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Hodler’s Digest, February 4–10: Top Stories, Price Movements, Quotes and FUD of the Week

The mystery around embattled crypto exchange QuadrigaCX deepens, and Facebook acquires a blockchain startup.

Top Stories This Week

Facebook Reportedly Acquires Blockchain Startup in First Blockchain-Related Acquisition

Social media network Facebook has reportedly acquired blockchain startup Chainspace in its first apparent blockchain-related acquisition. According to news outlet Cheddar, the acquisition is considered an “acquihire,” or an acquisition of a company made in order to get the skills or expertise of its staff, as opposed to the company’s service or products. According to Cheddar, four of the five researchers that worked on Chainspace’s academic white paper will be joining Facebook. Facebook had told Cheddar that it had not acquired any of Chainspace’s technology.

Leaked Mt. Gox Info Purports to Show $318 Million in Bitcoin, Bitcoin Cash on BitPoint

According to leaked documents reportedly showing the rehabilitation proceedings of defunct cryptocurrency exchange Mt. Gox, the trustee for the process has sold around $318 million in  Bitcoin (BTC) and Bitcoin Cash (BCH) on trading platform BitPoint. The information, which purportedly comes from the Tokyo District Court, shows incomplete scans of transaction at BitPoint, reportedly confirming that Mt. Gox trustee Nobuaki Kobayashi sold coins on a major exchange to repay creditors. CEO of United States exchange Kraken Jesse Powell has previously noted that Kraken’s suggestions for selling coins in an auction or with an OTC broker were not acted on.

Jack Dorsey, CEO of Twitter and Square

Venezuela’s New Crypto Legal Framework Comes Into Force, Doesn’t Mention Petro

Venezuela’s new crypto legislation, which establishes a legal framework for the industry, officially came into force at the end of January. The official set of rules, which makes no mention of the national cryptocurrency Petro, was initially approved by the Constituent National Assembly — an alternative to the country’s Parliament, created in 2017 — in November 2018. The bill lets the national crypto watchdog inspect crypto-related commercial activities in the country. Also this week, Bitcoin trading reached an all-time high in the country amid the hyperinflation and ongoing presidential crisis, above 2,000 BTC on the week.

QuadrigaCX Controversy Continues as Securities Regulator Begins Investigation

As research this week has alleged that major Canadian crypto exchange QuadrigaCX may not have the cold wallet reserves that it had reported, the Ontario Securities Commission (OSC) has initiated a probe into the situation. The exchange had filed for creditor protection after the death of its founder in late December, Gerald Cotten, who allegedly controlled all of the exchange’s funds. Roughly 115,000 customers are without access to their funds, and a court-ordered lawyer will receive the encrypted laptop — which allegedly contains the crypto reserves — from QuadrigaCX representatives as per a court order. Moreover, the crypto exchange’s lawyers are considering selling the company to cover the debts.

BitTorrent Token Sales Sells Out in Under 15 Minutes, Makes Over $7 Million

The BitTorrent token (BTT) sale on the Binance Launchpad platform that concluded earlier this week net $7.1 million with the sale of 50 billion tokens in under 15 minutes. The BTT is based on a Tron TRC-10 token and will be used in order to transact computing resources between BitTorrent clients and other service users. Each token was priced at $0.00012, and were sold on the Binance Launchpad in two simultaneous sessions, one for those using Binance’s native token and the other for those using Tron (TRX).

Winners and Losers

The crypto market has seen a slight uptick at the end of the week, with Bitcoin trading at around $3,654, Ripple at about $0.30 and Ethereum at around $117. Total market cap is at about $120 billion.

The top three altcoin gainers of the week are Guaranteed Ethurance Token Extra, Nullex and MMOCoin. The top three altcoin losers of the week are Ultra Coin, bitqy and DOWCOIN.

Winners and Losers

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“I only have bitcoin,”

Jack Dorsey, CEO of Twitter and Square

 

“Amazon will have to issue a currency sooner or later.”

Changpeng Zhao, CEO of Binance

Changpeng Zhao, CEO of Binance

“There are 2,000 cryptocurrencies out there, 95 percent of them are useless and will die a painful death. The sooner that happens, the better.”

Matt Hougan, Global Head of Research at Bitwise Asset Management and president at ETF.com

 

“Eventually, do I think someone will satisfy the standards we’ve laid out there? I hope so, yes, and I think so.”

Robert J. Jackson Jr., the SEC’s only Democratic commissioner, speaking about Bitcoin exchange-traded funds

 

“Thus, transparency and instantaneity are the true strengths of the blockchain, and should generate not only significant time savings and increased security, but also significant [financial] savings.”

Béatrice Collot, Head of Global Trade and Receivable Finance at multinational banking giant HSBC

 

“We need a change in our laws and that requires more interaction with lawmakers and regulators. We need to make Switzerland open and easy for companies to invest in blockchain projects.”

Daniel Haudenschild, recently elected president of the Swiss Crypto Valley Association

FUD of the Week

US Lawsuit Alleged Investment Group Duped Investor Into $2 Million Token Purchase

A U.S. lawsuit this week has alleged that New York-based investment group Blue Ocean Capital Group Inc. had misled plaintiff Lijun Sun to purchase $2 million of the cryptocurrency MCash. The lawsuit notes that the MCash token was not properly registered with the U.S. securities regulators, and that the investment materials provided to Sun did not accurately represent the token or its terms of purchase. Sun has asked for a return of his investment as well as damages worth $6 million.

Zcash Discloses Already Fixed Vulnerability That Permitted Unlimited ZEC Counterfeiting

An official blog post from Zcash reported this week on the patching of a vulnerability that could have allowed an attacker to create infinite Zcash (ZEC). According to the post, the vulnerability was discovered in March 2018 by one of the Zcash developers. A solution for the problem was covertly included (in order to prevent exploitation by bad actors) in the Sapling network upgrade that was adopted last October. Since the variant of zk-SNARKs that contained the bug was implemented by other projects, Zcash noted that these projects have also taken appropriate actions.

Matt Hougan, Global Head of Research at Bitwise Asset Management and president at ETF.com

Winklevii vs. Shrem: Judge Rules Twins Must Pay $45,000 in Shrem’s Legal Fees

A judge has ruled that Tyler and Cameron Winklevoss must pay $45,000 of crypto entrepreneur Charlie Shrem’s legal fees as part of an ongoing lawsuit. In the proceedings, the Winklevoss twins have previously instigated an investigation and asset freeze on Shrem after accusing the entrepreneur of failing to pay back 5,000 BTC from a 2013 trade deal. Shrem’s lawyer has denied the accusations, and a judge has removed the asset freeze. According to media reports, the lawsuit will cover new ground in June.

Best Cointelegraph Features

‘The NEM Foundation You Knew Before Is Gone,’ What Is Next?

After the NEM Foundation released an announcement this week about the state of their funds, revealing that they only had about a month of operations left, the crypto community has been questioning how things got to this point. Cointelegraph looks at the history of the Foundation and how this financial disaster could have come about.

Forbes ‘Fintech 50’ List, Reviewed: New Players, Veterans and Startups Which Didn’t Make the Cut

Forbes’ latest edition of “Fintech 50” has been released, this time with only six crypto and blockchain companies, as opposed to last year’s 11. Cointelegraph examines what made these companies stand out even amid the crypto bear market.

QuadrigaCX Is Filing for Creditor Protection Amid Liquidity Crisis, Community Remains Largely Skeptical

As the controversy around embattled Canadian crypto exchange QuadrigaCX deepens, Cointelegraph gives a rundown of the exchange’s legal history, current legal problems, and some of the questions raised concerning the death of its founder and the locations of its cold wallet reserves.

How We Will Remember the Year of the Dog? ICO Market Decline, Trend Toward Compliance and Other Takeaways

And happy Chinese New Year to all our Hodler’s who celebrated this week! We here at Cointelegraph looked at all of the major events that have taken place during the Year of the Yellow Mountain Dog.

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Facebook Blockchain Arm Booms, Even Amid Crypto Bear Market

Just months ago, David Marcus, the former president of fintech giant Paypal, was appointed as the inaugural head of Facebook Blockchain, the social media giant’s first stab at so-called “internet 3.0” innovation. But since Marcus’ appointment, many have been puzzled, as Facebook’s blockchain division has seemingly disappeared off the face of Planet Earth. In a testament to this confusion, the Menlo Park-headquartered corporation has only fleeting referenced its newfangled branch, specifically through the incessant stream of Facebook job opportunities posted via LinkedIn.

Yet, an exclusive report from Cheddar, an up-and-coming business media outlet, has revealed that Facebook’s “small” blockchain consortium has been bolstering its defenses behind closed doors. Citing those familiar with the matter, the outlet’s Alex Heath and Tanaya Macheel explained that nearly 40 employees, which consist of blockchain developers and former members of Paypal’s top brass, now work within the walls of the little-known program. In the exposé piece from Cheddar, it was also divulged that two former key members pertinent to the Instagram project had jumped onto the blockchain bandwagon.

And the social media powerhouse doesn’t seem poised to pause its blockchain efforts, even in spite of the Bitcoin market rut. Facebook has reportedly shot representatives across the globe in a search for potential team members at crypto-centric events. Such efforts to find talent haven’t been deemed enough, however, as Facebook Blockchain’s staffing recruiters and chiefs have also reached out to leading cryptocurrency projects in an attempt to poach promising employees.

Related Reading: The Crypto Markets May be in a Rout, But the Blockchain Job Market is in Full Swing

Pomp Bets Facebook “Builds The Most Used” Crypto Product

But while Facebook evidently means business, not much is known about the blockchain spoke’s inner workings and long-term ambitions. Crypto industry commentators have speculated that Facebook could be seeking to put pertinent segments of its social media platform on (de)centralized ledger technology, while others have speculated that a digital identity platform is in development.

Still, at a private rendezvous hosted by Facebook, attendees purportedly told Cheddar that the firm has intentions to launch a “decentralized digital currency” that would be aimed at its expansive user base. And interestingly, while the latter plan sounds the most ambitious, multiple reports have nearly verified that a token could be in development at Facebook’s new department. Speaking on the matter of a cryptocurrency or digital asset backed by Facebook, explaining why such a venture is logical, Drew Hinkes of New York University told Cheddar:

“They have a massive installed user base… They probably are looking at China and seeing how popular mobile commerce has been there and wondering why we can’t do that.”

Regardless, no matter the form that Facebook’s first crypto or blockchain offering takes, many are sure that it could turn this industry right on its head. Morgan Creek Digital partner Anthony Pompliano, known across Twitter for his hate for banks, and advocacy for cryptocurrencies, recently “bet” that the American internet juggernaut will build the “most used product in crypto.”

Related Reading: Morgan Creek Digital Makes $1 Million “Buffett Bet 2.0” Crypto Wager

Although this shouldn’t be exactly surprising, especially considering Pompliano’s former role at Facebook and the firm’s global influence, his comments took many aback, as Facebook accentuates the hallmarks of centralization in the eyes of cynics.

Not The Only Corporate Player On The Blockchain Block

Facebook isn’t, by any means, the only multinational institution to further its foray into blockchain technologies. As reported by NewsBTC, Paypal, the widely-used payments network, recently begun an in-house initiative centered around company-branded crypto assets. This system, which some have jokingly dubbed “PaypalCoin,” allows employees to garner, trade, and exchanges tokens for rewards, dubbed “experiences,” that include martial arts classes with CEO of Paypal, Dan Schulman.

Although this system was likely made in good fun, the fact of the matter is that if Paypal finds value in cryptocurrencies, the firm may seriously consider rolling out products surrounding this asset class in due time.

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Facebook Is Hiring 5 New Staff Members for Its Blockchain Team

Facebook is hiring.

The social media giant now has five job openings for blockchain talent at its Menlo Park, California, headquarters in the areas of data science, software engineering and marketing.

While the firm’s possible plans for blockchain have not yet been revealed, the ads on its careers pages state that the ultimate goal is to help “billions of people with access to things they don’t have now.” It further cites “equitable financial services, new ways to save, or new ways to share information” as some potential use cases for the tech.

Facebook launched its blockchain team in May, with the reported aim of exploring the emerging technology. The team is headed by David Marcus, who had previously served as the company’s vice president of its Messenger app division. In June, the firm appointed one of its senior engineers, Evan Cheng, as its first “director of engineering, blockchain.”

In the ads, Facebook said that the blockchain division has been set up as a startup within the firm, and has the aim of making blockchain technology work at scale within the company.

For its data-focused roles, there are openings for a data scientist and a data engineer, with some of the requirements being described as quantitative analysis expertise, “informing solutions with a variety of data,” making product decisions and “building models of user behaviors for analysis or to power production systems.”

Facebook is also looking for two blockchain software engineers “who share a passion for tackling complexity and building platforms that can scale through multiple orders of magnitude,” one post reads.

A product marketing lead is also sought “to build and manage a new product marketing team focused in exploring the opportunity the blockchain will bring.” Perhaps indicating that Facebook is now considering more than merely exploring blockchain use cases, they must also manage the firm’s “product go-to-market plans.”

1 Hacker Way sign image via Shutterstock 

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Blockchain Platform Allows any Phone-owner to Sell Content

Blockchain-based media platform Snapparazzi released the public prototype example of its eponymous blockchain-based content platform just yesterday, and it appears to post a significant threat to the troubled status quo of the media industry. 


Rise of social media

The content market has changed drastically over the past 10-20 years and is mainly represented by mainstream media outlets and independent/alternative content creators.

Issues resulting from this gap include reduced public trust in mainstream media organizations, elite talent circles, and a reduction in intellectual diversity.

Subsequently, the phenomenon of independent content creators and reporters has come to fruition: who range from travel documentarians to product and media reviewers, independent journalists, artists, and much more.

They have helped grow the platform, been launched to success by the platform, and in some cases – made small fortunes.

Problems within problems

The early days of these sites saw ordinary people, often far from the realms of “professional” entertainers, being afforded the opportunity to upload their creations and potentially achieve fame or relative fortune through cyberspace.

Since the days of ‘Chocolate Rain’ however, concerns such as YouTube demonetisation – which affects how much creators are paid, proportional to their channel size and popularity – have catalyzed a growing chasm even within the creator communities.

The saturation of creators suggests that there is certainly a demand coming from the suppliers of content however the lack of tangible rewards offered by existing models has arguably left a gap in the market that has been unaddressed for many months.

Power to the phones

It’s safe to say that almost everybody carries a phone in their possession with over 5 billion users expected worldwide by 2019. With phones acting often as an all-in-one personal device, it means that everybody has the potential to be a creator as well as a viewer of audio-visual content.

Snapparazzi hopes to dissolve the line between content creator and viewer by connecting users to advertisers and professional media organizations through their forthcoming mobile application.

It will allow anybody with a smart device to capture and market content and sell it in return for cryptocurrency based rewards, with users effectively answering local ‘bounties’ facilitated by geo-locational technology.

In all, the team claims that one of the primary objectives of this is “to reward exceptional and popular content creators”. This is achieved through a much larger proportion of the rewards going straight to the creator compared to standard platforms – and those trading content on the platform are fairly judged based on quality of work, rather than quantity of channel subscribers.

Even the viewers of content on the platform are able to earn currency in return for opting into viewing advertisements.

Everybody earns

To be more specific, the content creator is specified to receive 60 percent of all advertising revenue and 80 percent of the amount paid by the purchasing party, with the remainders going towards compensation of viewers of content – as well as a unique party in their decentralized eco-system who they call ‘moderators’.

Moderators play the role of content approval and authentication, in place of solutions such as in-house teams or proprietary self-learning algorithms used by many top platforms at present. To maintain impartiality, Snapparazzi will rely on community-sourced human moderators who in turn have a digital reputation based on accuracy rates.

The full version of Snapparazzi’s mobile app is due for release next month. The presale launched in tandem with the MVP, as well as round two of their airdrop. Each SnapCoin (SNPC) will cost $0.18 for the duration of this period.

With over $5 million in funds already secured through private investment rounds, it is more than likely that the team will accomplish the goals set for their public initial coin offering (ICO) in no time.

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What Volatility? How Facebook’s Historic Loss Became Crypto’s Gain

July 26 might be forever remembered as one of the darkest days in Facebook’s history – or, at the very least, for its shareholders.

An otherwise unassuming Thursday, the day saw the social media giant lose more than $120 billion in market value, the biggest loss in one day for any U.S. traded company. According to Bloomberg, the loss is a direct result of the company’s second-quarter report on sales and user growth figures, which fell short of analyst projections, along with months of scandals and criticism regarding data privacy.

But if the social media giant was already having its worst day ever, crypto advocates were there to make it (maybe) just a little worse.

If you’re wondering how Facebook’s loss could possibly be associated with cryptocurrency, the answer is simple: it all started with a comparison between the values of bitcoin and Facebook.

Of course, crypto supporters would not let it go as cryptocurrencies have long been criticized for being volatile by traditional market views.

The seemingly tenuous nature of Facebook’s stock price led some to draw comparisons with the volatility seen in cryptocurrency markets. As Romain Dillet put it, bitcoin “feels like a stable asset” by comparison.

Interestingly, as many can still recall the feud between Facebook’s CEO Mark Zuckerberg and the Winklevoss brothers from the award-winning movie The Social Network, members in the crypto community also gave a shout-out to Cameron and Tyler Winklevoss brothers, who are now among some of the biggest crypto investors as well as co-founders of Gemini, a New York-based cryptocurrency exchange,

In the words of one observer, the reversal of Facebook’s market fortunes represented a dose of “sweet revenge.”

(The Winklevoss brothers, as CoinDesk reported Thursday, suffered a blow as the SEC once again shot down their bid to have a bitcoin exchange-traded fund (ETF) listed.)

Not everyone was buying the Facebook stock and cryptocurrency comparison, however.

Some Twitter users who said they believe that conflating Facebook and cryptocurrency is a meaningless exercise.

As of the time of writing on Friday, Facebook’s stock hadn’t seen much of a recovery, according to data from Google. Yet the plunge seems to have been arrested, offering, at the very least, a possible reprieve from the crypto-critics.

Facebook image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.