to cloak misinformation in trusted terminology, said Nick Lucas, founder of the Los Angeles-based social media analysis startup CoinTrend. This means simple vocabulary lists and language analysis, processes Twitter and other social media sites use, won’t be enough to weed out scams, he said.

Yet, Pastoor pointed out that bots and spam accounts often promote tokens in packs, swarming to give each other good reputations and boost visibility, which could make it easier to spot systematic scams.

However, it remains a tricky endeavour, and so Pastoor recommends that Twitter take a page from traditional psychology to help combat the problem.

Most people trust their close friends more than acquaintances, so a layered approach to trust could offer some tools for filtering the noise. For example, a user may trust a coworker’s friend more than a complete stranger, but less than a family member. Just as Facebook lets people control which people they see posts from – friends only, select groups or the public – Twitter could give users more control over who shows up in their feeds.

“There are definitely going to have to be iterations,” Pastoor said. “I would probably recommend starting with allowing people to filter based on people that they already trust, and to maybe make more use of your second or third-degree networks.”

Twitter declined to comment on any topic related to these events or policy changes in general, but Twitter CEO Jack Dorsey recently admitted that the platform’s verification system is broken.

Changing hands

The issue is made even more confusing by the fact that accounts can change hands among owners, not only through hacks, but also simple handovers, and those new owners may have different motives.

For instance, what started much of the debates around Twitter’s policies was the suspension of the “@bitcoin” Twitter handle.

Before the bitcoin scaling debate came to a head last fall, with a significant contingent of enthusiasts splitting off the core bitcoin network to create bitcoin cash, the @bitcoin Twitter handle tweeted information in support of bitcoin. The account has been operated by many owners over the years, and the latest is an anonymous bitcoin cash fan.

As such, the account became highly controversial, tweeting out incendiary comments aimed at Bitcoin Core developers and several other leading figures in the cryptocurrency community who were on their side. Many Core developers saw this as misleading, since the handle was tweeting out things Bitcoin Core, which a majority of users and businesses still see as the “true” bitcoin, didn’t stand behind.

Because of the outrage, Twitter briefly suspended the account and then stripped it of its blue check mark (the account is active again but no longer verified).

Speaking to the debates that have plagued the leaderless tech community for some time, Sterlin Lujan, a bitcoin cash supporter and communications ambassador for, told CoinDesk:

“These social media networks should not allow handles to be censored or shut down arbitrarily, just because a bunch of people do not like it.”

And while Twitter has said the blue check mark does not imply its approval or endorsement, Lujan contends, “A person with a check mark has a stronger likelihood of appearing at the top of searches and feeds. What it boils down to is that Twitter verification processes need to be made more clear.”

Market influencers

While Twitter’s verification process is still uncertain, what remains clear is Twitter’s impact on the cryptocurrency markets.

Not only can scammers have a dire impact on user’s crypto holdings, but even those earnestly voicing their interest in a certain crypto project can cause price swings. For instance, Lucas has seen a clear correlation between tweets from influential Twitter accounts and market volatility.

“There’s basically a lot of influence on Twitter when John McAfee or someone mentions a specific coin,” Lucas said.

As an example, when McAfee tweeted about “burst,” a crypto token project focused on creating a “greener” mining process, on December 22, the price of the cryptocurrency quickly doubled.

A similar, albeit temporary, spike happened the previous week when McAfee tweeted about another crypto token project, Safe Exchange Coins. The day before McAfee’s tweet, the cryptocurrency was selling for roughly a penny each, but within 24 hours of the tweet, the price doubled and by the following week, the coin briefly sold for more than $0.06.

Some argue that when McAfee charges $105,000 per tweet, he’s basically advertising for companies for a fee. However, he told CoinDesk it’s not really advertising because he only promotes projects he truly believes in.

Twitter chatter doesn’t only drive prices up for new cryptocurrencies and crypto tokens, though. It can also have negative impacts as well.

For example, Lucas has noticed that a lot of Twitter feuds about bitcoin code changes and technical updates correlate to price dips.

“If everyone is talking negatively about something that is getting pushed into a core repo coin, that can also have an impact. If someone with a big following tweets something, it can cause a scare,” Lucas said, adding:

“There’s a lot more influence coming from specific accounts, unlike, say, Reddit, which pushes more topics to be talked about rather than creating influence.”

Twitter account on computer screen image via Shutterstock
Written by CoinDesk

Insurance Giant Allianz Is Testing a Token to Move Money Internally


Insurance giant Allianz has been testing an internal token to move money around between its global affiliates without having to deal with currency conversions and other costs and inefficiencies.

Development of the so-called “Allianz token” is being helped along by blockchain startup Adjoint, which created a proprietary blockchain for the project, CoinDesk has learned. Adjoint declined to comment on the project.

But Oliver Volk, a blockchain expert at Allianz’s reinsurance unit and representative to the B3i insurance blockchain consortium, confirmed that the token was in the works.

“Yes, we are thinking about a kind of Allianz token whereby money coming in will be converted to a token,” he told CoinDesk, adding:

“But it’s a very big animal and we don’t know what kind of regulatory constraints there are.”

Volk said an Allianz token would be “very helpful to get rid of FX constraints and other stuff we have to optimize, especially if you talk to certain currencies which we do not accept at our headquarters and have to be reconverted.”

He said it would make sense to rely less on the banking system, as this would result in numerous savings on commissions and could be used by Allianz all over the world (the Fortune 500 company has operations in 100 countries).

The internal digital token is a project of Allianz Global Corporate & Specialty (ACGS), the business-to-business part of the insurer. It grew out of an Allianz captive insurance blockchain project to disburse payments using Citigroup’s CitiConnect API.

Alan Cabello, the innovation program manager for central and eastern Europe at Allianz AGCS, said the token idea cropped up from his previous prototype built for captives and retrocessions, the practice of one reinsurance company providing services to another.

“It’s essentially about the legal way of moving money from one side of the world to the other,” Cabello said. “Because of regulation and governance, etc., you need to move it from one entity to the next to the next – and that takes time.”

And that goes beyond the two or three days for a bank transfer to go through, he said. “It takes time to get every entity to book it, bind it; everybody at their own desk; it takes a lot of effort.”

The problem is widespread, Cabello added. “Every single major industry and every major company has issues getting money from one side of the world to the other.”

According to Volk, the corporate team at Allianz counted the emails one entity fielded regarding the transfer of a certain amount of money and it came to over 2,000.

Clients regularly ask where their money is, which is another reason Allianz thought of an internal token, Cabello said. “It’s what we have been playing with for the past few months.”

Cabello stressed that the token, while running on a blockchain, was nothing to do with cryptocurrency.

“It’s pegged to the dollar,” he said.

Allianz image via Shutterstock.
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Wall Street Veteran Likens Cryptocurrencies to Candy Crush Game Currency


Richard Bernstein isn’t building any bridges with the cryptocurrency community.

The head of the Wall Street research firm that bears his name said in a note to clients today that there’s little difference between cryptocurrencies and the virtual currencies you earn with internet games like Candy Crush, according to a report on Bloomberg. CryptoKitties might not be the smash hit it was cracked up to be, but it might have been a more viable comparison considering it’s built on the Ethereum network.

As Ethereum co-founder Joseph Lubin recently explained to CNBC, the value, at least for ETH, can be compared to commodities like oil, which trades for a price and “is a fuel that powers the global commerce platform. He said: “The ether token is used to pay for computational steps and storage operations on the decentralized application platform that is Ethereum.”

Meanwhile, according to Bernstein, the difference between Candy Crush’s in-game currency and the cryptocurrencies that bitcoin miners create and earn in exchange for solving complicated puzzles comes down to the fact that digital currencies can be traded. The speculative nature of trading cryptocurrencies qualifies the market for a bubble, says Bernstein, pointing to the following features of digital currencies as proof –

  • rising liquidity
  • rising leverage
  • new coins
  • high turnover
  • “democratization”

Bubble Economics

Bernstein wouldn’t be the first person to call cryptocurrencies a bubble, with some cryptocurrency market veterans having said in the past that not all of them will survive. And according to Bernstein’s note, trading in a bubble doesn’t discredit the economic and business case of cryptocurrencies, though it “suggests that the return-on-investment could be considerably lower than investors currently expect.”

Bernstein is a Wall Street veteran, having previously served as Merrill Lynch’s chief investment strategist, and he’s weighed in on bitcoin before. He can analyze equity market analysts under the table, but when it comes to cryptocurrencies, he’s skeptical. Bernstein said in a note to clients in December:

“It is ironic that [investors] fear traditional equities, but they do not fear cryptocurrencies. One must remember that risk typically lies in what you’re invested in, and not in what you fearfully avoid.”

Bitcoin’s worth is derived from the value that people place on it, as it’s not backed by any asset. But bitcoin is moving more into the mainstream for payments with the Lightning Network and altcoins like Bitcoin Cash have accelerated transaction times. As for bitcoin’s other use case as a store of value, cryptocurrency trader Brian Kelly recently suggested that losing 25% from cryptocurrencies is “better than losing 100% … by a “rogue government.” Kelly is also of the opinion that the bitcoin price will attain a new high in 2018.

Featured image from Shutterstock.

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