CryptoSlate Daily Crypto Newscast

The Bitcoin price has made a V-shape recovery from $3,600, following a capitulation-esque fall on March 12. Since then, the crypto market has recovered rapidly, similar to gold in previous crises, cryptocurrencies could perform strongly in the medium to long-term.

As CryptoSlate previously reported, gold demonstrated a close correlation with stocks in the early days of past financial crises. As time passed, gold broke out of the correlation, ultimately outperforming stocks.

Bitwise Global Head of Research Matt Hougan said in a letter to investors that crypto may see a similar pattern as gold, which makes the medium to long-term trend of the asset class highly optimistic.

Real demand, real buyers in crypto

In 2008, after the subprime mortgage crisis swept across the U.S. causing financial wreckage, all asset classes plunged in a short period of time.

In the next 12 months that followed, the price of gold increased sharply, making 2009 to 2011 the best performing years in gold’s history.

Hougan wrote:

“Toward that end, we are reminded of what happened to gold following the 2008 crisis. Although the initial deflationary impact of that crisis drove gold prices down sharply, prices rebounded rapidly in 2009 and beyond as the government’s response to the crisis rippled through the system. In fact, 2009-2011 was one of the strongest three-year return periods in gold’s history.”

Bitcoin has seen a fast-forwarded version of gold’s swift recovery in the 2000s. When the U.S. equities market was still struggling to rebound, BTC began to see a firm recovery from $3,600. Within less than a month and a half, its price rose by more than two-fold.

Based on the historical performance of gold in the aftermath of crises and the rising perception of Bitcoin as digital gold, Hougan said that Bitwise Asset Management remains increasingly bullish on the intermediate and long-term outlook for crypto.

He wrote:

“It is chiefly for this reason that we are increasingly bullish on the intermediate- and long-term outlook for crypto. We are in unprecedented times, seeing anomalous and unexpected developments in financial markets, including gold, and witnessing extraordinary fiscal and monetary responses to the coronavirus pandemic. In such an environment, a small allocation to crypto in a diversified portfolio seems increasingly prudent. We are hearing this from clients, and seeing it in our inflows.”

Recovery is backed by actual retail demand

The shift in the volume of major crypto assets from futures exchanges to spot trading platforms in recent weeks has shown that the market downturn was actively bought by retail traders, rather than by existing traders in the futures market using high leverage or debt to push up the market.

The fast rebound of crypto assets, which many existing investors in the cryptocurrency market did not anticipate, could solidify the image of cryptocurrencies as a potential store of value and safe haven over the long-run.

“Standing on the stones” was the phrase to describe the last resort of the many desperate, hungry, unemployed London workers in the late nineteenth/early twentieth century.

Men who had no fixed employment would rock up early in the morning, thronging in masses to await any possible job tickets that were dispensed two or three times a day.

150 years later, the London docks are the base for businesses at the interface of finance and technology.

Today, fintech entrepreneurs stand on the stones of what remains of the beating heart of trade in the London Docks. Fintech workers like those at Level39 now find themselves “slamming the keys” as they work in offices high above the Docklands’ West Wood Quay, now called Canary Wharf. In doing so, these innovators continue the vibrant trade history of the London docks.

Canary Wharf was named because the docklands’ primary trading partners were the Canary Islands, a Spanish group of islands 3,760 miles from London on the coast of West Africa.

Curiously, the islands themselves were named after the large native dogs inhabiting the islands. Since the Docklands are located on the Isle of Dogs, it was only fitting to name them Canary Wharf.

From 1802 to 1939, this area of London was one of the busiest docks in the world. Harking back to the time when innovation played a vital role in establishing the backbone of society, you can now see a return to these values as a new breed of fintech craftsmen embed themselves in the heart of Canary Wharf.

Designed by world-famous architect, Cesar Pell, One Canada Square established Canary Wharf as a new financial centre.

It was completed in 1991 and was initially the tallest skyscraper in London (it is now the third). It has been followed by another thirty skyscrapers that serve as residential and business establishments.

Set on the 39th floor of One Canada Square in Canary Wharf, the eponymously-named Level39 is a prime example of how a company can successfully provide a space and community for tech startups and scaleups.

Level39’s Ecosystem Development Manager, Nancy Gonzalez-Rivera, told CryptoSlate:

“Over the past nine years, Level39 has grown significantly, now occupying 80,000 sq ft in One Canada Square and boasting a vibrant community of over 180 member companies, operating in fintech, cyber security, smart cities, green tech, and most recently, life sciences and medtech.”

One Canada Square indisputably paved the way for establishing Canary Wharf as one of the main financial centers of the world. But it almost didn’t happen.

A billion-dollar bet that almost went horribly wrong

In the mid-80s London needed to build a new financial hub. At one point while One Canada Square was being constructed, the private group financing the construction was unsure whether establishing Canary Wharf would be a giant failure. The increasing construction costs and lack of an underground transportation line connecting it to the rest of London were the critical factors.

The London financial scene had already changed in the mid-80s when deregulation of the stock exchange occurred and the market went digital; Canary Wharf was primed to address that reality in a way that would facilitate its role as not just a financial center, but the leading fintech center of the world.

How Level39 provides fintech infrastructure

Some of the biggest names in fintech which have made Level39 home have grown to become billion-dollar brands. Heavyweights such as Revolut and Etoro have helped it develop a strong reputation within the fintech and crypto communities.

Of course, taking the leap towards entrepreneurship is not for the faint-hearted. Being associated with Level39’s infrastructure facilitates credibility and strength for the ambitious entrepreneurs diving head-first into the innovative and enigmatic waters of fintech, providing safe sailing to succeed.

Research conducted by the Harvard Business Review found that people who co-work demonstrate higher levels of thriving than their co...

IOHK has announced that Daedalus 1.0.0 mainnet wallet has finally launched and is now available to every user of Cardano (ADA). The launch of Daedalus comes after 18 months of work and marks the beginning of a series of important launches from IOHK that will bring about Shelley, the blockchain’s staking era. The company has also released the independent code audit carried out by security experts, R9B

It’s a whole different story today; since the highs set at the peak of 2018’s bubble, altcoins have fallen off dramatically by dozens and dozens of percent, crushed under the pressure of a dominant Bitcoin that has benefited from a strong first-mover advantage and sell-offs in the altcoin market.

But, according to a fund manager and a flurry of fundamental signs, it may be time for Ethereum to start to reclaim some of its lost gains.

Ethereum may have finally printed a “major cycle low”: fund manager

Late last year, ETH traded as low as 0.016 BTC.

But, when Bitcoin maximalists were certain the altcoin was well on its way to zero, it reversed, with the trading pair attempting to double when it nearly reached 0.029 BTC just earlier this year.

According to Mohit Sorout — partner at crypto fund Bitazu Capital — it is “quite possible that ETH has printed a major cycle low [against Bitcoin],” pointing to the below chart, which he claims shows a bullish “weekly market structure.”

As to why exactly it signals upside is likely, he pointed to two factors:

ETH/BTC has begun to print consecutive higher lows and higher highs, indicative of a reversal

And the directional movement index (DMI) indicator has recently crossed bullish.

Quite possible that $ETH/ $BTC has printed a major cycle low.

Weekly market structure is bullish👀

Mohit Sorout 📈 (@singhsoro) April 25, 2020

It’s not only Sorout’s technical analysis that signals the Ethereum low is in, as there are also two fundamental factors corroborating the sentiment the bottom is in.

Last Saturday, the Ethereum 2.0 upgrade got its latest testnet named “Topaz.” According to Etherscan data, there are around 20,000 active validators on the network, suggesting that members of the Ethereum community are excited about this major technical upgrade.

As reported by CryptoSlate previously, the Ethereum 2.0 upgrade — which will make the network purportedly dozens of times faster and usable than the previous iteration — is expected by analysts to have a decisively positive effect on the price of the cryptocurrency.

Furthermore, we’ve seen ETH investors start to accumulate more of the cryptocurrency, with institutions also starting to siphon large sums of capital into the altcoin.

It may be a tad too early to tell

Despite these signs, there is one crypto wild card that could discredit the idea that Ethereum has found a low against Bitcoin: the block reward reduction, or the halving, taking place in just over two weeks from the time of this article’s publishing.

Crypto trader known as “Pentoshi” explained that with the halving near, he is reducing his exposure to altcoins due to the uncertainty around the event, which strongly decreases the chance Ethereum and other cryptocurrencies will outperform BTC. He wrote:

“The halving [is] near. If Bitcoin pumps, altcoins get rekt. if it dumps, altcoins get rekt.”

Bakkt, the Intercontinental Exchange (ICE) crypto subsidiary, suffered its second high-profile executive exit last week after CEO Mike Blandina stepped down. While the rumored institutionalization of cryptocurrency remains a far-fetched vision, several empty promises and misplaced hypes question Bakkt’s integrity as a company.

Third executive in four months

As reported on Bloomberg, Blandia resigned the Bitcoin futures bourse after just four months on the job. He now joins J.P. Morgan to head its payments technology division. Interestingly, the U.S. investment bank was poised to develop its JPM coin in 2019, but not much has transpired on that front since.

When Ethereum Blandia joined Bakkt as CEO in December 2019, he vowed to oversee the exchange’s expansion in key markets, explore newer product offerings, and even launch a retail application for everyday payments. Previously, Blandia had stints at PayPal and Google, both centered in the payments division.

Bakkt’s new CEO is David Clifton, previously at ICE as head of M&A and integrations. XRP Adam White continues his role as company president, and no further announcements on the exchange’s future exist at press time.

Promises, hot air, and zero substance

Formerly, Blandia replaced U.S. senator Kelly Loeffler, who was recently in the headlines for gaining millions in the stock market based on insider information. Loeffler was extensively praised in 2018-19 for bringing in institutional tools for the cryptocurrency market before her administrative appointment. But Bakkt’s poor, non-existential performance in the recent months has begged larger questions — are institutions even interested in Bitcoin exposure at all?

Crypto fanatics once regarded Bakkt as Bitcoin’s “killer app” — a so-called slang for products/services that revolutionize industries and rival products. Popular crypto commentator Scott Melker tweeted:

The @Bakkt news is arguably the most bullish event for institutional investors in the history of bitcoin. PHYSICALLY delivered futures (require the holder to either produce actual bitcoin or take delivery from the exchange) backed by the New York Stock Exchange. We are maturing.

The Wolf Of All Streets (@scottmelker) August 16, 2019

However, since its launch in September 2019, Bakkt has no substantial metric or use case to boast about. On the first hour of trading post-launch, only five contracts changed hands. At the end of the session, only 28 contracts were traded — a number smaller than the worse ranked crypto exchanges.

The exchange’s main selling point — that of physical-settled Bitcoin futures — turned out a disappointing farce. Only 63 percent of contracts were reportedly settled in the digital currency.

Myth: Bakkt futures fully backed by bitcoin.

Reality: Bakkt futures 37% backed by dollars or treasuries.

Alex Krüger (@krugermacro) December 2, 2019

Bakkt’s daily volumes continue to remain woefully low — only 200 June BTC contracts — and any developments about the much-hyped Starbucks application seem buried. Most who expected Bitcoin prices to rise substantially after the launch were in for a surprise, the currency fell 50 percent in the months to come, exactly a day after Bakkt’s launch.

Among a rotating door of executives, low volumes, absent mobile applications, lies about daily Bitcoin settlement, a former executive involved in insider trading, and questionable margin statements – Bakkt comes across as an “institutional” leader no better than “unregulated” crypto exchanges.

Surely the greatest irony in the blockchain space is that there has never been any agreement on “the best” consensus model. Bitcoin and Ethereum are widely lauded for pioneering the concepts of blockchain and smart contract platforms respectively, but both also come under heavy criticism for their lack of scalability. The scalability challenge is largely due to their use of the proof-of-work (PoW) consensus method.

Therefore, teams of developers have been focusing for years on devising a different method for achieving consensus among network participants. One that removes the bottlenecks caused by PoW, but still achieves the security of decentralization, while maintaining the right balance of incentivizing honest actors and deterring bad ones.

So far, there have been dozens of attempts at solving this quandary. However, only a few have emerged as main contenders, namely proof-of-stake (PoS) and delegated proof-of-stake (dPoS.)

However, a new horse just entered the race. It’s not a new consensus protocol – rather, a means of speeding up consensus. A blockchain project called Solana is developing a secure, scalable blockchain that can handle up to 50,000 transactions per second on its testnet. How does it achieve this? It uses a feature called Proof of History to determine the passage of time, which, in turn, considerably reduces the weight of consensus.

Proof of History, Explained

Proof of History (PoH) aims to lighten the load of the network nodes in processing blocks by providing a means of encoding time itself into the blockchain. In a regular blockchain, reaching consensus over the time a particular block was mined is as much a requirement as reaching consensus over the existence of the transactions in that block. Timestamping is critical because it tells the network (and any observer) that transactions took place in a particular sequence.

In a PoW scenario, the successful block miner is the first to find the correct nonce, which requires a certain amount of computing power to perform. However, PoH uses a newer cryptographic concept called Verifiable Delay Functions (VDFs.) A VDF can only be solved by a single CPU core applying a particular set of sequential steps. No parallel processing is allowed, so it’s easy to define exactly how long it takes to apply those steps. Therefore, the passage of time is evident.

PoH solves the time challenge, and thus reduces the processing weight of the blockchain, making it lighter and faster. Solana combines PoH with a security protocol called Tower Byzantine Fault Tolerance (Tower BFT), which allows participants to stake tokens so they can vote on the validity of a PoH hash. This protocol penalizes bad actors if they vote in favor of a fork that doesn’t match the PoH records.

Furthermore, Solana deploys proof-of-stake (PoS) as a means of determining who can participate as a block validator.

The Evolution of Blockchains

So how does Proof of History stack up to its predecessors?

Proof-of-Work

There are some similarities between Proof of Work and the Proof of History feature. Mainly, that both methods rely on a defined expenditure of computing power to produce blocks, or hashes as they are known in PoH.

Like Bitcoin and most other PoW blockchains, Solana also uses the SHA-256 algorithm. This may raise the question of whether an ASIC could significantly speed up solving the VDF function in PoH. Solana believes that this isn’t a challenge and that the processing power of most ASICs would be within an acceptable range of what’s available to the wider network.

Because PoH removes the timestamping burden from the network, it results in a far lighter, faster blockchain than anyone has been able to achieve so far using PoW. The incentive mechanisms are protected by combining with Tower BFT.

Regardless, PoH can work together with Proof of Work as well, thereby improving its scalability.

Proof-of-Stake

Proof of Stake (PoS) has been the long-promised solution to Ethereum’s scalability. In PoS, net...