It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
Money is a lot more complex than authors realize (40k, Metro, WoW, D&D, IRL)
One of the “easier” ways to create a unique world is to choose a different form of currency. It’s something people notice, since money is ubiquitous. The issue is that money is fairly well developed. It needs to have certain features, or else it flat out doesn’t work. Examples In Warhammer 40k, orks use their own teeth as currency. Since every ork has access to teeth, there isn't absolute poverty. Since the teeth decay, hoarding teeth isn't feasible, and it means that orks need to constantly try to expand to get more teeth. Since every ork gives teeth in a tax to their boss, it means that war bands constantly expand and fight, giving the combat happy bastards yet another reason to go to war. A huge amount of fantasy universes use copper, silver, and gold as currencies. Metro uses ammo. In real life, we see many alternative, and ineffective, currencies, ranging from company script, to cryptocurrency, to hyperinflationary national fiat currency, to precious metal based money. Background The issue is that all of these are fundamentally flawed in some way as a currency, rendering the economy of that location extremely vulnerable to various shocks that would rightfully upend the entire economy. A currency fills three major roles 1. A medium of exchange. 2. A store of value. 3. A unit of account. A medium of exchange means that it is accepted by enough people as having value to be used for trade. Rather than needing to find someone who wants your goods to trade in a chain for something you want (like in every Zelda trading questline), you just give them money and they give you the item. This is why money is more efficient pure barter. It acts to lubricate transactions between peoples. A store of value means that you won't see all your wealth disappear if you don't spend it now. Which means that you can save up for major purchases, you can make deals that last for years (like mortgages), and people can actually retire on what they’ve earned over the course of their life. A unit of account means that you know the value of the money and it is standardized. Imagine if the only form of money was in fine art. You could exchange a Van Gogh for a house, and a large spiky suspended ball for a car. Art could fit as a medium of exchange and a store of value, but actually trying to compare artwork to artwork would drive people insane quickly. You'd be in the situation that a dollar isn't worth a dollar, or one Van Gogh isn't worth another Van Gogh. There is no way to convert between lesser and more valuable pieces in a logical manner. Now, why is that relevant? Because a huge amount of monetary systems in fiction fail these requirements and allow for overt exploitation or unduly hamper the government's ability to respond to threats. Problems With regards to the ork teeth, what is functionally happening is constant hyperinflation. Since the teeth decay, there is explicitly no store of value. Which means that the only orks who can afford the best and most fun toys are the warbosses and WAAGH! leaders. There are probably billions of orks who just want to save up for a spaceship or motorcycle or set up a Squig farm of their own, but will never be able to because their money falls apart before their eyes. Somewhat more seriously, for a race dedicated to war, constantly decaying teeth means that the number of war bands that can attack space based shipping or otherwise need more complex and expensive equipment is limited, reducing the race's overall effectiveness in combat. By attempting to be clever with inflation, by making it so that it couldn't happen, they created the effects of hyperinflation. And, since it is still a money based system, that means that a race designed to go to war can't do it as effectively as they should. In WoW or D&D or any of a dozen universes where wealth is metal based, using multiple metals as various values of currency would have a similarly debilitating problem. It destroys the unit of account. Basically, the government sets an exchange rate between the chunks of metal, making gold 10x as expensive as silver which is 10x as expensive as copper. But the rarity and expense of gold isn't 100x as much as copper. It is usually much much more. So, it makes counterfeiting extremely attractive, since you can produce 100 small value coins, of the actual metal, and exchange them for a coin of much higher value. Or if it is in the other direction, where you can exchange something where the face value is less than the value of the metal, all the government is doing is funding a small extremely active and profitable metal reclamation industry. This would be an ongoing and unavoidable issue, one that could cripple a government attempting to keep enough money in circulation, or cripple business if the government failed to intervene in an ongoing manner. Metro has the same issue of lacking a unit of account. The value of a bullet depends on what you're facing and what weapons you have. Even if the nominal value of a .50 cal armor piercing round is high, the number of people who can use it is very low. Consequently, you'll see the value change and possibly invert, as use brings more common rounds out of circulation and makes the more expensive rounds increasingly obviously useless. Without a set value across the board, or something interchangeable and universal, the currency itself will always be in flux, making for a really really shitty form of money. And a fairly cursory read of human history reveals why being inventive with money is a bad idea. Company script is money that doesn't function as a medium of exchange. It acts to tie people to a small location and punishes merchants, intentionally gimping economic power of consumers. Bitcoin, aside from arguably not working as a medium of exchange, fails as a store of value. It is inconsistent and disconnected from reality, making any long term contract in it unfeasible. It has many of the same problems as hyperinflation, except you don't know which direction the value will go. Less common now, but currencies that are based on the weight of an amount of precious metal suffered from failing as a unit of account. As gold coins were chipped, sweated, plugged, adulterated, or otherwise debased, the value of the coin and the face value became disconnected, and a buyer was dependent on merchants being trustworthy with their scales. Functionally, money is the way it is because it works fairly well, and the obvious alternatives tend to fail in overt ways. Attempting to be clever with monetary solutions isn't really feasible most of the time. Solutions So, are there any currencies that actually make some degree of sense in world, and aren't just "GOLD FOR ALL"? Surprisingly, yes. Fallout's bottle caps have surprisingly good arguments around why they are used beyond the water traders of the Hub. Basically, becoming a medium of exchange is more based on mutual consent than it is on logic.. Shells, pieces of wood, large rocks, feathers, and shiny metals have all been used. Ragnar Benson, of the survivalist fame, claims to have found isolated African tribes that were using Austro-Hungarian bills in the 70s. Unless there's a government that forces something, pretty much anything can and will be used. By selecting it as a currency, the water traders turned bottle caps into a representative currency, each cap was a certain amount of pure water. They gave it some base level of value that was universally accepted. Outside the Hub, people were willing to trade for them since they had value, prompting other people to accept them on since they could be used in trade, gradually shifting it to something like fiat, abet unbacked by a government. Fallout has a surprising amount of trade across the US, where jet reached the East Coast and the Wasteland Survival Guide reached the West in a couple decades. Over 100 years, it's completely reasonable for bottle caps to become an accepted medium of exchange, valued because people value them. With regards to unit of account, bottle cap or not is pretty effective. And, since it doesn't have higher denominations, which could introduce the potential for arbitrage, it works. Abet annoying to count out hundreds or thousands of caps of you had to do it manually. For a store of value, after 100 years as an accepted currency, most large stashes would have been found, and the only input would be through Nuka cola, which is more valuable as soda than caps. And, as described in game, without a press and marking machine, counterfeiting is difficult; labor intensive and involved. There really isn't much way for more caps to come in, which preserves its value. The greatest issue with bottle caps is long term deflation as the population expands, but, while the wasteland continues, population growth will be muted. Consequently, caps in the Fallout universe ought to provide a stable bedrock for longer term business and functioning governance. Assuming that the world’s inability to actually rebuild despite that being the story for hundreds of years gets resolved. So what? So, what makes a good fictional currency? Well, that’s mostly fulfilling the functions of a currency.
Medium of Exchange – that can be nearly anything, as long as it is universally accepted. Attempting to create a new currency for each trader, like some sort of munted script, would be horrible and useless.
Store of Value – The currency should not be easy to counterfeit, which implies 2 things. Either that it is nearly worthless on its’ own (like paper currency) or that the value is derived from a hard to fake commodity, like gold. At the same time, making this needs to be difficult, or else you have the issue of the Elder Scrolls with Transmutation and turning iron into gold, which is also the foundation of their currency. Hyperinflation means broken economies.
Unit of Account – If you’re going to have more than one currency, you need to directly tie them together. More money should be based on the same features as the Store of Value, either just a bigger number on the front, or a larger chunk of hard to adulterate or change money.
And, if you think you’ve solved a major problem, you really really should talk to an economist before designing your world around a special feature.
In this final edition, we will look over each point mentioned in the previous articles and explain how they contribute to the realization of the world’s most affordable overseas remittance. https://preview.redd.it/d8q8zbsic1l51.jpg?width=792&format=pjpg&auto=webp&s=4410bbed2fb4f71c868ceca5c60295da67194b10 Realization of the world’s cheapest overseas remittance ① Multi-currency wallet In the case of a digital money wallet that only accepts one type of currency, to conduct overseas remittance one would have to use another wallet or service, and that becomes a cost. With Eternal Wallet, the system accepts and handles multiple currencies, and this is a key factor in how the world’s cheapest overseas remittance can be achieved. https://preview.redd.it/m0kxjuvlc1l51.jpg?width=790&format=pjpg&auto=webp&s=de8060fc17c339d354628a68ead3f0715f4f8ae5 ②P2P Trading Being able to bypass the banking infrastructure, and send between users via P2P has many merits. 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We hope that this article has been a good read for you, and it has encouraged you to try out our services upon opening. Our launch is imminent, and we look forward to your use and support of our product and services.
Particl Marketplace is a decentralized marketplace for trading goods and services. Every installation becomes an independent node of this network and is helping to distribute it. Payments are made private and anonymous under the aid of its own cryptocurrency named PART. It utilizes CT and RING CT for privacy. Furthermore, it shares the as most secure comprehended privacy technologies from the industry-leading electronic currency Monero and makes its security features available on the Bitcoin codebase. Additionally for the metadata needed to list products and to let users communicate with each other an encrypted protocol named SMSG is utilized. Only corresponding parties are able to decrypt its content. This benefits the marketplace to be able to scale.
Problems Particl Marketplace solves
The use-cases and problems getting solved are multidimensional.
Saving money for its participants
No revenue share fee, no final value fees (sales commissions), no payment processing fees, no subscription fees, no participation fees, no value based listing fees, instant settlement -no retention of payments for vendors
Free markets, no censorship, self governance, no product-listing manipulations
Privacy and security first
No user-data, no data misuse, scam and fraud protection with two-party escrow system, custom storefronts with custom access-rules, protection of supply chains & intellectual property, DDoS protection
Enable untapped markets
Empowering and protecting companies to make OTC (Over the counter) deals with unknown/untrusted business partners of any industry, without the risk of being scammed. Of course this is not limited to companies.
08-12 22:05 - 'Why Bitcoin Will Win: The Bearish Case for Ethereum' (self.Bitcoin) by /u/uncapslock removed from /r/Bitcoin within 207-217min
''' Hi Everyone! If you were around for the 2017 bull cycle, you might remember me from: [[link]6 With the advent of DeFi, I wanted to crystalize my thoughts on why Bitcoin will win in the end.
Why Bitcoin Will Win: The Bearish Case for Ethereum
Ethereum is the MySpace of decentralized finance. Hobbled together, scrappy, but provides an exciting glimpse into the future. We should be pleased with the new paradigms discovered through this experiment but should not expect it to be the de facto platform in a decade. Ethereum has demonstrated intrinsic challenges that are insurmountable without an Ethereum 2. We have witnessed unauditability, scaling difficulties, centralization and high contract fees. Building second-layer solutions to make up for shortcomings is akin to patching cracks in the asphalt with duct tape. In this piece, I’ll navigate why we should not confuse novelty of features for sustainable value, why Ethereum makes for a poor base layer, and what to expect in the decade ahead. There will only be onebase layer for digital scarcity of humanity and that is Bitcoin.
The “Bitcoin is money, Ethereum is apps” fallacy
There is a logical fallacy in arguing “Bitcoin is money, Ethereum is apps,” which draws a false equivalence between the value of money and apps. As any self-respecting financier knows, the value lies (quite literally) where wealth is stored.
“Applications are cheap. A store of wealth is expensive.”
Building applications is a solved problem. We know how to recruit engineers, build organizations and assemble technical solutions. We have a bevy of technologies that provide affordances for user interfaces. We have best practices for effective engineering. We even have strategies for amplifying creativity during brainstorming. The number of pages on CoinMarketCap.com is a testament to the commonality of applications. What is not solved is building applicationson top of a store of wealth. In order to build applications on top of a store of wealth, you either appropriate an existing store of wealth and build on top of it (i.e. Plaid) or you build a new store of wealth (Bitcoin). Building a digital store of wealth is so hard it has taken over half a century andis still not ready. The digital store of wealth is only ready when it stores a nontrivial portion portion of global wealth. On August 11, 2020, MicroStrategy announced it had acquired 21,454 Bitcoin for $250 million. Asinglecompany bought the equivalent ofall Bitcoin in Ethereumthat day. Building an application on Ethereum today is the worst of both worlds. It builds on a burgeoning new store of value with a tiny addressable market on top of a limited capacity network already showing strains. The vast majority of global wealth is still outside of the system, waiting to designate a digital store of value. Conceding that Bitcoin is the better store of value is conceding Bitcoin will be the disproportionate beneficiary of global wealth entering the system.
So where do applications fit in?
Imagine acquiring a bank. You are given a choice to either acquire the trillion dollars under management and no app or a smooth, slick app but not the financial assets. It’s easier to make a new application where users are already present rather than move users to a new platform with an existing application. As we’ve seen in the previous section, most users will be on Bitcoin utilizing its value as a store of wealth.
“Applications will be built where wealth is stored.”
What we’ll see is the best ideas from current generation of DeFi applications (elastic supply, governance, fair distribution mechanisms, auditability) built into layer 2 solutions of Bitcoin that itself sits on top of multiple trillions of dollars of global wealth. Why will this happen? Builders will note applications of value from the small pond of Ethereum and see a market opportunity to natively expose those features to the much larger accounts in Bitcoin, reaping proportionally higher revenue.
Why can’t we use Ethereum as a store of value?
“If native users of a platform are so important, why can’t we just use Ethereum as a store of value? After all, holders of Ethereum have seen much higher appreciation in value since its founding compared to Bitcoin.” Here we refer back to the [“The Bullish Case for Bitcoin”]2 which lays out the core properties of money of which three critical areas Ethereum is weak against Bitcoin.
As we see in the indefatigable investigation by [Pierre Rochard]3 in his epic quest to audit Ethereum’s supply limit, verifying the total number of Ethereum is not a trivial task. A number of supply adjustments had been made in node software instead of on-chain transactions, intermediate miner rewards calculated using uncles that are not finalized for a number of blocks, selfdestruct() that leaves ambiguity for token inactivity. These factors make it impossibleto have an objective measure without specifying an asterisk of the nuances appropriated for each method of calculation. Lack of auditability makes Ethereum a nonstarter for firms desiring a store of value. Without an objective measure of supply comes an impossibility of assessing the value of your asset. From measurement of the Ethereum supply through scripts, it has been hypothesized that there has been at least one inflation bug that has been exploited: [*[link]7
There is no set limit of Ethereum by design. From inception it was designed to be an inflationary currency which is essential as a utility token executing applications but is fatal for a store of value. There is an ongoing effort to curtail Ethereum’s inflation to appease to its holders which will be to its detriment as use as an application platform. This tension between being an appreciating digital asset and utilization as fuel is intrinsic to Ethereum and cannot be removed. When Ethereum prices go up by a factor of ten, only smart contracts that can provide commensurate proportional value will be viable.
“Using Ethereum as a store of value creates a perverse relationship with increasing contract fees that undermine its value as an application network.”
As the price rises further, we will see the majority of use cases today become priced out, adding platform risk where users will now need to worry whether they will be able to get their assets back out in the event of Ethereum appreciation.
It is an open secret that Infura is the defacto backend for Ethereum. Running a full Ethereum node is known and accepted to be an arduous task with astronomical processor requirements. This problem is getting worse, not better as the system struggles with transaction volume today, much less the several magnitudes of transactions needed in the coming decade. The solution provided is running Ethereum 2 and implementing applications on a second layer of Ethereum. This shifts the conversation to if building a new base layer or building on a second layer is necessary, what benefit is there to retain Ethereum as a base layer?
A Look Back from 2030
When we look back to 2017–2021, we will remember this period as the primordial era of where creative entrepreneurs came together to experiment with the new paradigm of permission-less smart contracts. We will see a meaningful portion of global wealth go into Bitcoin by 2024 raising assets under management to a trillion dollars. Companies will convert overseas holdings into Bitcoin to counter inflationary risk for sovereign currencies. Smaller nation-states will start to acquire a reserve of Bitcoin to counter dollar strength to pay off their dollar-denominated debt. During this time, firms small and large will rush to build applications to service wealth stored in Bitcoin on layer 2 and layer 3 solutions. Many of these applications will be inspired by what is currently built on top of Ethereum but addressing a much larger market. Through two more halvings by 2030, everyone will have a Bitcoin account providing both a store of value as well as a unified platform that provides the largest installed userbase for financial products. We'll be ending the decade with 10M per Bitcoin, (one magnitude increase each for the three halving periods: 2020-2024, 2024-2028, 2028-2032) with Bitcoin serving as the generational store of wealth for those with the foresight to stack sats and hodl.
Tips for Builders
You’re not late. In fact you’re incredibly early. We’re still building the store of value that will be the foundation to the financial apps that you’ll build. Ethereum is a nice environment for experimenting with new paradigms that are made possible through smart contracts. But understand that the bulk of your future customers will be onboarding onto a different platform when they do arrive. There will be a bonanza period where we see thousands of companies and millions of retail users adopting Bitcoin. It’ll be up to you to recognize the arbitrage opportunity to offer product features in native Bitcoin format to beat other products that must employ bridges to access wealth stored in Bitcoin.
For future writing, [you can follow me on Twitter at @uncapslock]5 . This article is for information purposes only and is not intended to be investment advice. ''' Why Bitcoin Will Win: The Bearish Case for Ethereum Go1dfish undelete link unreddit undelete link Author: uncapslock 1: www.red*it.co***/Bi*coin/*om**n*s/6h4*1i/why_i*sol*_all_***e*h*reum_*oda**an*_convert*d_i*/ 2: medium.c*m/@*i*a*bo*apati/t*e*bu*l*sh*case-for-*it*oin*6ecc8*de*c* 3: tw*t*e**com/pierre_*o*hard 4: *w*tte*.***/GeistLight/st*tus/1*926*756*3801390** 5: t*itt**.*om/uncap**ock 6: ww**r**di**com*Bitcoin/comments/6h4**i/why\_*\_***d\*al*\_my*_eth*re*m\*today\*and*_*onve*te*\_it/**^1 7: twitter.com/*eistLi*h*/s*a*u*/*29*6475***801390***]^^4 Unknown links are censored to prevent spreading illicit content.
Particl Marketplace - short and easy. 📷Education Particl Marketplace is a decentralized marketplace for trading goods and services. Every installation becomes an independent node of this network and is helping to distribute it. Payments are made private and anonymous under the aid of its own cryptocurrency named PART. It utilizes CT and RING CT for privacy. Furthermore, it shares the as most secure comprehended privacy technologies from the industry-leading electronic currency Monero and makes its security features available on the Bitcoin codebase. Additionally for the metadata needed to list products and to let users communicate with each other an encrypted protocol named SMSG is utilized. Only corresponding parties are able to decrypt its content. This benefits the marketplace to be able to scale. Problems Particl Marketplace solves The use-cases and problems getting solved are multidimensional. Saving money for its participants No revenue share fee, no final value fees (sales commissions), no payment processing fees, no subscription fees, no participation fees, no value based listing fees, instant settlement -no retention of payments for vendors Self-sovereign commerce free markets, no censorship, self governance, no product-listing manipulations Privacy and security first no user-data, no data misuse, scam and fraud protection with two-party escrow system, custom storefronts with custom access-rules, protection of supply chains & intellectual property, DDoS protection Enable untapped markets Empowering and protecting companies to make OTC (Over the counter) deals with unknown/untrusted business partners of any industry, without the risk of being scammed. True global arbitrage without intermediary Obtain global arbitrage opportunities for trading goods with a local price-fixation by utilizing local price advantages. www.particl.io
The growing popularity of bitcoin or other virtual currency attracting the people and on the other hand many scam investment companies are emerging every day just like rainy frogs. Everyone keeps on proving how the benefits offered by their company are better. However, the number of people caught in such breathtaking claims is very huge in the world. Everyone knows that such companies can be a scam, yet many people do not feel any difficulty in losing their hard-earned money in such companies. For this reason, in the discussion of whether such companies are scams or not, we also would not like to waste our time. Now the point of discussion is only, that investing in which company can be less risky. Today in this article we will discuss iamsatoshi.global and arbitrage.is. From the primary point of view, both concepts are Ponzi schemes only. The difference is that iamsatoshi.global is being claimed to be a Decentralized block-chain smart contract, and arbitrage.is collect the investment in the usual way.
Let us know about iamsatoshi.global
The most important thing here is that IAMSATOSHI.GLOBAL is far ahead of ARBITRAGE.IS, to attract investors. Their website and presentations are very good and can easily catch the investor in their trap. But all the big claims are being made by iamsatoshi.global, are absolutely false. iamsatoshi.global is claimed that Satoshi Nakamoto (believed to be the creator of bitcoin) is behind this business, although this is unlikely to be the case at all. Why the person like Satoshi Nakamoto need to start a Ponzi scheme? See the screenshot below, what is in the headings and what is the body text ... This is where lies are caught. Read more
Im willing to teach how to earn fully passive, just by investing some bucks.(about 10$ will do) So whats it all about? Its about adshare company, which is fairly new, but the most promising. The catch here is, while everyone else is struggling with similar platforms, this platform still brings steady income every day. How does it work? Easy. You have to deposit some funds (forgot to mention, you will need a bitcoin wallet), and thats quite it! For the next 125 days you will earn UP to 1% from your original deposit. (right now, while that covid is out there, earning are 0.8% up to 1% every day). After those 125 days, you will earn back your deposited money + precentage of interest. How are this company making money? This company is transperant, they expose everything about their earning streams. AS they claim: " Our company activities include investing in crypto trading, crypto arbitrage, forex-crypto arbitrage and forex trading over a solid, well-diversified portfolio. " These are pretty safe, and whats the difference between this and other similar platforms? THEY HAVE MULTIPLE REVENUE STREAMS which allows you to earn despite all crisis. If you are interested joining my team, and want to start to earn fully on autopilot, give me a DM! Have a nice day! (To join, you will need basic knowledge in technology and a crypto currency wallet)
Im willing to teach how to earb fully passive, just by investing some bucks.(about 10$ will do) So whats it all about? Its about adshare company, which is fairly new, but the most promising. The catch here is, while everyone else is struggling with similar platforms, this platform still brings steady income every day. How does it work? Easy. You have to deposit some funds (forgot to mention, you will need a bitcoin wallet), and thats quite it! For the next 125 days you will earn UP to 1% from your original deposit. (right now, while that covid is out there, earning are 0.8% up to 1% every day). After those 125 days, you will earn back your deposited money + precentage of interest. How are this company making money? This company is transperant, they expose everything about their earning streams. AS they claim: " Our company activities include investing in crypto trading, crypto arbitrage, forex-crypto arbitrage and forex trading over a solid, well-diversified portfolio. " These are pretty safe, and whats the difference between this and other similar platforms? THEY HAVE MULTIPLE REVENUE STREAMS which allows you to earn despite all crisis. If you are interested joining my team, and want to start to earn fully on autopilot, give me a DM! Have a nice day! (To join, you will need basic knowledge in technology and a crypto currency wallet)
The world economy is on the verge of crisis again, cryptocurrencies will be strong
Vulnerability refers to the property that things are vulnerable to damage when faced with fluctuations. -Nassim Nicholas Taleb In the face of economic fluctuations, it is disadvantageous to hold such a negative view. Every capital market has its own life cycle, which inevitably goes through a process from growth, to peak, and then to recession. Now is no exception. As we emerge from the longest bull market in history, we suddenly find ourselves in a highly vulnerable global economy facing the panicked and perplexed planet unprepared. However, the turmoil has just begun. Newton's first law, also known as "the law of inertia", means that any object must maintain a constant linear motion or standstill until an external force forces it to change its state of motion. Although this analogy does not perfectly correspond to the capital market (because the market is always changing and developing in different directions), at least one thing is certain that under the action of the market mechanism, the market cycle always appears Trend from peak to valley. The music box winds up, and the performance of the song sounds, and then it stops after a while. When this happens, the market structure collapses, eventually leading to huge chaos, and then falling into silence. Once external forces force the entire economy into trouble, people will realize the long-standing hidden structural defects in the economy. Now, the world economy is on the verge of crisis again. All human beings have to face a sudden outbreak of a global epidemic and the resulting shocks in supply and demand in the market. The economies of some countries have stalled. Ironically, the effects of inertia may be prevalent in market fluctuations. While witnessing the development of the global economy, we still find two simultaneous macro trends: --1-- USD strong We believe that the strong US dollar is driven by three factors: Investors turn to safe assets: Despite the Fed ’s interest rate cuts and monetary stimulus policies, the market ’s increasing demand for the US dollar has pushed up the US dollar index and hit a new high in 18 years. US Dollar Financing Issues: Cross-currency basis swaps measure that investors are more inclined to hold the US dollar than the euro or the yen. On March 17, the euro-dollar basis swap swap premium expanded from -60 basis points to -120 basis points, the highest level since 2011. As of press time, the Euro-US dollar basis swap has rapidly dropped to about -27 basis points, while the US dollar-Japanese yen basis swap has expanded to -70 basis points. Negative basis points indicate greater pressure on the dollar and higher hedging costs for European and Japanese investors. The reality is that U.S. banks, which are the main source of funding for the U.S. dollar, are storing large amounts of cash instead of actively issuing short-term U.S. dollar loans to foreign banks. Due to recent pressure from the balance sheet, more and more U.S. banks are beginning to reduce credit lines to retain cash. In addition, many foreign banks that lack direct access to the US dollar market can only rely on central bank liquidity swaps for financing. This week, the Fed and several other central banks opened new liquidity swap tools, providing USD 30 billion to USD 60 billion of liquidity, respectively, to ease pressure on USD financing. Central banks in emerging market countries are taking urgent steps and lowering their benchmark interest rates: Emerging market investors are very worried about the stability of their currencies and are pouring into the dollar market. According to Bloomberg, all major emerging market currencies weakened against the US dollar on January 20, just as the new crown virus began to spread in Asia. ——2—— Treasury liquidity tightening Abnormally performing credit markets: In general, price fluctuations will prompt investors to switch from risky assets (such as stocks) to safe-haven assets (such as bonds). This was indeed the case when the new coronavirus was causing panic. However, the current despair of liquidity (especially cash) by market investors has led to a large-scale sell-off in the global bond market, falling bond prices and rising interest rates. Repurchase market: The Federal Reserve's rescue measures have not brought the expected results. In the past week, the Federal Reserve announced three repurchases and other measures to release liquidity, hoping to ease the current state of the US Treasury market and reduce the inventory of primary dealers. However, market demand for government bonds remains sluggish. Let's turn our eyes from the home of the macro economy to the cryptocurrency market. Although they are not necessarily related, we find that the two are closely related. In the face of volatility, it is particularly important to develop a price action strategy. The CBOE-VIX index, an indicator that predicts the trend of the S & P 500 in the next 30 days, has surged to its highest level since the last global financial crisis. At the same time, we also saw that the 90-day implied volatility of Bitcoin options rose to 6.8% (annualized 130%), which is about 5.9% (annualized 113%) this weekend. As the "Black Thursday" on March 12th, BTC was down 40% and ETH was down 50%, some leveraged positions were forced to close. According to reports, BitMEX alone closed USD 700 million worth of long and short positions. At the same time, the sell-off of ETH dropped the value of the DeFi ecosystem by 40%. The total amount of collateral liquidation of Compound, dYdX and Maker and other lending platforms reached US $ 10 million. But in this turbulent market, not all assets perform so badly. Although the price of BTC, like the stock market at the beginning, plummeted, falling by 60% from the high price in mid-February, it rebounded by about 50% from the price low on March 12. Over the past period, we have found a large amount of funds flowing from altcoins to BTC. With the spot premium (the spot price is higher than the futures price), the demand for bitcoin lending has increased. The effective fund interest rate also gradually returned to normal as the curve was inverted. In contrast, when futures are at a premium (the futures price is higher than the spot price), there is almost no demand for BTC's lending transactions. At present, the BTC funding rate on various lending platforms has increased from 3-5% to 8%, and the ETH funding rate has increased from 2-4% to 6%. ——3—— Floating profit stablecoin market Since February 14, the entire cryptocurrency market has experienced a large-scale sell-off, with a market value of $ 45 billion evaporated. At the same time, the market value of USDT has risen to nearly $ 5 billion. USDT has emerged from this market volatility and has become a safe-haven asset. This week, the premium rate of USDT prices in China and South Korea is as high as 7%, which is caused by the demand of payment service providers and arbitrage traders. The current over-the-counter USDT supply exceeds supply. At the same time, the market value of USDC climbed to US $ 630 million, a record high. The market value of BUSD is exceeding the US $ 150 million mark, mainly due to the surge in demand for Binance's borrowing and margin trading. ——4—— Near-term outlook We pay close attention to the changing macroeconomic trends and the successive monetary and fiscal policies implemented by governments around the world. Although we cannot predict the specific trend of the market, we still believe that cryptocurrency as an asset class will be strong. In a nutshell, we think: ● Due to the recent sell-off in the market, the value of positions has shrunk sharply, making the distribution of positions in the market clearer. ● With the exit of market makers, the spread between major exchanges has brought more market arbitrage opportunities for retail traders. In particular, the derivatives market (futures and perpetual swaps) has seen a significant discount compared to the spot market, which has pushed up BTC's lending rate. ● By hedging the spot and long futures, market participants can carry out arbitrage trading, which is completely contrary to the market situation we saw last year (the futures price is significantly higher than the spot). ● Over the past six months, trading activities in the options market have grown rapidly. We expect that trading activities in the options market will continue to grow. ● At present, on our platform, institutional clients such as hedge funds, arbitrage traders, crypto companies, etc. have all bought a lot of BTC and USDT. Market volatility is part of investment. We believe that after a period of time, the economy will re-enter the upward trajectory, please let us work together for it.
Review: The most thrilling 24 hours in Bitcoin history
From 12:00 on March 12th to 12:00 on the 13th, Bitcoin, the most influential currency in the cryptocurrency industry, suffered two major declines, and its price fell from a maximum of 7,672 USD to a minimum of 3,800 USD (data from Huobi, the next Same), the decline was 50.4%, which means that the price of Bitcoin has achieved a fairly accurate "half price" in these 24 hours. Previously, Bitcoin's "halving market" was mostly considered to be an increase in market prices caused by Bitcoin's halving production, although many people have questioned the "halving market" as " The price is halved ", but when bitcoin walks out of the current bad market, it still surprises most investors. First plunge The bad 24 hours started at 12 o'clock on March 12. Due to the rapid spread of the new crown epidemic in Europe and the United States, the global financial markets have been raining for several days. After several adjustments, the price of Bitcoin has hovered up and down within the range of $ 7600-8200 in the previous three days. However, after 12 o'clock on the 12th, Bitcoin The price fell below $ 7,600 for the first time, breaking the psychological expectations of many investors, entering a rapid decline channel, and dropping to about $ 7,200 at around 18 o'clock. At this time, the decline of Bitcoin is still around 7%, which is a common occurrence in the history of Bitcoin. However, after 18 o'clock that day, the market turned sharply, and the price of bitcoin plunged again in a short period of time. It fell to US $ 5,555 within tens of minutes, a drop of 28%, and the amount of contractual positions on each platform exceeded US $ 2 billion. During the decline, most major exchanges such as Huobi, Binance, and OKEx experienced systemic freezes of varying degrees. Many users complained for a long time that the exchange app could not properly display the homepage, market page, and transaction page, and added positions, stops, and withdrawals. Obstacles such as cash withdrawal and cash withdrawal operations have also shown that this situation also highlights that mainstream exchanges still fail to address the ability of their trading systems to respond to extreme conditions. For this decline, the collective sell-off of large Bitcoin holders is considered to be the main reason. For example, Grayscale Investment, the world's largest crypto asset fund management company, was sold and sold 40,000-50,000 Bitcoins. News from the exchange said that Bitcoin sold 400,000. For a long time, bitcoin has been called "digital gold" by the blockchain industry, and has good risk aversion properties. During the tense situation between the United States and Iran in January this year and the global stock market fell, Bitcoin rose from $ 7,200 all the way to more than $ 10,000. Bitcoin's safe-haven attributes have been widely recognized in history, but this time caused by the new crown epidemic Under the risk of the global economic downturn, the decline in the price of bitcoin has become the asset with the largest depreciation among various mainstream financial assets, and its high-risk nature will most likely collapse. Some analysts believe that bitcoin should be further classified as an alternative asset. At a time when liquidity shortage is extremely serious, as a high-risk alternative investment asset with the highest volatility in the world, funds will naturally be drawn from the market by investors. Looking for safer, more liquid assets, prices plummet. "Everyone in the future will realize that Bitcoin is not digital gold, but" an amplifier of risk. " Its value cannot be anchored. Unlike other asset prices, which are affected by costs and prices, Bitcoin has no normal market value range. As of now, it does not have any convincing valuation basis, more like a swaying boat. Without the anchor, its value fluctuates greatly, and the impact of halving the market and supply and demand on it is far less important than psychological factors. "Said Cai Kailong, senior researcher at the Institute of Financial Technology of Renmin University of China. However, some people in the industry hold different opinions. "BTC is still the most powerful currency in the history of mankind. It provides liquidity 24 hours a day. This is something that other markets simply can't imagine, but because liquidity is too good, this time it just happened to happen in other markets. When funds are scarce, the first choice for selling supplementary funds has also led to the decline of gold. Of course, the amount of BTC that is currently much lower than gold is certainly unstoppable in a short period of time. "A Weibo blogger" "fhrp". In addition to the sell-off of large institutions, some mortgage lending platforms have also passively become an important boost for this downturn. In the past six months, the Defi concept has been particularly hot in the blockchain industry, and many cryptocurrency-based cryptocurrency lending platforms were born. As a result, a large number of large Bitcoin users will pledge the Bitcoin in their accounts to third-party lending platforms and use the USDT to borrow cash to purchase cash, which is equivalent to increasing leverage. However, these platforms are not mature in terms of mortgage rate setting and liquidation mechanisms. Users who increase the mortgage rate of assets have a slower transfer speed on the chain. As a result, during this period of rapid decline in the market, a large number of mortgage orders have lower mortgage assets than loans. As a result, the amount of bitcoin out-of-market positions this time was far more than in the previous period of large market volatility, which further exacerbated the selling pressure of the bitcoin spot market. From 19:00 on the 12th to the early morning of the 13th, the price of Bitcoin hovered in the range of 5800-6200 US dollars, and the market began to prepare for the next stage of the trend. Second plunge On the evening of the 12th, the stock markets of mainstream countries in Europe and the United States successively opened and collectively fell, and the stock markets of at least 11 countries, such as the United States, Canada, and the Philippines, melted down. At the close of the morning on the 13th, both the Dow Jones Industrial Average and the S & P 500 Index had the largest single-day percentage decline since the 1987 stock disaster. The Dow closed down about 2352 points, the largest drop in history. The bad performance of the stock market quickly passed to the currency market. Beginning at 7 o'clock on the 13th, the price of bitcoin plunged from the position of $ 5,800 once again, dropping all the way, and successively fell below $ 5,000 and $ 4,000. For the rapid decline of the market, many people in the industry believe that the main factor is not only the panic selling of the market, but also the mutual stepping on of contract investors. Weibo blogger "AlbertTheKing" pointed out that most of the long positions in Bitcoin leverage are in the BitMEX perpetual contract market. The long positions caused by the decline in bitcoin prices caused a series of short positions, which in turn caused arbitrage spreads and spot arbitrage. The party rushed in to open multiple orders and sell spot arbitrage at the same time, thinking it was okay. As a result, I did not expect Bitcoin to fall more and more fiercely, and his own arbitrage and long positions also burst. So at first, the leveraged bulls stepped down on each other, and later became the arbitrage party. . "Fhrp" also pointed out that because BitMEX only has BTC margin, ETH's permanent liquidation also needs to be undertaken by btc. The profit portion of the hedge order cannot be included in the margin, and BTC is not sufficient because of the card being in serious shortage. The exploding warehouse order was opaque, so that no one dared to pick up the corpse later, fearing that it would become a corpse. Of course, the key is the lack of a fusing system, so that the market can slowly wait for liquidity to keep up. Under the interweaving of many risks, the price of bitcoin is about 10:15. It has fallen below 3,800 US dollars in many exchanges such as Huobi and OKEx, which is 38% lower than the price of 0 on the day and 50.4% lower than 24 hours ago. This is the highest record in the 24-hour drop since the birth of Bitcoin. Such a precise decline cannot be doubted as the bad taste of the bookmaker behind the exchange, if the bookmaker does exist. Of course, it is not excluded that this situation is due to the tacit understanding among the main market participants, or a purely natural phenomenon. But judging from objective facts, there is indeed some evidence that the situation is unnatural. After bitcoin hit a low of $ 3,800, its price quickly rose in the next 20 minutes, rising by 59% to $ 5,250, but then fell rapidly. At the turning point of $ 3,800, which is 10:16, the BitMEX trading system, the largest bitcoin exchange in the cryptocurrency industry, suddenly stopped until 10:40. It can be seen that the time point when the Bitcoin price stopped falling rapidly and stopped rising rapidly was close to the time point when BitMEX went down and returned to normal. This shows that BitMEX has a huge influence on the secondary market, and it also makes a lot of One suspects BitMEX is manipulating the market. Sam Bankman-Fried, chief executive of Derivatives Exchange FTX, tweeted that he suspects BitMEX may have intentionally closed transactions to prevent further crashes and to avoid using exchange insurance funds. Mining company BitPico also tweeted yesterday, "According to our analysis, BitMEX Research has closed its long position of $ 993 million with its own robots and capital. Today the manipulation of the bitcoin market is caused by an entity and the investigation is ongoing. " In response to this incident, BitMEX responded that there was a hardware problem with the cloud service provider, and in a subsequent announcement, it was pointed out that the DDoS attack was the real cause of the short-term downtime. Why the downtime of the BitMEX trading system is difficult to verify, but from its objective impact, its short-term downtime plays a vital role in curbing the further decline in the price of cryptocurrencies such as Bitcoin, which has eased investment to a certain extent. The panic sentiment created by this has created space for the rebound and correction of cryptocurrency prices such as Bitcoin. Sam Bankman-Fried even speculated that if BitMEX did not go offline because of a "hardware problem" this morning (February 13), the price of Bitcoin could fall to zero. If compared with the traditional financial market, the effect of this BitMEX outage event is quite similar to the "fuse" mechanism of the stock market. Trading is suspended for dozens of minutes at the moment when investor sentiment is most panic, so this outage event Also aroused the emotions of many people in the industry. "BitMEX has helped the currency circle" melt out, "otherwise the chainless stepping will not know where to fall. After the fuse, everyone calmed down and the market returned to normal. Weibo blogger "Blockchain William" posted a blog saying, "The market is not afraid of falling, and it is not afraid of stepping on it. That is why. This is why the global stock market has melted down because investors panic. It is a bottomless pit. Once out of control, there is no bottom Now. " Of course, the factors that cause the market situation to reverse are not limited to this. According to the feedback from multiple users on social platforms, BitMEX and Binance's major exchanges forced the short positions of multiple accounts to close positions at 10 o'clock on March 13th, that is, the automatic lightening mechanism was in effect. According to the BitMEX platform mechanism, when investor contracts are forced to close out, their remaining positions will be taken over by BitMEX's strong closing system. However, if a strong liquidation position cannot be closed in the market, and when the marked price reaches the bankruptcy price, the automatic lightening system will lighten the investor holding the position in the opposite direction, and the order of lightening is determined according to the leverage and profit ratio . Specifically, due to the sharp fluctuations in the price of bitcoin, a large number of long single-series bursts and the scarcity of market liquidity. In order to control the risk, the platform will automatically place some short orders with high profit ratios and high leverage on the market, increasing market flow. It also avoids the risk to the platform caused by the inability of the short-selling order to be executed in a timely manner. According to BitMEX's announcement, about 200 positions were automatically closed by the system. And Twitter blogger Edward Morra said, "On BitMEX alone, short positions worth about $ 500 million have been liquidated." If this data is true, it means that BitMEX's strong liquidation operation has brought more than 5 to the contract market. The market price of 100 million US dollars has a significant positive effect on the market that is being sold out. However, as a compensation, BitMEX also stated that it would contact each damaged user and compensate them according to the maximum potential profit that the investor obtained during the automatic liquidation. In any case, through the operation of exchanges such as BitMEX, the price of bitcoin has entered a recovery channel, and it is still hovering at the $ 5,000 mark, while driving the entire cryptocurrency market to pick up. After this thrilling 24 hours of bitcoin, the ideal "halving market" has disappeared. The real and brutal "halving market" is coming. Perhaps many investors and investment institutions have expressed their confidence in the crypto assets represented by bitcoin. The understanding will change in this regard, and the confidence of the entire industry needs to be rebuilt. This depends on the application value of bitcoin to be deepened.
After the Bitcoin crash: do others fear me for greed?
At 6:30 pm on March 12, Bitcoin dropped from $ 7211 to $ 5555.55. The bitcoin price dived again this morning, slumping nearly $ 2,000 again in half an hour, the lowest fell to $ 3,782.13, a drop of more than 40% in 24 hours. According to the data of the contract emperor, only Huobi, OKEx, Binance, and BitMEX exchanges had a daily short position of 3.133 billion US dollars, which reached the highest in a single day in history. The number of liquidated positions exceeded 110,000, which was also the highest in a single day. Also on March 12, the S & P index fell 260.74 points, triggering the fusing mechanism for the second time this week. The Dow hit its largest decline in history, at 2352.6 points. The Nasdaq fell 750.25 points to 7201.8 points. This is the third time in the history of US stocks. This fuse has been 33 years since the first fuse, but only 4 days have passed since the last fuse. Buffett shouted, "I only lived this way in 89 years." It is reported that Buffett lost $ 6.8 billion last night. According to incomplete statistics, with the exception of the United States, the stock markets of 11 countries including Canada, Mexico, Japan, South Korea, Thailand, India, the Philippines, Indonesia, Brazil, and Pakistan plummeted. The five largest US technology companies, Apple, Amazon, Google, Facebook, and Microsoft, had a cumulative market value of $ 416.63 billion. The Bloomberg Billionaires Index shows that the top 15 richest people in the world lost a total of $ 46.4 billion. Market panic or pullback demand? Regarding the meltdown of U.S. stocks this week, Yang Delong, chief economist of Qianhai Open Source Fund, believes that the spread of the epidemic is not the main reason. It is more a decade of bull market for U.S. stocks. Some factors driving the rise of U.S. stocks are quietly changing, such as the Federal Reserve ’s interest rate There is not much space. Regarding this crazy drop in Bitcoin, Apocalypse Capital told InfoQ that there are two main reasons for this drop in Bitcoin: on the one hand, the bearish demand caused by the expected global economic downturn, and on the other hand, Bitcoin Callback requirements themselves. As we all know, Bitcoin will be halved in the second half of the year, but the trading market pays attention to speculation expectations. This round of rise has essentially halved the market. After hitting a high of 10500, Bitcoin is facing a callback demand. Of course, this round of downtrends is so rapid and there are only a handful of recurrences in the history of Bitcoin, which are inextricably linked to the decline in global stock markets, both of which are the result of expectations of a bearish global economy. However, Johnson Xu, chief analyst of TokenInsight, told InfoQ that the Bitcoin dip was mainly due to market panic, because some market participants bought bitcoins by buying mining machines, borrowing, etc., and expected to reduce their expectations by half. A linkage effect caused by everyone being too optimistic about the market. The market is overhyped because Bitcoin is halved, and some market participants are afraid to miss the opportunity to enter the market irrationally. The current market slump is driven by strong irrational behavior, which translates into a rapid downside response and quickly depletes market buyers' liquidity (flattening down). When the overall financial market panic or other unexpected events are caused by the New Crown virus and the global economic slowdown, market participants often seek to withdraw assets such as stocks and bitcoins and convert these assets into cash (cash is king). So has the recent gold sell-off. When the market panics, people ask for cash in the beginning instead of investing in safe-haven assets such as gold. At the same time, because gold is considered a high-quality asset, investors usually start with liquidity crunch and market panic. Cash in on good assets (because inferior assets are more difficult to sell in panic times). The Bitcoin crash this time has a certain connection with the decline in global stock markets, because the entire financial market is a globalized market, and there is more or less linkage between each asset. In addition, Forbes speculated that it may be because PlusToken scammers transferred bitcoins worth more than 100 million US dollars to the mixer, and then sold bitcoins, resulting in rising market supply.
Other people are greedy, I am afraid, others are afraid of me, greedy? In this case, should investors still expect "halving the market"? Johnson Xu believes that there is no such thing as a "half quotation", and most market participants are too optimistic about the halving of Bitcoin. Price fluctuations are not necessarily caused by halving, but may be caused by the sum of other factors. When everyone is saying that they are optimistic about the market, the existence of risk is ignored in the subconscious. At this time, the risk will be actually reflected, and the upside will gradually shrink. Bitcoin halving was written into the code, and it was not an accident. Bitcoin should be halved in a rational way. It is worth looking forward to, but not overly interpreting and speculation. However, Tianqi Capital believes that this plunge is a callback period for bitcoin's halving of the market, and each round of sharp decline also indicates the opportunity of the market outlook: cheap chips will be hoarded, waiting for the next wave of hype and explosion. Therefore, Tianqi Capital still believes that the market outlook of Bitcoin is worth looking forward to, provided that it is not frightened by the current fierce washing of the chips, after all, when the bear market is the worst, it is also when gold is everywhere. Regarding the future trend of Bitcoin, Apocalypse Capital stated that it should judge according to the current trend. In this round of market, Apocalypse Capital initially chose to follow the downward trend of May 18, and Bitcoin has gradually dropped from a high of 10,000 to 3150 points, so the big support level predicted by this round happens to be 3700 today. Near the point. Data monitoring shows that some funds are involved in this price range. But whether it can hold on to this support remains to be tested. If the 3700 support cannot be maintained, it is very likely that it will hit the US $ 2000 level. Tianqi Capital believes that this is the market's last line of defense. Long-term investment is recommended to buy some relatively stable targets, such as BTC, ETH, etc. The bear market will eliminate many currencies, but if it survives, it will shine in the next round. Johnson Xu believes that the plunge is also a test to promote the healthy development of the industry. Extreme market is a test for the entire industry, especially for infrastructure, risk management, etc., so it is still optimistic and supports the development of the industry for a long time. For current investors, Johnson Xu offers the following suggestions:
Other people are greedy, I am afraid, others are afraid of me, greedy.
Global financial markets have also undergone major changes. From the data point of view, I don't think Bitcoin has the attributes of a safe-haven asset, but this market can test whether Bitcoin has a certain risk-avoidance capability. This is a global world. We need to analyze various markets, not just the digital asset market.
In the long run, we are still optimistic about the digital asset industry.
Does Bitcoin have a fusing mechanism? On March 9, after the U.S. stock market crash triggered the fusing mechanism, the market began a discussion of "whether Bitcoin should set up a fusing mechanism". But at present, most people are not optimistic about the Bitcoin fusing mechanism. OKEx CEO Jay Hao said that the fusing mechanism is difficult to implement in the digital currency market. In the face of a highly volatile market, setting the fuse point is a difficult problem. At the same time, for a 7 * 24h market, when a certain exchange breaks down, the price difference between the digital currencies between the platforms will increase, leading to arbitrage, and the fuse mechanism will eventually become a decoration. Du Wan, the co-founder of Contract Emperor, also said that it is unrealistic to use a fuse mechanism in the currency circle. The fusing mechanism first violates the original intention of the decentralization of the blockchain, and at the same time, it will touch the interests of the top of the currency circle ecological chain. For example, large trading teams can no longer use pins to obtain large profits. When the market is panic, exchanges with a fuse mechanism may lose traffic to exchanges without a fuse mechanism because of the run effect of traders. It can be seen that the current risk aversion measures in the traditional stock market are difficult to transfer to the fickle currency market in a short time, and the regulation of this market still has a long way to go. Investors should still be cautious when investing.
Dear CoinEx Users: I am Haipo, CEO of CoinEx. The Chinese New Year has just passed and the coronavirus outbreak casts a shadow on society and our hearts. At this moment, I sincerely hope that everyone stay safe and healthy. From December 24, 2017 to today, CoinEx has been with you for more than two years. Having experienced a rebirth in 2018, CoinEx embarked on a new journey since last year. “Do something that can change the real world with the blockchain.” This is my original intention to create CoinEx, and I hope more people will get to know blockchain through CoinEx. CoinEx always bears in mind the ambition of putting the blockchain to good use and making the world better. 2019 witnessed how CoinEx consolidated the foundation for its ambitions. CoinEx Accelerators, futures, options, CoinEx Lending, CoinEx DEX, CoinEx Chain, the key account privilege system, and a new value system for CET… We have completed what may take others four or five years, but we also know that a complete ecosystem is the first step to achieve our ambitions. CoinEx still has a long way to go, and what we are doing now is just a small part. With the arrival of 2020, the blockchain world has embraced its eleventh year, and CoinEx has also ushered in its third year of growth. I am very grateful to every user who has always been supporting CoinEx. It is your encouragement along the way that makes it possible for me to share with you our progress in 2019 and look into 2020. Now I’m going to explain to you in details of what CoinEx has gone through in the past year and every new breakthrough it has achieved.
First, users are our first priority: 24-hour online customer service and key account privileges
“Users first” is the service principle that CoinEx has always implemented, and the ultimate product experience is our basic practice in abiding by this concept. As the chief product experience officer of CoinEx, I deliver one idea to the team on many occasions, that is, the most important for a product developer is the ability of instantly changing from an expert to a novice so that he or she can judge and design the product from users’ perspective. We want CoinEx to be a product that can be operated with ease even by a novice and a digital asset service platform that serves as a wallet. I believe that’s exactly what CoinEx means to its users as we really did it. In addition, in order to serve users around the world, we have launched versions of ten languages, respectively Arabic, Italian, Malaysia, German, Ukraine, Portuguese, French, Turkish, Vietnamese and Indonesian, in 2019. CoinEx has become a global trading platform with the most languages. High-quality and efficient service represents our efforts to implement the “users first” concept. In 2019, CoinEx’s global customer service team expanded four times on the original basis, and gradually improved the customer service system in practice. At CoinEx, every customer service personnel must be strictly selected and trained from interview to induction. We strive to ensure that each customer service personnel can be timely, meticulous and professional in answering users’ questions so that our users can enjoy high-quality services. As long as you have any doubt, the CoinEx customer service team will be there for you around the clock. On September 26, 2019, after months of user surveys and reference to the VIP service cases of hundreds of Fortune 500 companies, we officially launched a privilege program for key users. We must never be unworthy of every user’s trust, and we want every key user to enjoy his or her privileges at CoinEx. In addition to basic customer service, we provide them with “customized fast services” and “customized value-added services” from three aspects: the account, transaction, and service.
Second, build a complete product system: spot, futures, leveraged trading, options, perpetual contracts, CoinEx Lending, and Accelerator
In order to meet users’ diversified trading needs, we have refined our products carefully, and now we have established a complete product system covering spot, futures, leverage, options, perpetual contracts, wealth management products, and high-quality project accelerators. Spot Trading To enrich the asset classes of the spot market, the CoinEx Research Institute has dedicated itself to exploring and screening of global blockchain projects last year. At the end of 2019, there were 100 asset classes on CoinEx, a success in fulfilling the target set at the beginning of the year. For trading depth, we have introduced preferential policies for market makers, which is to cooperate with excellent quantitative teams in the market and run operating campaigns to increase our asset liquidity. Futures Trading On July 15, 2019, we launched a new trading service — futures contracts, and opened five major trading markets: Binance Coin, Huobi Token, OKB, Polkadot, and Telegram Open Network. At the same time, our original Call Auction along with Short-term/Long-term price limit ensures the stability of Futures market and large fluctuations in futures prices can be avoided. Leverage Trading In 2019, we launched a leverage trading function that allows users to invest more with small funds. Perpetual Contracts In addition to futures trading, we have also developed perpetual contracts to support the trading of digital currency futures such as BTC, BCH, LTC and ETH to meet the needs of professional traders for high leverage and arbitrage, inter temporal arbitrage and hedging. In the long run, such market is of great positive significance for digital assets. Options Trading In August 2019, we successfully launched a new derivatives trading market — options trading, a financial instrument based on futures. Compared with futures trading, options trading features lower risks, helping investors to profit from multiple dimensions. CoinEx Lending We launched CoinEx Lending, a wealth management product, which improves our derivatives services and provides users with an additional option for the pursuit of a stable investment. CoinEx Lending will distribute 70% of the platform’s interest from leveraged. Users only need to transfer the idle assets to CoinEx Lending to enjoy daily revenue, further enhancing their asset utilization. Excavator of quality projects: CoinEx Accelerator For the past decade since the birth of the blockchain, digital assets and projects have been driving the blockchain to realize its value step by step. As an important exploration of the application of blockchain technology, blockchain projects are often In 2019, after rigorous screening and in-depth research by the CoinEx Research Institute, the CoinEx Accelerator screened 13 premium blockchain projects including SEELE and BNN for users. These projects have proved excellent in both technology and asset appreciation. Among the ten projects with the highest return on investment according to media statistics in 2019, technology-based SEELE was included in the list with a 400% increase. At this point, CoinEx has completed the construction of the entire ecosystem for the product system. The cornerstone of the product has been solidified. What we need to do next is to make every function and service perfect.
Third, optimize the team structure and do something interesting with great minds
I once said that I wanted to create a company that is very fun, interesting, and awesome where some great minds are working on something exciting together. I have created the fun and interesting part. The main task of the past year is to find those great minds to join me. In 2019, the team went through a period of confusion and groping. There are some problems in terms of both staffing and department collaboration. Fortunately, such troubles have been greatly relieved after two organizational structure adjustments. In September 2019, Eddie, former Marketing Director at Bitmain, officially joined the CoinEx team. Eddie is an all-rounder with extensive experience in market operation and team management. I believe with him working with us, CoinEx will make greater breakthroughs in team management and brand building in the future. In addition, we have attracted increasing outstanding talents for the past year, and have grown to a team with nearly 100 members. At present, we have established a complete team management system, incentive system and training system. I always believe that only when the team members are united as one and all do a great job, can we provide better services for users.
Fourth, it is the mission of a digital asset service platform to screen high-quality projects: to launch 100 high-quality projects
The abundant types of trading assets serve as the foundation of a digital asset service platform. In the past year, the CoinEx Research Institute has been committed to exploring and screening high-quality projects worldwide, increasing the types and number of tradable assets for users. I am proud to say that, as of December 31, 2019, CoinEx has launched 100 high-quality blockchain projects. We ensure that every project has undergone in-depth research and investigation by the think tank of the Research Institute, and is finally strictly appraised by the coin issuance decision committee before it goes online. We hope that each CoinEx user can avoid unnecessary risks and rest more assured in investment. In 2020, we will continue to improve the asset list on CoinEx and provide users with global high-quality blockchain projects to further realize the vision of global and professional cryptocurrency exchange service provider.
Fifth, build the most solid cornerstone of the blockchain: CoinEx Chain, CoinEx DEX, and CET
At present, the public chain, the cornerstone of the blockchain industry, remains the bottleneck of the industry’s development, and the key still lies in technological breakthroughs. In 2019, CoinEx also explored the third generation of public chains. Our solution is three dedicated chains in parallel to achieve both performance and flexibility. On Nov.11 last year, ViaBTC, Bitmain, Matrixport, and Bitcoin.com jointly launched the Mainnet of CoinEx Chain, a milestone in our journey towards the ambition. CoinEx DEX is the first application scenario of CoinEx Chain. It is the world’s first DEX dedicated public chain developed on the Tendermint consensus protocol and Cosmos SDK, under the leadership of my good friend Jiazhi Jiang, a senior blockchain technology expert. CoinEx DEX is friendly to ordinary users who have zero experience in digital assets, and has made many innovations in applications and wallets. After CoinEx Chain and CoinEx DEX went online, CET was also given higher value and mission. As the basic currency of the public chain ecosystem, it has more value sources than the income of the CoinEx platform. Now we can use CET to develop tools at CoinEx DEX, to open accounts, to purchase and modify account names, etc.
Sixth, CoinEx’s ecosystem and partners
In the past year, besides the fruitful results in products and ecosystem improvements, CoinEx has also gained many like-minded partners. Market liquidity team In 2019, CoinEx further upgraded the market maker’s preferential policies. Market makers on other platforms or other excellent maker strategy teams can directly match CoinEx market makers and enjoy privileges at a negligible rate in CoinEx. CoinEx Chain nodes On October 16, 2019, CoinEx Chain officially launched the global Node Election plan. We set off from Shenzhen to places such as Beijing, Shanghai, Hangzhou, and Singapore to host offline campaigns. It’s easy to make new acquaintances, yet those who share the same ideals with you are hard to find. So we really cherish the cooperation with dozens of peers such as Matrixport, Hoo, TokenInsight, BTC.com, Bitcoin.com, Ant Mining Pool, Wayi, and NNB in the construction of the CoinEx Chain ecosystem. CoinEx Ambassadors Of course, CoinEx cannot grow without a group of special partners around the world — CoinEx Ambassadors. They commit themselves in work such as community building, promotion and product translation. They all contribute their share to CoinEx. I would also like to take this opportunity to express my gratitude to the CoinEx Ambassadors.
Seventh, keep moving forward in 2020
The year 2020 is a very special year. A considerable part of the important national strategic goals are set to be achieved in this year. Based on an intergenerational interval of a decade, we have entered the third generation of the 21st century. It is also a year of special significance for CoinEx. This year we will comprehensively upgrade our products to further enhance users’ experience, keep launching high-quality assets online at a steady pace to meet users’ more diversified demands for trading assets, accelerate globalization and compliance across the world, and launch a new Ambassador Program to drive the construction of CoinEx’s community. As for the CoinEx Chain, we will focus on the development of the Smart Chain, perform two hard fork upgrades on the DEX Chain, and introduce high-quality stable coins, Defi and other applications.
Blessings for the Future
The blockchain industry is still in its early stage of development, and huge room for growth is expected in the future. What we have to do is to continuously improve our product and service quality, as well as to enrich asset types to better meet user needs. Again, I would like to express my gratitude to the users who have shown great patience and support to CoinEx, to the CoinEx Chain nodes who have trusted us enough, to the CoinEx Ambassadors who have contributed a lot to our development, and to partners who have been working with us along the way. I wish you all the best in the new year! Haipo Yang, CoinEx CEO February, 2020 https://preview.redd.it/im4kwke3wtg41.jpg?width=1092&format=pjpg&auto=webp&s=7bb452833f2fa827f06a80c034dca1fa71025c73
Chinese importers in Russia are buying up to $30 million a day of tether (USDT) from Moscow’s over-the-counter trading desks.
They use the cryptocurrency to send large sums back to their home country, which has strict capital controls.
Previously the merchants used bitcoin for this, but when the market crashed in 2018 they switched to tether, which is designed to maintain parity with the U.S. dollar.
Despite longstanding questions about USDT’s collateral, in this market “nobody actually cares if tether is backed or not,” says one Moscow trader.
Vrrrrrrrrrrrrr….. The cash-counting machines were softly buzzing in an office with floor-to-ceiling windows overlooking Moscow’s landmarks. “Hear that sound?” asked the head of an over-the-counter (OTC) cryptocurrency trading desk — let’s call him ‘Oleg’ — who requested his real name and company be withheld. “You can hear it 24/7 in here.” Business is brisk thanks to a constant flow of Chinese merchants who come in daily with heavy bags of cash. Oleg said his OTC desk sells about $3 million worth of crypto every day. Most of it usually goes to China. But what’s perhaps most surprising is which crypto. Only 20 percent of Oleg’s sales are in bitcoin, the oldest cryptocurrency with the largest market capitalization. The other 80 percent is in the dollar-pegged token known as tether, or USDT. Tether’s best-known application is allowing crypto traders to move money between exchanges quickly to take advantage of arbitrage opportunities. But according to several Moscow OTC traders, it has at least one real-world use case – as the go-to remittance service for local Chinese importers. The total volume of USDT purchased by Chinese businesses can reach $10 million to $30 million daily, these traders said. “They accumulate a lot of cash in Moscow and need tether to transfer it to China,” said Maya Shakhnazarova, head of OTC trading at Huobi Russia, the Moscow office serving high-roller clients of Singapore-based exchange Huobi Global. It’s a simple process. “A client comes with cash, we register the price at exchanges, when we agree on a price, we make a deal,” Shakhnazarova told CoinDesk. “The client hands over cash and a wallet address, the seller sends USDT to the wallet.” Why tether? It has the usual advantages of crypto – no limits on how much money can be sent or where – without the volatility that makes most coins infeasible for moving millions across the border daily. Despite longstanding questions about USDT’s purported dollar backing, exacerbated by the New York State Attorney General (NYAG) court case against the issuing company Tether, the stablecoin usually trades around $1. The tether-for-rubles purchases often take place in offices like Huobi’s in the steel-and-glass skyscraper district of Moscow City. “There are a lot of OTCs here in Moscow City, a bunch of offices in every building, and the volumes for them all can reach several dozens of millions of dollars a day. It’s all paid for in cash,” Shakhnazarova said. Tether’s killer app Chinese grey-market importers used to rely on bitcoin before the 2018 bear market, another OTC dealer, Roman Dobrynin, told CoinDesk. As the price was ever-growing, merchants and the intermediaries helping them buy crypto could make some extra money along the way. But since the beginning of 2018, hoping that your bitcoin will still be worth the same or more at the end of the transfer became too risky. “As the price was going down, tether became much more convenient to use,” said Dobrynin. “China is totally reliant on USDT, they trust in it a lot, plus it’s very liquid.” His own clients are mostly Chinese, and they usually find him by word of mouth, connecting via Telegram. To buy or sell USDT for dollars from Tether itself, a trader must be verified through the company’s know-your-customer (KYC) process. However, since the token runs on top of public blockchain networks (bitcoin, ethereum and tron), anyone can receive or send it, and secondary trades are unrestricted. Tether did not respond to requests for comment by press time. Back in China, the merchants can exchange USDT for fiat easily, even though the People’s Bank of China banned fiat-to-crypto spot trading in September 2017, forcing the exchanges to move out of the country and limiting trading to crypto-to-crypto pairs. Chinese traders who need to liquidate crypto assets into Chinese yuan can still go to an OTC market maker, such as those registered on exchanges like Huobi and OKEx, to get matched with buyers and send them crypto after receiving a wire transfer via a bank, AliPay or WeChat Pay. Critics of Tether have long questioned whether the stablecoin was fully backed 1:1 with dollars, as the company long insisted. The NYAG case revealed that Tether had loaned a big chunk of its capital reserves to Bitfinex, an exchange with overlapping management and owners, leaving the coin only 74 percent collateralized by cash and equivalents. None of this seems to faze the Moscow traders or their Chinese clients. “Nobody actually cares if tether is backed or not,” says Konstantin Plavnik, chief operating officer of Moscow-based crypto derivatives exchange Xena. Confidence in Tether’s solvency relies on long-time habit and convenience: this market needs tether, so tether is trusted. OTC traders also point out that USDT’s daily volume exceeds its supply in circulation several times over, which indicates that people turn the token around multiple times during the day. For example, according to CoinMarketCap, on July 29, the 24-hour volume of USDT was recorded at $17.5 billion, while the total supply was just around $4 billion. The turnaround of tether is fast, so for the merchants using the token for remittances, whether it’s worth something or not matters only within one day. Large batches of USDT get transferred to China overnight and then exchanged for yuan, crypto entrepreneurs in Moscow told CoinDesk. “USDT will stay propped by the power of habit and trust of its users,” said Vladislav Bulochnikov, the head of product at crypto wallet app provider Chatex. “Even if it loses half of its backing — it’ll still be out there.” Skirting capital controls Stepping back, the Chinese government maintains strict capital controls, limiting the amount of foreign currency anyone can buy or sell to $50,000 a year. People can apply for an additional quota, but still the amount of currency they can buy and sell will be limited. In this situation, some Chinese have opted to use crypto to move money across the border, Bloomberg reported in 2017. The fact that Chinese merchants bringing cheap goods to Moscow’s shopping malls use crypto to move money around was all but officially recognized by the Russian authorities last year. Several large malls in the city account for around $9.5 billion of unregulated cash flow monthly, and most of the merchants are from China, said Yuri Polupanov, the Bank of Russia’s head of financial monitoring and currency control, during an event hosted by Thomson Reuters in Moscow in April 2018. These malls, located inside huge warehouses on the outskirts of Moscow, host multiple retail stands, selling mostly clothing, usually for cheap and for cash. They are shopping Meccas for people who can’t afford to spend much on their wardrobes and avoid even mass-market chain stores. “We see most of the revenue turned into cryptocurrency, which is not reported in any way at the moment,” Polupanov said at the Thomson Reuters event, according to the RBK news agency. “We see simultaneous transfers of that cryptocurrency via email to the homeland of those merchants and producers, and the following exchange of it for the local currency there.” According to a March 2019 report in the Russian newspaper Novaya Gazeta, cash would be received at places like a hotel called “Druzhba” (“Friendship” in Russian), located next to the shopping mall named “Moscow.” Then this cash would be swapped for crypto and sent to Hong Kong. The wholesale trade offices at Druzhba could be turning around $10 million to $12 million daily, Novaya Gazeta’s sources estimated. The operations were ceased for a short time after police raided the hotel, along with the malls mentioned by the Bank of Russia, in March of this year. Small crypto desks are still functioning at those malls, OTC trader Dobrynin believes, though they likely don’t provide the volumes merchants need. Outside traders are often afraid to go to those areas to make deals as things can get dangerous there, he said, explaining:
“The personnel working there can sell somebody information about how much money you have, and some armed people can meet you on your way back. People go there only with armed bodyguards.”
Wolfie Zhao contributed reporting. Russian ruble and Chinese yuan banknotes, image viaShutterstock
An incredible comment about bitcoin from a zerohedge reader from May/2017
http://www.zerohedge.com/news/2017-05-31/ethereum-forecast-surpass-bitcoin-2018#comment-9633923 "The deflationary aspects of a free market avalanche of investment capital into cryptocurrencies is terrifying, especially for a world that is drowning in debt represented by existing national currencies. Here's the frightening scenario : you owe several hundred thousand dollars or yen or euro on your mortgage and other debt. Your employer is pretty hip and they start paying you in this new cryptocurrency because they see the currency rising so they have transferred all the company's cash assets including payroll into a cryptocurrency. They hope the transfer will lead to increased bottom line earnings for the company, since the cryptocurrency keeps rising and that means the company may enjoy a currency arbitrage profit as their former currency not in crypto keeps rising and providing profits. For you, the new payments in crypto are great, because by the time you finish paying your bills each month your paycheck has risen in value...so its like getting a bonus with every paycheck ! What's even better, you easily transfer enough cryptocurrency each month into dollars because the mortgage servicer who you sends your mortgage to specified in the mortgage agreement that your payments will be in dollars. So too did the credit card companies. So you translate some of your crypto paycheck into dollars and pay your debt bills. Here's where it gets interesting... The mortgage servicer and the credit card banks receive your dollars as planned. But like you, they are having to start transacting more business in cryptocurrency as the world marches toward the brave new world, and so the dollars they are being paid by you to settle your debts with them are becoming less and less powerful in terms of how much cryptocurrency those dollars can buy. In real buying power terms, the banks you owe money to start losing buying power when they have to translate dollars they are paid into cryptocurrency, and that is causing the banks to suffer loses to its overall earnings. When banks start losing money, they become more cautious and lend less money. There will be the constant losses doe to currency translation from dollars to crypto, along with risk managers in the banks cautioning not to make new loans in crypto because the more the crypto rises in value against existing currencies, the more likely will there be a correction in crypto value that means the crypto collected on the new loans will be worth less than the crypto lent. When banks reduce their appetites for making loans, economies slow down and suffer. The gain that indebted consumers made from the cryptocurrency translation resulted in offsetting losses for banks. Since there are a lot fewer banks than borrowers, the gains for each individual borrower are a lot smaller than the huge losses that the banks will take in receiving loan payments in a currency that is in free fall because of the supply-demand equation for the more favored crypto. What you then have is a mortgage crisis like in 2007, magnified several times over. In the mortgage crisis, individuals received small benefits by living in homes without paying mortgages, while banks and holders of mortgage backed security liabilities died a death of a million slashes as they absorbed all of the defaults. This time it will be far far far worse. What makes this scenario even more catastrophic is that in order to stay in business, the banks will need massive capital infusions from governments, just like last time. But since governments cannot mine cryptocurrency like they could print currency, whatever infusions of liquidity they make to the banks to save them will simply serve to push the value of cryptocurrencies higher, causing this entire process to multiply to the point of runaway reaction. Cryptocurrency mining procedures are just too small and difficult and time consuming to be useful in a liquidity starved world. The solution, of course, is to pull the cryptocurrency plug once the problem appears. But as we see time and again in financial crises, by the time the problem appears its way too late to take corrective action that would avert a catastrophe. So that's where the world unwittingly is going, and because governments have lost so much trust in their constituencies, and also because they have shown an incredible set of blind eyes to work on fixing problems, this deflationary firestorm will occur and destroy the world's financial system. There is a huge amount of money to be made on all of this, just think about who gets hurt if the major banks really fail and the governments are unable to save them. Bank stocks, industrial stocks, home builders, home furnishers...basically everyone. This is the one scenario in which the stock market could not even be saved by the government printing press...what an interesting idea ! So from an investment standpoint, the growing wave into cryptocurrency will provide the investment opportunity of a lifetime. Its the perfect storm...it combines the seemingly universal dislike of government intervention to prop up highly overvalued stock markets so the rich get richer while the working person cannot get a decent raise, with the also seemingly universal desire to keep the internet free and beyond the clutches of government regulation. It gets rid of these dastardly Central Banks that have done nothing to help anyone but that same wealthy one percent that benefits from zero percent interest rates, and individuals love the perceived strength that a currency freed from government entanglement means to a free world. Everyone sees the nirvana, but hardly anyone understands the devastation that deflation has on a world so over-leveraged on debt. Interestingly, the winnings from this deflation have nothing to do with whether you decide to put a few thousand dollars into Bitcoin so you can look cool to your kids and co-workers. No, the profits in this one will be in the old school avenues, assets denominated in the old currencies that crypto is looking to replace. Imagine shorting Goldman's stock and actually seeing it drop and stay down. Or seeing Berkshire Hathaway put that old man who has been a beneficiary of his time sink into oblivion and turn the old wizard into an old fool. The most interesting times in the financial world occur when the world moves from one age to another. Think of agrarian to industrial, industrial to government/military, and now government/military to information age. At all of these interfaces, the seams were sharp enough to cause a terrible rip in the fabric of the world economy, and winter came in the form of global depressions to wipe away the old leaves and dead wood. Cryptocurrency will be the death knell of the government/military age, because it takes government out of controlling the money. There will be a new money with millions of new overseers and a free market that replaces the dominance of small cabals of government bureaucrats who dictate the terms of commerce in the world. That seam is going to be greater than most in the past, because of the magnitude of what is being replaced and the terribly ripe condition that exists to be replaced. The interface will be epic, the transition states along the way will be horrific. Remember what Brad Pitt cautioned in The Big Short :"...for every one point rise in the unemployment rate, 40,000 people die". That relationship will rise when this nightmare takes hold. It’s so interesting how a development led by young people - the advent and expansionary use of cryptocurrency - still will be subject to the old rules of society. The axiom "may you live in interesting times" - originally intended to be a cautionary advisory - along with the caution to "be careful what you wish for as it might come true" both ring in my ears as I contemplate how cryptocurrency will be the bleach that washes away the excesses of a dying age in favor of the birth of a new one. Economic depressions are magnificent social colonics, as they wash away all of the filth that accumulated in the prior age. Every bad thing that you saw on display in the lead up and psot script of the financial crisis is about to be gutted and burned. Yet the world will enter its new economic age hamstrung by the pains of paying a severe penance for its foolishness of the age it is putting to rest. The best thing about economic depressions is that the greatest transfers of wealth - usually from the haves to the have nots - occur in these times. So if you really believe that cryptocurrency is here to stay and the next big thing of the future, then take precautions now and get yourself in position to be one of these beneficiaries of the transferring wealth. Have your plan ready, you will know when its time to execute. Fortunately for the foolishness of the Gods of the old world, they have put up the prices of assets so high that you will have plenty of time to get onboard when the train starts heading down the mountainside. Enjoy the ride !" -Harry Lightning
Revolution!! *Prelaunching* Alert! HitPay Wallet & Token Global Launch will be on 1st February’2020.
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There is nothing wrong, it is the dog village. In the currency circle, it is the people who hold a lot of coins that affect the price of the currency. As a dog village with sufficient funds, the media of the combined currency circle releases the news and guides the impetuous small leek to follow suit and let the currency price Rising and falling are a breeze. So who are the dog villages with a lot of funds? The first part is the miners. They are the source of the coins. Bitcoins are generated by mining. This part of the total bitcoin is becoming less and less. If the miners do not have Tun currency, it will lose control of the market currency price. The second part is the exchange. The exchange has a large number of users' coins. As long as the user's coins are on the exchange, it cannot be used, but as long as the data of the user's funds is available, the exchange has room to operate. After all, this is An era when data is king. The third part is the capital fund team. When we wanted EOS to be a super node, the real estate speculators in Wenzhou all came in. It was because of the involvement of these capitals that it affected the currency price and caused a real wave of fire. Therefore, with so many powerful bookmakers in the hands, the speculators will obey it. Is there no way to make money by speculating in coins? In fact, in the dogfights of major dog villages, we still have money-making skills, such as adding people to a fund team, depositing funds, and having funds to invest to earn income. Basically is to lie down and make money. At present, in the digital currency wealth management market, there are many products with annualized income of more than 10%. For example, fund company Bitcapital, which obtains excess returns through long-term holding of high-quality digital assets. At present, the arbitrage treasure jointly launched by it and the QB exchange is a good wealth management product. The basic strategy is to use the spread of digital currency spot in different markets to carry out cross-market arbitrage, which has brought stable returns to users for a long time since 2013.Expected annualized earnings can be as high as 12%.The currency circle is ups and downs, and winning in stability is the long-term way.
Rebalancing Crypto Portfolio: What is BAT, Brave, PAY & TenX?
Digital money that’s instant, private, and free from bank fees. Download our official wallet app and start using Bitcoin today. Read news, start mining, and buy BTC or BCH. T here are many reasons why the demand for Bitcoin in South Africa is higher than the supply. One of them is that it is prohibited for companies to send money abroad for the purchase of Cryptocurrencies. So any South African company that uses Bitcoin for their business operations is forced to buy it in the local market, this pushes up demand which in turn pushes up the price of Bitcoin locally. Bitcoin has taken over the cryptocurrency market. It’s the largest and most well-known digital currency today. Many large companies are accepting Bitcoin as a legitimate source of funds. This post will cover them all. Who Accepts Bitcoin Summary. A 2020 survey by HSB reveals that 36% of small-medium businesses in the US accept Bitcoin. The ... In order to provide an actual profit of an Arbitrage trade on Cryptocurrencies and Bitcoin in specific, there are other factors such as the fees involved. Each trade (transaction) on the mentioned exchanges and all crypto currency exchanges has a fee to it. Depending on the amount and number of trades, Bitcoin trading would have from 0 to 0.5% of trading fee involved with it, with the most ... With cryptocurrency trading still in its infancy and markets spread all around the world, there can sometimes be significant price differences between exchanges.Cryptocurrency arbitrage allows you to take advantage of those price differences, buying a crypto on one exchange where the price is low and then immediately selling it on another exchange where the price is high.
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