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7th January 2020

This week we cover:

  • UK’S FIRST CRYPTO BANK
  • VIRGIL GRIFFITH RELEASED ON $1M BAIL
  • YOUTUBE GOES TO WAR ON CRYPTO CONTENT
  • CHINESE PRESSURE CRYPTO BUSINESSES
  • CHINESE FIRST BLOCKCHAIN ETF
  • CHINESE POLICE SEIZE THOUSANDS OF MINERS
  • CARNEGIE MELLON UNIVERSITY DONATIONS
  • DLIVE, TRON, BITTORRENT MIGRATION & PARTNERSHIP
  • BTC TECHNICAL ANALYSIS
  • FEAR, GREED AND MENTALITY

UK’S FIRST CRYPTO BANK

Ziglu, the United Kingdom’s first fully-regulated digital bank is due to open its electronic doors to the public in the first quarter the year. Headed by former Barclays bank executive Mark Hipperson, the bank will strive to “break barriers between fiat and digital currencies, making both accessible to customers and easily interchangeable within the same banking system”.

Founded in September 2018, Ziglu has now applied for an e-money lice which will allow it to be a recognized and regulated digital bank as outlined by the Financial Conduct Authority (FCA). The bank will charge a yet to be determined fee on all cryptocurrency trades that are made on its platform, but has pledged to be “fee free” for any fiat to crypto transactions. Ziglu will also offer crypto-backed debit cards with instant multi-currency conversion at point of sale.

These kinds of developments make the crypto world much more accessible to newcomers and less tech savvy investors as well as serving to reassure those still on the fence that crypto is a legitimate form of currency here to stay. And with Ziglu confirming they intend to expand their offering to other countries in the future, it’s an absolute positive for the space.

VIRGIL GRIFFITH RELEASED ON $1M BAIL

Ethereum developer Virgil Griffith was released on $1M bail just prior to new year’s, and will reside with his parents in Alabama pending full trial. Griffith was initially refused bail a week earlier due to the possibility of flight risk, “text messages indicating an intent to renounce his citizenship as a deciding factor in the denial” per Coindesk. The judge’s reason with releasing Griffith to his family being “moral suasion” and he strongly reminded Griffith that “laws in this country are not suggestions”.

Mr Griffith stands trial for “allegedly violating the International Emergency Economic Powers Act (IEEPA) by traveling to North Korea for a cryptocurrency conference organized by the government in Pyongyang”. Which basically means he travelled to North Korea to give a presentation on cryptocurrency and blockchain which the US government had denied approval for.

YOUTUBE GOES TO WAR ON CRYPTO CONTENT

YouTube went censorship crazy in the lead up to Christmas 2019. In case you were living under a rock or undertaking some digital detox time – YouTube removed thousands of cryptocurrency related videos from the platform citing “harmful or dangerous content” and “sale of regulated goods”. YouTube was quick to reinstate all content within approx. 24 hours and made a public apology, claiming the removal was done in “error”.

Behind the scenes, it’s not hard to imagine the pressures facing this growing space of decentralised content streaming and sharing. With Google owning YouTube there wouldn’t be much they don’t know in terms of trends, data and undeniable growth in the space with platforms like DLive (further write up below) and LBRY. We need only think back to last year when Google banned all crypto-related advertising on its platform for 3 months and Facebook did the same right up until it launched the idea of Libra (coincidence much?).

You have to wonder if it was coincidence that on December 26th 2019 the Google Play store also suspended MetaMask under the banner of a policy prohibiting crypto mining on mobile devices. Metamask is the gateway for many into the world of DApps (Decentralised Apps) – a growing competitor to Google’s own products.

It all comes back to these massive companies seeing the potential and knowing exactly what kind of benefits blockchain can bring them. It’s in their best interest to be active and invested without letting the world know, because they know the flipside is. Crypto and decentralised platforms could easily become legitimate competitors. Too many times have massive companies with huge egos at the helm stood stubbornly and refused to adapt to a changing market – heed the warnings of Blockbuster and Kodak.

Forbes has a good write up covering time stamped events and opinions of big players in the space.

CHINESE PRESSURE CRYPTO BUSINESSES

Authorities in Beijing have issued risk warnings on cryptocurrency trading activities. The warnings have specifically reminded firms not to engage in crypto businesses.

While we have seen recent promotion of blockchain technology, China still does not allow cryptocurrency trading. Although some platforms have “seriously violated” the rules with the full extent of warnings ordering all firms not to  “promote cryptocurrency projects or platforms; not engage in crypto trading business; and not provide any services related to cryptocurrencies”. The recent crackdown on Ponzi scheme Plus Token also saw the government warn investors to “remain rational to avoid being deceived”. The full report can be found at The Block.  

CHINESE FIRST BLOCKCHAIN ETF

Given all of the pressure China has put on crypto, it’s worth looking at those businesses reaping the benefits. An application has been made for China’s first ever Blockchain ETC; the project has been dubbed Penghua Shenzhen Stocks Blockchain ETF, as reported by Coindesk. The ETF will track and reflect the performance of any Shenzhen listed public stocks that operate within the blockchain space.

The application coincides with the Shenzhen Stock Exchange rolling out a Blockchain 50 Index, with, you guessed it, 50 stocks that are listed and operating in the blockchain space. These companies range from banking services group Ping An Bank through to bitcoin mining technology developers Wholeasy.

You have to give it to China, when they start moving it doesn’t take them long to adopt new technology and ideas, so long as its legislated and done within the law.

CHINESE POLICE SEIZE THOUSANDS OF MINERS

Chinese police are cracking down on stolen electricity miners.

In the week leading up to Christmas, Chinese police reportedly seized close to 7,000 mining rigs that were using stolen electricity. Power theft in China appears to be fairly systemic. Since April 2018 the Hebei Tangshan Police have conducted 70,000 inspections of “households, factories, mines, courtyards, merchants, communities and villages, in conjunction with power supply and other departments” reported Bitcoin.com. The police are looking for anything that appears unusual, generally this is suspicious private transformers or privately connected power lines.

The 7,000 miners that were seized represent the electricity equivalent of fuelling 45,000 Chinese households non-stop per day. As much as we have all probably thought about ways we could save on our own electricity costs (hmmmdoes anyone actually check that server room at work?) actually doing so in China can come with serious ramifications. While there has been no statement as to what will happen to the confiscated miners, I wouldn’t be surprised if they end up in a state-run mining facility hidden up in the hills of China.

CARNEGIE MELLON UNIVERSITY DONATIONS

Pittsburgh’s Carnegie Mellon University has one of the best computer science departments in the world. And it’s about to get better, with Former MakerDAO contributor and Carnegie Mellon Alumnus, Nikolai Mushegian, announcing a pledge of 10,000 MKR (Maker) or around $4.3 million to develop a research program for decentralised applications.

Nikolai posted that his goal for the donation was “to establish a research program for decentralized applications/protocols and game-theoretic mechanisms” and pledge a full research agenda in the coming weeks. One of the main ethical drivers for the donation was what he called “the increasing rent-seeking behaviour from some of the big players in this space, and also from existing banks and tech giants” with his faith lying with the university system’s resilience, especially when faced with pressure from governments and business.

DLIVE, TRON, BITTORRENT MIGRATION & PARTNERSHIP

DLive, launched on the Steem Blockchain, has amassed more than half a million active monthly users and hosts PewDiePie, one of the most famous content streamers worldwide. As at June 2019, active users have contributed a total of around $2.6 million in Crypto via DLive.

Popular among content creators, DLive offers significantly lower fees and pushes the majority of revenue back to the creators. Amazon’s Twitch, in comparison, takes 50% of ad revenue while Google-owned YouTube takes 45%.

This week, Tron’s Justin Sun announced a partnership with file-sharing platforms BitTorrent and DLive. DLive will officially migrate to the Tron blockchain with migration already underway, beginning on the 30th December 2019. The collaborative effort will allow for seamless cross platform access of 100 million active BitTorrent users to the DLive platform.

This all comes amid YouTube’s recent crypto-purge “error” and it’s becoming more and more apparent that the likes of Google and, perhaps as an extension, YouTube wish to curb the growth of decentralised platforms and DApps as a whole.

FEAR, GREED AND MENTALITY

Alternative.me Fear and Greed index is sitting in fear at 41. The index has spent much of the last few weeks in this area, fluctuating by only a few points. The recent Iranian and US unrest has led to Gold surging but has yet to translate into much Bitcoin strength and the halving is approaching quickly now with May only months away.

2020 is going to be a great year for crypto, here’s just a brief recap of what we know so far:

  • Bitcoin supply drop off in May
  • UK’s first crypto bank
  • US companies like Greyscale snapping up all new Bitcoin supply each month

It seems inevitable that Bitcoin can’t be held back much longer and has the potential to really fly high. I think we might just get one more wick lower and another extreme fear reading before we can really clear out the sellers and push north. Time will tell.

BITCOIN TECHNICAL ANALYSIS

Since mid-November Bitcoins price has consolidated between the $7000 – 7500 USD mark. Today Bitcoin has finally broken that consolidation range and has broken to the upside.

We have recently been following the mid-range trend line highlighted in orange. Bitcoin briefly broke out of this range in early December, however, it shot straight back up and re-entered the midterm trend line. Since re-entering the midterm trend line, BTC has managed to stay above the lower level trend line and now BTC is pushing to the top end of this trend line.

It will be interesting to see if Bitcoin can stay above the $7600 mark where it broke out of its consolidation range. If BTC breaks back below the $7600 mark then we could be in for lower lows below $7,000 USD.

However, If Bitcoin can find support around the $7,600 USD mark, then we could see BTC maintain its strength and test the $8,000 USD mark.

Author: Julian Carruthers

Not financial or investment advice, always do your own research.

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