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Vitalik Buterin Gives Sobering Take on ‘Tokens 1.0,’ but Says Next Wave of Cryptos Will Be Better

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Ethereum’s Vitalik Buterin doesn’t have a lot of faith in most ERC20s these days. In fact, he expects most of them to crash and burn sooner rather than later. But the future of cryptocurrency is expected to be much brighter as investors and developers learn from ‘Tokens 1.0’.

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“This, basically, is Tokens 1.0”

Speaking at ETHWaterloo, Ethereum’s 23-year-old founder reminded us that 90% of startups fail. The same ratio likely applies to ERC20s. In Buterin’s view, 90% of the tokens currently listed on CoinMarketCap are going to zero. (Props to Jordan Daniell for providing the quote.)

The sobering remarks come as billions pour into initial coin offerings (ICOs), a novel but controversial crowdfunding model that allows startups to raise capital by minting their own cryptocurrency. It is estimated that no less than $2.3 billion flowed into the ICO market in the first nine months of the year, dwarfing traditional funding methods like early stage VC.

Regulators have taken notice, but are struggling to define this enigmatic space. For China and South Korea, ICOs are too problematic to even regulate. That’s why they rushed to ban them recently.

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Although Japan has become the epicenter of cryptocurrency trading due to favorable regulations, the same latitude probably doesn’t apply to ICOs. According to a well-known Japanese blockchain entrepreneur, it’s only a matter of time before Japanese authorities clamp down on token sales.

Light at the End of the Tunnel

Naturally, you wouldn’t expect Buterin to be pessimistic about the future of ICOs. Whereas Tokens 1.0 has a grim ending, the next wave of cryptos is going to be much better. He calls this “Tokens 2.0.” This era, which is a lot closer than you think, will see developers build cryptocurrencies that are of significantly higher quality.

In the meantime, the industry still has a lot of work to do to clean up its image. As Buterin says, “there are some good ideas, there are a lot of very bad ideas, and there’s a lot of very, very bad ideas, and quite a few scams as well.”

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Switzerland Introduces New Bitcoin Futures Products

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Switzerland’s major financial institutions are making it easier to short bitcoin, as one of Europe’s most dynamic economies continues to embrace all things cryptocurrency.

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Bitcoin Futures Come to Switzerland

Swiss asset manager Vontobel has announced it will launch new futures contracts designed to short the world’s most active cryptocurrency. The first two mini futures to short BTC will hit the markets on Friday, giving investors the ability to bet against the value of bitcoin or to hedge positions in the crypto asset.

Vontobel has also published termsheets explaining how the mini futures contracts will fluctuate vis-a-vis bitcoin. According to the information provided, the more conservative mini futures contract will drop nearly 6% should bitcoin lose 10% of this value. The other futures contract will gain nearly 10% during the same process. This setup provides the advantage of limited loss potential when compared with traditional futures contracts.

As investors are no doubt aware, fluctuations of this nature are not uncommon for bitcoin. The cryptocurrency tanked over 20% last week as Bitcoin Cash (BCH) spiked to new all-time highs. Bitcoin has since reversed all of its declines en route to fresh records north of $8,000.

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Bitcoin’s recent run of gains has catapulted the crypto universe to all-time highs in terms of market cap. At last check, the total value of cryptos in existence was north of $225 billion. Bitcoin owns roughly 55% of that market.

BTC has gained 1,000% over the past 12 months. Prices are up more than 15% (roughly $1,000) over the past five days.

Eric Blattmann, a senior executive at Vontobel, issued the following statement:

“We have seen big demand for our long tracker certificate from investors interested in playing the upside potential of bitcoin and now they have also the possibility to hedge their position or go short.”

Vontobel wasn’t the only Swiss entity to announce a bitcoin futures contract this week. Leonteq Securities AG will also offer a product allowing investors to profit from price declines of bitcoin. That product will have a two-month maturity, according to reports gathered by Bloomberg Technology.

Switzerland: Crypto Heaven?

When it comes to cryptocurrency regulation, Switzerland is one of the most progressive nations in the world. This favorable attitude is best reflected in Crypto Valley, a region in Zug that houses some of the world’s leading blockchain companies.

Crypto Valley is the culmination of government and private efforts to remodel Switzerland as the blockchain capital of Europe. The municipality of Zug has already succeeded in landing some of the world’s biggest blockchain companies, including Ethereum, Bitcoin, Suisse, Xap, Tezos, ShapeShift and many others.

Many bitcoin enthusiasts believe that the actions at major financial institutions will lead to greater adoption of cryptocurrency. That’s why investors rejoiced when CME Group and CBOE Global Markets both announced plans to introduce futures contracts on Wall Street. These futures products are expected to be rolled out at the end of 2017 and early 2018.

Disclaimer: The writer 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. 

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Bitcoin Prices Reach $13,500 in Zimbabwe as Military Putsch Triggers Currency Crisis

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If you think bitcoin prices are getting out of hand, you clearly haven’t been to Zimbabwe. The African country, which is known for runaway inflation and political instability, offers bitcoin at a 2:1 premium. The price gauge reached epic levels on Wednesday in the wake of a military coup targeting “criminals” around President Robert Mugabe.

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Zimbabwe’s Political Crisis

The national army seized power on Wednesday in a coup that has confirmed the arrest of the 93-year-old president.  Mugabe, who has been in power for 37 years, is apparently at the center of crimes leading to the “social and economic suffering” of the nation, the army said in a statement broadcast over national airways.

Analysts say that a coup has been in the works since Mugabe axed Vice president Emmerson Mnangagwa on suspicion of plotting to take power.

Bitcoin Surges

Bitcoin’s Zimbabwe premium reached historic levels as prices on the major exchanges topped $13,500. That’s more than double the price level offered on most global exchanges.

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Demand for cryptocurrency skyrocketed following the military putsch, which agitated an already fragile political situation inside the country. News of the coup sent bitcoin prices soaring by almost 10%, according to local exchange Golix. Political instability, combined with a shortage of fiat money, has made bitcoin much more attractive.

Last month, the Golix exchange commented on the large premium Zimbabweans pay for their digital currency. It said prices have nothing to do with domestic cash shortages, but instead reflect anticipation for government intervention in the cryptocurrency space. Growing support for bitcoin and other digital currency systems may compel the government to introduce new capital controls to limit the growth of non-fiat based money.

As RT reports, Golix has seen roughly $1 million worth of BTC transactions over the past month, compared to just $10,000 for the entire previous year.

Zimbabwe was hit especially hard by the 2008 financial crisis, as hyperinflation erased the local currency. Inflation rose by a staggering 500 billion percent, leading local authorities to drop the currency all together. Since about 2009, the country has relied on the U.S. dollar and South African rand.

The country remains in a protracted economic slump that has cut GDP in half over the past two decades. It is estimated that some 95% of locals are without a job.

Disclaimer: The writer 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. 

 

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Asia Banking Giant Labels Bitcoin a ‘Ponzi Scheme’

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One of Asia’s most prominent banking institutions has called bitcoin a ponzi scheme, signaling continued resistance to one of the most groundbreaking developments in recent history.

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DBS Bank Calls Bitcoin a Scam

“We see bitcoin as a bit of a ponzi scheme,” David Gledhill, chief information officer at DBS, told CNBC on Wednesday.

Bitcoin is already too expensive with multiple fees “hidden through the crypto-mechanisms,” he said while attending an event in Singapore. In his view, entering the bitcoin space doesn’t make much sense for DBS at this stage in the game.

Despite calling bitcoin a scam, Gledhill did acknowledge that the digital payment system will eventually scale. This will bring much needed efficiency and affordability to a space that he believes has run amuck.

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DBS, or the Development Bank of Singapore, has 482 billion SGD in total assets. It is one of the region’s biggest lenders, with over 200,000 institutional banking customers and over seven million consumer banking/wealth management customers. The bank employs more than 22,000 people.

Of course, the views expressed by Gledhill are nothing new. JP Morgan Chase CEO Jamie Dimon regularly rips on bitcoin, even calling its investors “stupid.”

Then there’s Dennis Gartman, the commodities guru who has taken an extremely negative stance on cryptocurrency. In a recent interview with CNBC, Gartman said bitcoin is a market for criminals and millennials. (We’re not sure whether the latter is supposed to be an insult.)

“How can you buy or sell a painting using bitcoin, when the change in volatility is 20-30-40 percent in the course of a week? It’s nonsense,” he said.

Bitcoin Price Levels

Naturally, bitcoin’s dramatic appreciation has caught many sensible market participants by surprise. The coin has added more than 600% this year, and has reached multiple record highs in the process.

Bitcoin faced an extreme selloff last week as prices shed more than $1,200. However, the market has quickly regained its footing, with BTC/USD valued back to trading in the $6,800-$6,900 range. At press time, bitcoin was up 5% at $6,850.28.

Factoring in current price levels, bitcoin is capitalized at roughly $114.7 billion, with 24-hour trading volumes exceeding $3.3 billion.

Blockchain alternative Bitcoin Cash (BCH) also gained ground on Wednesday, rising 3.5% to $1,322. The BCH hard fork surged to record highs last week after backers of Segwit2x abandoned their mission to upgrade the original blockchain. BCH’s market cap is currently sitting at $22.2 billion. Its total value peaked above $30 billion last week.

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrency. 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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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