Top Crypto News – 01/05/2018

Binance to Invest $15 Million in Bermuda as Crypto Regulations Advance


Binance Brings Jobs, Education and Investment

Binance to Invest $15 Million in Bermuda as Crypto Regulations AdvanceThe Premier of Bermuda, Edward David Burt, announced on Friday his government’s new partnership with cryptocurrency exchange Binance. Under the signed agreement, the company is to establish a Global Compliance Centre in the country creating forty jobs. Binance will also invest $10 million in education for local residents, and $5 million in Bermuda-based blockchain companies.

While far from Binance’s Asian roots, Bermuda is an ideal choice for a global compliance department. The official language is English, it is an established offshore financial hub and as a self-governing British Overseas Territory offers a legal system similar to those in other commonwealth countries such as Australia and Canada. Additionally, the local government is advancing a welcoming regulatory environment for cryptocurrency firms.

Bermuda Sets Up Legal Framework

Binance to Invest $15 Million in Bermuda as Crypto Regulations AdvanceAlso on Friday, Bermuda’s Virtual Currency Business Act passed through the House of Commons in the UK. The bill is expected to pass the Senate this week, and as we reported earlier, seeks to foster the development of the local cryptocurrency industry. It covers the issuing and selling of cryptocurrencies, ICOs, exchanges, wallets and other services.

“When you look at other current jurisdictions, they have either not been banking hubs traditionally, do not have the best track record when it comes to KYC/AML, or are in developing countries that aren’t presently suitable to support rapid growth of a technology or financial system. Bermuda does,” commented Joseph Weinberg, Chairman of blockchain KYC/AML solution Shyft. “Along with that, Bermuda also has a highly skilled workforce that is experienced in regulation and compliance and securities laws. The island also has a rich entrepreneurial history and a willingness to learn and adapt quickly. This made for an incredible working relation in building out regulation for the crypto community.”

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Buffett: Bitcoin Is More Gamble Than Investment


“Oracle of Omaha” Warren Buffett, whose aphorisms and advice many investors take as gospel, has laid into bitcoin, saying it’s a gamble, not an investment.

The Berkshire Hathaway chairman and CEO – and the world’s third-wealthiest person, according to Forbes – has long been skeptical of bitcoin. In his latest comments on the subject, he told Yahoo Finance on Saturday, “If you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”

He continued:

“There’s nothing wrong with it. If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”

Buffett bought Berkshire Hathaway, a struggling textile mill, in the early 1960s and turned it into one of the world’s most successful investment vehicles. According to his most recent letter to shareholders, the firm’s share price has increased by 2.4 million percent since the takeover, compared to 15,500 percent for the broad stock market.

That success has been attributed to a strategy of buying strong firms with business models that are simple to understand and difficult to disrupt. That philosophy has led Buffet to be skeptical of the technology sector and of bitcoin in particular, which he called a “mirage” in March 2014.

Bitcoin was trading at around $600 when Buffett made that comment. In January, when the price was around $14,000, Buffett doubled down, saying cryptocurrencies “will come to a bad ending.” The cryptocurrency’s price is close to $9,300 at the time of writing.

One of Buffett’s most famous quotes is “our ideal holding period is forever.” In Saturday’s comments, he further criticized bitcoin, arguing its value is too dependent on trading.

“Now if you ban trading in farms, you can still buy farms and have a perfectly decent investment,” he said, but if trading in bitcoin was banned, people would have no reason to invest.

He did not address the bitcoin “hodler” movement, whose advocates urge investors never to sell.

Warren Buffett image via Shutterstock.


Ethereum’s Dialogue Divide Is Slowing Answers to Its Toughest Questions


As ethereum, now the world’s second most valuable blockchain, grows larger and more diverse, it’s becoming clear its mechanisms for getting input from its constituency are proving problematic.

Indeed, a series of proposals targeted at controversial topics – lost fund recovery, the ether supply rate and the emergence of new mining hardware – have sparked questions within its developer ranks of late about how to coordinate messaging and find consensus among the often conflicting attitudes about the protocol’s roadmap.

Most recently, several developers even went so far as to worry such divisions could have broader repercussions after a new proposal, EIP 999, was introduced that some feared could lead to the creation of two incompatible blockchains.

And while many prominent developers, including software creator Vitalik Buterin, are pushing back on the idea that a split is probable, it remains a technical possibility, both because of the extent of the disagreement and the fact that anyone who runs the code is capable of choosing to fork off the network to take advantage of it at any time.

What’s more, understanding just how probable such an event could be is becoming a technical challenge of its own.

Not only are developers divided, but the wider community also seemed splintered on the subject, with a “coin-voting” website – a web page that enables ethereum users to vote on topics based on the number of ether coins they have – showing a nearly even distribution of those for and against.

Infighting on social media displays much the same sentiment.

“Right now, we are all working off signaling, which is a really imperfect way to determine the needs of the community,” Ashley Tyson of the Web3 Foundation, which lost $210 million in the Parity fund freeze, told CoinDesk. “You can monitor Reddit or Twitter, [but that doesn’t] necessarily provide an accurate reflection of the community,” she said.

However, the problem isn’t unique to ethereum.

Indeed, bitcoin developers, miners, startups and users have aired competing views at various times in the cryptocurrency’s history, most notably during the scaling debate (which in August last year, came to a head with some members of the community breaking off the main chain to form a competing cryptocurrency).

The issue seems to stem from developer conversations often occurring on platforms like GitHub and within channels and meetings where technical discussions take place. As such, it can be challenging for a non-technical audience to keep up, prompting concerns more novice users haven’t yet been properly represented.

And while not all software changes have a direct impact on the average user – they’re often just simple optimizations to improve the platform in discrete ways – some notable voices believe it’s important for a variety of stakeholders to have a say when it comes to more contentious changes, generally those that could have an impact on the core values of the system.

“You can’t create a governance process without actively involving all participants,” Péter Szilágyi, an ethereum core developer, told CoinDesk.

And speaking to the process of architecting systems in a way that everyone’s happy, he continued:

“As long as people feel something is being forced on them, they will fight it. Build something together that’s beneficial to both sides, and everyone will consider it an upgrade.”

Imperfect signals

If it’s not obvious from the fierce debates and vitriol spewed throughout the crypto community over the past few years, that’s easier said than done.

And currently, the only way to measure community sentiment to get that done is through social media channels and coin-voting sites.

While the chatter on social media can serve as a useful metric for gauging how the community feels about a particular topic, there are issues with this method as well. Trolls run rampant and fake accounts spam and manipulate, each spurred by possible financial gain or a simple willingness to escalate controversy.

Because of this, at a developer meeting last week, Jutta Steiner, CEO of Parity Technologies, which supports the proposal that last week so divided users, warned that social media could give the wrong impression of how deep the controversy over these topics actually runs, potentially adding fire to sensitive issues.

Speaking on EIP 999, Steiner said, “I’m not convinced that [EIP 999] is as contentious as it sometimes seems on social media.”

She added:

“I think it’s a pretty important point actually because often at the moment conclusions are drawn based on social media and it’s not the only space.”

While the mob mentality that proliferates on social media can be an effective way of getting your voice heard, it tends to silence subtler arguments and it’s unclear whether these mobs are even ethereum users, much less real people.

“Who knows how many multiple usernames one party is using,” Tyson told CoinDesk, asking, “and does that person even represent an ethereum community member?”

Used to try and clear some of the opaqueness up, coin-voting has become another way of measuring ethereum community sentiment. This method was first used heavily after The DAO hack, in an effort to get consensus on whether users wanted to hard fork the blockchain to get victims ether back.

At that time, many criticized the mechanism, saying that the poll was poorly communicated and wasn’t open long enough for ether holders to properly respond. Plus, because the weighting of a particular vote is relative to how much stake – or quantity of ether – a user holds, some argue it puts too much control in the hands of the ether rich.

Coin-voting mechanisms deal with the same criticisms today.

“Minority voices, no matter how valid they may be, are never heard,” Afri Schoedon, a communication officer at Parity, told CoinDesk, adding:

“The more money you have the more you can control the result.”

Finding solutions?

And there’s no easy solution at hand, although several developers and groups are trying.

For instance, as detailed by CoinDesk, several developers have started a working group named the Fellowship of Ethereum Magicians that relies both on a dedicated forum and in-person meetups to coordinate changes to the platform. Yet while the group strikes a median between the core developer community and other interested parties, it still doesn’t fully encompass the broader community.

That said, several ethereum members are knuckling down.

For one, ethereum communication officer Hudson Jameson has migrated the ethereum GitHub repository onto a dedicated webpage that highlights the various code proposals in a more accessible manner.

Member of the ethereum magicians Lane Rettig has also expressed his commitment to better communicating the processes of ethereum governance in a blog post, stating that his vision of ethereum is as ruled by “rational, constructive, well-intentioned, economically incentivized human beings brought together by selfish and selfless inclinations alike.”

As such, at the ethereum educational conference EDCON this week, Rettig has organized a workshop where he hopes to break down the network’s governance basics and the philosophical assumptions behind these mechanisms.

And still, there might be even more creative solutions on the horizon.

For instance, core developer Alex Van de Sande proposed a code change that he believes might solve all the contentious topics – fund recovery, ether issuance and ASIC mining – that are being debated right now.

Because ethereum developers are looking to change the consensus mechanism of the protocol to proof-of-stake, eliminating proof-of-work mining, Van de Sande suggests sending all future ether issuance to a smart contract, which acts as a kind of insurance policy for the community. In the event of lost ether, the pool can be used to make users that lost whole again.

About the proposal, Van de Sande writes, “It should be seen as a platform to settle disputes to avoid the implementation of contentious hard forks, not as a means to remove the power of users and developers to execute them.”

Still, the proposal has not been broadly accepted.

As such, Web3’s Tyson concluded:

“We don’t have the answers to these questions. But I hope that as a community we can begin to understand the questions and define the answers.”

Broken phone image via Shutterstock
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UNICEF Wants to Use Your CPU to Mine Monero to Raise Funds for Children


UNICEF Australia, an organization that is dedicated to humanitarian aid for disadvantaged children, is shining the spotlight on a good cause while simultaneously seizing an opportunity for an added revenue stream through cryptocurrency mining.

The agency has launched The HopePage, which is designed to use the CPUs of local website visitors to perform cryptocurrency mining, which is the power-intensive process of solving complex equations to create more digital currencies like bitcoin. By donating their computing power to mine the cryptocurrency — in this case it’s reportedly Monero — website visitors are “automatically generating funds for UNICEF Australia.” As of Monday, there were nearly 2,000 people participating.

The HopePage

Funds generated by cryptocurrency mining are then directed toward helping UNICEF to both protect the rights and save the lives of children, which resembles the social impact that blockchain veterans had in mind when they developed the technology.

“We wanted to leverage new emerging technologies to raise awareness about current humanitarian crises and raise funds to support children caught up in them. The HopePage allows Australians to provide help and hope to vulnerable children by simply opening the page while they are online,” according to UNICEF Australia’s Jennifer Tierney quoted in reports.

The HopePage asks for user permission to use a browser’s processing power in the cryptocurrency mining process, which is a courtesy that was lost on some companies that attempted to secretly generate profits from browser-fueled digital currency mining. Meanwhile, earlier this month, Google banned cryptocurrency mining programs from its Chrome Web Store.

Donating Cryptocurrencies

Think of visiting The HopePage as another way of donating, as the revenue generated from the creation of more digital currencies is used to support UNICEF Australia’s mission. It’s unclear if any tax receipts will be sent for those donations, however.

UNICEF Australia assures its visitors that “mining is perfectly safe for your computer.” Besides, donating doesn’t mean relinquishing total control to UNICEF Australia. Visitors can limit the amount of processing power they want to be directed toward cryptocurrency mining, which in addition to the length of time that they stay on the site determines how many algorithms are solved and ultimately how much gets donated.

The humanitarian organization says the cryptocurrencies that are created from the mining process are then converted into “real funds” that make their way to the needy children in the form of “safe water, therapeutic foods and vaccines.” UNICEF Australia is all in, suggesting that people make The HopePage their home page so that they can continually support the organization.

While UNICEF Australia claims to be the first charity to be engaging in cryptocurrency mining, it could catch on like wildfire, especially considering the global influence that UNICEF as an organization has. According to reports, UNICEF Australia is “hoping to raise thousands.”

Featured Image from Shutterstock
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Bitcoin frenzy settles down as big players muscle into market


A worldwide wave of regulation has led to a collapse in trading volumes. Cryptocurrency advertisements are disappearing from top internet pages, and bitcoin no longer dominates Google searches.

As investors try to figure out what bitcoin wants to be when it grows up, the best-known cryptocurrency is going through somewhat of an existential crisis.

“It needs a new narrative,” said Nicholas Colas, New York-based founder of investment research firm DataTrek. “There is every chance that if there is some sort of institutional involvement, there could be a move higher.” Bitcoin rallied 25 per cent in April after crashing 70pc from a high near $20,000 late last year.

The cryptocurrency landscape has indeed changed. Mom-and-pop investors who drove bitcoin’s skyrocket rise in 2017 have been pushed aside by government bans on trading, and replaced by cryptocurrency funds, wealthy individuals and established financial firms.

The bigger players can make bigger moves, but their trades are often obscured by screens on over-the-counter (OTC) brokerages and matching platforms.

They are also less likely to chase sudden swings in bitcoin’s value, being more interested in the potential of unproven but promising blockchain technology.

Average daily traded volumes across cryptocurrency exchanges fell to $9.1 billion in March and to $7.4bn in the first half of April, compared with almost $17bn in December, according to data compiled by crypto analysis website CryptoCompare.

Several exchanges saw their daily trading volumes drop by more than half between December and March, including Bitfinex, Poloniex, Coinbase and Bitstamp, the data shows.

Cryptocurrencies’ biggest-ever trading day was Dec. 22, when volumes topped $30bn, according to CryptoCompare.

On April 8, volume sagged to $4.6bn, the weakest day since last October, according to the data.

Reshaping the market

The theory that bigger institutions will make bitcoin markets less volatile and more liquid has grown as new OTC exchanges and platforms spring up, carrying names such as Circle, Octagon Strategy, Cumberland and Kraken.

Digital exchange Gemini’s new block trading product allows high-volume trades that will be invisible to other traders until the orders are filled.

Cumberland, one of the biggest block traders, has counterparties in more than 35 countries and quotes two-way prices in about 35 crypto assets.

Gatecoin, a Hong Kong-based crypto exchange, saw retail volumes plunge from peaks of $100 million a day last September, said Aure­lien Menant, its founder and chief executive.

But, he said, as institutional players enter the market, OTC trades hidden from view have pushed up overall volumes in a way that doesn’t show up in data. Gatecoin also operates an OTC platform.

Few institutions have gone public about their plans to trade cryptocurrencies, and many asset managers say they still aren’t sure the digital currency is more than a fad.

But a Thomson Reuters survey this week found one in five financial institutions is considering trading cryptocurrencies in the next 12 months. Of those, 70pc said they planned to start trading in the next three to six months.

In the meantime, the price of bitcoin may be stabilising, at least on paper. The futures market shows bitcoin staying nearly flat — between $8,900 and $9,050 — until September.

Gatecoin’s Menant, however, is considerably more bullish. He reckons the currency might end the year above $100,000, but acknowledges that’s a gamble.

Underlying value

Joe Duncan, founder of Singapore-based Fintech firm Duncan Capital, expects to see retail investors return to trading as governments slowly relax their cryptocurrency rules.

“But bitcoin could still lose some market dominance,” Duncan said.

Thomas Lee, managing partner and co-founder of Fundstrat Global Advisors in New York, said the bitcoin market is languishing in a “purgatory” phase somewhere between a bear and a bull market. He predicted that could continue until at least September.

One issue is that although many of the big institutions are curious about how bitcoin’s underlying blockchain technology could revolutionise the financial sector, bitcoin isn’t widely accepted as currency and has no intrinsic value.

That, and the currency’s intense volatility, make it challenging for investors to forecast a price.

Some analysts think bitcoin will retain a premium as a security, like gold, in the digital world, while other cryptocurrencies are used for commerce.

Others see it as just another asset.

“One of the reasons to own cryptocurrencies is because they are an effective hedge,” said Sam Doctor, a data analyst at New York-based Fundstrat, a research firm whose founder is a well-known bitcoin bull predicting large rises this year. “Until something happens to disprove that thesis, you aren’t looking to sell them so long as other asset classes are falling.”

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