Posted on

Stephane De Baets is Tokenizing a Luxury Hotel on tZERO


Stephane De Baets visualizes a future where every asset, whether a small business or property, can be tokenized and sold on the blockchain– and he’s putting his tokens where his mouth is. 

Stephane is a Belgian-born real estate, hospitality, and investment entrepreneur with a penchant for standing out in each respective industry. As the Founder and President of Elevated Returns, an international asset management firm, Stephane launched the first major tokenized commercial real estate auction to sell a portion of his ownership stake in one of his properties– the idyllic Aspen St. Regis Resort in Aspen, Colorado. Stephane is also the Founder and Owner of Chefs Club, a restaurant group with a rotating residency of world-class chefs at its locations in Aspen and New York City. 

Stephane De Baets in a pool, courtesy of https://twitter.com/stephanedebaets

Stephane believes the tokenization of the St. Regis will lead to an avalanche of interest from real estate developers and mainstream investors into the blockchain industry. As a self-described “ultra-conservative old man in capital markets,” Stephane posits that his colleagues just need to see tangible proof of tokenized assets in action to see the value of allocating capital to blockchain-based investments. 

“Blockchain is about giving people the tools to do something that was restricted to a few selected individuals,” says Stephane. “Blockchain is a similar evolution as going from fax to email– was for communication. It made it easier and more efficient. People started finding new applications for communication through email, and then SMS.”

Stephane’s decade-long journey into blockchain isn’t just about making more money– there’s a rebellious element to his investment philosophy. Stealing fire from the gods and democratizing access for the masses is a sentiment not unfamiliar to those in the cryptocurrency industry. In Stephane’s case, this prodigal fire is the ability to invest in projects generally outside the purview of the ordinary investor. At the heart of Stephane’s key message is the disintermediation of the finance industry and creating a direct path for the creation and sharing of value between businesses and their customers.

“At  Elevated Returns, we think the current world is too elitist,” says Stephane. “Access to capital is limited to a very few privileged individuals. Giving access to this upper echelon of investing on a democratic basis, a la tokenization, would go a long way towards promoting equality. It’s not normal that five companies control an amount of wealth that is greater than the rest of the NASDAQ 100 combined. I think tokenization is low hanging fruit. I have a great deal of trust and conviction that sooner or later, there will be a great disintermediation that takes place no matter what, and the people should be ahead of it.”

The St. Regis Aspen, the hotel that the AspenDigital tokens represent partial ownership of.

Editor’s note: The following article is written as educational and informational, and is not to be construed as an endorsement, sponsorship, or investment advice for any of the entities discussed within. Cryptocurrency is an inherently very risky asset class, and always do your own research and consult a licensed financial advisor before making any investment or purchase. 

Luxury Real Estate 101: A Walk Through with Stephane De Baets

Stephane walks us through the traditional process for luxury real estate entrepreneurship. 

“If you want to own a hotel, you realistically need to be plugged into a very selective network of people that can show you what’s available for sale,” says Stephane. “Then, you need to raise the capital– typically a portion of debt and a portion in equity. Then you need to do your due diligence, bid for the asset, negotiate the contract, execute the contract, and if you’re successful, you will own property. Making an income on that property means you must also be good at effectively managing the asset to turn a profit, which is the excess of cash flow over the debt servicing and other expenses. When you flip the property, you make a capital gain.” 

This is the old way of higher-end commercial real estate, and according to Stephane, a small, incestuous world with a limited number of players. 

A screenshot of The AspenCoin August 2020 disclosure statement on tZERO

“There isn’t much value added beyond solving those cashflow inefficiencies,” says Stephane. “Tokenization changes the game completely. As a retail investor, you can go to a marketplace and choose a token corresponding to a property. For example, you can go on tZERO and look at AspenCoin, the digital token for the St. Regis. There is a disclosure statement, and you can see the performance of the asset.”

tZero, is a project launched by Overstock that functions as a platform for asset holders to tokenize their assets.  This system allows average investors to piggyback on the work of someone like Stephane, a process usually done privately. 

So, what incentivizes someone like Stephane has to allow the public to reap the fruits of his labor? 

Stephane describes the experience of owning a luxury property as wonderful in terms of bragging rights, but short-lived. 

Owners like Stephane can relish the beauty of their property, but this romanticism is soon dampened with the understanding that they aren’t able to access their equity without the tremendous amount of complications that come from selling the property. 

“Owning a property basically means you have a balance sheet that tells how much you owe the bank and the value of your equity,” says Stephane, reducing the glamour of luxury property ownership to accountant-speak. “There is no price discovery, nor is there a way for you to monetize that equity position other than selling the hotel. When you tokenize your asset as the asset holder, you have price discovery and know the full value of your equity. Better yet, you have liquidity. Let’s say you get married and are starting a family. You can sell off a few tokens of your asset. If you think the token price is too cheap, you can buy them back.” 

Having your money locked in an asset rarely caters to the ebbs and flows of life; as the owner of a tokenized asset, Stephane suggests, you have the flexibility to increase or decrease your position and know the current going rate of your equity. To that end, giving asset owners the luxury of liquidity also makes that asset that much more attractive to hold. 

What is AspenDigital?

AspenDigital is the token associated with Stephane De Baet’s tokenization of the St. Regis in Aspen, Colorado– a prestigious getaway for society’s pinky-up upper echelon tucked into the Rocky Mountains.

How has the tokenization of assets been applied so far?

“We created a digital security as part of an ownership privilege program,” says Stephane. “For us, it’s wonderful because we’re able to reward token holders like a true owner. We save on marketing costs, travel agent costs, and so on. The cost to us, the property owner, is minimal and the benefit to the consumer is maximum.” 

According to Stephane’s description of the tokenomics of AspenDigital, 

  • If you own 10,000 tokens for 30 days or more, you’re entitled to a 20% cash rebate on your spend during your stay. 
  • If you own 100k tokens: 35% cash rebate.
  • If you own half a million tokens:50% cash rebate. 

Stephane implores us to think about a patron spending Christmas or New Year at the St. Regis: The average room costs about $2,000 per day around this time, and if you come to stay for seven days with a family that requires two rooms, you’ll be looking at a $28,000 bill. If the current price of one of these tokens on tZERO is $1.31, 10,000 tokens will run you about $13,100. 

AspenDigital on tZero

AspenDigital on tZERO

This lump sum of tokens entitled you to 20% cashback on your stay, or about $5,600 back, which is a bit over 42% return on the value of your tokens for that one stay. 

I’m dreaming of a world where I don’t have any bank loans, and I’m just sending rebates to people buying pre-paid stays at my hotel. I will prove that this is a cheaper way for an owner to finance a property than a traditional mortgage.

In other words, Stephane wants to cut bank loans out of the hospitality industry, and build the infrastructure for business owners to raise capital from their top customers. 

“We want to find a way to repay a hundred percent of our debt and yield the benefits of savings on your cash flow to the consumer,” says Stephane. “All that the bank is doing is bridging a mismatch in cash flows as entrepreneurs build businesses to provide services to customers. Your consumer is actually the party giving you cash to pay your employees, pay your bank loans, and make a profit. The ultimate line of disintermediation is to get funding right from the consumer.”

Direct fundraising from consumers is not a new concert. For example, Elon Musk did it recently with Tesla, selling the Roadster at a high price point to raise capital. Selling your future product tends to be the cheapest source of capital. 

How can an asset holder leverage the perks of tokenization?

The problem with the current system is that value that would otherwise be devoted to improving the business-consumer relationship leaks into the coffers of third-party intermediary banks.

“If you raised capital from banks and private investors, you must factor loan obligations and interest into the equation,” says Stephane. “The bank will say, Stephane, I need my 6% interest payment. And then you have private investors and partners asking for their 15% return on their money. So, as an asset manager, I’m primarily incentivized to pay my debts first, and this often isn’t aligned with providing the absolute best experience for the consumer.”

You need to make sure you can pay your owners and investors, or otherwise, you’re in a hot seat. 

The service provider and consumers are tainted by that evil intermediary called banking. If we can remove the bank out of the equation and have consumers fund us directly, we can focus our efforts on building a better relationship between us as a service provider and our consumers.

How can security tokens or utility tokens change the world of real estate? When businesses are funded by customers directly, Stephane asserts, an entire asset class can be changed: 

  1. The valuation of the asset becomes somewhat irrelevant. Someone buys an asset because they want to use it in the future at a better price. They want a good deal. They don’t want to own the asset, they want to access a service in the future at a more attractive price. 
  2. Tokenization simplifies the relationship between a service provider and a consumer. For example, as a hotel provider or hotel operator, your job is to provide the best service to your consumer. You want them to be very happy with the experience he receives at your establishment. If you’re raising money from your customers, who now become partial owners of your property, you’re better incentivized to invest further into the customer experience. Similarly, your customers are incentivized to support your business.

“In order to offer perks, you need to own the asset,” says Stephane. “If someone is promising perks on someone else’s asset, I get uneasy. In order to be successful in the model we’re developing, you need to be ready to own the asset you’re offering perks on.” 

This is why, Stephane concedes, traditional banking relationships will always have a place in business. In order to hold assets without your own capital, you need someone to lend you money. However, lending must evolve with the world, not antagonize it.“I see the lending market changing significantly in the next decade,” says Stephane. “Think about it; if you buy Aspen Digital, you have the leverage which is basically the mortgage of the asset. Let’s assume I pay the mortgage tomorrow and issue more tokens. You should be able to show a lender you own tokens that represent unlevered ownership over a hotel and ask for an increase of leverage on your wallet. I think you’ll eventually start seeing asset-based leverage moving to consumer base leverage.”

A screenshot of AspenDigital’s trading history on tZERO.

Stephane sees a future where digital asset holders, whether that be Bitcoin or a coin representing a luxury mountain hotel, can seamlessly take out loans from mainstream banks. 

*Note: There are a few cryptocurrency loan providers such as BlockFi and Celsius that provide crypto-collateralized loans on cryptocurrency deposits.*

There is also a significant utility of these tokens, Stephane posits, that shouldn’t be overlooked. 

“Utility means people have a use for it, which creates natural liquidity into the asset class,” says Stephane. “The perks you receive from your tokens can grant token holders a value much greater than potential capital gains.”

Waxing philosophical, Stephane describes cash as merely a medium to acquire goods and services in the future. 

“Cash is an instrument to create an exchange,” says Stephane. “If you don’t need that instrument because you have access to the services simply by holding the asset and not spending it, you’ll change the relationship between people and money.”

In other words, instead of value slipping out of the business-customer relationship into the hands of third-party intermediaries, customers can achieve entirely new benefits usually only granted to the high-rolling owners. 

Regulation and Innovation: A Historically Toxic Relationship

Stephane’s journey into blockchain seeking an alternative to a very aging capital market and banking system, a search spanning decades. 

“The fact that we’re still relying on the Securities Act of 1933, dealing with paper securities, and using a clearing agent is amusing in that it’s nearly 100 years old. The whole finance industry and derivative of finance were really ready for a revolution, and I believe the ability to tokenize assets on the blockchain is a rallying cry.”   

Stephane encourages a future where regulation grows alongside innovation, rather than impeding it.

Stephane De Baets PHOTO CREDIT: BENJAMIN LOZOVSKY

“As entrepreneurs, we need to be respectful of the authorities and regulators, because while innovation can open new doors, it can also enable scam, fraud, and abuse,” says Stephane. “Collaborative regulation ensures we don’t shut down an entire enterprise just to protect the masses from a very small few negative actors.”

To truly stimulate the evolution of a landscape, you need a healthy regulatory environment, infrastructure to onboard new users, and market leaders. 

“If you consider 2017 as the first mainstream wave, we’re looking at the second one now,” says Stephane. “We’ve had the perfect element of a relatively stable economy to allow innovation to stabilize before this second wave, and now this more unstable economic environment pushes the need to deliver financial aid straight to the hands of the people. It brings us to consider what are the actual strengths of the legacy banking environment, and how well-suited is it to the people’s best interests?”

Coming from capital markets, Stephane argues, this revolution isn’t a matter of if; it’s a matter of when, who, and how. 

“I can say within five years, everything’s going to be digital, including the Dollar and Euro,” says Stephane. “We will have a digital wallet in our hands and we will be able to manage our assets without having to go to the bank or an ATM machine and withdraw money or deposit money.”

Final Thoughts

Access to capital isn’t equally distributed across the world, and as Stephane notes, it’s a very small network of people that tend to have the highest access. The businesses that bring in the highest returns aren’t usually available as investment options for the everyday Joe. 

The primary lever of any business relationship sits in the hands of the party who holds the capital. This capital has historically rarely left the grips of banks and society’s ultrawealthy, and the barrage of tax breaks and bailouts in the United States, in particular, have made sure that big money stays put.

However, by getting rid of the capital intermediaries by democratizing access to investments by tokenization, the luxuries of society’s ultrawealthy will finally trickle down to the masses.  At least, that’s the argument Stephane De Baets is making with the tokenization of the St. Regis hotel. 

These intermediaries, a category the Elevated Returns Stephane De Baets admittedly falls into, don’t act in the best interest of the Hotel Owner Stephane or the Customer Stephane. However, the multi-faceted Stephane seems to align his professional identities under one banner: the democratization of access and the disintermediation of the engorged third-party of banks, and he wants to use AspenDigital to revolutionize the real estate industry. 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

NFT Platform Cargo Founder on Building on Ethereum – CoinCentral


Cargo is an all-in-one platform to create, manage, and sell digital collectibles. Because of the interoperability that Ethereum provides, users can manage all of their compatible digital collectibles on Cargo– not just the ones created on Cargo. 

Launched in July 2020, Cargo represented several years of Founder Sean Papanikolas’ research and experimentation within the Ethereum ecosystem. Sean helped pioneer scalable minting technology on the Ethereum blockchain. 

With the launch of the Cargo Marketplace shortly after, Cargo has grown to voter 265 accounts created and over 170 unique digital items added to the marketplace. So far, the highest an item sold for has been for around $1200. 

We connected with Sean to discuss his entrepreneurial journey within the cryptocurrency landscape and the future of Non-Fungible Tokens. 

Could you give us a two-minute movie trailer of your life? How did you end up involved in the NFT space?

In 2017 a friend introduced me to Ethereum and It immediately piqued my interest. I’m drawn toward new technologies, but I’ve found the best way to understand them is to build something on them. So, I decided to build a dApp. At the time, I was dating a woman who was a fan of The Bachelor, so I created a smart contract betting on who would win The Bachelor. 

Well, nobody used the contract and the relationship didn’t work out, but I saw the power of Ethereum and learned how to write smart contracts in the process.

I asked my friend if he had an idea about something else we could build on Ethereum and he came back with an idea – a marketplace of 3D models. We planned on calling it Pedddle with three d’s – you know for “3D” models. We had the Pedddle t-shirts made and we were off to the races. 

Through this, I got familiar with the ERC-721 standard and even came up with an ERC-20 token called xR coin that would be used to purchase the 3D models. By the middle of 2017, I had a working prototype where users could upload 3D models and the platform would create NFTs and you could sell them.  

Unfortunately, my partner dropped out, so I scrapped Pedddle and started working on a digital collectible iOS and Android app to bring crypto to the masses. The plan was to abstract all of the crypto stuff and users could pay with a credit card.

The app was called Dolli and it allowed users to buy and collect grungy characters – most notably of which was the infamous Pizza Rob, which was a pretty big hit that I designed. The app was completed and ready to ship, but right before the launch, the payment processor rejected supporting the Dolli app. (At the time, payment processors wouldn’t touch a crypto app with a ten-foot pole.)

I tried a couple of other payment providers but soon came to realize that I was facing a centralization of power – the exact thing bitcoin was supposed to fix. I decided to rebuild Dolli using a decentralized infrastructure. 

That was the catalyst for Cargo. I knew there had to be others like me who would benefit from a platform that allowed you to create digital collectibles, interact with and sell them within your application.

For someone looking to get involved, either as an investor or as an entrepreneur, how would you define opportunity in the cryptocurrency space?

I’m not an investor, so take this with a grain of salt, but you want to look at the technology and the team. Who’s the team building the product, what are they building, and can they pull it off? 

The same applies to launching a startup. Even if the technology may be difficult to understand, you want to look at the team. In my case, I was fortunate to have teamed up with Polyient Labs, an early-stage blockchain incubator founded by Brad Robertson. He and his team understand the crypto and blockchain space, which is why they saw Cargo’s potential.

How will NFTs change day-to-day life?

I think for many people, it’s only a matter of time until NFTs are part of their daily life.

NFTs help make sense for digital ownership. Think about all the digital things you can own – art, tickets, subscriptions, access tokens, the list goes on. 

So, it may be that everyone eventually owns a piece of digital art and has it hanging in an electronic frame on their wall, or they are buying NFT tickets that they can trade or transfer. 

Or imagine that in every video game you played you actually owned the in-game items and could take them out of the game and sell them on secondary markets, or even use them in other games. This is exactly the ecosystem that Polyient Games and I are building.  

What does Cargo accomplishing its 5-year vision look like?

Hard to tell where the space as a whole will be in five years. We are really at an inflection point now, but I imagine that we will have made great strides in usability and scalability. But no matter, Cargo intends to be the platform of choice to power any NFT project regardless of whether it is small or large. 

For now, Cargo will continue building on Ethereum, but Ethereum in its current state could look significantly different in five years. We may be building on the next iteration of Ethereum, or a layer-2 solution. No matter what we are building on, we intend to take our principles of usability and scalability with us.

Can you explain how Cargo differs from other NFT platforms?

Cargo has spearheaded and is the first platform to integrate EIP-2309 which is a standard event to track the infinite creation of NFTs. Using efficient data structures, Cargo pioneered a smart contract allowing creators of the batch-create as many collectibles as they want in one transaction. 

Because of high gas fees, this can save creators thousands (or even tens of thousands) of dollars in transaction fees when creating collectibles at scale.

We’ve also just announced Cargo Gems, which will function as a utility token and payment option on the Cargo platform, as well as a governance token for the upcoming Cargo DAO. What’s exciting is that Gems can be staked inside of any compatible NFT for token rewards.

Cargo is the only platform that allows users to deploy smart contracts which enable them to create an infinite amount of NFTs in one transaction for the same cost as creating one NFT on other platforms. ERC-2309, an open standard on Ethereum that makes this possible, was spearheaded by myself because I realized early on that to scale NFTs we’d need a way to create and transfer large amounts at one time for a price that worked. Recently OpenSea, the largest marketplace for digital goods, started supporting the standard that makes this possible. 

From a feature perspective, we are the first open platform to support 3D NFTs and we also support audio, video files in addition to image NFTs. On Cargo, you can lock digital content within your NFTs that only the token holder can unlock and that content is AES-256 encrypted. 

When I was building Cargo I never thought that it would be only an NFT marketplace and it’s not. Cargo was built to be the engine that powers other NFT projects in a way that scales and is cost-efficient. We have a robust API that allows you to use Cargo’s infrastructure directly in your platform.

From the beginning, we could collaborate with others and automatically split payments – this has been supported via our API.  We are seeing that people want this in the UI of the site, so we are working on including it in a future version of Cargo. 

This is a cool feature and opens the door for a lot of cool projects. 

For example, you could do an art series for charity and you can set it up so each of the charities will automatically receive payment when one of the pieces is sold. Or, if you’re an artist, you can collaborate with other artists, or create your own marketplace that other artists can join.

Where we learn more?

Our next big release will be Cargo Gems which brings the exciting world of Defi to the NFT space. You can find more information here.  

Readers can visit Cargo here. They can also follow Cargo on Twitter. 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

What is Yield Farming? Exploring DeFi’s Recent Rising Star – CoinCentral


Yield farming is a method to harness idle cryptocurrencies such as coins, tokens, stablecoins, and put those assets to work in a decentralized finance fund, often generating interest rates that range between conservative 0.25% for less popular tokens and above 142% for some MKR loans.

Crypto lending rates on Defi Rate

A full list of interest rates and projects can be found at Staked.us and DefiRate.

Passive income from DeFi lending and staking isn’t guaranteed and actual returns will depend on each protocol’s approach. The risks run the gamut of missing out on the promised returns due to slow transactions or market volatility, or even losing your entire collateral.

To understand yield farming, we can draw comparisons from traditional finance: money is issued by a central bank, and then commercial banks lend those funds to businesses and individuals. Banks levy an interest rate on those loans, thus making a profit. 

In the cryptocurrency DeFi economy, a yield farmer plays the role of a bank, lending their funds to boost the use of coins and tokens. Thus, any cryptocurrency owner can hold their own funds while also participating in lending activity, essentially becoming a one-person commercial bank. This increases the flow of value within the decentralized ecosystem system, which in turn, generates returns for the lender.

“Farming” refers to reaping high annualized percentage gains while providing liquidity for various projects. In a way, yield farming resembles the more traditional practice of staking coins, where the user remains in control of their asset, but locks it temporarily in exchange for returns.

Yield farming has quickly become a point of interest for cryptocurrency enthusiasts and investors, often advertised for providing theoretical “fast gains” in the wake of high risk. 

Is yield farming worth it? Let’s dive into the mechanics of yield farming so you can become more educated on what yield farming and how it functions. 

In this article, we’ll explore:

  1. Yield farming’s relationship with DeFi
  2. How yield farming works
  3. Are your funds safe?
  4. The risks of decentralized lending
  5. The best DeFi projects for yield farming 
  6. The future of yield farming

Is Yield Farming DeFi?

Yield farming is a relatively new concept within the Decentralized Finance (DeFi) ecosystem, and the term entered the popular lexicon of the cryptocurrency world in 2020.

DeFi, an ambitious copy of the traditional finance system, is completely on decentralized Internet protocols. Instead of legal hassles and third-party intermediaries, DeFi offers a no-barrier entry to risk exposure. 

DeFi sprung from one of the use cases for the Ethereum protocol. The possibility for cheap and borderless transactions pushed the creation of startups that tried to mimic banks and financial brokers. DeFi applications branched out in various directions including novel cryptocurrency trading algorithms, derivatives trading, margin trading, money transfers, and most importantly, lending markets. 

DeFi Pulse – the growth of DeFi in 2020

Cryptocurrency lending entered a phase of functional maturity largely due to two behemoth projects – Maker DAO, and Compound. 

Other important DeFi platforms combine cryptocurrency lending and cryptocurrency interest accounts into single user-friendly platforms, such as the Celsius Network and BlockFi. These two companies are leaders in an industry where offering more than 6% on BTC and 8.6% on stablecoins such as USDC and USDT is considered industry standard. 

Another important aspect of DeFi and yield farming are trading projects and decentralized exchanges. These projects also offer yield farming, but the liquidity is used for trading. Prominent projects include Bancor, Augur, and UniSwap.

So, where does yield farming come into play?

How Yield Farming Works

Yield farming depends on the inflows and outflows of a certain anchor asset, usually DAI, a dollar-pegged coin that originated with the Maker DAO protocol. As of August 2020, DAI is backed by ETH and BAT deposits, and is used for loans, arbitrage or algorithmic trades. The DAI dollar peg makes the system more predictable by setting an intuitive value for each token, $1. Yield farming depends on a collateral of ETH or another token, which are used for loans and generate passive income. 

A DeFi user will usually lock in the chosen coins by using the MetaMask browser plugin. Locking in funds means the wallet will communicate with a smart contract on the Ethereum network. Depending on the logic of the smart contracts, there are various ways to extract value, though the most traditional one is to levy an interest rate on a cryptocurrency loan. Users will pay fees to transact on the Ethereum network, and due to heightened interest, those fees may rise rapidly, or make the network too congested to be able to participate successfully.

In the middle of March 2020, ETH prices dropped sharply, creating a perfect storm of market panic and the triggering of multiple algorithms on the Maker DAO platform. The Ethereum network also slowed down transactions, not allowing the owners to increase their collateral. Multiple deposits (known as vaults) were liquidated, and DAI briefly lost its dollar peg.

In the case of falling prices, the 150% over-collateralization can help offset the risk partially. Projects like DeFi Saver can automatically increase the collateral to stave off liquidations. Liquidations happen when the minimum collateral requirement breaks down due to price volatility.

DeFi tends to work better in climate climbing asset prices, because the collateral locked for yield farming is safer. For example, if ETH prices drop by 33%, this would liquidate most deposits on Maker DAO. Smaller price fluctuations also mean holding ETH may, in the long run, be more profitable than yield farming.

Alexander Ivanov, the founder of the WAVES protocol, compares DeFi to the frenzy for initial coin offerings (ICOs). Ivanov is still optimistic about the future, only warning against another bubble due to irrational enthusiasm.

The difference between an ICO and yield farming is that coins can be taken out of the DeFi protocol at almost any time, whereas participating in an ICO meant exchanging ETH or BTC for a new token. 

The new token could be changed back only by trading, once it was listed on an exchange. In DeFi, tokens become immediately liquid as they get pairings on the UniSwap exchange, a decentralized, automated trading protocol.

Are Your Funds Safe While Yield Farming?

All types of cryptocurrency investing carry risks. 

In DeFi, the lender is always in control of their funds, as operations happen in automated smart contracts and do not require the oversight of third parties. Unlike token sales, a person can withdraw their collateral at almost any time. 

However, smart contracts can dictate how and when you can withdraw your collateral, so be aware of you’re getting into, in particular during the cases of liquidation. 

What are the Risks of Yield Farming?

Locking your funds in vaults and using smart contracts is inherently risky. Smart contract exploits, which abuse the logic of the contract to generate high returns, and liquidations are a major threat to collateralized funds. The other big risk is the peg of the DAI stablecoin, which must retain its $1 value. Breaking the $1 peg will diminish the value of loans, and create panic selling and quick removal of liquidity.

The boom of DeFi also brought multiple untested protocols, using new smart contracts that led to malfunctions. The YAM DeFi protocol drew in close to $300 million in funds, but due to unforeseen smart contract behavior, led to the printing of thousands of billions of extra tokens. Other projects also release untested smart contracts, which may lead to losses of funds.

Another major concern is a more recent development: the Compound DeFi fund shows more than 1.3 billion DAI in its lending and borrowing markets, while there are around 421 million DAI coins created as of August 14, 2020. This situation resembles a debt bubble, in which cryptocurrency assets are created via the process of lending, thus circulating value that is artificially amplified by yield farmers. 

This situation may put pressure on the DAI dollar peg, and create more serious fallout in case of liquidations. So far, as of August 2020, greed and a price boom allow for the rapid growth of Compound DeFi. 

What are the Best Projects for Yield Farming

Maker DAO is one of the earliest successful attempts at cryptocurrency lending. Initially, lending DAI backed by ETH drew the initial bulk of capital into DeFi. 

Compound, a similar lending platform, followed soon after. Compound also evolved beyond lending, launching its own incentive COMP token. This caused an explosion in DeFi funding between July 15 and early August, when the amount of funds locked in yield farming doubled, from roughly $2 billion to above $4 billion. 

Both Compound and Maker DAO competed for the top spot in DeFi, based on locked value and on their well-known brands. In terms of algorithmic trading, projects like Augur, Bancor, and dy/dx remain prominent in the crypto space.

Alternatively, and not particularly “yield farming” per se, decentralized lending platforms and cryptocurrency interest accounts such as BlockFi and Celsius provide upwards of 8.6% APY on stablecoins without many of the complications of the yield farming outlined in this article, so they’re worth checking out if that’s up your alley. 

Final Thoughts – What is the Future of Yield Farming

Things tend to happen very fast in the cryptocurrency world, and yield farming seems to have spiked into the mainstream foray in the blink of an eye.  

If one was compelled to cast a prediction for the future of Yield Farming, we recommend looking at all possibilities– both positive and negative. 

For example, yield farming can mobilize otherwise idle tokens, potentially generating passive income for their holders. 

On the other hand, negative possibilities range from crisis events such as price crashes or exploits that manage to trick the smart contract and reap gains from collaterals. DeFi isn’t regulated and doesn’t come with the legal protections that come with more centralized financial institutions. 

For instance, DeFi tokens are not considered securities, and the US Securities and Exchange Commission hasn’t taken any decisive actions against them. 

While some yield farming projects are well-established and draw in the bulk of collateral, new DeFi algorithms are constantly popping up. Some DeFistartups use copied and unaudited smart contracts, posing risks for unexpected operations and effects. The YAM yield farming project, for instance, has recently crashed, taking some of the market collateral with it. 

In August 2020, the WAVES platform expanded into DeFi. A long list of former ICO tokens that were repurposed for various forms of DeFi, starting with BAT, LINK, 0x, Kyber Network. A complete list of the most current and active DeFi tokens can be found at CoinGecko.

Yield farming is a mercenary-like approach to cryptocurrency, where risk-takers seek out the highest yields, causing token price volatility along the way. Many DeFi projects are still in their nascent phases and can be rather difficult to understand, yet many newcomers are rushing in to get a piece of the pie. We advise our readers to do their own research into the intricacies of each platform– don’t lock in any funds you can’t afford to lose.

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

Does Bitcoin’s Enhancing Anonymity Mean Doomsday for Privacy Coins? – CoinCentral

In the early stages of Bitcoin development, most cryptocurrency enthusiasts tended to think that the original digital currency offered them complete anonymity and they could make purchases with this type of “new money” without revealing their identities. The level of Bitcoin’s privacy was often compared to that of Swiss bank clients. However, that was far from the case.

Is Bitcoin anonymous? Bitcoin transactions are recorded in the ledger and broadcast publicly to everyone with access to the blockchain. This means, your money transfers are vulnerable to being traced, and, for hackers or governmental structures, the way to your wallet address can be as evident as a trail of wet footprints leading to a bathroom. Remember Ross Ulbricht, the notorious creator of the Silk Road black market?

Authorities tracked his transactions and were able to identify and catch him while he was sitting with his computer at one of the libraries in San Francisco. So, your financial activity is actually an open book, and Bitcoin should be thought of as more of a pseudonymous asset than anonymous. 

This is why the crypto market saw the phenomenon of privacy-focused protocols gain momentum alongside various coin-mixing tools and services without public records linking transactions to wallets. In simple terms, privacy coins were designed to cover tracks after operating with cryptocurrencies, which made their usage very popular among crypto geeks bent on anonymity.

But recent news regarding Bitcoin’s potential upgrades aimed at improving its privacy seems to threaten the future of this class of digital assets, and may even move some to eliminate Monero, Dash, and ZCash out of their portfolios. To measure the possibility of such a scenario coming true, we need to look at where privacy coins stand now. 

Overall excitement for cryptocurrency during the pandemic

Statistical data from ICO Analytics shows that prominent privacy coins, with DASH (see Dash vs. Bitcoin) leading the way, had outperformed Bitcoin as of January 31, as privacy became a bigger concern in the industry, most likely in response to the People’s Bank of China statement regarding their centralized digital yuan initiative. This was the first time in 18 months that privacy coins had outperformed Bitcoin in price gain, owing mostly to their lack of viable value propositions and the high regulatory scrutiny leveled at them.    

Source: ICO Analytics

The bullish sentiment kept gathering strength after Fed Chairman Jerome Powell’s testimony, in which he noted that privateness is essential for transactions with digital currencies and global crypto adoption: “A ledger where you know everybody’s payments is not something that would be particularly attractive in the context of the US.” The importance of the Fed chief’s stance was highlighted by one of the most famous crypto influencers, Anthony Pompliano, which in turn created hype in the community and led to a spike in privacy coin transactions.

Source: CoinMarketCap

With the COVID-19 crisis, privacy has also become a new battlefield for combating the disease. Monero, ZCash and Dash all witnessed increased trading, while the latter managed to reach new highs and outperformed Bitcoin by over 60% compared to the beginning of the year. Moreover, Dash was among the assets that recovered quickly after the “Black Thursday” market collapse in March. Interestingly, the demand for this coin was caused in large part by Venezuelians, some of whom use it for daily shopping.

Notwithstanding such impressive gains, by the beginning of the second quarter of 2020 there was only one privacy coin outpacing Bitcoin. The coin in question is Monero (see Monero vs. Bitcoin guide), which has improved its performance by around 5%. Some experts think this sudden uptick was a result of several positive developments that were done to improve transaction execution and the way Monero works with privacy networks Tor and I2P. In addition, the cryptocurrency received a great deal of attention from well-known faces in the crypto industry like Coinbase’s CEO Brian Armstrong, who expressed his hope to see privacy coins among the main trends of 2020, and controversial antivirus software developer John McAfee, who named Monero as his cryptocurrency of choice in terms of privacy. Many traders sharing this view seemed to immediately flock to long-standing exchanges that also operate in accordance with anonymity ideals, making the XMR/USDT trading pair on HitBTC the most liquid in the market.

Source: Coin360

With such a significant liquidity margin, it wouldn’t be a mistake to say that the exchange has one of the most conducive environments for trading privacy coins at fair prices, alongside its over 500 other assets.

Bitcoin Illegality concerns and “not-so-private” discourse

Not everyone is bullish on privacy. Detractors of privacy coins emphasize their involvement in illegal transactions conducted on dark markets and insist this outweighs all the arguments made by privacy advocates. Most marketplaces existing on the dark web accept untraceable privacy, thereby skirting anti-money laundering and counter-terrorism financing requirements. Japanese and South Korean regulators are among those fighting hard against anonymous coins, even enforcing local exchanges to delist them.

For example, the Korbit exchange removed five privacy coins in May 2018, citing the South Korean government’s ban on anonymous cryptocurrency transactions. Later on, Tokyo-based CoinCheck stopped its support for several privacy coins, including Monero, Dash and ZCash, when half a million of dollars was stolen from the exchange, despite the fact that none of the cryptocurrencies was used for committing the crime.

Actually, the May report from the Rand Corporation revealed that the majority of illicit transactions (59%) on the darknet use Bitcoin, while the presence of privacy coins widely believed to be the “currencies for criminals” is far less prominent.

Source: RAND DWO

And what is even more interesting is the recent announcement from Chainalysis detailing its support for Dash and ZCash. This means that now almost all of the transactions conducted with these two assets, which fancy themselves as anonymous and untraceable, can be easily tracked. It looks like this sudden move by the U.S.-based crypto analysis company will ease the task for law enforcement agencies and make privacy-focus coins practically useless.

Chainalysis stated that anonymous coins offer a fraction of increased privacy, but nothing close to total anonymity. The company found that only around 1% of transactions executed on the ZCash network can boast maximum privacy, even with enhanced encryption taken into account. As for Dash, that rate falls below 0.7%, which, from a technical point of view, places the privacy aspects of the coin on the same level as those of Bitcoin.

It’s noteworthy that almost two months earlier researchers from Carnegie Mellon University generated similar results through their test-trial of ZCash and Monero traceability. The figures are disappointing: 99.9% of ZEC transactions and 30% of XMR transactions can be easily tracked.

With all that in mind, Bitcoin’s increasing privacy poses an existential threat to anonymous cryptocurrencies that may eventually see less growth and community support, as the first-ever cryptocurrency still has many more resources and much more interest than any of the altcoins.

The prospects of the “Bitcoin vs privacy coins” rivalry

Of course, technologies benefiting Bitcoin’s privacy and efficiencies like the Taproot protocol and Schnorr signatures, enabling cooperative closes to look like regular transactions and remain completely hidden to people from the outside, might take away some of the edges from anonymous cryptocurrencies. Bitcoin Core developer Ryan Havar suggests that the wider BTC user base will be capable of making it more private than its privacy-focused competitors: “Simply put, there’s a lot more Bitcoin users, and use cases. So if you can ‘hide’ in the crowd of Bitcoin users, it’s a much bigger crowd than say ZCash.” 

The situation for privacy coins is marred by the crackdown against them that is gaining momentum in different parts of the world. In March 2020, the head of the French National Assembly ‘s financial committee, Eric Woerth, claimed, “it would also have been appropriate to propose the prohibition of the dissemination and trade of crypto-assets to guarantee complete anonymity by preventing, by their design, any identification procedure.”

However, this doesn’t mean that Monero, ZCash, Dash, and other similar coins will eventually fade into obscurity, as the crypto market is not a zero-sum game where only one asset can maintain popularity. This type of crypto is still in demand with the most valuable privacy coin in terms of market cap, XMR, rising in price by approximately 86% since the beginning of the year. The BTC privacy updates still lie ahead and, while the jury is still out, privacy assets can take advantage of Bitcoin’s current lack of anonymity and fungibility and accelerate their attempts to gain more territory.

The Bitcoin for privacy debate will continue to rage on, so be sure to keep track of updates within the network and any future anonymity tests.

This article is Originally posted on CoinCentral.com
Author: Adam Stieb

Posted on

YoBit Exchange Review: Is YoBit Legit, Safe, and Worth Your Time?


A steady presence in the cryptocurrency space since 2014, YoBit is one of a small set of exchanges that don’t require you to enter personal information to trade. 

YoBit has a very user-friendly interface; virtually anyone can set up an account and start trading in under five minutes all while keeping their anonymity. 

Anonymity, it seems, is a core tenet of the YoBit organization, as there are no formal owners or operators listed. This anonymity, however, seems more of an ideological preference of the exchange’s founders, rather than a more dubious alternative. It seems the exchange is based in Russia. With an average trade volume hovering around $60m, 800 coins available for trading, and 3353 trading pairs, YoBit is considered a moderately active platform. 

YoBit offers a very wide variety of altcoins, and it allows altcoin creators to list their coins seemingly with very little obstacles or verification. 

But how does the rest of YoBit stack up? Let’s find out. In this YoBit exchange review, we dig into everything you want to know, including:

  • Key Information
  • How It Works
  • Trading Fees
  • Available Cryptocurrencies
  • Transfer Limits
  • Company Trust
  • Fund Security
  • Customer Support
  • Final Thoughts

How YoBit Works

YoBit seems to be better suited to an intermediate to advanced cryptocurrency trader. While beginner investors and traders could still use YoBit, they may be intimidated by the number of options on the trading screen.

If you’re well-versed in cryptocurrency trading, though, you’ll likely enjoy YoBit’s interface. The platform places all trading functionality on a single screen, so you don’t have to switch between tabs or open multiple windows to research and perform trades.

YoBit Exchange Interface

YoBit Exchange Interface

YoBit contains all of the functionality you would expect from an advanced trading platform. For analysis purposes, you have candlestick charts over multiple timeframes as well as an order book depth chart. 

Additionally, you can view the current orders, daily volume, 24-hour highs and lows, and the trade history for each available market. 

Placing buy and sell orders on YoBit is straightforward. 

YoBit Exchange Interface

Launching a trade on YoBit

From your dashboard, simply input the amount of the cryptocurrency you’d like to buy/sell (or the total amount you’d like to receive for it) and the price. From there, YoBit automatically updates the other relevant fields.

YoBit Exchange Interface

Trading on YoBit

InvestBox and YoPony

A feature unique to YoBit is InvestBox. InvestBox is advertised by YoBit as a tool for developers to promote their coins as well as a means of passive income for investors. According to the YoBit team, you can earn anywhere between a 0.1% and 7.0% daily return on your investment through InvestBox. 

It’s not entirely clear how InvestBox works. We advise our users to be wary of any feature or service offering a guaranteed percentage payout with advertised zero risks. 

A representative from YoBit claims InvestBox is essentially a tool that provides visibility to low cap coins for short-term investments. 

YoPony, another unique feature of YoBit, is a “cryptocurrency racing game” where users guess which horse will win the race. Each horse represents a coin, and the winning coin receives a 5BTC pump. 

YoPony, along with dice games, are essentially based on a randomized probability. The legality of the feature is between YoBit and their local jurisdiction, but we advise our users to be wary in participating. 

The representative from YoBit claims that YoPony is a means to keep users incentivized and engaged to use the platform. An example: 

YoBit Trading Fees

YoBit’s trading fees are straightforward – just 0.2 percent per trade. It doesn’t matter whether you’re the trade maker or taker. Your monthly trading volume has no effect on the fee either.

Available Cryptocurrencies on YoBit

YoBit has quite a few cryptocurrency markets at your disposal. Most of the supported cryptocurrency are available as trading pairs with BTC, ETH, DOGE, USD, RUR, or USDT. In these markets, you can trade:

  • Bitcoin
  • Doge
  • Dash
  • Ethereum
  • ZCash
  • Waves
  • Litecoin
  • Ethereum Classic
  • EOS
  • Tron
  • And many more.

Listing a coin on YoBit is a relatively straightforward process, so the platform also contains numerous low-cap cryptocurrencies that you wouldn’t be able to find on other exchanges. 

YoBit Transfer Limits

There do not appear to be any transfer limits on the YoBit exchange. You should note, though, that certain deposit and withdrawal methods come with varying levels of fees.

Deposit fees range between 0.00% and 1.00% while withdrawal fees can reach up to 7.00%.

Company Trust: Is YoBit Legitimate?

YoBit’s origins are somewhat shrouded in mystery. The exchange was started in Russia in 2014 and is currently registered in Panama as YoBiCrypto Corp. However, not much else is known about the founding team. 

While the company’s duration since 2014 lends some credibility, a Google search yields a wide array of positive and negative reviews– which is natural for most any product or service. 

YoBit, however, seems to be hit particularly hard by negative reviews, many of which appear to be fraudulent bot comments. For example, one of the negative reviewers on TrustPilot has left the same exact negative review for 13 different cryptocurrency exchanges and services. 

A representative comments, “The Russian cryptocurrency exchange market is very bloody. Competitors create fake accounts to blanket their competition with negative reviews, they create scam accounts to trick users of other exchanges, and so on.”

The representative implores users to not follow headlines such as “yobit scam” and “Yobit steals money” as they are most likely posted by competitors using bots. 

Rumors have circulated alleging that Pavel Krymov, a previously arrested financial fraudster, is the man behind YoBit. However, it has emerged that the rumors are unfounded. The team has stated that, “Rumors about the relationship between the Yobit exchange and Krymov are spread by our competitors for money, so do not be fooled by this misinformation.”

In an interview with a Russian media site, Mr. Krymov’s lawyer claimed: “Krymov has nothing to do with Yobit, these are baseless statements.”

One can still find remnants of the Krymov scandal, such as an account named Pavel Krymov is listed as the Founder and CEO on a page that claims to be the official YoBit page, which is also fraudulent. 

This is a good point to remind our readers to not fall for scams online, whether that be fraudulent social media accounts or pages asking for your cryptocurrency. 

Members of the cryptocurrency community seem to have mixed opinions. On TrustPilot, the exchange has a 4 out 5 star rating. However, those ratings are primarily split between 5-star reviews (62%) and 1-star reviews (24%). However, as we’ve seen with numerous fake TrustPilot reviews, it’s difficult to pinpoint a genuine sentiment. 

Fund Security: Are Your Funds Safe on YoBit?

Regarding the security of your funds, YoBit offers little information. It’s unclear what percentage of funds the company holds in hot vs. cold storage. And the team keeps security mechanism information for internal eyes only.

YoBit hasn’t experienced a significant hack from which it couldn’t recover from. The exchange did experience a 51% attack in January 2019, but the exchange tweeted out that the funds would be covered by its insurance fund.

However, numerous users have reported difficulty accessing their cryptocurrency and withdrawing their funds from the exchange. However, virtually every exchange, even top-tier platforms such as Binance and Coinbase, has had difficulties with withdrawals. 

YoBit offers two-factor authentication (2FA) to bring an additional layer of security to your individual account.

We implore our readers: if you do decide to use an exchange, only deposit what you can afford to lose.

YoBit Customer Support

YoBit’s customer support team typically responds to inquiries within the hour but may take up to 24 hours to answer your question.

For further help, the YoBit platform also includes a 24/7 chatbox from which you can talk with other YoBit users and members of the YoBit team.

YoBit runs two Telegram communities (one in English, one in Russian) which contains over 60,000 members each. 

A representative from YoBit advises users to use Telegram support, claiming admins are usually online 24/7 and capable of solving all problems. The ticket option should serve as an additional option for those who don’t use Telegram. 

Insurance fund: In the Support page, there is an option to request compensation from an insurance fund.

YoBit's Insurance fund

YoBit’s insurance fund interface

Not many details are known about the insurance fund. But from our research, the Exchange did deal with the repercussions of a 51% attack on the Ethereum Classic network. 

Some users lost funds, but YoBit’s insurance covered the losses. 

Final Thoughts: International Anonymity, Developing Public Presence

If you’re looking to trade cryptocurrency without supplying any KYC information, YoBit may be the exchange for you. It transacts around $60 million in daily volume and supports a wide variety of trading pairs.

YoBit is a relatively simple and intuitive platform, but it does take some getting used to trading if you are not already handy with trading fundamentals. 

The exchange also seems to be very popular in international circles (language options include in English, Russian, and Chinese and is available all over the world. It also has a live chat within the trading interface, with languages available in English, German, Arabic, Chinese and Russian. It currently has the most trading pairs of any exchange, and accepts both USD and Russian Ruble.

However, the platform’s anonymity seems to be working against it on the public relations front, which seems to be a challenge for any organization without a central publicly available party. However, since it has been around since 2014 and does boast several authentic positive reviews, we’re inclined to give them the benefit of the doubt. 

YoBit advocates can point to its presence and reputation on forums like BitcoinTalk and all user-reviews online should be taken with a grain of salt: whether positive or fake. A positive perspective will applaud YoBit’s support for anonymity, which is a core tenet of the self-sovereignty ethos of many cryptocurrency traders. 

A few other risks worth mentioning is that the company hasn’t outlined any of their security practices, but it has seemed responsible and active in protecting its users from hacks (as evidenced with the prior ETC 51% attack). 

YoBit also lists altcoins for minor listing payments. While the platform itself may be legitimate, many of the unchecked altcoins can be exceptionally risky. 

YoBit has been operating for over five years, which does grant it some legitimate tenure in a relatively nascent industry. 

Regardless, as with all exchanges, we advise users to tread very carefully: only trade what you can afford to lose and don’t risk large sums of cryptocurrency on the platform– words of warning particularly pertinent for smaller exchanges with large numbers of altcoins like YoBit. 

Disclaimer: The content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner. The creation of the above article is a sponsored post that meets our editorial guidelines for objective review. 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

Ethereum 2.0: Is the Interest Real or Hype About Nothing?

No sooner had the crypto world started to settle down after the third Bitcoin halving event, when another wave of hype started to build around Ethereum 2.0, which was initially projected to be released this July. Ethereum 2.0 is the next level of the Ethereum platform which will be achieved by introducing sharding, proof-of-stake and a new virtual machine. Despite some doubts regarding the prospective date, in a February AMA ETH 2.0 researcher Justin Drake expressed his 95% confidence that phase 0 of the project will be finally launched in summer 2020. As it stands now, no one knows if Ethereum will hit the target date, as, according to testnet coordinator Afri Schoedon, the full spec hasn’t been implemented in any client so far. 

Ethereum’s shift from its current proof-of-work (PoW) consensus to a proof-of-stake (PoS) algorithm has been the talk of the town over the past few weeks. It’s obvious that many average users and big investors enamored by the team’s strong commitment to better security, further decentralization, and lower reliance on miners are highly anticipating the rollout of ETH 2.0. But with all the buzz going around, it’s getting harder to sort out the wheat from the chaff and understand whether the positive public sentiment towards the future of Ethereum is fact-driven or hollow. So, let’s figure it out.

Ethereum regaining lost ground

In early 2018, when Ether holders saw it hit its record price of around $1400, the number of ETH addresses was slightly over 10 million. Today, according to data from Glassnode, there are currently 40 million active ETH addresses, with more than 15 million joining the party after Ethereum 2.0 was announced in late May 2019, which represents a good 60% growth. The overall usage of the world’s second most popular cryptocurrency has also experienced a significant increase since the beginning of 2020 and, as of mid-May, the amount of ETH daily transactions has almost doubled from 450,000 to roughly 900,000.


Source: Etherscan.io

The same upward trend can also be seen within the Ethereum network powered by the Gas token, which enables transfers of payments or smart contract information. The total consumption of Gas has recently surpassed 61 million units, hitting its all-time high and moving up by around 60% compared to what it registered in January. This is a great sign for Ethereum 2.0 developers, as the more people utilizing Gas to make the whole network operate, the more smooth the update from PoW to PoS will be.

With that said, the release of ETH 2.0 is expected to create a real demand for the in-house cryptocurrencies, Ether and Gas. While the latter will serve as a fuel for decentralized computers, the higher speed of ETH transactions and much lower fees will become more appealing for both producers and consumers, as well as for both retail and institutional investors.

The influx of larger players feeling bullish about Ether has been dramatic, since it was revealed that currently over $276.5 million are under the management of the Grayscale Ethereum Trust, whereas that figure was only $11.7 million at the same period in 2019.

Authentic hype or marketing?

But are big investors really prepping for Ethereum 2.0? Some media outlets have also tied the surge in ETH volumes to growing institutional interest. At first sight, it seems to be a logical conclusion, however, figures are stubborn things.

Ethereum 2.0 Charts

Source: Coin360

As you can see ETH daily volume hit its maximum of over $10 billion after the March crypto market breakdown on April 30. This was a remarkable performance considering its previous level of $2.92 billion in early January and the subsequent global financial turbulence. Nevertheless, if we take this value and divide it by the number of transactions that were registered on the eve of Labour Day – approximately 840,000 – we discover that the average volume of one transaction is only around $12,000. Moving further, this figure decreases to below $10,000, where it remains today. Doesn’t actually look like intense institutional involvement, does it?   

There is another explanation and it’s probably much more authentic. With Ethereum 2.0, users will have the chance to become staking agents and earn rewards over time by transferring 32 ETH to a contract. At the time of writing, 32 ETH is worth $7,776, which is almost equal to the current average Ether transaction. With that in mind, this rising demand seems indicative of average users and retail investors feeling curious about how this is going to work out and flocking to ETH markets available on the most liquid exchanges with proven security, such as HitBTC and Huobi, in order to come out winning after the much-awaited release.

The aforementioned boom in user activity inevitably led to an ETH price surge. It’s noteworthy that since Ether was worth $1400, its price has declined by 85%. At present, ETH is trading at around $243, having recovered from the repercussions of “Black Thursday” when the price fell to just $111. Nonetheless, it is still not even close to its all-time high.

But this explanation for the uptick in Ethereum activity has been largely ignored in favor of the institutional investor’s narrative.

Why? Whether it is being consciously manufactured or not, the narrative that has institutional investors flocking to DeFi, and specifically Ethereum, is more beneficial to the Ethereum ecosystem. Big names getting involved with Ethereum is more likely to lead to another bull run than average users making investments in a project they believe in. 

Artificially inflated excitement?

In the crypto space, there are few better at making waves that cross over into traditional finance than the Winklevoss twins, long-known in the community for their crypto investing experience and for holding the biggest Bitcoin fortune in the world.

In a recent interview for The Defiant, Tyler and Cameron admitted to making concerted efforts to accumulate a huge stake of Ether, which is now rumored to be “in the same galaxy” as their BTC holdings: “We’re big fans of Ether. We have a material amount.”

It comes as no surprise that the brothers have been investing in ETH, but until this May they never really spoke about the quantity of their investment. Notwithstanding the fact that the real figure remains undisclosed, Cameron has hinted at its size, saying that a few years ago they received a large amount of Ether in profit, meaning that they have been investing heavily for a while now. 

So it is more likely than not that the Winklevoss twins number among the ETH whales as well, and their public bullishness has played no small part in the public’s enthusiasm for Ethereum 2.0. But why did they decide to break their silence on the issue now? Coincidence or not, the interview was published on May 21, when the price of Ether dropped below $200 for the third time in two weeks, and, following its publication, the price did an about-face and began climbing again. The Winklevoss’ enthusiasm was disseminated by a number of leading crypto media outlets where retail traders, eager to make profits, found their next big market event. The effect on institutional investors was remarkable, too, and Ether derivatives are becoming more popular than ever before.

Killing two birds with one stone indeed. This is how it works and above all, nobody can blame Tyler and Cameron Winklevoss for their sincere belief in the Ethereum network’s significance for the development of decentralized finance.

“Sell the news” opportunity

The hype around the Ethereum 2.0 launch can also be seen as a consequence of the “buy the rumor, sell the news” maxim when traders act in anticipation of any big announcement that can potentially cause a shift in the market. “If we get the rally on Ethereum I am expecting,” tweeted popular crypto trader Ethereum Jack, who used to go by the “Bitcoin Jack” moniker, “then July seems like the perfect sell the news moment with the ETH 2.0 launch.” ETH whales, if they employ this trading strategy, will be able to take advantage of the situation, while the community is speculating on the release date and the media are adding fuel to the fire.

But in reality, the event itself is not as important as we imagine, because, at least initially, Ethereum 2.0 will mostly serve as a testnet for the updated PoS consensus system. So, it’s not completely clear whether institutions are investing in the future of the crypto-financial network or are just trying to grab as big a piece of the hype pie as they possibly can. We can only wait and watch how things unfold.

This article is Originally posted on CoinCentral.com
Author: Adam Stieb

Posted on

Cryptocurrency in Eastern Europe: Innovations, Companies, and Progress


Cryptocurrency in Eastern Europe is history in motion.

You may be surprised by how active Eastern European countries are in the cryptocurrency space. According to Statista research, Poland, Latvia, Georgia, Estonia, and Lithuania, all ranked among the top 15 countries by the total value of alternative finance market transactions in Europe in 2018. In the same year, per capita funding for alternative online finance transactions was highest in the UK, but followed by Latvia and Estonia. 

This is not the only evidence that Eastern Europe is exploring financial paradigms outside of traditional channels like central banking. One might be surprised to learn that Georgia is the world’s second-largest mining country after China, Moldova has legalized cryptocurrency mining, and Belarus is predicted to become the European Hong Kong? 

This article is brought to you by Solomon Brown, Head of PR at Freewallet, to give you an idea of which countries favor Bitcoin and other cryptocurrencies, and which ones strictly forbid them. Get the full picture of the suddenly-hot crypto ecosystem of Eastern Europe.

Cryptocurrency Regulation in Eastern Europe

Most countries in Eastern Europe are split on cryptocurrency: either pro or con. Here’s a chart displaying where crypto and mining are legal (+), not legal (-) or unregulated (0). 

Country  Cryptocurrency Mining
The Republic of Belarus + +
Georgia 0 +
Czech Republic 0 0
Russia – –
Bulgaria 0 0
Hungary 0 0
Slovakia 0 0
Poland + + 
Moldova – 0
Ukraine – 0

+ The Republic of Belarus and Cryptocurrency

 Let’s start with the fact that Belarus has its own Silicon Valley that operates on the principle of extraterritoriality. Hi-Tech Park (HTP) is a Belarusian tax and legal zone, facilitating IT evolution, and home to 450 companies working in software development. 

In 2017, the cryptocurrency activities of the residents of the HTP received full comprehensive legislative support from the government. The administration of the HTP, together with the National Bank, the Department of Financial Monitoring of the State Control Committee, international experts, and other bodies, compiled and signed all the necessary documents. 

For instance, Decree No. 8 “on the development of the digital economy” legalized crypto exchanges and cryptocurrency exchange operators, mining, smart contracts, blockchain, tokens, etc. 

From the moment the Decree was adopted, any transactions with tokens (mining, storing crypto, purchase, exchange) became exempt from income tax and VAT until January 1, 2023. The rules regulating the operations of companies involved in the cryptosphere have been accepted by the HTP, and the full legal regulation of cryptocurrencies in Belarus has been established. It is worth noting that only entities that are registered as residents of the Hi-Tech Park are allowed to carry out activities related to cryptocurrencies.

– Georgia’s Powerful Mining Pools

In 2019 UN statistical publications, Georgia is assigned to Western Asia, not to Eastern Europe. But, geographically it belongs to Eastern Europe and is a member of the Council of Europe. We’ve decided to include it not because of favorable crypto legislation, but due to its triumphs in mining. 

A document from the Ministry of Finance notes that each unit of a crypto-asset has a market value, it can be issued, it can have an owner, its property rights can be transferred to another and divided into parts and it can be bought and sold. At the same time, the note states that, in accordance with the legislation of Georgia, a crypto asset is not a legal means of payment or electronic money.

Nevertheless, the country is experiencing a hydro-powered Bitcoin boom. According to BBC, the fact that cryptocurrency mining is “sucking its power grid dry,” doesn’t matter because of Georgia’s vast reserves of renewable hydroelectric power. Probably this reason and lack of regulations have encouraged home miners and attracted foreign businesses. According to NPR, most of the Georgian mining facilities belong to the American company Bitfury.

And although the legislation of Georgia does not regulate activities related to virtual currency, and cryptocurrency in the country does not constitute a legal means of payment, transactions of virtual money between individuals are nevertheless made. However, the government of Georgia has taken the first step towards regulating the crypto business. The multiple mining pools that will use the services of intermediary companies registered in Georgia will be subject to a value-added tax of 18%.

+ Czech Republic Pioneers Bitcoin Regulations

The Czech Republic was one of the first European countries open to operations with Bitcoin, even before the cryptocurrency market boom of 2017. In April 2015, the Czech National Bank issued a document that clarified the attitude of the state towards cryptocurrencies called, “Safety of online payments and virtual currency from the Czech National Bank point of view.” According to this document, operations with cryptocurrencies were not limited by the law of the country, only the norms of EU law applied to them.

Later on, in 2017, the Czech Republic decided to comply with the EU’s requirements for anti-money laundering and introduced the amendments to the Act on Selected Measures against Legitimization of Proceeds of Crime and Financing of Terrorism. According to the new law, all exchanges, including banks, have to verify client ID for crypto to fiat transactions amounting to €1000 and more.

– Russia and Cryptocurrency

On March 16, 2020, local news outlet Vesti.ru announced that cryptocurrency production and circulation would be banned in Russia. The issuance and circulation of cryptocurrency in Russia carries an unjustified risk, according to the bill on “Digital Financial Assets”. 

The bill levied a ban on the issuance and circulation of cryptocurrency in Russia, and established penalties for violations of the ban. Nevertheless, the authorities don’t intend to ban ownership of digital currencies. 

+ Bulgaria’s Prized Stash of Nearly $2B Bitcoin

A Bitcoin retailer spotted on the streets of Bulgaria (via Reddit)

The Bulgarian government sees cryptocurrencies as a financial asset (and owns 213,519  BTC confiscated from criminals, which is more than Bulgaria’s GDP). This state has neither recognized the legitimacy of Bitcoin nor declared it to be illegal. The main condition for the use of cryptocurrency in Bulgaria is the payment of a tax in the amount of 10% of the exchange or sale. 

– Hungary and Cryptocurrency Taxes

Cryptocurrencies are not considered a legal means of payment in the country. According to the local news outlet Portfolio (restricted access), the government has created a special group of Hungary’s central bank, the Finance Ministry, and the tax authority that is studying the industry to develop a legal framework. All cryptocurrency transactions are filed under “other income” and taxed under Hungarian capital gains tax code, which contains 15% capital gains tax and 19.5% health contribution which is called as (EHO).

+ Slovakia Monitors Cryptocurrency Transactions

Slovakia is on the list of countries that have officially recognized Bitcoin and other cryptocurrencies. However, in 2018, the authorities tightened their stance on digital business. Following the initiative of a national regulator — the Slovak National Bank — all banks began to close the accounts of firms associated with cryptocurrencies. A similar hostile reaction from the existing financial system to digital currencies was observed in the Czech Republic and Bulgaria.

In spite of the restrictive measures, non-fiat currencies are not regulated in Slovak law in any way, and their exchange, mining, and other operations are not outside the legal framework. Like the rest of the European Union, Slovakia recognizes that cryptocurrency transactions should be monitored and taxed.

+ Poland Forward Thinking Finance

The Republic of Poland ranks 36th in the world in terms of population. It stands to reason that such a large European country is forward-thinking when it comes to finance. The attitude of local financial regulators towards investing in cryptocurrencies is quite positive. The country’s Central Statistical Office (GUS) has recognized the trading and mining of virtual currencies as an official economic activity. In a statement from 2016, the ministry stated that despite virtual currencies not being subject to any separate regulations under Polish legislation, they are fully legal and subject to income tax. 

Along with that, the government supports blockchain startups. For example, in January 2019, the financial and budgetary supervision service of Poland (KNF) granted state licenses to blockchain startups Coinquista and Bitclude.

+ Ukraine’s Approach to Digital Money

The Verkhovna Rada has registered a bill proposing to legalize cryptocurrency. Plans for this were announced back in 2017, but then authorities did not dare to take such a step. And now “digital money” can be recognized as legal assets. The document titled “On Amending the Tax Code and other laws of Ukraine regarding the taxation of operations with crypto assets” was developed by representatives of the blockchain community, inter-faction elected representatives, the Office of Effective Regulation of BRDO and the Ministry of Digital Transformation.

Along with that, recent introductions to the legislative structure haven’t been that positive. The law “On Amending Certain Legislative Acts of Ukraine on Ensuring the Effectiveness of the Institutional Mechanism for the Prevention of Corruption” No. 140-IX, which entered into force on October 18, 2019, made amendments to the law “On Prevention of Corruption” and establishes the need to declare cryptocurrency as an intangible asset.

– Moldova’s Legal Mining

Cryptocurrency transactions are not legalized in the country, however, according to local media reports, digital money is popular in Moldova. In the center of Chisinau, there are several points that accept digital money as a means of payment. 

In May 2018, the Association of Digital and Distributed Technologies of the country introduced its own cryptocurrency exchange that accepts fiat like Moldovan Leu, the Russian ruble, the US dollar, and the Euro, as well as all top ten cryptocurrencies. Even though the National Bank of Moldova hasn’t officially permitted making transactions with crypto, it sent a letter to Drachmae Market, the first local crypto exchange in Moldova, which indirectly allows it to do banking. 

Moreover, in 2018, this small country hosted its first conference on blockchain and cryptocurrencies called the World Blockchain and Cryptocurrency Summit Chisinau – WBCSummit. Reporting on the conference, Crуptovest noted that “the central bank recognized the potential of blockchain for the financial system and revealed that it was assessing the implementation of technology via local banks.” Cryptocurrency legislation might be on the horizon in Moldova, as mining is already legal here.

Cryptocurrency Mining in Eastern Europe

The Transdniestrian Moldavian Republic (DMR) adopted a law on the development of information blockchain technologies, which technically makes cryptocurrency mining legal. According to the president of DMR, the law will contribute to the development of the information technology industry and attract investment from entities operating in the field of blockchain technologies. DMR may become a paradise for miners. 

The law provides for the creation of a targeted free-trade zone, where foreign companies and individuals can become legal entities without additional bureaucratic procedures. Thus, the country is becoming a relatively attractive region for investment. Local authorities have guaranteed the duty-free import and export of mining equipment for residents and special electricity tariffs for miners. The president promised that the energy supply to mining farms will be provided by the Dubossary hydroelectric station and three thermal power plants.

Who would have thought that such a small country like Georgia could become a world leader in the field of cryptocurrency mining? A study by the Cambridge Alternative Finance Center (CCAF), which was published in 2018, indicated that Georgia ranks second in the world in terms of mining volume after China. At least 60 MW of electricity was officially spent on the mining of virtual currency in the country.

The first, and perhaps most important, thing that attracts mining lovers to Georgia is cheap electricity. And there is plenty of it since, after the collapse of the USSR, small Georgia inherited 20 hydroelectric power stations from the defunct Soviet state. The country was meant to become a kind of energy hub in the Caucasus. Obviously, such a large amount of electricity for a country with a population of 3.7 million people is a lot. As a result, the cost of electricity in Georgia is among the lowest in the world. 

So, as of May 2019, the price of 1 kW in Tbilisi was approximately 6 cents. But, there are still mountainous areas where electricity is cheaper or even free of charge (due to state subsidies), and free industrial zones (where the cost of electricity is 18% lower due to the absence of VAT). 

Belarus is another strong Eastern-European player in the field of mining. As you already know, a crypto-friendly economic policy and the creation of its own Silicon Valley is a part of the country’s strategy of becoming a global IT center. Though mining has lost ground after Bitcoin halving, Belarus is ready to invest its fairly cheap energy to gain profit from BTC mining. 

In 2019, during a meeting with representatives of the IT sector in Hi-Tech Park, Alexander Lukashenko said that he was going to employ a new Belarusian nuclear power plant, to mine Bitcoins. The president explained he wanted to use the surpluses of electric power to ensure the operation of mining farms. “I even especially left a place there! Let’s build farms and mine this Bitcoin (…) If there is Bitcoin, you can always sell it” – Lukashenko commented.

Cryptocurrencies in Eastern Europe: Where to Buy and How to Spend

To buy cryptocurrencies, a lot of countries in the so-called “second world” use one of the largest crypto exchanges, Exmo. This trading platform supports 183 trading pairs with many leading cryptocurrencies and local fiat currencies like the euro, Russian ruble, Ukrainian hryvnia, Polish zloty. The website is available in Russian, Ukrainian, Romanian, and other languages. Users can buy crypto with a credit card, SEPA transfer, Yandex Money, Qiwi, and Payeer.

Non-EU former Soviet countries, like Russia and Ukraine, use Bestchange.ru. The service provides structured information about automatic and manual exchangers of crypto and electronic currencies, and also supports the ruble and hryvnia.

Eastern European countries are home to many of Freewallet’s regular customers with Czech Republic, Hungary, Slovakia, Romania, Poland, Russia, Ukraine, Bulgaria, Belarus, and Moldova making up about 10% of our user base. From our family of simple and secure wallets, these countries most often go for Freewallet: Crypto Wallet, which supports BTC, ETH and 100+ other cryptocurrencies, and our Bitcoin Wallet. Freewallet apps are highly rated for their built-in exchange and fee-free transactions within the ecosystem.

In Georgia, the first ATM that allows you to exchange fiat money for cryptocurrency appeared in March 2018 at the New York Burger diner. A few months later, a second one was installed in Tbilisi. As of November 2019, there are 14 cryptomats operating in the country.

Poland is one of the largest countries in Europe that welcomes the development of blockchain technology. In 2018, the first Bitcoin ATMs with BTC, LTC, and ETH appeared in Gdansk and Bialystok. 

The largest Polish food delivery service Pyszne.pl began to accept cryptocurrencies in 2017. This innovation took place after the purchase of the service by Dutch investors. Currently, Pyszne.pl serves more than 8 thousand catering establishments. The average number of customers is 955 thousand and 7% of users pay in crypto.

The Czech Republic might be small, nevertheless, it ranks sixth in the world in the number of crypto ATM machines. Globally, there are almost five thousand ATMs, and in the Czech Republic, there are about 70. Most of them are set in Prague. Bitcoin ATMs can be found not only in large shopping centers and electronics stores but also in kiosks at metro stations, along with printed materials, cigarettes, and tickets.

The number of Czech companies and organizations that accept Bitcoins as payment is increasing, and not all of them are related to the IT field. On the list, you can find the largest electronics store Alza.cz, a coffee shop in Paralelni Polis (in addition to BTC, they also accept Litecoin, Dash and Monero) and the Paper Hub coworking agency related to the same project. 

A real estate agency Home Hunters has been in the public eye since it closed on a 35-Bitcoin-deal, which at that time exceeded 5 million korunas. Also, there are places like Krypto, a local gas station, FairPlayAuto, a second-hand car marketplace, and a number of hotels and restaurants.

There is a large list of exciting blockchain and crypto projects out of Eastern Europe. We will start with the fintech startup with Russian roots Zerion. The company deals with investing and managing decentralized assets. It was founded in 2016 by graduates of the Higher School of Economics and has 15 thousand users. At the end of 2019, the startup raised $2 million during the seeding round with the American venture fund Placeholder, with Blockchain Ventures among the investors. Recently Zerion acquired the crypto platform MyDeFi that facilitates viewing crypto portfolios.

No wonder Belarus is on the list of the top 10 European countries for launching a blockchain startup. One of the local projects you might have heard of is Rocket DAO, a decentralized crowdfunding platform with independent expert evaluations of startups. These venture capitalist market analysts work with Hi-Tech Park, Angels Band, Volat Capital, Belagroprombank, friendly accelerators and foreign funds to allow startup founders to quickly and safely attract financing. The company provides startup audits, mentoring programs, and unique assessments. Their Startup Training Camp graduates get a free Startup Pack that usually costs over $7,000.

Czech Republic takes 27th place in the Global Innovation Index. The country is the cradle of innovative projects like Apiary whose parent organization is Oracle Corporation. Founded in 2014, it specializes in providing frameworks and tools for creating application programming interfaces (APIs), including the Blockchain APIs that allow you to send and receive Bitcoin, as well as convenient ways to design modern cloud applications. The startup attracted $6.8 million in investments in a Series A in San Francisco in 2015.

Have you ever thought of farm-to-table food traceability? TE-Food, a Hungarian food supply chain solution, offers this service on a blockchain. With food industry experts and Animal Welfare and Husbandry advisors in their management and FAO (The Food and Agriculture Organization) and Deloitte among their partners, the company takes care of the logistics and makes livestock and fresh food supply information transparent.

Sofia, Bulgaria hosts the headquarters of Open Source University that is trying to change the world of education through distributed technologies. The project connects educational institutions, students and businesses directly by eliminating the middlemen. It helps organizations get insights on candidates’ personalities. Learners can enroll in, and track the completion of tailored educational and professional development experiences. The company behind Rechained Ltd. decided to solve the problem of trust beyond institutional and national borders in the authenticity of formal diplomas and certificates after writing a book called Blockchain in Education.

The Prospects of Cryptocurrency in Eastern Europe

Cryptocurrency in Eastern Europe is set to become a facet of everyday life. As people that have experienced financial instability and changing political regimes (often swings from Communism to Democracy), the residents of Eastern Europe are mentally more prepared for cryptocurrencies than Westerners. 

The West is characterized by a higher standard of living and better banking services, as well as a higher average age of the population. Eastern Europe, on the other hand, is full of active young entrepreneurs who are engaged in small business and therefore are especially interested in lightning-fast financial transactions of better quality and without intermediaries. 

Many governments want to tap into the benefits of blockchain. Georgia and Belarus, for instance, are taking full advantage of the economic perks of mining. Hopefully, that new laws and amendments will not impede the development of the crypto industry in Eastern Europe, but rather will lead to this region becoming a world blockchain hub. 

This article is Originally posted on CoinCentral.com
Author: Solomon Brown

Posted on

Why the United States Needs Blockchain for Relief Packages


It seems like only yesterday people were tepidly excited about receiving a $1,200 check from the U.S. government to lessen the hardships of stay-at-home orders and pandemic-induced loss of jobs. However, rent is due today. Grocery bills for June have yet to rack up. That $1,200, regardless of how one tried to stretch it, is either running dangerously low if it hasn’t completely evaporated already.

Talks of another (few) rounds of stimulus checks have already been circling political circles, but who’s to say that future economic stimulus packages are going to find their way to the hands of those most in need? 

Over 60 million Americans haven’t seen a dime of CARES money, and nearly 40 million Americans are unemployed. Some economic models forecast American unemployment to be around 15 percent in 2021, and this figure only counts individuals that have actively filed for unemployment.

Brad Robertson, the Founder and CEO of Polyient Labs, a blockchain incubator and Polyient Games, a blockchain gaming ecosystem, argues that blockchain needs to be used to guarantee the delivery of future stimulus cash.

We got the chance to connect with Brad to discuss blockchain for relief packages.

What needs to happen at an institutional level to implement blockchain-based solutions?

There was a massive amount of hype surrounding blockchain in its infancy. The hype-honeymoon is over. Blockchain-solutions must prove themselves. To gain traction at the institutional level, blockchain solutions have to be adaptable, scalable, and interoperable.  

Corporate executives don’t have the time to discuss “which chain is right for our business and our customers.” They are only interested in efficiency and cost-savings.

So, in order to win over institutions, cross-chain functionality will be a requirement.

We’re already seeing this in blockchain gaming: Those games and gaming ecosystems that are gaining momentum are the ones that offer cross-chain functionality. That will be true for institutional implementation as well.

What are the potential downsides of using blockchain to distribute relief money?

The biggest potential downside of using blockchain to distribute COVID-related relief money is the likelihood that the Treasury Department will screw it up.

I’m not being flippant. Traditionally, government agencies have a poor track record when it comes to adopting new technology. We all remember the early days of ObamaCare. More recently, look at the IRS. It set up a website to help people track their CARES relief checks and the site has crashed at least twice.

This doesn’t mean the Treasury Department shouldn’t deploy blockchain to speed up relief payments – it absolutely should. Millions of Americans are waiting for checks that were supposed to be delivered in March. Just know, there will be bumps in the road – just as there are with every new government initiative.  

Why now is the time to deploy blockchain to ensure relief money is delivered more quickly?

The time to deploy blockchain to improve the distribution of relief money was in February– if not before. Before CARES was signed into law.

Some 60 million Americans still haven’t seen a dime of CARES money. Nearly 40 million Americans are unemployed. Lawmakers were proactive in increasing unemployment payments for millions of Americans, but they did nothing to ensure state employment agencies could process the wave of new applications. Most of those agencies still rely on centralized 1980s technology. 

Why is the US so far behind in the adoption of this technology? What is the hesitation, especially when it could ensure people get their relief money more quickly?

The U.S. is behind Canada, China, Switzerland, Malta, etc. because our laws and regulations marginalize blockchain and cryptocurrencies, making it difficult for the technology to gain real traction in the U.S.

Our current regulations reflect a lingering mindset among some lawmakers and policymakers who associate blockchain technology and cryptocurrencies with crime.

It’s not entirely their fault; there’s a lot of misinformation out there, but the research doesn’t support that viewpoint. Criminals are 800 times more likely to use traditional fiat currencies over digital ones when breaking the law.

The good news is that an outdated mindset is slowly crumbling. In 2019, Reps. Warren Davidson (R- OH) and Darren Soto (D-FL) introduced the Token Taxonomy Act and the Digital Taxonomy Acts.

Last February, Sen. Sherrod Brown (D-OH) proposed using digital dollars to distribute COVID relief, and more recently, a bipartisan group of a dozen members of Congress sent a letter to Treasury Secretary Mnuchin asking him to consider blockchain to distribute relief money.

In each case, lawmakers are trying to drag Capitol Hill into the 21st century. My companies, Polyient Labs and Polyient Games, are both headquartered in Arizona and we see Rep David Schweikert (R-AZ) doing it here: helping create a business landscape that welcomes blockchain.

Schweikert, Brown, Davidson, and Soto all have a responsibility to bring jobs back to their districts. They recognize blockchain is a job creator.  

Will the COVID crisis force the US to get up-to-speed when it comes to blockchain and digital currency?

Yes. We’re already seeing signs: Sen. Brown’s call for a digital dollar, the Congressional letter to Mnuchin asking that his department use blockchain for COVID payments.

Lawmakers know traditional payment methods don’t cut it any longer. I mean, the IRS has resorted to sending physical relief checks to citizens – and millions of those checks are lost. The COVID crisis is forcing lawmakers to admit the old methods are broken.

Similarly, industries now have to admit global supply chains are broken. We saw it firsthand in the last few months: critical shortages of medical supplies, food, toilet paper. You name it.

I guarantee you: conversations are taking place in C-suites across the country right now. Executives are saying “we need a decentralized, reliable and transparent method of tracking, tracing and auditing inventory.” That sounds like a recipe for blockchain.  

Thanks, Brad!

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

Michelle Phan: YouTube Star, Beauty Mogul, Bitcoin Bull


There are very few people in the world that can talk about makeup, entrepreneurship, and cryptocurrency like Michelle Phan. 

Michelle has grown a loyal base of supporters, numbering over 8.9 million subscribers on YouTube today, with her makeup tutorial videos that have collectively racked up over a billion views. 

In 2011, Michelle co-founded IPSY, a subscription-based company that delivers monthly boxes of beauty samples to an estimated 1.5 million subscribers per month. The company has raised a total of $103.2 million from high-profile investors such as Sherpa Capital and TPG Growth, valuing the company at $800 million. 

credit: Luis Trujillo

Along the way, Michelle regularly revisited her relationship with money and wealth as something more intimate than just numbers. She talks about money at a conceptual level, and educates herself on monetary policy and economic theory. She’s also appeared on Bitcoin podcasts, co-hosted an interview with former Presidential candidate Andrew Yang, and interviewed with CoinCentral (hey, that’s us!)

Recently, Michelle joined Pathfinder (Founders Fund’s early-stage investment vehicle), Ashton Kutcher, and Guy Oseary in a nearly over-subscribed $3 million Seed II round for Lolli, a service that allows users to receive rewards in Bitcoin while shopping at one of Lolli’s participating retailers.

A philosophical attraction to decentralization and self-sovereignty connects the dots between her entrepreneurial endeavors, something that may have developed during Michelle’s formative humble experiences as the daughter of Vietnamese immigrants in the United States. 

Before the success and accolades such as a Streamy ICON award and making the Forbes 2015 30 Under 30 list in Art and Style category and Inc’s 30 Under 30 Coolest Entrepreneurs of 2015, before being an “influencer” was a lucrative career, Michelle could be described as the “bashful teenage daughter of impoverished Vietnamese refugees, and sometimes bullied at her high school in Tampa.“

Like many first-generation children of immigrants in the States, Michelle emulated a persistent work ethic in the pursuit of a better life without the benefits of growing up with a family with established professional and social connections. 

She found solace in the day-to-day grind and hustle. From selling candy bars to blogging, Michelle quickly learned the value of a dollar. When she uploaded her first video to YouTube in 2007 at 19 years old, she encountered the powers of the digital economy, even if it was just 25 cents per week from her videos. 

In 2011, one of Michelle’s friends brought his gaming rig over explained his excitement about using it to do a variety of things: gaming, rending images, and mining Bitcoin. 

“This when I first heard about Bitcoin, and I was curious,” reminisces Michelle. “After that, I looked it up online. I saw lots of naysayers, people calling it fools gold. My first impression was that it was a trend.”

Like many Bitcoin advocates that once had a negative first impression, Michellelook backs at her first encounter with Bitcoin with a laugh. 

Michelle kept the Bitcoin idea in her back pocket and focused on building her beauty empire. Fast-forward to late 2015, about the time IPSY its $100 million Series B and Michelle started racking up prestigious awards.

“It was until late 2015 that I was getting serious about building my assets,” says Michelle. “I was interested in building generational wealth. I came from an immigrant family, and I wanted to provide for the next lineage of my family. That’s when I got interested in gold. I watched some videos about how those people who held gold and precious metals in the Depression in the 1930s were able to provide for their family.” 

“I also started watching a lot of conspiracy videos,” Michelle laughs. “I must have thought the world was going to end. I eventually found the “digital gold” of Bitcoin. I thought I should at least diversify, at least have 1% of my holdings in some digital asset.” 

Once the satoshis hit her wallet, however, Michelle was converted into a voracious student of digital assets and a Bitcoin advocate. 

“It’s about having skin in the game,” says Michelle. “When you actually have satoshis, you want to see it grow. You want to understand it better. I decided I wanted to educate myself and learn about the Bitcoin community. I would frequently go on Bitcoin Reddit. I was able to learn a lot.” 

Michelle was brought to revisit her relationship with money in a relatively short time frame– she essentially went from working at her mother’s nail salon to the cover of Forbes in under 10 years. Her goals of financial wealth and taking care of her mother were met, but something was missing. 

In early 2016, Michelle dropped everything and went on a nine-month globetrotting hiatus. Taking a step back away from producing regular YouTube content and running several projects gave Michelle more time to herself, and she spent more time learning about the word and eventually Bitcoin. 

Michelle’s Foray into Cryptocurrency: 

Through her self-education, Michelle has a favorite: Saifedean Ammous’s book The Bitcoin Standard. It was indirectly through Ammous that Michelle connected with her newest investment: Lolli. 

“I messaged Saifedean on Twitter to thank him for writing the book,” Michelle recalls. “Since I followed him, he’s been DMing me new seminars. One day, he recommended I check out Lolli and talk to the Founder Alex Adelman. I knew it was the right company for me to invest in.” 

Michelle looks back at the countless opportunities to invest in and promote a project in the cryptocurrency space but just couldn’t find a fit.

“I had met with a lot of people, CEOs of different exchanges,” says Michelle. It didn’t make sense for me to promote them. Yes, they make it easier to buy cryptocurrency, but at the end of the day, it’s another wallet you don’t really have full ownership over– kind of like a bank. When you have Bitcoin, you should be your own bank, I believe that’s kind of the point. I believe in the decentralization of power.” 

Lolli, according to Michelle, made the most sense to her because she can see herself using it, as well as ultimately a base of customers similar to her prior successful entrepreneurial endeavors. 

“I love shopping, and I love getting rewards (like Honey),” says Michelle. “I know a lot of women do as well. I also feel that many of them aren’t comfortable taking that financial risk to buy Bitcoin. It’s foreign to them. Earning rewards is something they’re familiar with. They’re rewarded with satoshis on the side. If you don’t want to stack sats yet, you can still do so at a smaller level.” 

2020 Investment Theory: Educate Yourself, Be the Customer

As an investor and cryptocurrency advocate, Michelle sees the vague and hazy post-pandemic road ahead with an optimistic lens. 

“The pandemic couldn’t have provided a better set up for cryptocurrency,” comments Michelle. “The Fed is printing trillions of dollars, which could lead to rapid inflation. A gallon of milk could cost $12, and people are going to ask what happened to their money. That’s going to drive a lot of interest to Bitcoin.”

Michelle views the fact that hundreds of millions of people around the world at home as an extremely productive and empowering learning opportunity.

“Every person in this world is giving their time for money in one way for another,” says Michelle. “It’s ridiculous most people don’t know about money. People have a lot of time on their hands, and now is a great chance to be exploring this crazy world. Monetary policy is changing all the time, but the Bitcoin protocol is very simple. It follows Austrian economics. The more people learn more about money, the more they can invest their time and energy into something of value.

In order to spot the best opportunities ahead, Michelle advises entrepreneurs to put themselves in the shoes of their consumers.

“The official number of people claiming unemployment is around 30 million and rising,” says Michelle. “That’s only counting people that have applied, not the ones that aren’t able to because the sites are crashing or just haven’t had the chance to. So, there will likely be a lot of people without disposable income.”

“If they cut back on disposable spending items, they may spend more on essentials. Also, people will want to stay at home. I think there’s going to be some sort of trauma with going back out. [Entrepreneurship] is going to be about capitalizing on those transitions. Be the customer yourself and work your way up.” 

Looking Ahead: Final Thoughts with Michelle 

Michelle keeps herself entertained with passion and self-education. 

“I find it very interesting that there are lots of billionaires and immense amounts of wealth moving to Bitcoin,” notes Michelle. “I mean, just this week Paul Tudor Jones said he has almost 2% of his assets in Bitcoin to hedge against risk, and he’s pretty conservative with his investments. If you have big financial titans and thought leaders jumping into Bitcoin, that could be huge. Imagine the impact Buffet saying he’s going to start buying Bitcoin will have on markets. I’m interested to see who starts converting.” 

Michelle and her own make-up brand, EM Cosmetics.

Michelle Phan embodies a bit of the traditional American dream with a dash of modern digital zest. The success story of someone powering up their laptop (or smartphone) and launching a million-dollar company is no longer viewed as a surreal outlier event. Today, it’s commonplace. 

Hundreds of thousands of content creators spanning YouTube, Twitter, Instagram, Facebook, Twitch, and now Tik Tok are earning billions of dollars per year from viewers that would have likely watched a tube TV just a few decades ago. 

Billion-dollar completely remote (decentralized) companies are coming out of the woodwork, attracting top talent that would have likely walked into a JP Morgan or Goldman Sachs a few decades ago. 

Michelle may have evolved well past any of her financial concerns as a teenager, but she’s maintained a strong relationship with money at a philosophical level.

“When you see what’s happening in the world, even at a government level, you see people that are positioned to take their power back,” says Michelle. “Bitcoin is sovereign money made for free people, which sounds a lot like the American ethos to me.” 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Posted on

What is the Bitcoin Halvening and Why It Matters – CoinCentral


The Bitcoin Halvening (or halving) is a significant moment in Bitcoin’s history. Bitcoin’s Halvening is a pre-programmed event that protects Bitcoin from inflation and helps ensure a degree of scarcity for the digital asset. 

Before we get into the thick of the Bitcoin Halvening discussion, let’s take two minutes to go over some quick halvening questions. Then, we can get into the juicy stuff.

What is the Bitcoin Halving? 

The Bitcoin Halving is an event pre-determined by Bitcoin’s programming where mining rewards are cut in half. Basically, the amount of BTC miners can earn as a reward for validating the next Bitcoin block is cut in half. 

In the 2020 halvening, the mining subsidy is going to be split from 12.5 BTC to 6.25 BTC. 

Why is the Bitcoin Halving Important? 

Bitcoin’s many Halving events seek to give the asset an element of “scarcity” to protect its long-term value. Bitcoin would become nearly as scarce as gold. 

This Bitcoin Halving event will cause the asset’s inflation rate to drop to 1.8%, making it lower than the inflation rate of the U.S. Dollar. This is particularly notable in 2020, as the United States has been printing trillions of dollars in economic stimulus packages to tackle the economical chaos caused by the COVID pandemic. 

“The Halving is an important event for Bitcoin, but it’s just one element in the perfect storm that BTC is enjoying at the moment,” comments Alex Mashinsky, CEO of Celsius Network. “Governments around the world are implementing unprecedented fiscal stimulus, which risks causing high inflation across fiat currencies, which reinforces Bitcoin’s value proposition as a deflationary asset. As a result, many first time retail investors are flocking to BTC as a way to protect their wealth.”

Every future Halving will make Bitcoin more scarce. Since we primarily see BTC’s value as a relation to USD, we have two diametrically opposed forces that point to a higher Bitcoin price.

Halving events tend to come with a flood of industry price speculation, which mostly assumes the Halving event will cause a surge in Bitcoin’s price. 

How Many Bitcoin Halvings are there? 

Halvings occur every 210,000 blocks until the block mining subsidy reaches 1 satoshi, the smallest unit of bitcoin (0.00000001 BTC). Once the final Halving event occurs, the next block subsidy drops to zero, and miners will no longer be awarded block mining subsidies but can still collect transaction fees. 

The last Bitcoin halving is expected to be in 2140. Be sure to read our article about it then– don’t forget! 

There are about 18,355,462 BTC in circulation right now. 

Notice the slight curves due to prior bitcoin halvenings

Notice the slight curves due to prior bitcoin halvenings

When is the Bext Bitcoin Halving? 

Bitcoin’s next Halving event is expected to occur in May 2020, with various sources targeting a May 12th to May 16th date range.

Bitcoin Halving Dates History

There have been two Bitcoin Halvings– one in 2012 and one in 2016. 

2012 Halving

The first Halving occurred on November 28th, 2012. The halving block was mined by SlushPool by a miner using a Radeon HD 5800 miner.

The BTC block reward dropped from 50 BTC per block to 25 BTC per block. 

Bitcoin’s Price on 2012 Halving Day: $12.35

Bitcoin’s Price Price 150 Days Later: $127.00

Price gain: 928.34%

2016 Halving

The second Halving happened on July 9th, 2016.

The BTC block reward dropped from 12.5 BTC per block to 12.5 BTC per block. 

Bitcoin’s Price on 2016 Halving Day: $650.63

Bitcoin’s Price 150 Days Later: $758.81  

Price gain: 16%

  • 2009 – Blocks 1-210,000 earned 50 BTC in rewards.
  • 2012 – Blocks 210,001 – 420,000 earned 25 BTC in rewards.
  • 2016 – Blocks 420,001 – 630,000 earned 12.5 BTC in rewards.
  • 2020 – Blocks 630,001 – 740,000 will earn 6.25 BTC in rewards.
  • 2024 – Blocks 740,001 onward will earn 3.125 BTC in rewards.
  • ~2140 – all 21 million bitcoins will have been mined; the reward will be 0.

It’s worth noting that just because the BTC reward is lower doesn’t make mining any less attractive. Bitcoin’s price has increased throughout the years. Earning the block reward in 2016 was worth about $16,250, whereas the new block reward post-Halving 2020 would be worth about $53,125.

Why Halve Bitcoin?

A common question many have is why not keep the bitcoin reward the same throughout its existence? The answer brings us to the concept of scarcity. 

Bitcoin Scarcity: A Delicate Balance

If Bitcoin were to keep the reward consistent at 50 BTC, that would mean only 420,000 blocks would offer the reward until the 21 million BTC cap is hit, which would have happened at some point in 2016. 

This would have been extremely detrimental to Bitcoin’s user adoption since the technology was still relatively new and only a small minority of the population would hold the vast majority of the Bitcoin. 

At first, an early decrease in accessibility might make Bitcoin seem to be more valuable, but ultimately, this would repel many early-stage users. If there are fewer people capable of using it, then the digital asset would essentially be trapped in a gilded cage of low liquidity. 

Following along the trail of events, low liquidity would increase the risk of holding the asset, chipping away at its inherent value. 

The supply and demand among the small group of Bitcoin hoarders would determine the price. 

The price of BTC would be artificially inflated and holding (hoarding BTC) becomes a game of hot potato. Any individual whale with massive holdings could tank the price at any moment, further increasing the volatility risk of the asset. 

One of the core drivers of Bitcoin’s price is user adoption, and by placing such unreasonable hurdles on new users (high volatility and high costs to enter the Bitcoin ecosystem), few newcomers would venture into relatively unfamiliar cryptocurrency territory. 

With so many comparable digital assets such as Litecoin, user adoption would not bode well for Bitcoin.  

One the other side of the scarcity extremities, we could remove the 21 million cap to understand Bitcoin’s mechanics. 

If Bitcoin were to keep the reward at 50 BTC but removed the 21 million cap, there would be a theoretical infinity of BTC available on market over a long enough time frame. This would flood the markets in the long-term creating an essentially worthless digital asset. Each new year would theoretically slightly devalue the asset. If you need any real-world evidence, just take a look at the Venezuela cryptocurrency situation and why so many Venezuelans have embraced Bitcoin.

The 21 million cap and the periodic halvening events help to ensure that Bitcoin offers users the best of both value retention and usability. 

How Will the Halving Affect Bitcoin’s Price?

If you’ve been reading CoinCentral for a while, you’ll know we don’t speculate on asset prices. We’ll leave that to the Twitter day traders that soundlessly delete their tweet predictions when wrong. Trixy hobbitses.

However, there are a few logical arguments that can be made for Bitcoin’s price moving in either direction. Bitcoin’s price did increase after the first two halvings, but it’s hard to tell whether this is merely correlation or causation. 

Will there be a price jump after bitcoin halvening 2020? Only time will tell.

Will there be a price jump after bitcoin halvening 2020? Only time will tell.

That being said, many influential and respectable figures in the space have made price predictions, many of which are predicated on Bitcoin being a scarce asset. 

Billionaire venture capitalist Tim Draper, for example, predicted a $250,000 Bitcoin by 2022. 

Ex-Goldman Sachs hedge-fund manager Raoul Pal, recently claimed Bitcoin’s price could hit $1 million before the next halving event in 2024.

But take any prediction on the Internet with a spoonful of salt. John McAfee, for example, made a lot of noise with a $1,000,000 bitcoin prediction but soon backed out once proven wrong by the test of time.  

In a pure vacuum where only basic market forces and mathematics prevailed, Bitcoin’s price would go up after a halvening because of scarcity, but the reality is far more complicated than that. In lieu of us jumping into a rabbit hole here, feel free to shoot us an email if you’d like us to go into greater detail in another article.

Final Thoughts

Regardless of its impact on price, the Bitcoin halvening is a unique piece of digital asset history. By sheer resilience, Bitcoin has proven countless doubters and antagonists wrong. Each successful milestone of its programming keeps Bitcoin on its path to being a resilient, decentralized, and global means of exchange and store of value. 

“In 2016, I didn’t participate in the halving and all things considered, it was a minor event,” comments Catherine Coley, CEO of Binance.US. “The real rally happened 18 months later. On the whole, I’m bullish on Bitcoin long-term, whether not this event changes the prices noticeably or not. With unemployment and stimulus funding flooding our USD system, I think more people are looking for an alternative exposure to a market that’s unrelated to USD.”

The halving doesn’t require much, or any action, on your part. If you hold the digital asset, it’s worth your while to develop a more intimate understanding of how it works. Learning this unlocks the flood gates to better understanding global monetary policy in an increasingly more tech-enabled, a crucial lesson given the current economic conditions. 

To get a better understanding of Bitcoin, read our Bitcoin guide or Bitcoin for dummies guide. 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov