Posted on

Greed and Listing: The Twin Engines that Crashed the Crypto Industry

CoinSpeaker
Greed and Listing: The Twin Engines that Crashed the Crypto Industry

Crypto lit up like a Christmas tree a year ago in Dec 2017, everybody got their gifts and more, and joy was in the air. Now the lights are out, snow is thick, and all the wonderful gifts have been returned, except nobody got their money back. 

Bitcoin has been cited as the worst investment instrument in 2018, having lost more than 72% of its value in the year. And many tokens that were hot items a year ago, simply ceased to exist. Santa Claus definitely did not come to town, and from the looks of it, won’t be for a while. So we find ourselves asking, “what happened?”

Pundits, analysts, and experts have written many words trying to answer this question, citing lack of adoption, an inevitable bubble, regulations, etc., yet there is a much simpler answer composed of two items: greed and listing.

First, greed of crypto funds, exchanges, projects, and token buyers themselves have hurled the industry headlong into a chasm. The irony is that greed is a good thing, as Mr. Gecko famously pointed out in the movie Wall Street. Greed is the foundation of competition, and is what drives corporations to compete not just for a slice of market share, but for the entire pie.

However greed without regulations always lead to bad things happening, as history shows over and over again. This is why there are rules and regulations, to protect the public and reduce foul play. Yet the crypto industry lies within a vacuum, and that space has been filled with parties all eager to take profit with whatever means necessary.

But crypto has been outside regulatory oversight for many years, why have we seen 2017 and 2018 explode and implode? The second part of the answer lies in unchecked token listing on exchanges. Crypto projects are unique in that their tokens can list on exchanges and trade immediately as liquid assets, without having gone through any review or check.

With no users, revenue statements, product, or even real team members, projects and token buyers are able to induce massive transfers of wealth through conducting ICO’s and then list immediately. It would be unprecedented in any other industry for a company to be traded solely off the strength of its marketing and white paper, yet it has been the norm of the crypto industry.

The lack of accountability or even legality in this process created a fundamentally misaligned incentive structure for all parties involved, funds, projects, exchanges, and retail token buyers. Most crypto funds do not care about a project beyond its speculative value and projects are ill-incentivized to actually develop when they’ve already been paid millions for writing a wishlist.

Exacerbating the issue is that exchanges generate revenue from listing and trading of tokens, meaning they are inherently incentivized to look the other way if a project seems fraudulent. Finally, retail token buyers who do not have any technical background, product building, and business experiences are directly exposed to projects without any guidance of measurement or review. 

This has created a dysfunctional cycle that has decimated the industry:

  1. Projects put most of the time and resources into developing and marketing a whitepaper, not an actual product. Marketing team does a good job, and ICO is expected to smoothly. Tokens are sold privately with a heavy discount for “crypto funds.”
  2. ICO is conducted and retail buyers rush in due to the project’s backing by “well-known” crypto funds.
  3. Due to pressure from crypto funds to liquidate, projects rush to list on exchanges. 
  4. Project pays exorbitant listing fees, as exchanges are the sole gateway to liquidity
  5. Once listed, everyone dumps to realize gains. Price tanks, whoever is unlucky enough to buy last, is now left holding the bag.
  6. New projects start and the cycle begins again.

Dysfunctional Cycle of Crypto (DCC)

So now that there are no one left to fleece, how do we break the cycle? There are 3 major changes that must happen in order to right the damage done to the industry, and they are not easy:

  1. Stop funding ideas and focus on execution;
  2. Regulate exchanges;
  3. Dis-intermediate, not de-centralize.

First, we as an industry, need to stop funding ideas and instead fund execution. It has been reported that over half of ICO’s that started in 2017 failed within the first four months. By now the failure should be well over 90%. And that is normal, as failure is the norm for any new company, blockchain or not. It is easy to write words, but much harder to make anything work. 

There is a saying that “an idea is worth 1%, execution is the other 99%.” ICO’s are essentially being funded with millions, and sometimes tens, hundreds of millions based just on their ideas. As a serial entrepreneur, I am now on my fourth startup with Asia Innovations. My first startup struggled and was sold. My second one failed. My third one was sold to Zynga, and my fourth and current one has grown from 0 to close to $200mln in fiat revenue in 5 years.

GIFTO, my token project, was incubated together with Binance in 2017, based on the strength and insights of the existing business. Even after all this, most of the new ideas that came up in my company never go anywhere. There is also a very good reason why traditional venture funding is in stages, and amount of funding is small at the beginning.

Why does a new team of 10 needs $10mln? One time, big ICO’s should go away and instead become a series of smaller fundings, to better accommodate the natural failure rate of doing anything real.

Second, exchanges must be regulated, especially in listing and trading of tokens. Exchanges are not incentivized to be discerning when listing projects since it is profitable to list and money is made simply on trading, whether it is sell or buy. There needs to be regulations that hold them accountable for the projects listed on their platform. 

The simple fact is that retail investors need to be protected, and trading needs to regulated. Liquidity availability must be based on actual economic value generated, not speculative. GIFTO has been traded on 16 exchanges. We have seen first hand a wide range of listing and trading management capabilities on exchanges. 

Unfortunately, it is natural for human beings to not want rules, until they consistent suffer negative consequences, like those of us who don’t wash hands before you eat and end up with a tummy ache (yes, I’m looking at you). Specifically, two areas must have clear consistent rules:

  • Listing: Projects must be listed not just based on “quality of proposal”, but based on “quality of delivery”. Remember, most projects will fail naturally, and listing of a project does not increase its chance of success. In fact, listing has only negative distractions and incentives for the project. Ultimately, only those projects that have had traction and success, in terms of users and economic value generated, should list.
  • Trading: non-regulated trading puts all the power in hands of sophisticated traders and firms with large amount of money. Simply put, this is the same as in equity markets, where if unchecked, traders have huge incentives and capability to fleece the retail. This is exactly what happened, and is still happening

Finally, we must accept that “de-centralization” is still a myth and act accordingly. Despite the popular narrative that everything will benefit from “de-centralization”, crypto is the most “centralized” industry I have ever seen. Everyday conversations revolve around twitter comments and actions of a few “crypto influencers”, and a recent fight between two prominent individuals dragged down the whole market. 

The most lucrative businesses are centralized exchanges and powerful crypto funds, and we forever are searching for “crypto gods” who can deliver us a new world. Let’s face it, de-centralization is a myth. Dis-intermediation, or reduction of middlemen is the key. It was how Internet and mobile technologies created huge value and entire new industries, and it is what blockchain will do too.

Thus, existing companies and who have an established business, brand and savvy enough to figure out how to use blockchain will herald the next wave of blockchain value creation.

The true pioneers of this concept are likely to come from Asia, where regulations are much friendlier than in the United States. The recent announcement of the Asia Blockchain Accelerator in Taiwan are hints at the direction the industry needs to move in.

The accelerator is officially sanctioned and supported by the Taiwanese government, and accelerates projects that are already delivering real economic value and seeking to enhance their services through blockchain technology. The ABA represents a test case for the future this piece advocates for, one where credible companies tokenize successfully with the right government oversight.

The 3 steps outlined above are not easy. Rebounding from the painful lows of the past year requires focus and willpower that may simply be lacking at this juncture. No good things are ever easy. Only by slowing down the rapid liquidity cycle, can projects, token buyers, and the whole industry refocus on building, not speculating. With the number of smart and resourceful folks still remaining in crypto, it is possible that we will once again hear sleigh bells in the next few years.

Greed and Listing: The Twin Engines that Crashed the Crypto Industry

Posted on

Bitmain Cancels Texas Mining Operations

CoinSpeaker
Bitmain Cancels Texas Mining Operations

It is no secret that the cryptocurrency industry has been suffering a lot lately. However, not many suspected the largest companies like Binance or Bitmain to suffer along with the smaller ones. But the reality is that they are the ones looking at the largest losses. In all honesty, the mining business, in which Bitmain was leading, is becoming unsustainable, the drop in prices is just too hard to handle.

Because of this, the crypto giant had to postpone or in the grand scheme of things, completely scrap its plans for the mining operations it had in Texas. This does not bode well for cryptos as these mining companies keep struggling with coin generation. Soon the exchanges might just run dry and people will have to rely on the CFD brokerages that offer cryptos, which is something nobody wants to face.

Lost Jobs & Revenue

According to reports from Texas Public Radio, a local news reporter. The facility that was supposed to work on the mining for Bitmain, has suffered a large lay-off of staff. Before the operation was put on hold, the facility had about 15 employees, after the hold, there are only 5 left. This is quite alarming as Bitmain poured in millions of dollars to renovate and prepare the building with its 8000 mining hardware.

The representatives of Milam county were also very disappointed. You may think that cryptocurrencies are not welcome in the USA, but you may be mistaken. The number of jobs these large companies bring with their facilities are very hard to ignore for some remote town. Milam representatives said that it was nothing short of a disaster as the opening of the facility was such a remarkable event.

Industry in Chaos

The layoffs and halts in operations over in the USA are sadly not the only problems Bitmain is facing at the moment. This is indeed the beginning of the rumors that surfaced back in December of 2018, when Bitmain was supposed to start massive layoff, ultimately terminating more than 50% of its current staff.

This used to be nothing but a rumor, but it is starting to become a reality. Bitmain is not the only company facing these problems, as most cryptocurrency firms are starting to waver in terms of revenue, which could only be fixed by reducing costs, meaning more layoffs of “non-mandatory” staff.

Stories like this can be seen all over the industry as companies are faced with 2 choices. Either lay off some staff or end their mining business with the hopes of starting something else. Things are going terribly for large companies as well, especially for Canaan Inc, which is looking into an IPO in the United States, whether this is a desperate attempt at a cash grab and survival or just a start for a new opportunity remains to be seen.

Bitmain Cancels Texas Mining Operations

Posted on

Tron Takes the Spot Within Best Crypto Performers Ahead of Massive Selloff

CoinSpeaker
Tron Takes the Spot Within Best Crypto Performers Ahead of Massive Selloff

The beginning of 2019 has become rather busy for blockchain platform Tron. On January 4, peer-to-peer torrent client BitTorrent acquired by Tron announced creating its native token, BitTorrent (BTT), that would run on the Tron protocol.

The new token will be used by BitTorrent’s 100-million client base to pay for higher network speed and faster downloads. BTT will be available for non-U.S. users on Binance Launchpad, the token sale platform operated by a well-known cryptocurrency exchange Binance.

Later, TRON chose a person to join the team as its first chief compliance officer. As was reported by Coinspeaker, David Labhart, the former SEC attorney, will help Tron build effective interaction with financial authorities as its first head of compliance.

Last weekend has been lucky for TRON’s token TRX as well. The token’s trading results have become the best, with the token included in top 10 performers of the past week. The TRX price decreased a little after other currencies suffered drops, and by now, it has already recovered, having gained about 10%. Currently, the coin continues its growth, and its price makes up $0.0238 per token as shown by CoinMarketCap.

Tron (TRX) Accused of Price Pump

Not everything is as smooth for TRON as it seems. The company has some problems as it has faced price pump accusations. On January 4, TRON’s accelerator competition closed with $1 million in prize money to be won. After the event, some participants complained that the company was misleading them. As Reddit reported, TRON delayed its winner announcement and then changed prize payouts. There were complaints about the cut in the minimum prize size from $5,000 to $1,000, casting doubt on whether the prize money would be fully distributed.

TRON’s founder Justin Sun was reached out on Twitter for a comment:

Later, Sun published a post, referring to the response to all the complaints.

TRON’s Upcoming Summit

TRON is a blockchain-based decentralized protocol that aims to construct a worldwide free content entertainment system with the blockchain and distributed storage technology. The protocol allows each user to freely publish, store and own data, and in the decentralized autonomous form, decides the distribution, subscription, and push of contents and enables content creators by releasing, circulating and dealing with digital assets, thus forming a decentralized content entertainment ecosystem.

Despite some problems that the company has after accelerator competition, TRON is actively preparing for its niTRON Summit 2019 that is scheduled to take place on January 17-18, 2019 in San Francisco, United States. The main idea of the event is to continue fostering innovation within the blockchain industry and to tell the audience what is happening in this space right now.

The summit will bring industry experts, regulators, and entrepreneurs together to discuss new opportunities for blockchain and to establish valuable business contacts that may become a ground for new cutting-edge projects.

Tron Takes the Spot Within Best Crypto Performers Ahead of Massive Selloff

Posted on

Top 5 Crypto Performers Overview: Tron, Neo, Cardano, Binance Coin, Litecoin

The recent market sell off may indicate that the process of bottom formation will be volatile.

After a strong start in 2019, the crypto markets have witnessed sharp selling that dragged the prices down by about 10 percent on Jan. 10. This indicates that the process of bottom formation will be volatile.

The traders should aim to book quick profits and trail their stops higher to protect any potential profits. The important event that turned the tide in favor of the bears was the 51 percent attack on the Ethereum Classic network.

The crypto markets had topped on Jan. 7, 2018, reaching a total market capitalization of over $835 billion. From there, most of the top cryptocurrencies reversed direction causing a huge erosion in wealth. Even after one year, we can not confirm that the markets have bottomed out and are now on the way up.

However, in 2019 the prices could by boosted by any positive regulatory developments, Bitcoin exchange-traded fund (ETF) approval, or increased institutional interest. Until then, what should the traders do? Let’s study the charts of the top 5 performers among the top coins to gauge the current sentiment.

TRX/USD

Tron was the best performer in the past week, as it bucked the trend and stayed comfortably in the green. The company has acquired the peer-to-peer torrent client BitTorrent in August 2018. Last week, the latter has launched its own Tron-based cryptocurrency called BTT.

Justin Sun, the founder of Tron, expects this move to increase the reach of blockchain to hundreds of millions of users. However, Simon Morris, former chief strategy officer at BitTorrent, has opined that the Tron blockchain does not have the capacity to manage the transaction volume needed to tokenize BitTorrent.

In other news, Tron has hired former SEC supervisory attorney David Labhart as its head of compliance. Will the performance of the digital currency continue for the next few days? Let’s find out.

TRX/USD

The TRX/USD pair has mostly been trading inside the range of $0.0183–$0.02815521 since mid-August of last year. Although the bears had broken down of this range in mid-November, they could not capitalize on it.

After trading close to $0.011 for about five weeks, the bulls staged a smart recovery that pushed the price above the resistance of the range at $0.02815521. However, the breakout was momentary, as sellers pounced at higher levels, dragging the price back into the range.

We anticipate a new uptrend if the price breaks out and closes (UTC time frame) above $0.02815521. Currently, both moving averages are flat and the RSI is also close to 50 levels, which suggests that range bound action might continue for a few more days. Our view will be invalidated if the bears sink the price back below $0.0183.  

Short-term traders can buy closer to the bottom of the range and sell near the top of the range. However, as the price action inside the range can be volatile, traders should keep their positions small.

NEO/USD

The news of a rumored partnership between the Russian government and NEO developers has kept the cryptocurrency buoyed. The expectation is that in order to dodge the United States sanctions, the Russian government is attempting to diversify into cryptocurrencies.

If the rumor turns out to be completely false, the price might fall. So, what should the traders do?

NEO/USD

The NEO/USD pair has a tendency to consolidate before breaking out or breaking down. The two previous attempts resulted in a breakdown of the range, followed by extended fall.

Currently, the cryptocurrency is again stuck in a range with support at $5.4808 and resistance in the $10–$12 zone. Both moving averages are sloping down and the RSI is also close to the oversold zone. There are no signs of a reversal forming on the charts yet.

The previous consolidation had lasted for 13 weeks and the current one has so far been going on for seven weeks. We expect the price to remain stuck in the range for a few more weeks, before it breaks out or breaks down.

We suggest investors wait for a trend reversal to be signaled before initiating any long positions.

ADA/USD

The market participants are awaiting the release of Project Shelly that will help Cardano shift from a centralized platform to a decentralized one. Will this upgrade propel the digital currency higher in the near future? What should the traders do now?

ADA/USD

The ADA/USD pair is in a downtrend. It continues to make lower highs and lower lows. Both moving averages are sloping down and the RSI is also in the negative territory. The previous two pullback attempts have been shallow, which points to a lack of buyers.

A break of the recent low of $0.027237 will resume the downtrend. On the upside, a move above $0.1 will indicate strength. We suggest traders wait for a bullish pattern to form before buying.

BNB/USD

Binance has revealed plans to launch one new token every month of this year through Binance Launchpad, its exclusive token launch platform. Will this give a much needed boost to the struggling initial coin offering (ICO) market?

BNB/USD

The BNB/USD pair has been trading inside the descending channel for the past few months. The bulls are struggling to break out of the resistance line of the channel. If the bears sink the price below $5.4666, a retest of the recent low at $4.1723848 is probable. If this support breaks, the fall can extend to the support line of the channel.

Our neutral-to-bearish view will be invalidated if the pair breaks out of the channel. The pattern target of such a breakout is $15, with a minor resistance at $12. Therefore, investors can wait for a breakout and close (UTC time frame) above the channel to initiate long positions.

If the price remains stuck inside the channel, buying can be done close to the support line of the channel and profits can be booked closer to the resistance line of the channel. As this is a counter-trend trade, the position size should be about 40 percent of usual.

LTC/USD

The total amount of litecoins in circulation has reached 60 million on Jan. 12. That number represents about 71.5 percent of the total 84 million that can be mined. The last litecoin is expected to be mined somewhere in 2142.

In the wake of the 51 percent attack on Ethereum Classic, Charlie Lee, creator of Litecoin has said that a decentralized network “must be susceptible to 51% attack,” because otherwise it does not meet the requirements of being decentralized.

LTC/USD

The LTC/USD pair is in a long-term downtrend. The attempt by the bulls to stage a recovery in the past few weeks has hit a major roadblock at $40.784. If the bulls fail to defend the support at $29.349, a retest of the lows at $23.090 will be on the cards.

The downtrend will resume if this support breaks. Both moving averages are sloping down, and the RSI is in the negative zone, which shows that the bears currently have the upper hand.

However, if the bulls defend $29.349, we anticipate another attempt to break out of the overhead resistance at $40.784 and $47.246.

The previous two consolidations had resolved to the downside. Hence, we recommend traders wait for a buy setup to form before initiating any long positions.

Posted on

Upcoming Ethereum Constantinople Hard Fork Already Backed by 19 Exchanges Worldwide

CoinSpeaker
Upcoming Ethereum Constantinople Hard Fork Already Backed by 19 Exchanges Worldwide

The second update of Metropolis hard fork, called the Constantinople hard fork, should have been finalized on 13th of August 2018, tested for two months and released by the second week of October. Yet, the fork got postponed to January 2019 after developers detected mistakes in its program during the testing period.

According to the sources, the Ethereum Constantinople hard fork is now set to happen between January 14-18th once block number 7080000 is mined.

Currently, the date is not precisely set, but the sources suggest, that Constantinople will most likely activate on Wednesday, Jan 16th, probably around 7 am UTC with a block 7080000. The current average block time is around 15 seconds and today we are in a block number 7035939, so there are 44 061 blocks to go. The preliminary calculations show that there are around 5 days left until we reach the mentioned block (7035939/7080000).

However, this will make a job a bit harder for many of the exchanges that announced their support of the Fork. For now there is 19 exchanges that officially confirmed support.

Major cryptocurrency exchanges OKEx and Huobi among the first announced their intention to support the upcoming Ethereum (ETH) Constantinople hard fork.

OKEx’s management team noted that the exchange would be taking a snapshot of all its accounts at block height 7,080,000. Huobi advised traders to deposit their ETH tokens into the platform as it will help them to manage all technical issues related to the network upgrade.

London based crypto exchange CEX.IO announced that at the moment the company is making the necessary technical adjustments that will be able to enable the support need for the Constantinople upgrade. Just before the upgrade takes place, the CEX.IO will be stopping all the deposits and withdraws that are made in ETH. It is just to ensure that the customer’s funds are kept secure, but once the upgrade is completed all the ETH holders will be able to quickly resume with their trading of the coins on the exchanges just as before, but now on a better working system.

The same goes for the US-based cryptocurrency exchange Bittrex that confirmed finishing all the preparations required to get ready for Constantinople hard fork.

They tweeted:

Binance asked holders of ETH to allow sufficient time for deposits to be processed in full before the aforementioned block height is achieved. The exchange went on to assure traders that they will handle all technical requirements related to the event.

The Constantinople hard fork has been lauded for achieving consensus across the Ethereum community. However, there is a slim chance that their might be other hard forks as developers and other Ethereum community members wish to carry out their own versions upgrading the Ethereum network. Binance has therefore added the following information in case of such outcomes:

“Should there be any other hard forks or airdrops during the Constantinople hard fork period, we invite these respective project teams to contact us at [email protected] for further discussion.”

OKCoin also confirmed their support advising their clients to deposit their Ethereum tokens into OKCoin as they will be handling all the technical requirements for the hard fork. Similar goes for IDAX that also recommended clients to deposit Ethereum tokens into IDAX.

A popular Indian cryptocurrency exchange Koinex stated that the company will be also supporting the much-discussed Ethereum [ETH] Constantinople hard fork. Koinex had tweeted:

BitMart also confirmed their support for the upcoming Fork. Similar to other exchanges they are asking their clients to leave sufficient time for deposits to be processed in full prior to the block height.

One of the last joined exchanges is New Zealand-based exchange Cryptopia who also announced their support on their official Twitter account saying:

The rest of the exchanges that announced their support (and we, at CoinSpeaker, will try to keep the list updated as possible) are Chinese digital exchanges Bibox and Hotbit, decentralized exchange EtherFlyer, crypto exchange BitForex, Indian crypto exchange WazirX and multi crypto wallet Exodus Wallet. Also, support comes from transaction mining exchange platform Catex, Indian platform Indodax, Thai crypto exchange TOK and Singaporean crypto exchange ABCC.

Mid December last year found ETH in the number 3 spot according to market capitalization. This was after XRP edged out the King of Smart Contracts from the number 2 slot as the bear market accelerated with BTC trading at $3,200 on the 15th of December. At the same time, ETH was trading at around $83. At the time of writing ETH was trading at $134.84 with market capitalization of $14,063,336,619.

Upcoming Ethereum Constantinople Hard Fork Already Backed by 19 Exchanges Worldwide