Newsletter 02-28-2018

Newsletter 02-28-2018

Blockwolf Weekly Newsletter
May 15, 2018 by matthewrobinson
632
Goldman-Backed Circle Agrees to Buy Crypto Exchange Poloniex This is a major news story because it appears as if Goldman Sachs supports cryptocurrency. The story is misleading because it shows that Circle is bullish on cryptocurrency and not necessarily Goldman Sachs. Circle is a startup funded by Goldman Sachs and although Goldman generally supports Circle,

Goldman-Backed Circle Agrees to Buy Crypto Exchange Poloniex

This is a major news story because it appears as if Goldman Sachs supports cryptocurrency. The story is misleading because it shows that Circle is bullish on cryptocurrency and not necessarily Goldman Sachs. Circle is a startup funded by Goldman Sachs and although Goldman generally supports Circle, it does not mean Goldman directly supports Circle’s action to buy Poloniex.

Nonetheless this is a significant news story because Circle may overhaul Poloniex and make it more competitive with Coinbase/GDAX. Coinbase gets away with  complaints about high fees and long withdrawal times because other American cryptocurrency exchange competitors (Poloniex, Gemini, Bittrex, Robinhood) have not created a noticeably better solution. We expect this to lead to better customer service for American cryptocurrency exchanges and therefore a better common sentiment towards investing in cryptocurrencies.

 

Bill Gates Cyrptocurrency Opinion

Bill Gates stated on Reddit:

“The main feature of crypto currencies is their anonymity. I don’t think this is a good thing. The Governments ability to find money laundering and tax evasion and terrorist funding is a good thing. Right now crypto currencies are used for buying fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way. I think the speculative wave around ICOs and crypto currencies is super risky for those who go long.”

Bill’s statement disappoints crypto fans because most cryptocurrencies are not anonymous and that it is certainly not their main feature. Most cyrptocurrencies like Bitcoin publicly track pseudonymous addresses. Once you figure out who is associated with each address, you can trace every financial payment they’ve ever given or received on the blockchain. Bill mentioned that cyrptocurrencies are used to buy fentanyl and other drugs, which is true, but not unique to Bitcoin. US dollars are used to buy the same products, but that does not make the dollar harmful. Bitcoin does make it easier to transact internationally, which may make buying international products (such as drugs) easier. He is 100% right that it is risky for those who go long on ICOs and crypto currencies, but people who research the best projects should experience a great ratio of risk vs reward. There is merit to diversifying investment portfolios will small amounts of certain cryptocurrencies if the risk vs reward is aligned with an investor’s risk tolerance.

 

Litepay Setbacks

Liepay announced that “Due to hostile actions by card issuers towards crypto companies, we have decided that offering LitePay card registrations at this time is imprudent”. Litepay is a method of immediately converting Litecoin into fiat money to use that Litecoin with vendors that accept Visa. Litepay’s vendor registration is open but they have not been able to implement a plan with a major credit card issuer. It is unclear how long this problem will last. This is an obstacle for the widespread use of Litecoin, but it seems like their gradual implementation of Litepay is still a step in the right direction.

Litepay’s difficulty with dealing with a credit card company adds credence to investing in OmiseGO. OmiseGO’s team stems from the same team as Omise, a payment processing company, so it will be easier for OmiseGO to implement its cryptocurrency with a payment processor than it will be for a cryptocurrency like Litecoin.

 

A Goldman Sachs Executive Says Cryptos Could Be Useful For Central Banks

The executive said that cryptocurrencies are in a bubble and that they are hard to sensibly evaluate, but he said that central bank-backed cryptocurrencies could be useful. This is a relevant story because Venezuela recently issued a sale for its oil-backed ICO. Many people disapprove Venezuelan’s ICO because they are unsure if they can trust the Venezuelan government and their motives behind an ICO. Regardless of the outcome of Venezuela’s ICO, the Goldman officer hinted that a government-backed ICO could be useful if executed properly.

 

Bank of China Moves to Patent Blockchain Scaling Solution

China has filed a patent application to scale blockchain systems. The patent is under review but the greater story here is that cryptocurrencies are not disappearing in China despite actions that attempt to ban them.

 

Bitcoin Fees Are Down to ~$3

 When Bitcoin fees spiked to over $34, small Bitcoin transactions no longer made economical sense. The fees are less significant now because the number of daily Bitcoin transactions has decreased. The takeaway from this story is that unless Bitcoin releases a scaling solution (Lightning), users will seek altcoins with cheaper transaction fees.