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Goldman Sachs Reneges on Crypto Trading Desk, Prices Tank

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Goldman Sachs has reneged on its promise to launch a cryptocurrency trading desk and the market is getting punished. The Wall Street investment bank is shelving its plans — for now — to launch a crypto trading desk amid a murky regulatory landscape, Business Insider reports.

But it is not leaving traders entirely empty-handed, as Goldman will direct its efforts on a custody solution to keep institutional capital secure. But investors were anticipating more, and that’s sent cryptocurrency prices into a tailspin, including bitcoin, whose price plunged 3% in a matter of minutes and is currently barely trading above the psychologically important $7,000 level.

Source: Bloomberg

Goldman’s trading desk would have supported “physical cryptocurrencies including bitcoin,” according to Business Insider. They even tapped Justin Schmidt to spearhead the digital-asset effort and have been engaged in clearing bitcoin futures contracts that trade on the Chicago-based derivatives exchanges, the CBOE and CME, as well as supporting CFDs. Perhaps they put the cart before the horse, so to speak, in anticipating the regulatory structure a regulated bank like Goldman Sachs commands to operate. The backpedaling is a wake-up call to the cryptocurrency community that Wall Street’s role in this nascent market is unpredictable.

“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point, we have not reached a conclusion on the scope of our digital asset offering,” according to a Goldman spokesperson cited in Bloomberg.

Plan B

There is a lot hinging on institutional capital coming into the markets, as evidenced by the sharp sell-off that ensued in response to the Goldman news. But it’s not as though Goldman is abandoning its plans altogether, at least not for now, and they are focusing on another area of crypto that big investors need to keep their assets secure — a custody product. But it is Plan B, not Plan A, and it’s clearly a setback for the market.

Mati Greenspan, eToro’s Senior Analyst and a Hacked.com contributor, told Bloomberg: “The expectation of adoption by Wall Street has been a major theme for the cryptocurrency market for the last year, so any kind of updates on that can certainly move the prices. Even if it’s not true, it should be enough to cause a minor selloff like this in cryptocurrencies.”

Prior to the Goldman Sachs development, the markets were already showing signs of strain, particularly Ethereum, which was the subject of a scathing report in TechCrunch, one that sent the ETH price spiraling more than 10% as of press time. Meanwhile, bitcoin has also proven resilient in recent weeks, e.g., the bitcoin ETF setbacks, which is a feature that could prevent any further massive selling on the news.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 70 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Fake Satoshi Craig Wright on Asimov, Pseudonymity and Why E-Cash is Still Relevant

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Craig Wright continued to try and convince the world that he was Satoshi Nakamoto this week, even after WikiLeaks released a fairly damning batch of files all but confirming that he wasn’t.

But that didn’t stop Wright from doubling down, and on Saturday he released another Medium screed detailing the many reasons why he can’t conclusively reveal himself to be Satoshi Nakamoto.

Along the way he compares himself to Isaac Asimov’s Hari Seldon, makes some intriguing points on the subject of pseudonymity vs anonymity, and pulls the example of E-Cash from the 1990’s as a reason for why Bitcoin (SV?) can never be truly secretive.

Craig Wright’s ‘Foundation’

According to Wright, the reason he can’t just use his private key to move Satoshi Nakamoto’s original BTC holdings is because it would only cause more problems than it would solve. His reasons for this are vague, and repeated throughout (the way of the huckster in general?).

Wright then goes on to imply that time-locked releases via the blockchain could be the manner in which he chooses to reveal himself – an idea he says he took from Asimov:

“Something people don’t understand about Bitcoin is that it is also a time lock. Bitcoin with nLockTime allows for the pseudonymous release of information at defined times. It’s a concept that I took from Asimov. It is aimed to ensure that information is provably released when the author chooses. Only when the author chooses.”

How long he intends his Seldon-like drip-feeding of clues to last is anyone’s guess, although I wouldn’t be surprised if it ends with an anti-climactic reveal of a ‘second foundation’ – which we once again must wait for to be revealed.

Can Bitcoin be Anonymous?

While describing his own pseudonymity, he also touched on that of Bitcoin’s (I assume Wright is referring to his own pet project, Bitcoin SV, although the same would apply to BTC, BCH, etc).

Wright referenced the failure of 1990’s digital money solution, E-Cash, and pointed out that privacy doesn’t always mean anonymity. He wrote:

“If you want privacy, the last thing you want is anonymous money, because anonymous money allows every action to be traced using legally viable methods and law.”

Wright points out that anonymity brings scrutiny, namely from government agencies. That’s why Wright says Bitcoin can never succeed as a truly anonymous currency.

This 1997 paper titled: ‘The Unintentional Consequences of E-Cash’ suggests something similar, and describes how the very thing that was created to foster privacy could prove to be the same thing that destroys it:

“If the World Wide Web or its successors become fee-based systems in which readers are charged for access, consumers who use traceable digital cash will find that their reading habits as well as transactions become valuable, tradeable data. This will lessen their privacy and could have a chilling effect on readers and, possibly, on authors also.”

Twenty years on from the paper’s publication date and its authors appear to have been remarkably prescient. Will Hari Seldon…  I mean Satoshi Nakamoto… I mean Craig Wright prove to be just so?

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 144 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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WikiLeaks Exposes Craig Wright’s Lies as Nakamoto Saga Hits Peak ‘Faketoshi’

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The comedy of errors that is Craig Wright’s attempt to convince the world that he is Satoshi Nakamoto took another turn this week, when WikiLeaks dropped a batch of documents showing his dishonest retrofitting of Bitcoin documentation.

WikiLeaks vs Craig Wright

Wright released a Medium post last week where he told the world once again that he was the real Satoshi Nakamoto. In the post he also gives some more vague reasons as to why he just won’t move some of Satoshi’s BTC from his original address. And more importantly, he took time to take a swing at WikiLeaks.

I do not like Wikileaks, and I have never been a fan of Assange’s methods. More importantly, I am strongly opposed to criminal markets and bucket shops. Ross Ulbricht and others like him are criminals.”

Fast forward a few days and WikiLeaks responded. This batch of documents was released to Github on February 11th, and announced via Twitter with the following message:

Craig S. Wright is a proven serial forger of documents claiming that he is the inventor of Bitcoin. He has been repeatedly caught. This has been independently verified by WikiLeaks at the time of his first claim and subsequently.”

The documents show evidence of Craig Wright’s long history of forgeries and lies, including his failed attempts to fake blog posts by the original Satoshi, and thwarted attempts to fake PGP keys, public keys, and contracts and emails.

Project BlackNet

Screenshot of Craig Wright’s tweet.

The comedy stylings of Craig S. Wright got even more surreal on Feb 10th, when he released this screenshot of a paper he supposedly submitted to the Australian government in 2001.

The paper, titled ‘Project BlackNet’, details you know what… Craig Wright’s early sketchings of his ideas for Bitcoin, nearly a decade before Bitcoin was invented.

Within hours of the claims, inquisitive internet detectives had taken them apart, and supplemented their takedown with multiple examples of photographic evidence, like this one which showed Wright’s amateurish attempts to echo the writing style of Satoshi Nakamoto based on the Bitcoin whitepaper.

Side-by-side comparison of Wright’s paper and the original drafts.

But what Wright didn’t seem to realise was that an earlier draft of the Bitcoin whitepaper was already in existence, from around August 2008. In the end, Wright’s forgery contained all the changes and rewrites present in the October 2008 version, meaning his plans were doomed from the start.

Why Does He Persist?

Speculation as to why Craig Wright continues to push the idea that he is Satoshi Nakamoto proves to be varied. Without delving too deep into the personal life of Craig Wright, many have accused the Bitcoin SV backer of attempting to ease his own financial worries by drawing investors towards ‘Satoshi’s Vision’.

Others say this is just another chapter in the long history of Craig Wright’s obsession with fortune and fame. To borrow a turn of phrase from a humble redditor: ‘This is peak Faketoshi’.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 144 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Electric Minerals: Tesla, Chrysler Feel the Heat as African Nations Demand Bigger Cut

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Officials from mineral-rich African nations met with representatives from the ‘big mining’ industry at the Mining Indaba investment conference in Cape Town this week, with each hoping to make headway amid newly-simmering economic tensions.

Those tensions have been fuelled by a realization on the part of certain African nations that they now hold all the cards when it comes to producing minerals essential for the manufacture of electric vehicles.

As such, countries like Democratic Republic of Congo and Zambia have demanded a bigger piece of the pie from mining companies, so much so that the CEO of multi-billion dollar mining company, Barrick Gold, has already labelled the situation ‘untenable’.

This economic standoff threatens to makes itself felt in the U.S, where both political and financial pressure has already hit electric car manufacturers hard – in the balance books and on the assembly lines.

Africa Wakes Up

Electric cars use almost ten times as much copper as conventional cars – 185 pounds compared to around 18 pounds. The amount used in the production of electric busses is a staggering 800 pounds.

Zambia recently raised taxes on copper by 5%, and announced plans to add a further 10% if (when) the price of copper exceeds $7,500 per tonne. Currently, a tonne of copper costs $6,200 on the world market.

When Barrick Gold CEO, Mark Bristow, called the situation untenable, he was referring specifically to demands made by Tanzania and Democratic Republic of Congo. The Tanzanian government is currently attempting to squeeze a $190 billion tax payment from gold mining company, Acacia. Meanwhile, the DRC continues to flex as many muscles as it can, safe in the knowledge that the modern world relies on its cobalt and tungsten.

With western nations, and particularly the eurozone, making strong commitments to converting to green energy in the coming decades, electric car firms now find themselves being pushed and pulled in several directions.

On the one hand, they must innovate quickly enough to keep pace with government fuel efficiency targets; while on the other they must balance the environmental and financial cost of acquiring the minerals required to make their machines more efficient.

Playing Hardball

Both Tanzania and DRC refused to send any delegates to the Cape Town conference; instead choosing to dig their heels in and stick to their guns.

The President of Ghana, Nana Akufo-Addo, was present at the conference, and as custodian of Africa’s second largest gold reserves, Addo spoke up in favour of African nations getting the best deal possible. He said that international companies should no longer expect any special relationships or deals from African nations, and that:

“…The people of Africa do not have to be poor for others to be rich.”

Major mining companies voiced concerns that they would be forced to shut up shop and find somewhere else to mine for minerals. Some have even gone so far as to begin exploring new ways to make electric vehicles which don’t rely on Africa’s conflict minerals.

Tesla Effect

Tesla’s Elon Musk has been very vocal about the fact that his company has to move away from reliance on the ‘Blood Diamond of Minerals’ (cobalt), and that the next generation of Tesla vehicles would not use any at all. Last year he tweeted:

“We use less than 3% cobalt in our batteries & will use none in next gen…”

Last year, an analyst at Benchmark Mineral Intelligence, Caspar Rawles, described how cobalt use has already been greatly reduced by the likes of Tesla and Panasonic – but that they may have reached a ‘bottom’. He said:

“Tesla uses a formulation called NCA (nickel, cobalt, aluminum) that is already very low-cobalt. Over the last six years, Tesla and Panasonic [which supplies batteries to Tesla] have reduced cobalt dependency by about 60 percent already. That’s already very low. We think it’s going to be difficult for them to go much lower because you run into engineering problems.”

New Sources?

Cobalt isn’t a problem in itself, it just so happens that some of the most mineral-rich nations also happen to be mired in decades-old conflicts and civil wars. And those are often exacerbated, not helped, by the influx of foreign money.

But in 2017, Tesla made moves into the small Canadian town of Cobalt – which has, as it happens, a huge supply of… cobalt. As quoted in Bloomberg, Roger Bell, director of mining research at London-based firm Hannam & Partners, said:

“Anybody who has cobalt outside the DRC is in a better situation because carmakers are very worried about their supply chains.”

Within months of the move into Cobalt, two cobalt mining companies saw their stock rise from between 90% and 600% – purely on speculation, and despite having zero revenue at the time.

Breaking the reliance on African minerals is a major goal for global manufacturers, and Tesla’s Conflict Minerals Report from 2017 aimed for the same:

“Tesla does not and will not accept human rights abuses in our supply chain. While Tesla’s responsible sourcing practices apply to all materials and supply chain partners, we recognize the conditions associated with select artisanal mining (ASM) of cobalt in the DRC.”

Tesla published the names of all of their supply chain interactions in the report, and filed it with the Securities and Exchange Commission in the same year. Tesla has been one of the ‘cleanest’ operators when it comes to conflict minerals, but its two rounds of worker layoffs at the end of last year – including over 50% of its delivery force – highlights the difficult industry it finds itself in.

Fiat Chrysler Coughs Up

Italian-American car company Fiat Chrysler recently felt pressure from the other side of the fence, when it was forced to pay a $77 million fine for failing to meet fuel efficiency requirements in the United States.

The FCA (Fiat Chrysler Automobiles) stock price sunk 15% in the past week, and is only now starting to rebound. A gap between financial targets and economic reality caused the stock price to drop, and FCA continue to lobby the Trump administration for a relaxing of fuel economy laws. Fiat Chrysler say the laws target them unfairly due to their cars increased default size and bulk compared to cars in the general market.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 144 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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