Crypto AM: Kaleido, Fighting Tax Fraud, and Altcoins Anonymous

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Good morning sleepyheads. If you got into crypto in January, you’re probably having a rough time. Sometimes you have to see the red before you see the bread. Let me put some things into perspective; there are 13.3 million Coinbase accounts, 8 million Binance accounts, and 10 million Bitcoin wallets with over 75 cents in them. There is surely plenty of crossover between the owners of those accounts. These are not large numbers, they represent 0.2% of the worlds population. You are an early adopter, for better or for worse.

4 things you need to know:

One: Scotland hospital starts a treatment center for CryptoAM readers. No, seriously. A hospital in Scotland is now treating people who are addicted to trading cryptocurrencies such as Bitcoin. According to Chris Burn, a gambling therapist at Castle Craig Hospital, people with addictive personalities find themselves drawn to the “high risk, fluctuating cryptocurrency market”.

  • Chris goes on to say that it also “provides excitement and an escape from reality. Bitcoin, for example, has been heavily traded and huge gains and losses were made.”

  • Apparently, this is now an issue. I definitely didn’t know. Because I am most definitely not addicted.

  • Read more…

Two: Tencent using blockchain to help fight tax fraud. Tencent and China’s Shenzhen Municipality have partnered to form an “Intelligent Tax” innovation laboratory. Tencent will reportedly issue invoices called “fapiao” on the blockchain. There is a large underground market for forged fapiao and moving the invoices from paper to the blockchain would make them nearly impossible to counterfeit. The records will also be easily traceable and will be stored permanently stored on the blockchain leaving no chance for any records to get “lost”.

  • Buzzwords: “The newfound organization will reportedly employ cloud computing, artificial intelligence, blockchain, and big data to improve taxation management and find a technological solution to fraudulent fapiao”

  • Why this is important: Ah, blockchain and governance, one of my favorite combinations. What’s the best way to stop corruption? By making it literally impossible to be corrupt. This is a baby step, but an important one, especially considering it’s coming from China.

  • Did you know: In China, you can pay your taxes through WeChat?! Imagine paying taxes through Facebook messenger. Bananas.

  • Read more…

Three: A new blockchain complex in China is offering millions in subsidies to start-ups. The Chinese city of Hangzhou is trying to attract talent and startups by offering millions of dollars-worth of subsidies to blockchain start-ups.

  • “For early stage startups, the industrial park plans to provide a maximum of $230,000 for housing and $1 million as research and development funding.” For each start-up. That’s a lot of money…

  • “More mature blockchain startups may apply to reside in the area with the help of $480,000 for housing and $780,000 for R&D.”

  • Bigger picture: This is part of the overall Chinese initiative to encourage investment in groundbreaking technology. Hangzhou alone has a $1b in funding to give to blockchain start-ups. The Chinese are racing to be at the forefront of blockchain technology through funding and fair legislation, two things other countries should take note of…

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Four: ConsenSys is working to bring financial services to the unbanked in the Philippines. ConsenSys, in partnership with Filipino UnionBank, plan to use Kaleido, a private blockchain based on Ethereum and meant to run on AWS to offer remittance services to Filipinos. Banking services in the Philipines require a high minimum balance relative to their GDP per capita. This leaves over 86% of its citizens unbanked.

  • Kaleido vs. Ethereum vs. Western Union: Permissioned ledgers, although lacking the trustless nature of public ledgers (you have to trust the entity running the network), still hold many advantages over their centralized and public counterparts. Transactional throughput is magnitudes greater than a public chain, overhead cost is significantly reduced, and there is a much greater guarantee that Alice’s transaction will be received by Bob without complications compared to a non-DLT alternative.

  • My thoughts: I am excited to see what DLT can do for economies that rely heavily on remittance services. For example, foreign workers brought in to do construction the middle east are paid minimal wages, housed in poor conditions, and often have to deal with their passports being taken away preventing them from leaving and getting paid in a timely manner. These issues could be partly remedied by having proof of identification on the blockchain, and using DLT based remittance services to reduce exorbitant money transfer fees.

  • Read more…

What I’m reading today:

Traditional Asset Tokenization

One impact of blockchain technology that sparks interest for a lot of people is tokenization. Tokenization of assets fundamentally changes the way we interact with different asset classes by introducing liquidity where there was previously none. 

There are many benefits to increased liquidity and tokenization and they’re all laid out pretty well in this article by Steven McKeon. He argues that the main benefit of tokenization will come from people being able to access investments that they previously were shut out from, because of capital requirements. The average joe can’t get any exposure to the NYC real estate markets because they don’t have the money to actually buy a full apartment or house. By issuing “shares” of an apartment complex, we can open the markets to more people.  

  • Big picture: If we as a society decide to start tokenizing things like fine art, real estate, sports players, etc, then the average investor can begin to introduce previously unavailable investments into their portfolios. Risk profiles would improve across the board, as people could buy into investments

  • Be smart: This also creates a wonderful world for financial institutions that enjoy playing with derivatives. Imagine a world where people could go long on Brooklyn and short Manhattan. Or long Picasso short Rembrandt. 

Around the corner:


Good reads:

Market Outlook:

Next level to watch is the 6.6k level. If that breaks, I’m out.

Generally, 6.6k has been strong resistance and has been tested twice. The more a resistance level is tested, the stronger the panic when it finally breaks.

For something really in depth, I would suggest checking out this great post by Nick (known as @crypto_core) on tradingview.

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