FOMO - Crypto News Digest

Yesterday HTC announced the launch of Exodus, their blockchain phone. It is now available for preorder, and will be shipped in December, probably around Christmas. Exodus is not the first blockchain phone announced, but it probably will be the first blockchain phone released. The Exodus is basically a U12, which was the latest Android flagship device of HTC. It has all the specs, the cameras are great, the design is satisfying. So how Exodus is different from a normal U12 and what makes it a blockchain phone? The Exodus has a secure hardware element or an enclave. The operating system, Android in this case, cannot simply write information there. When you interact with the secure element, it's done on a lower level. In HTC's case, this secure element is used to store your private keys to your wallets. The phone will support Bitcoin, Litecoin, Ethereum and certain ERC20 tokens as a start. Exodus comes with dapp support out of the box, which is great as using dapps on a mobile is still a pain. It also has something called "social key recovery". But the most exciting feature of Exodus is the API.

Coinbase has just launched support for USDC or USD Coin, the stablecoin developed by Circle. USDC is fully-audited and fully-backed by US Dollar deposits. It think it is good thing for two reasons mostly. First, using USDC is certainly a much better idea than using USDT, Tether. Through Coinbase, USDC can capture a big slice of the stablecoin pie, and anything that makes Tether less used is a good thing. Second, USDC makes is possible to move quasi fiat from Coinbase to other exchanges, and this gives more opportunities for traders.

And another Coinbase news, their custody services are now fully operational, after obtaining a license from the New York State authorities. After Bakkt and Fidelity entering the institutional market, this news is not that earth-shattering anymore, but with mainstream adoption every little helps.

On the 19th we discussed a theory saying that Tether is gracefully exiting the market as Bitfinex is sending back USDT to the Tether Treasury at an unprecedented scale. The Treasury account holds the Tethers with are out of circulation. Some of them, those without fiat backing are meant to be burned, but of course no one knows how much fiat Tether actually has. But in any case, these Tethers are out of circulation. Since that show another $180M have been transferred to the Treasury account, where the balance is quickly approaching 1 billion dollars, currently it has $966M. That is a huge number, that is one-third of all the USDT in existence. We will see, but I'd say the signs are indeed pointing to a graceful exit, which would be amazing news for the whole ecosystem, and would probably trigger the next bull market.

The biggest news is of course Bakkt, launching its services on December 12th. If you've been living under a rock, Bakkt is the new upcoming cryptocurrency trading platform backed by ICE, the parent company of the New York Stock Exchange. While Bakkt is primarily focusing on institutional investors, it will supposedly be open to retail traders as well. Bakkt is not just a trading platform, it also provides custody and other services, but the most anticipated product is the Bakkt Daily Futures Contracts. This is the first physically settled Bitcoin futures product. Bakkt will not allow margin trading on the platform. ICE is still waiting for regulatory approval but I have little doubts they will get it.

Can Bakkt trigger a good old fashioned Santa Claus rally on the crypto markets? We will see, but I think the chances are reasonably high.

NEO announced yesterday that KPN, the Dutch telco giant is going to operate one of the NEO consensus nodes, which secure the whole ecosystem. EOS and NEO are fast and secure blockchains, but neither of them are very decentralized. We know 17 of the 21 consensus nodes in the EOS ecosystem are controlled by the same organization, Huobi, either directly or through backroom deals. This is very unhealthy and raises uncomfortable questions about the project. NEO is even more centralized, as it only has 7 consensus nodes. Before the announcement, all 7 of these nodes were controlled by the NEO Foundation, and this is now changing. And I think it is important to recognize that NEO is doing it right.

The latest news from China are either scary as hell or hilarious, depending on your point of view. Under proposed new rules, companies and entities operating in China that provide blockchain-based information services will have to ask users to register their real names and national identification card numbers, censor content deemed to pose a threat to national security and store user data to allow inspection by authorities.

This story is eye-opening in two ways. First, it shows you how insecure dictatorships are. Something they can't control just creeps the hell out of them because they know it poses a lethal threat to their power. Second, it shows what is the ultimate benefits of blockchain technology are: immutability, censorship-resistance and equal access.

The auditor firm Ernst & Young released a report on Friday about the state of the ICOs which raised funds in 2017.

The study analyzed the 141 top ICOs representing 87 percent of the total funds raised last year, and things don't look good. 71 percent of the projects don't have a working product or even a prototype. The fact that most of the ICOs seem to be failing doesn't bother me even a tiny bit. It shouldn't bother you either, unless you really bought the argument that ICOs are the future of business. Well, it turns out, as it always does, that crypto is just another market, and markets have certain characteristics. One of these is that nine out of ten startups fail, and it's not all that different with ICOs. Don't fool yourself: most of your ICO bags will go to absolute zero.

The web browser Brave, developed by the BAT team, has just announced a new feature which makes it possible to tip individual Reddit and Twitter users for their content. I am not sure Brave will ever be able to capture a market share significant enough to get this going and become mainstream. But they are onto something, just as Steem is. Both projects address the same issue: how to reward people producing valuable content.

A church in Siberia learned got caught running a modest scale mining operation which was still profitable thanks to the low, heavily subsidized electricity fees. The church tried to argue in court that they were using the electricity to produce religious materials. The court did not buy it.

The institutional crypto news of the week was Goldman Sachs and Mike Novogratz both being investors in the $58.5M dollars Series B funding round of BigGo. BitGo is a fully-regulated cryptocurrency custodian holding $2B in cryptocurrencies for institutional investors and transacting 15 billion dollars a month. Goldman Sachs is the most emblematic firm of Wall Street, so people have been speculating for months when the company will finally enter crypto. And while this is not the crypto trading desk we are all waiting for, it shows Goldman is indeed taking crypto seriously.

The anonymous person (or group) behind the Twitter handle Bitfinexed gave a long interview to Modern Consensus. In my opinion, Bitfinexed did a great service to the crypto industry with his with work around Tether, but I also think recently he's becoming a victim of his own tunnel vision.

And Tether might not be around for too long anyway. Hasu, an independent blockchain researcher just published an article about how Tether is exiting the market, and while I don't agree with everything he says, I find his scenario plausible or even likely. It's not that difficult to grasp and it makes a lot of sense.

You can, if you coordinate between all the big actors, let Tether gracefully retire. Tether is a device of mutually assured destruction, and we better pray the big actors succeed.

Binance announced to partner with Chainalysis, a blockchain forensics company to work on anti money laundering and know-your-customer compliance. The KYT solution of Chainalysis provides real-time transaction monitoring services based on pattern recognition and it can flag a suspicious transaction right as it happens. I argue the Binance partnership is nothing but a PR move. Binance does need some good PR around anti money laundering as regulators start paying attention to exchanges.

Monero is getting an upgrade today, an upgrade big enough to justify a hard fork. There are three major changes to be introduced. The first is the "bulletproofs" technology making the privacy layers more efficient and reducing the transaction size by up to 80%. The second upgrade is focused on anonymity by increasing the mandatory ring size for ring signatures. Lastly, the hard fork changes the Proof of Work algorithm to make sure Monero stays ASIC resistant

The South China Morning Post reported yesterday that because of the ongoing trade war between China and the US, mining equipment made by Bitmain and other Chinese companies is now a subject to 25 per cent tariffs when imported into the United States. If Chinese pools already own 74% of the Bitcoin hash power, aren't the tariffs counterproductive?

This morning, we cover a few stories which have been flying under the radar.

Line has long been rumored to launch its own token, and yesterday trading against Bitcoin and Ether went live on Bitbox. I'd argue this is a bigger deal than you might think. Line's mid-term plan is to build a decentralized app ecosystem around the Line token, and this would be very interesting as we all know how much distributed apps struggle to gain traction. Line can change this situation very quickly.

BitPay, the largest crypto payment provider announced yesterday that they are now supporting settlements in two more currencies: Circle's USDC and the Gemini Dollar. It's a pretty big deal, because merchants accepting crypto now can receive the funds in a regulated stablecoin, taking volatility out of the equation.

Finally, let's talk about Decred. Yesterday, a protocol called Politeia went live, launching one of the most exciting experiments in crypto. Decred is trying something that very few projects have ever tried: true blockchain governance. This means that the decisions are made by token holders, voting on proposals with their stakes. This is a very controversial thing, and we explain why.

The Tether situation is stabilizing a bit. Tether exchanges still trade at a markup above Bitstamp and Coinbase, and Tether is still trading at 95 cents to the dollar, but the immediate collapse has been postponed or avoided, depending on your point of view. Today is going to be an exciting day as Bitfinex is going to reopen fiat deposits.

The biggest news of yesterday came from Fidelity. Fidelity is a household name in the States knows for its 401k offerings and retail brokerage. Yesterday they have announced launching their new digital assets business, cryptocurrency custody and brokerage. Custody is launching with Bitcoin and Ether for the time being, but other assets are in the plans. The brokerage service will initially focus on institutional clients and asset managers.

When the announcement live on Medium, Fidelity made a rookie mistake. Right in the first sentence, they referred to the inventor of Bitcoin as Satoshi Minamoto. I am not sure I've ever heard of this guy.

Crypto is just another business, where your success depends on if you can make other people believe in it. No one knows this better than Justin Sun, the CEO of TRON.

Turns out, the partnership with Baidu is nothing more than TRON buying cloud servers. Well done Justin, that was a good one.

The Ethereum Ropsten testnet has stalled over the weekend, and it’s not usable at the moment. Ethereum developers were busy rolling out the next network upgrade, a hard fork, called Constantinople, which failed to activate because of an unspecified “consensus issue”.

While hiccups are always expected when rolling out network updates, this one is especially painful because Constantinople has been long in the works, and is important as it will introduce changes to Ethereum’s underlying economic policy. Looks like the upgrade failed because miners did not upgrade the software on their nodes. This failure likely means that Constantinople won’t be activated on the main Ethereum blockchain this year.

NASDAQ is reportedly exploring a security token platform, which would allow companies to raise funds by issuing tokens (STO). So looks like ICOs are not dead, they are just going to continue under a different name. To make the story even more interesting, NASDAQ might start tokenizing existing securities, and that is going to be a game changer.

And lastly, the price difference between Bitfinex and the non-Tether exchanges, Coinbase and Bitstamp, is growing uncomfortably big. At the same time, the USD - Tether peg looks weaker than ever.

Bitfinex announced that it's halting fiat deposits until the banking situation is resolved, which they expect to happen in about a week. My prediction is that Bitfinex will never reopen deposits. As you know Tether and Bitfinex are interlinked, and - what a surprise - audited stablecoins like Paxos or TrueUSD are now trading at a hefty premium against USDT.

The US Senate Banking Committee held a hearing yesterday on blockchain technology featuring Nouriel Roubini, also known as "Old Men Yells at Crypto". Roubini's testimony was light on facts and heavy on bs.

Coinbase exchange listed 0x, which long has been rumored. Expect more ERC20 tokens to be listed! Coinbase also announced to shut down its index fund, which offered institutions and accredited investors a convenient vehicle to invest into top market cap crypto. People familiar with the situation said the fund failed to attract clients, and it raised less capital than expected.

Pundi X revealed new, blockchain-powered smartphone at the their ongoing summit on Bali. The XPhone will hit the market in early 2019, but we only need to wait three more days to learn more about Function X, the technology powering the phone. Function X is a new transmission protocol built on blockchain, and it can be used to make calls, send messages and transmit data without connecting to a phone carrier.

Blockchain, the company behind the blockchain.info wallet, hired a new legal officer who comes from... Noble Bank.

We talk a bit about the current state of the market, which doesn't look good. The 200 days moving average is just crossing the 500 days MA, which usually points to the final phase of capitulation after a market bubble. This only happened once on the Bitcoin chart, during the long bear market of 2014, and the price dropped about 50% in just a few weeks.

Our main story this morning is about Bitcoin scalability and sidechains. The debates around scalability dies down after the Bitcoin Cash fork, but the problem remains. Bitcoin is a painfully slow and expensive cryptocurrency. Blockstream just announced that their sidechain solution, Liquid, is out of beta and ready for commercial use. The logic behind Liquid is not that different from Plasma on Ethereum, as we discuss in the show. It allows immediate Bitcoin transactions, because the transactions don’t need to be registered on the slow Bitcoin blockchain. It’s enough that they are submitted to the fast Liquid chain, which takes care of keeping the two chains in sync. On the other hand, Liquid is a permissioned blockchain, and on top of it, it requires proprietary hardware to operate. You and me won’t be able to use Liquid, ever.

Yesterday Yobit made crypto Twitter roar in disbelief after publicly announcing their pump and dump plans.This is illegal, you’ll probably get rekt, and you shouldn’t keep any money on Yobit.