Is U.S. Congress clueless about crypto?

Last week the folks on Capitol Hill made a few headlines and stirred up a Twitter storm. Well, at least Congressman Brad Sherman, a Democrat from California did that with his statement that all crypto and mining should be banned, thus provoking the crypto community into meeting his remark with total outrage online. This was a unique event in itself as the crypto sphere is known for its sniping and clashes. However, Sherman brought them all together.

Whilst Brad Sherman’s message tended to dominate the press reports, for obvious reasons as it makes a good story, other headlines didn’t do much to instil any sense that Congress has finally understood what cryptocurrency and the blockchain world is all about. In fact, to some onlookers it appears as to be the case that Congress is more hostile to crypto now than it was five years ago. For

example, Federal Reserve Chairman Jerome Powell said cryptocurrencies are “great if you’re trying to hide or launder money,” at a separate hearing on the same day Sherman made his astonishing statement. Perhaps he didn’t notice that the FBI had indicted 12 Russians for trying to tamper with the U.S. elections and that the FBI achieved this by tracing the conspirators bitcoin transactions. So much for that argument Mr Powell!

Were things better in 2013?

Let’s remember that when Congress discussed crypto towards the end of 2013, Jennifer Shasky Calvery, then-director of the Financial Crimes Enforcement Network (FinCEN), told bitcoin exchanges and wallets to register with FinCEN and people took this a positive sign. In fact, as Coindesk points out, Calvery’s invitation boosted bitcoin’s price in December 2013 to just over $1,100.

Beyond the big headlines

Of course there is danger in focusing too much on big headlines from the Congress hearings and not looking into the progress that has been made. For instance, regulatory understanding has moved forward even if it hasn’t arrived at an end point that everyone is happy with. Law firms are heavily engaged with it and some staff at the SEC, the Commodity Futures Exchange Commission and other agencies are much more comfortable with the crypto industry than five years ago. In a massive bureaucracy things were never going to move at lightning speed.

And things will keep moving forward. Why? Because there are too many people and too much money engaged and invested in this industry for anyone in politics and policymaking to ignore it completely. In the end those who understand crypto and its potential will outnumber people like Sherman and Powell and we’ll have a Congress that isn’t so clueless.

Who will win the Smart Contracts race?

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Vitalik Buterin’s Ethereum is widely known as the ‘go to’ blockchain technology for smart contracts. But, this week, Ripple’s former CTO Stefan Thomas has thrown down the gauntlet to challenge the leader with a new smart contracts platform.

Thomas left Ripple in May and now he is launching Codius, an open- source project designed by Ripple and released in a beta version back in 2014. So, it isn’t exactly new, but Thomas is positioning it as the core product of his new company Coil.

Coil’s ambition is to change the way websites monetise their content.

Monetising web content is clumsy

According to Thomas, the current way in which web content is monetised is a clumsy workaround that uses adverts, paywalls and data harvesting. His concept uses an interledger. This is an open-source protocol that allows payments to be sent across different ledgers. Basically, it allows users’ browsers to make micropayments to the websites they visit.

How Codius works

How will that work, and how will it affect consumers? Codius allows the use of a “revenue disbursement contract” that will collect revenues when consumers watch a movie, for example. The collected revenue will be paid to all the parties involved in putting that movie online, but it won’t be made in “batch payments’, it will be paid out in a stream of smaller amounts. And, those people who read newspapers with a paywall will make payments via a smart contract that manages payment authorisations and the subscriptions.

Codius has already released an instruction manual for uploading Codius in an effort to get developers to start using the platform immediately, and it seems that the call has been heard.

Who is using Codius?

Telindus, the IT solutions subsidiary of the Belgian telecoms group Proximus has said it will be using Codius to “push forward novel direct e-commerce models.”

Game platforms, Unity, Zynga and Kabam also plan to use it for new gaming platforms. Josh Williams, who invested in Unity et al, and is now creating his own gaming platforms said: “Teams in games and elsewhere are building on Ethereum and running into the cost and scalability issues we’re all familiar with. Codius has great potential in addressing these concerns, and we are eager to work with it.”

Codius offers better scalability

And there is the dreaded word that Ethereum’s team will fear most: scalability. We all know that Ethereum is still working on resolving its scaling issues. It looks like Codius is offering a solution that neatly bypasses that problem. Thomas said: “The people that are reaching out to us are saying, ‘Hey, we’re experimenting on Ethereum. We’re running into scalability issues. It’s too expensive, too slow. It’s not flexible enough. We don’t like writing in this awkward language.’”

It isn’t the only challenger to take on Ethereum, but it looks like it might be one of the strongest contenders to win the race to bring smart contracts into mainstream use.

Fundstrat bullish about Bitcoin for 2019

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Fundstrat Global Advisors, co-founded by Tom Lee, has just published a report claiming that Bitcoin prices will reach $36,000 by the end of 2019. How has it arrived at such a bold prediction? Fundstrat says the answer is mining costs.

Fundstrat’s Quantamental Strategist, Sam Doctor, analysed the relationship between Bitcoin mining costs and price, to come up with the prediction that the price range will fall somewhere between $20,000 and $64,000 next year.

He based his calculations on a Bitcoin Price to Mining Breakeven Cost Metric, known as P/BE, which he claims has “proven a reliable long-term support level.”

A statement from Tom Lee, published on Twitter, said: “We expect the mining economy to grow over the next several years, and project a BTC price of ~$36,000 by year end 2019 based on the historical average 1.8x P/BE multiple.”

The Twitter statement also points out that the rise in electricity costs is slowing and use of power is becoming more efficient as larger rigs with a higher hash power per watt, are now appearing. Plus, mining operations are getting bigger, bringing the benefits of scalability to the scenario.

However, he did point out that there was one risk to the prediction: “a material shift in the trajectory of hash power could change the P/BE support level of BTC price.”

It is interesting that Tom Lee’s personal prediction for BTC was $25,000 by the end of 2018 and both Lee and Fundstrat have been bullish about BTC this year. They also issued a statement in April, saying that 82% of institutional investors believe the price had now bottomed out.

If you own BTC and both Fundstrat and Lee are correct than it will be worth holding on to them for some time to come.

 

 

 

 

 

 

Crypto tribes threaten power of unity

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The crypto sphere is becoming a little like a football league table. Owners decide to give their allegiance to a particular ‘team’: let’s say Bitcoin is Real Madrid, and that’s your main team, and your friend likes ETH, let’s call it Arsenal. However, is being part of the Bitcoin fan club, and therefore competing with ETH supporters a healthy way to develop the potential of cryptocurrency?

People have a tendency to take a ‘tribal’ approach to pretty much everything, from dietary choices, to coffee brands, to football teams. But, it isn’t very helpful for crypto. Here’s why.

The cypherpunks had a beautiful idea

Privacy, free speech, and the ability to act as an autonomous individual are increasingly under attack, but decentralisation can protect these. Let us not forget that blockchain technology arose out of a community of cypherpunks who wanted more freedoms. Yet, it looks as though the crypto community now is just going to bow its head to the centralised institutions and retreat into the same old narrow-minded worldview.

As Kent Barton describes it in Medium: “The prevailing question has insidiously morphed from “how can we make the world a better place?” to “how can we defeat other blockchain platforms?”

He also argues that tribalism in the crypto sphere, “distracts the community from the crucial work of building scalable technologies that people will want to use.” And he adds, “Personal attacks and outright trolling make the environment uncomfortable or even untenable for newcomers.”

Social media channels have developed an “Us vs Them” discourse and influencers, like rocks stars, with their adoring fans fight it out with other influencers for the Top Dog spot.

Let’s show some respect

Measured and respectful discussion about the merits of various cryptocurrencies have been replaced with increasingly emotions attacks form the ‘opposition.’

Bartons says: “To an outsider, it must seem ludicrous to watch countless smart minds working on blockchain technology — developers, entrepreneurs, and other enthusiasts gifted with an ability to think outside the box and see a vision for a better future — descend into internecine bickering.”

And all the while the team battles are at the forefront of activity, the less time is being devoted to advancing the blockchain, and it is probably fair to say that this boils down to it being all about the money; not about cryptocurrency itself, but making millions and billions of fiat currency out of cryptocurrency. And that takes everyone back to the status quo before the blockchain emerged as tool for a real revolution that could make the world a better place and take power away from those who have had control of it for too long.

Say goodbye to the zero-sum game

Tribalism in crypto, particularly the desire to see one platform emerge as the winner at the expense of another will mean that we continue to be the slaves of power-holders, rather than channelling the power of the blockchain so that the people can reclaim power for themselves – at least some of it.

We will miss this opportunity by only supporting one team – it’s time to be an O.G. crypto fan and support the whole blockchain ecosystem rather than continue this zero-sum game.