Newsletter February 21st 2018
January has been a notoriously bad month for the cryptocurrency market in the last 4 years. Some speculate that the January dips are caused by people withdrawing cryptocurrency to fund their Chinese New Year’s holiday. It is unclear how much the Chinese New Year causes a dip, but it is possible that it becomes a self-fulfilling prophecy in the future. That means that even if the Chinese New Year has no direct causation on the price of cryptocurrencies, people may think it has a causation, leading people to sell their crypto in December or January, which would indirectly cause the Chinese New Year to impact the market. The Chinese New Year was on February 16, so that may signal a bullish market.
Venezuelan Crypto Currency – Petro
Venezuela had a sale for its government backed cryptocurrency, the first ever government backed cryptocurrency, and claimed to raise $735 million in its first sale. There is an interesting dichotomy in this sale because many people believe Venezuela will profit from their cryptocurrency, so some are buying the cryptocurrency to ride those profits. On the other hand, buying that cryptocurrency supports a government that some people think has malicious intentions.
Some people think that a government backed cryptocurrency negates the purpose of a cryptocurrency because it relies on a central third party, the government, to regulate the currency, but it could be it should be a step towards legitimizing the idea of cryptocurrency regardless of the Venezuelan outcome. If it goes well, we would see a solution for a government that has faced hyperinflation in its native currency. If it goes poorly, then crypto supporters could say that it failed because of a corrupt government, and that a decentralized governed currency like Bitcoin, would have been more successful.
South Korean Support
South Korean officials stated that the government will support cryptocurrency trading if normal transactions are made. This supports the idea that governments are against cryptocurrency exchanging for illegal activities but would support the development of cryptocurrencies and blockchain technology if it abides by the rules and know your customer laws. We never took a potential South Korean crypto ban seriously, so we did not find this news, but we thought it was worth reporting.
Users that bought cryptocurrencies using debit or credit cards on Coinbase through the dates of January 22ndand February 11thmay have experienced excessive overcharges. Visa stated that the issue was not caused by Coinbase, but they did not state exactly what caused the problem. It is an odd problem considering that unwarranted charges are rare from a company like Visa, so it may be perceived that Coinbase was at fault, regardless of Visa’s statements. Coinbase has had some customer service issues recently, which opens the door for another US exchange to compete. Some already exist like Poloniex, Bittrex, and Gemini, but none have emerged as significant competitors to Coinbase.
The infrastructure for Litepay is scheduled to release on February 26thso we look forward to seeing the progression of that news story. Litepay is supposed to immediately convert Litecoin into fiat currency for a 1% fee so you can use Litecoin at vendors that accept Visa payments. If implemented properly, this would add a significant use case for Litecoin, so we are excited to see what happens with Litepay and its effect on the rest of the crypto.