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Overstock.com Shares Spike 17% After Chinese Private Equity Firm Pledges $270 Million for tZERO

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Shares of Overstock.com (OSTK) surged in after-hour trading Thursday after a major Chinese equity firm agreed to invest in tZERO, the blockchain subsidiary vying to reshape the investment world through a SEC-regulated alternative trading system (ATS).

GSR Capital to Invest Heavily in tZERO

CNBC confirmed on Thursday that Hong Kong-based GSR Capital will invest up to $270 million in tZero. The investment is based on a valuation of $1.5 billion, giving GSR an 18% stake in the new blockchain startup. GSR will also buy $30 million worth of tZERO security tokens.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi in a statement, as quoted by CNBC. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

The announcement came less than six weeks after GSR Capital signed a letter of intent with Overstock to purchase $160 million worth of security tokens.

Launched in December, tZERO’s initial coin offering (ICO) has raised $134 million to finance its ATS infrastructure, which will provide a regulated venue for securities trading. The company plans to build similar systems around the world.

Despite a highly successful crowdraise, documents submitted to the SEC earlier this year revealed a target of $250 million. Independent valuations had placed tZERO’s ICO anywhere between $200 million and $500 million.

Overstock.com Spikes

Overstock.com’s share price was up by as much as 21% after-hours. It would eventually settle at $45.40 for a gain of 17.6%.

As the following chart illustrates, the OSTK price rose 4.5% in regular trading on Thursday to settle at $38.60.

Despite the gain, OSTK has been a dismal performer this year. Share prices are down 40% year-to-date, vastly under-performing the Nasdaq Composite Index, which has returned more than 14%.  What’s more, the stock is trading at less than half of its 52-week high.

Overstock’s share price has been rocked by disappointing quarterly results and the cancellation of a proposed public stock offering. Last March, the company offered four million shares of common stocks before abruptly cancelling those plans. Noursalehi said the decision to pull the offering was due to “market volatility and price.” To be sure, OSTK had declined 20% following the initial announcement to issue common stock.

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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4.6 stars on average, based on 542 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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A Closer Look at Boerse Stuttgart’s New Cryptocurrency Platform

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The Boerse Stuttgart group has is expanding upon past product launches to create a complete holistic ecosystem for digital assets, including cryptocurrencies. This comes on the heel of them launching the “Bison” app, which allowed users to trade cryptocurrencies with zero fees, similar in functionality to that offered by Robinhood.

The difference between Bison and Robinhood, however, is that the Boerse Stuttgart group is the second largest derivatives exchange in Germany. Another unique feature of the Bison app was its “crypto radar” feature.

This functions as a social media tool that aggregates more than 250k tweets and analyzes them to determine the “mood” of cryptocurrency investors.

Having an existing (and profitable) large financial firm expanding their brand to cryptocurrencies in any capacity reflects a market that is increasingly accepting the reality of institutional capital flowing into crypto markets.

The new ecosystem is composed of three distinct pillars. Bison represents the first of these pillars. The second is a branded platform for initial coin offerings to sell tokens. The third is a safe custody solution for digital assets.

This ecosystem, in turn, falls within Boerse Stuttgart’s so called “digitization” strategy and should serve as a bellwether of changes to come in financial markets. After all, as an established market player, Boerse Stuttgart Group has extensive knowledge in the fields of technology, regulation, and trading models respectively.

According to their own CEO Alexander Höptner, “On this basis, we can offer central services along the value chain for digital assets, all under one roof. Investors and market participants know that Boerse Stuttgart Group stands for quality, transparency, and reliability. As a Germany-based provider, we want to transpose this standard into the digital world. We will help to promote acceptance of digital assets.”

The key to their ambitions focuses on solving two major problems. The first is that KYC procedures tend to be overly complex for average investors, as well as time-consuming. The Boerse Stuttgart group’s own KYC solution allows traders to pass KYC and start trading within minutes, as opposed to more typical solutions that take a few days.

The second issue they are tackling the liquidity and accessibility of ICO tokens post-sale. They solve this by allowing tokens launched through their platform to be traded within their broader ecosystem using Bison.

According again to the CEO, “At the trading venue tokens issued via our ICO platform can be traded on the secondary market. This is an important success factor for ICOs. At the same time, we are responding to demand from both retail and institutional investors for a regulated and reliable environment for trading with cryptocurrencies. Furthermore, established cryptocurrencies like Bitcoin or Ethereum will also be traded.”

This approach will likely serve to establish the Boerse Stuttgart group a prime recipient of crypto-intrigued institutional capital. After all, the early bird gets the worm. A key component of this future success also rests on how well they partner with authorities.

This exact point was also emphasized recently by the CEO, who said, “In designing the strategic projects we closely cooperate with all competent boards and committees, and especially with the supervisory authorities.”

While it remains to be seen whether retail investors make use of this ecosystem, it seems reasonable to assume that larger investors will flock to a simple crypto-specific ecosystem backed by an old guard stalwart of finance.

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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MasterCard Could Be Your Best Friend

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Since just after the financial crisis, I have been searching for a way to beat MasterCard and Visa at their own game. These two brands dominate the business of processing debit and credit card transactions.  I have always considered this duopoly as the enemy of mankind, but could turn out to be a hasty judgement.

MasterCard and Visa don’t actually process transactions as much as they offer an electronic network and charge fees for the use of their name.  They collect about 0.11% per card swipe which ain’t much until you consider they are running more than 150,000 transactions per minute through their network.  Pretty nice business to be in. All together, the two will generate about $30 billion this year.

The problem with both of these guys is that it is impossible to get around them.  If you buy something anywhere in the world with a debit or credit card, it is almost guaranteed to run on either the Visa or MasterCard network.  In which case, in addition to the 0.11% taken out for the network, the store that accepts your purchase pays anywhere from 3% to often as much as 5% in total for processing fees.  And if you travel abroad and charge something, well forget about it. Everywhere along the network are intermediaries taking their nick of your wallet.

When foreign currency transaction fees are taken into account, that is where more intermediaries are included.  That is where the costs add much higher and that is often where the consumer is hurt most.

Fighting Back

The whole idea behind blockchain technology is to make transactions of all types fast with little or no dependency on intermediaries.  All this makes MasterCard and Visa the enemy of cryptocurrency developers. But neither of these brands are sitting still applying for patents on blockchain based payments methods.

The natural reaction is to sell to sell your crypto and find some easier way to earn a decent return.  We disagree: we think there is crypto to be made from MasterCards strategy. Here is why you should be encouraged.

ome time back, MasterCard applied for a patent on blockchain technology that created a link between crypto and fiat currencies. MasterCard is not alone, as there are any number of crypto projects with the same idea.  Recently we looked at TenX and there are others.

Using TenX for comparison, MasterCard’s recently awarded patent offers to convert crypto to fiat using the existing MasterCard network.  TenX and many others plan either create their own high speed mainnet or use the Ethereum platform.

In head to head competition, this gives MasterCard a sizable advantage since MC is pretty much accepted by merchants everywhere.  As much as I hate the duopoly represented my MC and Visa, right now they could turn out to be the best thing to happen for one simple reason.  They will unquestionable accelerate mass acceptance of crypto.

Their existing network and transaction speed, immediately solves the lingering Bitcoin/Ethereum issue of scalability.  In addition as observers have pointed out, both MC and Visa have had systems in place to identify fraudulent transactions.

Having said all of this, is MasterCard going to kill all other crypto payment wanabys like TenX and others? Before concluding the answer is yes, consider this.  In their recently released quarterly review to shareholders, MasterCard reported net income of $2.33 billion on revenue of $5.24 billion. That is a whopping profit margin of 44.5%!  This towers over extraordinarily profitable companies like Apple at 20.3% or the average US corporation at less than 10%.

When MasterCard’s blockchain system goes into use, it will plump up those already MC margins. So, as a crypto investor, you have to ask yourself, do you actually think that MC will pass on those savings or wallow in the cost savings?  The answer is pretty obvious.

MasterCard Could Be The Best News

Crypto naysayers are the first to deny that Bitcoin and others are a legitimate medium of exchange.  This is based largely on the limited number of mainstream merchants that are in the crypto loop. MasterCard could help take crypto mainstream and that would be a good thing for major names like Bitcoin, Bitcoin Cash and Ether.  And with the payments processing business dealing in over $50 trillion in transactions annually, there will be room for startups offering high speed scalability at lower cost. It will not happen this year but it will happen.

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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4.4 stars on average, based on 95 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Bitmain Faces New Accusations Of Secret Mining

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Bitmain appears to have been definitively caught in a lie said by their CEO regarding whether or not it operates “secret mining pools” using its own ASIC hardware prior to selling them.

The proof (as should now be said in general going forward) was in the blockchain. After all, one of the benefits of having a publicly viewable immutable ledger is the transparency of the network. It is difficult to lie about the blocks mined when who mines them can be traced.

This comes at an extremely awkward time for Bitmain and their CEO Jihan Wu. Industry insiders have speculated that Bitmain is seeking an initial public offering (IPO) in the near future. This has come as the notoriously camera-shy Wu has increasingly given statements and interviews to the media.

In June, Jihan Wu categorically denied operating secret mining pools in an interview with Fortune, saying, “No, it never happened. We have a small-scale test. We don’t do that. That is not our strategy.”

In the same interview, Wu doubled down on his claim, saying, “If we develop hardware, we just release and sell it on the market. Right after we have sample machines working, we start sales to the market. We don’t have such kinds of advantages.”

Now, however, a prominent blockchain developer named Hakkane (who is a prominent voice in the community around Siacoin, and also operates his own site, siastats.info, which purports to offer real-time statistics and analytical tools for the Siacoin blockchain) has provided hard data that Bitmain has blatantly lied.

In his original medium post, Hakkane cited a number of points to prove the existence of the pools. His original post was highly thorough (albeit very technical) but worth it for our readers to grasp every detail.

Some of the most important points made included that, “on the same release day of the A3, AntPool, (the mining pool of Bitmain) opened a branch on the Sia network, becoming the sixth known pool of Sia. On the first days of the pool’s existence, their API showed a very small number of workers (<100) and hashrates that comprised around 5% of the network.”

By March, however, the number of workers had grown to several thousand and the hashrate to around 20% of the network, remaining in that level until the present date.” This apparent gradual grow of their hashrate, if true, would have been compatible with their vision against secret mining, as the pool only got organic grow after their batch 1 was delivered.

Nevertheless, it has to be noted that the Sia community detected during November and December sudden spikes of the network’s hashrate. This was accompanied by bursts of blocks mined by unknown pools, which collectively represented almost 25% of the total blocks mined.

Previously, the rate of these unknown pools had remained under 5%. While some at the time suggested the new mining pools could be Bitmain or Baikal (an ASIC manufacturer and Bitmain competitor), Hakkane provided definitive evidence that Bitmain was the culprit.

This evidence consisted of:

1. There was no signature on the mined blocks coming from these unknown pools.

2. Most of the mining pools on the Sia blockchain use a single payout address for the block reward as well as a standard message on the arbitrary data field of the block they have mined.

Hakkane elaborated upon this by stating, “these two variables allow blockchain explorers to identify without a doubt the pool that mined the block.

Antpool instead has used so far more than 2600 different addresses and the arbitrary data of their blocks is an encrypted string, different each time. This prevents the independent validation of who mined the block.”

3. In the absence of a block signature, block explorers must trust whatever Antpool claims they have mined on its website.

4. Antpool has only claimed 687 blocks. Furthermore, their list of claimed blocks includes multiple gaps of several thousands of blocks.

5. Considering that Antpool’s hashrate comprised around 20% of the network, these gaps are impossible statistically, meaning that Antpool is refusing to report many of the blocks that they have mined.

6. Antpool claims fake blocks. Their list of claimed blocks also include blocks owned without doubts by other pools.

Hakkane elaborates that, “For example, blocks 155407 and 152847 are actually blocks of F2pool, and we can be sure of this because the block reward is being paid to the publicly known mining address of F2pool `dc0cb4f6…`”

7. Antpool reported fake hashrates.

Hakkane’s website has records of what the average reported hashrate of each pool in a daily fashion is. He does this by scoring what their websites/APIs indicate every 30 minutes.

His website also keeps records of the % of mined blocks mined by each pool. He makes the point that “even if we assume that all the blocks mined by “Unknown” pools are Antpool’s, even the aggregated % of blocks mined does not match the hashrate reported by them. ”

Since the end of March, Bitmain has reported contributing roughly 19% of the hashrate of Siacoin. But the combined blocks of Antpool plus the unknown mining pools represent only 14%. That according to Hakkane is impossible. He says that Bitmain is lying about their real hashrate. According to his statistics, it’s in actuality inflated by more than 35%.

8. Higher hashrates drive both more consistent and importantly larger payouts for miners contributing them.

9. In practice, this means that Bitmain is directly profiting by lying. Since by deceiving other miners and making them believe they will be paid more than they actually can mathematically they also drive larger sales of their own hardware.

By using an automated script, Hakkane found over 2100 new blocks that were mined by Antpool, despite Antpool itself rejecting having claimed them. In total, Hakkane disclosed that 550 blocks were mined in secret during the 2 months previous to the Antminer A3 launch announcement by Bitmain. This represented a grand total of 85 million Siacoins in block rewards.

According to CoinMarketCap, the maximal historic value of Siacoin was reached on January 6th, 11 days before the official Bitmain announcement. Depending on the moment they sold their earnings, Bitmain could have obtained around $9 million from this secret mining operation.

According to industry sources, the development of the A3 miner cost Bitmain around $10 million. If they planned the trades intelligently, this means that Bitmain could have recovered the entire cost of their ASIC development just by secretly mining Siacoin using their own hardware during the last 2 months before the announcement.

Despite the promise of “radical transparency” from Bitmain, the objective reality of the situation is that Antpool is acting as the most opaque and dishonest mining pool on the Sia mining scene, in addition to lying to their customers about the return they can realistically generate from the purchase of Bitmain hardware.

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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