Jonathan is the lead developer and ceo of Aleph – Aleph is a cloud computing platform that makes it easy for DeFi and Web3 dapps to securely access trusted off-chain data or computation. One of their current projects is working to solve the problem of NFT security standards and ownership.
Day: April 13, 2021
Ripple CTO: It’s Time to ‘Seriously Consider’ Selling Some Crypto
In brief
- Ripple Labs CTO David Schwartz says those with life-changing amounts of crypto should think about selling some.
- Ripple is fighting a $1.3 billion SEC lawsuit over whether its XRP token is a security.
Ripple Labs CTO David Schwartz is giving some reasonably sound investment advice, though it comes at a strange time for the payments network.
“If you have life-changing amounts of cryptocurrency, please take some time to seriously consider selling some to reduce your risk and exposure,” tweeted Schwartz, before adding: “This is not any kind of prediction about what the market will do.”
He went on to say that holders should reevaluate if they have at least half a year’s earnings in crypto and/or “significant debt.” Given the hot state of the crypto market—Ripple has risen 850% in the last year and Bitcoin is up 790% to $63,000—that’s probably most long-term holders.
Schwartz has taken his own advice in the past. He admitted in 2019 to having sold $40,000 worth of Ethereum before the peak of the late-2017 bull run to buy solar panels. In the latest thread, he suggested that he shouldn’t have sold all of it. “I guess I was thinking it would go back down and I’d buy back in,” he tweeted. “But it didn’t. You can regret taking too little risk too, of course.”
When taken alone, Schwartz’s tweets are hardly controversial. When your risky investment into a relatively volatile asset pays off, best to convert some of the profit into something more stable. That’s why retirement mutual funds rebalance every year to increase the percentage of bonds relative to stocks. It locks in earnings.
But the tweets come during the middle of a $1.3 billion SEC lawsuit against Ripple Labs over what the agency views as unregistered securities sales of the payment network’s XRP token. That case hinges on whether XRP is, in fact, an investment contract or merely a virtual currency. (The latter is how the SEC views Bitcoin and Ethereum; Ripple is hoping to be treated the same way.)
Ripple just yesterday filed a motion to dismiss the SEC’s suit after the tech firm won three fairly significant decisions. First, the SEC will have to share some documents detailing its discussions of Ripple, Bitcoin, and Ethereum. Second, Ripple can redact some of its executives’ private email exchanges, thereby limiting what the SEC can use as ammo. And last, the SEC’s request for executives’ personal financial data was denied.
But the case isn’t over yet. Usually, company executives try to maintain a low profile during legal proceedings, lest their words become evidence.
Then again, Schwartz was referring generally to cryptocurrencies, not XRP. And he implied that crypto prices can—and do—go down. Not XRP, though. It’s going up, hitting its highest price this year at $1.81.
Is anyone selling?
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Coinbase Awards All Employees 100 Shares in Surprise Giveaway
In brief
- The surprise giveaway was a “thank you” according to Coinbase
- Only Coinbase’s 1700 full-time employees are eligible
When Coinbase goes public on Wednesday, the list of people eligible to cash in will be longer than expected. That’s thanks to a recent decision by the company to hand out 100 shares to its approximately 1700 employees around the world.
The giveaway means that every full-time employee at the company is poised to become $25,000 richer based on a $250 reference price set by the NASDAQ stock exchange on Tuesday. The actual price at which the stock begins to trade, however, could be significantly higher—or lower.
The surprise gift was actually announced during a Coinbase all-hands meeting on March 25 . The Irish publication Business Post first reported the 100 share distribution upon learning of it from employees at Coinbase’s Dublin office. A Coinbase spokesperson confirmed the giveaway to Decrypt today, describing it as a “thank you” to the company’s staff.
In recent years, Coinbase has replaced equity grants to new employees with so-called Restricted Stock Units (RSUs) that permit recipients to acquire shares over time. By contrast, the March 25 distribution amounts to a no-strings-attached grant.
Like other tech and fintech companies, Coinbase relies on contractors to perform many lower-level jobs, so people who provide the company with tasks like cafeteria and janitorial services will not receive any of the largesse.
Meanwhile, former and current senior executives at the company are already awash in Coinbase shares. These include CEO Brian Armstrong, but also Coinbase’s head of product and chief legal officer, who are sitting on hundreds of thousands or millions of shares, according to regulatory filings.
Coinbase is making its shares available to the public via a direct listing, which differs from a traditional initial public offering in that the company in question does not rely on underwriters, and does not issue a new batch of shares. Coinbase stock is expected to begin trading Wednesday morning San Francisco time, where the company is headquartered. The listing marks a major milestone for the crypto industry as a whole, and is expected to inform the price of other crypto companies and have broader implications for Bitcoin.
Bitcoin Charging to $120,000, Says Veteran Trader Tone Vays – Here’s When
Veteran trader and crypto analyst Tone Vays says that Bitcoin (BTC) is headed towards $120,000 and reveals when he thinks the flagship cryptocurrency can get there.
In a new video, Vays tells his 105,000 YouTube subscribers why he thinks Bitcoin is close to hitting his bullish near-term price target of around $80,000.
“Bitcoin is currently at a brand new weekly all-time high. This is absolutely incredible. We have not broken the all-time high yet on a swing top that was $61,769 and the swing top last night was $61,200, but the close is so important. It is so incredibly important. I know it’s a 24/7 market, but I’m a traditional TA (technical analysis) guy and to me, it is all about the close and the weekly close being at a new all-time high makes me really, really bullish. I believe we are going to come close to hitting this target.
I know my target is in the low $80,000 range… I would be happy exiting my trades in the mid $70,000 range and the slower we get there, the more bullish I’ll remain. The faster we get there, the more I’ll be looking for a crash.”
While Vays is short-term bullish on Bitcoin, he expects a major pullback before the world’s leading crypto asset can do a giant leap.
“I am now looking for six more weeks of upside. Can we get to $120,000? Can we double in price over the next six weeks? Yes. Am I anticipating a doubling of the price over the next six weeks? I’m going to say no…
I think sometime in the next four to five weeks, we will reach a top and begin a more critical pullback.”
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Record $8B open interest on Ethereum futures shows the pros are ‘here’
The price of Ether continues to push higher, and many analysts are calling for $3,000 as a short-term target. All of this “success” takes place in the face of Ether (ETH) being in a bottleneck regarding high fees, network congestion and a tense situation with miners.
With decentralized finance (DeFi) applications taking center stage and the aggregate volumes at exchanges surpassing $4 billion per day, Ether’s price has rallied over 200% since the start of the year, marking a new all-time high at $2,300 on April 13.
This impressive price surge caused Ether’s open interest to reach a record high of $8 billion. The figure represents 50% of Bitcoin’s (BTC) markets just two months ago.
Some investors might say that derivatives contracts pose a risk for larger corrections due to liquidations, but one must remember that the same instrument can be used for hedging and arbitrage.
Not every short seller is aiming for lower prices
While the typical retail trader relies on perpetual futures (inverse swaps) primarily for short-term leverage positions, market makers and professional traders will tend to seek yields.
This is usually achieved via “cash and carry” strategies that combine options trades. Therefore, to understand whether the current open interest represents a risk or an opportunity, investors must look at other indicators such as the funding rate.
Massive liquidations typically occur when buyers (longs) are excessively optimistic. Hence, a 7% intraday correction forcefully terminates everyone using 15x or higher leverage. Despite making headlines, $1 billion orders would represent a mere 6% of the current average volume.
As shown above, Ether futures aggregate volumes will climb above $25 billion when additional volatility occurs. This data means the eventual liquidation impact might be even more negligible.
The impact of futures goes in both direction
Analysts tend to ignore a futures contracts’ buy-side impact, especially during a bull run. No one blames derivatives for a sudden 7% price increase, although that might have accelerated the movement. This theory holds especially true considering the steep funding rate charged for longs. Traders should avoid these moments unless they’re confident that the rally will continue.
Whenever longs are the ones demanding more leverage, the funding rate will become positive. A 0.15% fee every eight hours equals 3.2% per week. Therefore, arbitrage desks and whales will buy Ether at regular exchanges and simultaneously short the futures to collect the funding rate. This trade is known as “cash and carry,” and it is not dependent on markets moving up or down.
Markets eventually normalize on their own
As the current futures open interest continues to rise, it reflects that markets are becoming even healthier, allowing even larger players to participate in derivatives trading.
Its CME listing was undoubtedly an important milestone for Ether, and this is confirmed by the $8 billion open interest mark.
The funding rate will adjust itself by welcoming more participants on the “cash and carry” side or by positions being terminated due to high costs.
It doesn’t necessarily end with billion-dollar liquidations, but it certainly raises the risk of them occurring. Nevertheless, these same contracts could have been used to drive Ether’s price up, netting the impact over time.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
A Case For Buying More Bitcoin — A Letter To Ruby
Originally posted on Jakeeswoodhouse.medium.com
Ruby Rose and I, Melbourne, January 2021
This article was inspired by a letter I wrote in January 2021 to my 6-month-old daughter, Ruby Rose.
I am sharing this publicly in the hope it might assist other families as they plan for their long-term financial future.
Note:
- It is now April 2021, so the references and prices are old; however, the rationale remains valid.
- I have edited this version from the original I wrote, keeping some of the investment details private.
- I use Twitter to learn about Bitcoin, and you can follow me there. I would love to hear from you!
Dear Ruby,
First, I love you, and being a parent to you with your mum has been the happiest part of my life so far.
This is a letter that you might find boring, but it was necessary to organize my thoughts, which helped to make a major financial decision that will form part of your inheritance in the future.
I will discuss inheriting wealth, the problems with preserving it, and the solution that has only recently been invented: Bitcoin. Throughout, you will find links to information written by experts in the field whom I’ve researched and trust.
1. Unexpected Inheritance
On January 1st, 2009, my father, your Grandfather, died. He had an unexpected heart attack while working in the forest near our home, aged only 48 years.
This was one of the hardest times in my life, not only because I was grieving for my father, but also because a large financial responsibility was pushed onto me as the eldest son.
What were we going to do?
In 2010, we decided to sell our home, a property that had been in our family for three generations, leading to an unexpected portion of the inheritance being converted to fiat currency.
2. The Inflation Problem
On receipt of GBP (£) in cash by way of an inheritance, what do you do with it?
You want to keep it safe, accessible, and pass the value onto the next generation—but how?
- You could keep the GBP in a bank
- You could invest it
“Why not just keep it in the bank,” I hear you asking? “You can access it anytime, it’s safe, and you don’t need to take any risks with it!”
Well here’s the problem: GBP is losing its value over time due to inflation.
What is inflation?
Inflation is a currency’s decline in purchasing power over time.
As an example: if an apple costs £1 today, it’s possible that it could cost £2 for the same apple 1 year from today. This would effectively decrease the time value of money, as it would cost twice as much to purchase the same product in the future.
Inflation is caused by a number of different things, including changes in the demand and supply of goods and money, the latter of which is the major problem we face today when saving to preserve wealth.
What has the UK’s inflation rate been?
The UK government uses the Consumer Price Index (CPI) as the “basket of goods” against which it measures inflation. Analysis of its long-term trends suggests that the UK’s inflation rate is not a problem and in line with the Bank Of England’s targets (i.e., the cost of living is increasing at the intended rate of approximately 2% annually).
Source: Office for National Statistics
What is the truth?
In my opinion, the government manipulates the CPI to help achieve its inflation targets, and therefore, the CPI does not reflect the real changes in prices.
For example, take “shrinkflation,” in which a chocolate bar continues to be sold for the same price of £1, but the manufacturer reduces its size over time. This means your £1 buys you less real value than before, and although the Office for National Statistics claims to factor this in, I am not so sure.
As a further example, Tanay Jaipura makes an interesting point by citing the Chapwood index.
Wow, 10%–12% inflation! But why?
The money supply.
The source of most of the inflation we see today is the monetary policies set by central banks, whether the Bank of England, the United States Federal Reserve, or the Royal Bank of Australia.
The last decade has seen huge quantitative easing (QE) programs, in which central banks create new money and increase the total money supply in circulation.
For example, if an economy had £100 in circulation, and the central bank created £10, then the money supply would increase by 10% to £110. This means that the purchasing power of any money you had has just been eroded by 10%.
Please see this excellent presentation by Parker Lewis that explains how the United States Federal Reserve has been “debasing” the USD. In March 2020, the Fed created $2.9 trillion in new money, and Parker predicts that this will happen again. He goes on to explain why bitcoin is exciting.
What’s next?
So, if I were to simply save GBP in the bank until it was time to pass it to you, your inheritance would have lost huge amounts of value in real terms: somewhere between 2% and 12% per year, according to our data.
What does this mean?
One has to invest.
3. Investment History
For 10 years, I’ve been working to preserve our wealth prudently for you, investing across different asset classes with a number of services.
Property
I made three real property investments: one is the house in which we now live, and the others are apartments. I leveraged the buy-to-let mortgage market, renovated one flat, and had tenants rent when possible.
Public Markets
I used wealth managers Ruffer and Tribe to invest in public markets, giving me exposure to financial products such as commodities, currencies, debt, equities, and funds.
Private Equity Angel
I joined an angel investment syndicate, Green Angel Syndicate, to invest in cleantech startups. I deployed a small amount of capital into multiple high-growth, high-potential technology companies.
I am happy to say that I’ve made more good decisions than bad, in that I’ve not lost all our money, but it has not all been smooth sailing.
4. Investment Problems
Investing is not easy, and I came across a number of problems:
Property
- Management is expensive. Rental agents charge 12% of each year’s rent to manage a tenancy, and unexpected operating expenses and vacancies happen, so yields are inconsistent.
- It is illiquid, with high transaction costs. They are not easy to buy or sell, and even when you can, there are very high transaction costs (approximately 10%–20% of the asset value can be lost to agents, lawyers, and taxes).
- Strong regulations. For example, the UK government now asks for 6 months’ notice to end a tenancy, so to sell your asset, you now have to wait out that period.
Public Markets
- Poor transparency of investment. Once annually, you are given a portfolio report by your wealth manager that includes a complex dataset on how your GBP was invested, which is hard to decipher.
- Misaligned fee structure. You have to pay an annual management fee of approximately 1%, regardless of performance, so there is no recompense for poor performance.
- Strong regulations. For example, certain assets can only be accessed by regulated entities, meaning that you have to use a wealth manager rather than invest personally.
Private Equity Angel
- Illiquid. It is only possible to make a positive return after the startup has a liquidity event, such as an acquisition or IPO.
- Long-term. Because of the amount of time required to build a profitable business, it is unlikely that you will get a return before 10 years, if not longer.
- High-risk. Investing into pre-revenue or pre-profitable businesses is by nature very risky, with a high chance that your investment will fail, and in that case, you receive no returns at all.
Remember: the objective of all this investing is to store value over time, which because of inflation rates means your investments need to gain more than 12% per year.
Akshay BD nicely summarizes the situation into which I have been forced:
5. Dad’s Bitcoin History
It’s about time we talk about Bitcoin. In December 2015, thanks to the influence of my friend Dan Burke, I purchased 13 bitcoin at approximately $450 per coin. Frankly, it was a gamble on an interesting new technology about which I knew very little.
Over time, I sold off 75%:
- October 2016 — to pay for a trip to Japan with your mum
- May 2017 —to pay for travels in South America with your mum
- July 2017 — out of fear that the Bitcoin Cash hard fork would negatively affect the price
Screenshot showing the dates and prices of my bitcoin trades
The story you will likely find most amusing is of when I used my Bitcoin Cash to buy a 1980’s Mercedes SL350 from a rapper called “Black the Ripper.” I didn’t want the coins after the hard fork, so while browsing eBay in January 2018, I found a car advertisement stating that the owner was “willing to exchange for crypto.”
The car broke down on day 1, used to leak on your mum’s side, and was a nightmare for the 2 months we owned it.
At the time of writing, we still own 3 bitcoin, each valued at $31k.
(Editors note: bitcoin is now worth more than $60,000.)
Screenshot of bitcoin portfolio performance, 2015–present
The value of each bitcoin has gone up almost 7000%, or 70✕, in just 5 years.
These gains can be attributed partially to the inflation problem we’ve discussed, but also to the newfound demand for bitcoin as the technology matures.
Without a doubt, bitcoin is the best performing asset I have ever owned, and this experience has laid the foundation for my conviction in its future.
6. What Is Bitcoin?
I’ve just finished reading two excellent books, both of which were written since my first bitcoin purchase in 2015 and are representative of the number of intelligent people who have since been drawn into the space:
Inventing Bitcoin takes just a couple of hours to read and is a nice summary of the technology. Here are two excerpts from the book that explain what Bitcoin is:
1st excerpt from Inventing Bitcoin
2nd excerpt from Inventing Bitcoin
The Bitcoin Standard is also one of the most mind-blowing books I’ve ever read, and it has been a critical basis for my newfound conviction in the asset. I love the history of money, its relevance in today’s macroeconomic scenario, and the theory of “hard money.”
If you’d like to hear a podcast that covers many of the questions most people have about Bitcoin, then have a listen to “Bitcoin Common Misconceptions” with Preston Pysh and Robert Breedlove. They cover many of the misgivings I initially had with Bitcoin, discussing the essence of money, how the technology works, and the lack of potential for government intervention.
I also recommend reading this article, “The Number Zero and Bitcoin” by Robert Breedlove. It provides an amazing historical recap of what money is and how it has evolved, including the revolutionary impact of the invention of zero in mathematics. The concept that people used to only be able to view the world in fractions and not move through zero into negative or make multiple subdivisions with a decimal point is fascinating. Breedlove frames Bitcoin as being as potentially revolutionary as the concept of zero.
7. Bitcoin’s Impact
Bitcoin has the potential to have a huge positive social impact on people. Yan Pritzker made the interesting point that people who are unbanked in developing countries adopt Bitcoin, among other use cases.
Alex Gladstein made the case for Bitcoin as a human rights issue here:
The final slide summarizes his points nicely:
Parker Lewis is very concise in his analysis here. He contends that Bitcoin has far-reaching ramifications as far as reduction of the power that modern governments wield today, which I personally support:
8. Why Buy Bitcoin Now?
Since 2015, so much has changed in the Bitcoin space, which is very exciting.
- Stock-listed companies are buying bitcoin: This podcast featuring a conversation between Raoul Pal and Michael Saylor was what triggered my most recent dive down the Bitcoin rabbit hole. Specifically, I was attracted to the way Saylor spoke about how to preserve his company’s wealth for 100 years from now, which is the exact lens I have been using for the past 10 years, and the problem he was facing with regard to inflation. The upshot was that he discovered and researched Bitcoin, and then persuaded his US stock-listed company board to buy $450m worth of bitcoin from their cash reserves. (Wow!)
- Tech investors are openly buying bitcoin: I follow Shaan Puri, who has an excellent take on all things startups, and he is very open about the positive case for bitcoin and his personal asset allocations here:
- High-net-worth money is buying bitcoin: Mexico’s 2nd-richest man recently announced that 10% of his liquid wealth is in bitcoin after having read The Bitcoin Standard.
- Institutional investors are buying (more) bitcoin: This is an example of an institutional investor (Skybridge Capital) that has already invested in bitcoin raising funds for additional bitcoin investment.
- Analysts are bullish: The Bitcoin Liferaft is another interesting piece of analysis from the extremely respected investor Raoul Pal. In addition, Dan Held explains nicely here and here why we are currently in a potential supercycle:
PlanB is another interesting analyst who is very bullish with his modeling here:
- Exchanges are bullish: The Winklevoss brothers, Tyler and Cameron, were very early adopters of bitcoin. They see it as the “money network,” which is interesting considering their involvement in the world’s most famous social network, Facebook. This is another podcast with Raoul Pal in which they talk of bitcoin at $20k being the “trade of the decade.” Their business, Gemini, sees itself as people’s portal into digital assets and also aims to be the custodian of their assets. Thus, they aim for their clients to avoid the need to self-custody their bitcoin. (Beware the mantra of “not your keys, not your coins,” which is what I am following)
Finally, I like Mark Moss and how simply he puts the use case for bitcoin here:
(Note to reader: I built a website with links to all the bitcoin research I have conducted, www.bitcoinwithjake.com. check it out for articles, podcasts, and videos!)
9. Features of holding bitcoin:
Bitcoin is going to be easier to manage than my previous investments because of some clear differences:
- Liquidity
- No management fees
- No operating expenses
- Transparency
10. How Do We Buy Bitcoin?
I use an exchange called CoinFloor to exchange my GBP for bitcoin and then send it digitally to my wallet.
In this podcast, the founder of Coinfloor, Obi, talks well about where we are on the adoption curve: very early. In particular, I am fond of his point about how many smart businesspeople are still wrapped up in their day-to-day roles and haven’t had a chance to study Bitcoin and learn of the benefits it could bring them.
11. How Do We Store Bitcoin?
Bitcoin allows you to take total control of your money, hence “self-custody,” meaning that we must look after it with the utmost care.
“Not your keys, not your coins.”
I researched and found Unchained Capital to help set up a multisig wallet, which stores our bitcoin.
This means there is no single point of failure, and our wealth is protected by multiple people with multiple keys in multiple places.
(Take note, potential thief! Even if you bash my door down, you can’t access our bitcoin, as the required keys are spread across multiple locations.)
12. The Risks
Of course, there are risks involved, which I pondered long and hard. Here are the main ones:
- Inheritance: In the case of my sudden death, like what happened to grandpa, what happens to our bitcoin? This was hands-down my greatest concern.
- Loss: What if you send your bitcoin to the wrong place? Or lose access somehow?
- Theft: What happens if someone hacks you? Or, what if someone pretends to be someone else and defrauds you?
Well, the answer to these first problems has been the multisig setup that Unchained Capital provides. I cannot recommend them strongly enough.
- Regulation: Governments like to control the money supply, even though they all claim that their central banks are independent, so there is likely to be some kind of regulatory pushback in the future. Unchained Capital will keep us fully up-to-date with regulatory changes, and I also advise you listen to the “Common Misconceptions” podcast with Robert Breedlove about why it’s impossible to actually shut down Bitcoin.
- Volatility: In Parker Lewis’ presentation, he explains why volatility will decrease over time. Because we are taking a long-term position, near-term volatility doesn’t bother me.
13. Going Long Bitcoin
According to the table below, bitcoin has been the best performing asset of the last decade:
While angel investing, I came across a great thesis: “Invest in lines, not dots.”
In the context of startup investing, this means to watch for teams that progress extremely rapidly, and then supercharge your capital with them.
In my opinion, the progress bitcoin has made between 2015 and 2021 is the best “line” I have ever seen. Imagine it at 70✕ from here… If it performs how it has the last 5 years, that’s where it will be in 2026!
It’s time to double down, have conviction, and invest in your long-term financial security.
It is my belief that bitcoin is the best form of money humans have ever invented, represents the most effective store of value over time, and will outperform every other asset class.
So, here’s the plan: I am going to buy more bitcoin. Initially, this will involve simply buying with cash reserves, but I will also sell down our investment property until we ultimately end up with a 33%/33%/33% split between bitcoin/private equity/property.
14. Conclusion
As Michael Tanguma of Unchained Capital explained, there are three key pillars to bitcoin belief:
I hope that this letter has not been as boring as I thought you might have found it! I wonder what will have happened once you read this!
Lots of love,
Dad
Thank you so much for getting all the way to the end. I hope you found this useful! If you have any questions, please follow me on Twitter.
Best,
Jake
This is a guest post by Jake Woodhouse. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine
Mark Cuban, Vitalik Buterin, Winklevoss Twins to Speak at 2021 Ethereal Virtual Summit May 6-7
The live event that’s been called “the Burning Man of crypto” is coming back to your computer screen.
Ethereal Virtual Summit, powered by Decrypt, is set for May 6 and 7, 2021. You can register for free here.
The two-day confab will kick off with a fireside chat with Mark Cuban, the billionaire “Shark Tank” investor and Dallas Mavericks owner who has gone all in on Ethereum and NFT collecting.
Some of the other confirmed speakers so far include:
- Vitalik Buterin, Ethereum Foundation
- Aya Miyaguchi, Ethereum Foundation
- Sergey Nazarov, Chainlink
- Joe Lubin, ConsenSys
- Meltem Demirors, CoinShares
- Cameron and Tyler Winklevoss, Gemini
- Mike Novogratz, Galaxy Digital
- Miami Mayor Francis Suarez
- Sam Bankman-Fried, FTX
- Anthony Scaramucci, Skybridge Capital
- Caitlin Long, Avanti Financial Group
- Ross Gerber, Gerber Kawasaki
- Olaf Carlson-Wee, Polychain Capital
- Muneeb Ali, Stacks/Hiro
…and many more to be announced in the days to come.
For the uninitiated: Ethereal Summit, started in 2017, is a deep dive into blockchain, decentralization, and the democratization of data. The conference has always been known as a looser, less buttoned-up forum for technologists, entrepreneurs, investors, cyberpunks, and flag-wavers to come together for candid talks. Past speakers have included Changpeng “C.Z.” Zhao of Binance, Brian Armstrong of Coinbase, Mike Novogratz of Galaxy Digital, and Amber Baldet of Clovyr.
This year, the summit is powered by Decrypt, which means you’ll see a number of our journalists on the virtual stage as your guides, in keeping with our mission to demystify the decentralized web.
From the white-hot world of DeFi, to the NFT boom, to the growing list of Bitcoin ETF applications, the pandemic price surge in crypto assets, there is so much to discuss. See you in May, and in the meantime, read and follow Decrypt on our web site and mobile app.
Lockheed Martin adopts blockchain for supply chain management in Switzerland
United States aerospace and defense contractor Lockheed Martin has signed an agreement with SyncFab, a Silicon Valley distributed manufacturing platform, to streamline supplier capabilities across Switzerland, offering yet another tangible use case for blockchain technology.
Under the new agreement, SyncFab will provide Lockheed Martin with direct access to its parts procurement and supply chain platform, which is built on top of the company’s blockchain. The secure supplier intelligence platform connects Original Equipment Manufacturers, or OEMs, to Swissmem members, allowing OEMs to match with suppliers across Switzerland.
The platform essentially works as a “matchmaker” between OEMs and subject matter experts, allowing the experts to compete for long-term logistics opportunities with larger companies. In the case of Lockheed Martin, members of Swissmem will have the opportunity to bid on projects directly through SyncFab.
Founded in 1999, Swissmem represents Switzerland’s mechanical and electrical engineering industries. So-called MEM industries account for roughly one-third of the country’s exports.
Jeremy Goodwin, SyncFab’s founder and CEO, commented on the new partnership:
“SyncFab is honored and privileged to work with Lockheed Martin in our mission to expand access and digitally transform Swiss Industrial Supply Chains in partnership with Swissmem.”
Launched in 2013, SyncFab has secured several high-profile partnerships over the years. As Cointelegraph reported back in 2018, the company worked with the U.S. Department of Energy to deliver clean energy and smart manufacturing initiatives in the California cities of San Leandro, San Francisco and Oakland.
Supply chain management is routinely cited by industry as one of the biggest use cases of blockchain technology. As Cointelegraph reported in February 2021, more than half the companies added to the Forbes Blockchain 50 list are using distributed ledger technology to solve logistical issues.
Bitcoin Is a ‘Boon for Surveillance’, Says Former CIA Director
In brief
- The narrative that criminals are using Bitcoin for illicit activities is “overstated,” a new report by Former CIA Director Michael Morell argues.
- Government agencies should make better use of Bitcoin’s technology as a “forensic tool,” he said.
The technology behind Bitcoin is a “boon for surveillance” and shouldn’t be shunned by governments but embraced, according to an ex-CIA boss.
Michael Morell, who was previously the CIA’s acting director, said in ‘An Analysis of Bitcoin’s Use in Illicit Finance’ that “blockchain technology is a powerful but underutilized forensic tool for governments to identify illicit activity and bring criminals to justice.”
The report, co-authored by Josh Kirshner and Thomas Schoenberger, was ostensibly written as a defense of Bitcoin—a response to growing “concerns about the illicit finance implications of the cryptocurrency ecosystem.”
Published by the recently formed Crypto Council for Innovation, led by Coinbase and Square, among others, the report concluded that criminal use of Bitcoin is “significantly overstated”—rather than being the currency of choice for criminals, it can be used to catch them.
“Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool,” the report read.
The reason? The technology Bitcoin runs on—blockchain—means all transactions are logged on a public, decentralized, immutable ledger.
Tracking illicit Bitcoin transactions is therefore easier than tracing illegal funds moved across borders using “traditional banking transactions” and “far easier” than trying to follow cash, according to the report.
One source in the report was quoted saying that “if all criminals used blockchain, we could wipe out illicit financial activity.” And this goes against the narrative that authorities in the United States and Europe right now, as well as recent reports from crypto tracing firms such as Chainalysis. In December 2020, Chainalysis (which works closely with law enforcement throughout the world) said darknet markets had raked in more than ever in crypto.
Most recently, in February, US Treasury Secretary Janet Yellen expressed worry that Bitcoin was used “often for illicit finance.” And The European Central Bank’s president, Christine Lagarde, in January said that Bitcoin was used for “funny business” and money laundering.
But the former CIA director’s investigation found Bitcoin being used primarily for illicit finance was “uninformed and not based on data.”
Privacy coins like Monero, on the other hand, are favored by criminals—and “illicit activity as a percent of total transaction volume is ‘far larger’ than it is for Bitcoin” with such digital assets, the findings showed.
The report also noted that former Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes, Daniel Glaser, this year said that the regulation of crypto in the “appropriate way” was needed for “law enforcement agencies to be able to trace transactions.”
Though it did mention the difficulties posed with decentralized exchanges. “Although DEXs are responsible for only a small portion of overall cryptocurrency transaction volume, their decentralized, mostly open-source nature adds an additional layer of anonymity and thus offers increased opportunities for moving illicit funds,” the report said.
Morell’s report concluded that Bitcoin is singled out because “people are typically fearful of what they do not understand.”
Exodus Bitcoin Wallet Raises $60 Million in 5 Days
In brief
- Exodus is known for its crypto wallet.
- It’s distributing stock in exchange for Bitcoin, Ethereum, and USDC stablecoin.
Coinbase isn’t the only crypto company selling shares this week.
Exodus, the creator of a popular non-custodial crypto wallet, has raised $60 million since April 8 by selling stock in the company. It’s calling the sale, which was cleared by the US Securities and Exchange Commission (SEC), the largest “regulated crypto public offering” ever.
Last week, the company put $75 million in shares up for sale at $27.42 apiece. However, instead of accepting US dollars, Exodus only took a trio of crypto assets commonly stored in its wallets: Bitcoin, Ethereum, and USDC stablecoin. Its plan is to tokenize the shares on a public blockchain within nine months.
The Regulation A sale allowed the firm to reach beyond accredited (read: well-to-do) investors to those often left out of securities sales. “Think of this as the 2021 version of an ICO—compliant, transparent, and offered by a profitable company with a working product,” Exodus COO Sebastián Milla Goñi told Decrypt in March.
ICOs, or initial coin offerings, allowed crypto startups to raise money from everyday people. In exchange for providing crypto startups with capital, investors would receive tokens that could later be used on that project’s platform. Though tremendously popular, the SEC all but nixed the concept back in 2018, viewing them as unregulated securities offerings.
Blockchain project Stacks (née Blockstack) was the first crypto company to get permission from the SEC to conduct a token sale, raising $23 million. Trading platform INX is in the middle of what it hopes is a $117 million registered token offering.
According to an April 12 press release from Exodus, over 4,000 people have committed to investing in Exodus stock, with 92% of commitments coming from non-accredited investors.
The sale remains open to US investors outside of the states of Arizona, Florida, and Texas.