CryptoAM: BTC $1800, Wine, and Venezuelan Space Heaters.

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Good morning fellow nodes, Alex here. The market is stagnant today, and there really seems to be no news to drive it up or down. We’ll see whether bitcoin holds here or drops down to historic support levels around $6600. I’ve been spending the past few days learning about sentiment analysis because that seems to be the main driver of prices in this market (My sentiment towards the market? Mars).

4 things you need to know:

One: Fed values Bitcoin at $1,800. Joost van der Burgt, fintech policy advisor at the San Francisco branch of the Federal Reserve, authored a report called, “Making Sense of Bitcoin Price Levels”. In this report Burgt argues that Bitcoin doesn’t quite fit the characteristics of a currency, security, or commodity, and instead behaves like a blend of the three. However, Burgt believes if Bitcoin were to be characterized as one of those three, it would be a commodity.

  • “Although Bitcoins do not possess any real intrinsic value, from a commodity valuation perspective, we can estimate a hypothetical value based on its production costs. Recent estimates regarding the energy involved in mining a single Bitcoin by professional energy-efficient mining rigs put it at about $1,800 when mined in China.”

  • My thoughts: Crypto is moving towards POS, DPOS, and DAG. Although this report certainly is relevant today, the Fed needs to think beyond Bitcoin. Bitcoin dominance is at 38% and dropping, nobody knows whether it will reign king in five years, or even one year. As Avi said in the last newsletter, most crypto assets today should probably be classified as some sort of security.

  • If you’re interested in how to value proof-of-work coins such as Bitcoin, read our article, “How to value crypto by cost of production: Introducing P/P”.

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Two: Commerzbank and Thyssenkrupp complete $500,000 forex transaction using blockchain. The deal was for a forex forward and it was executed using a platform based on Corda. This transaction was a test to see whether using a blockchain based platform could have benefits over traditional platforms.

  • Refresher: Blockchain is useful for commercial transactions for multiple reasons, both parties maintain a shared book on the blockchain, this increases accuracy and reduces the time needed to finalize transactions. It also makes it easier for regulators to review transactions. Tl;dr it reduces complexity. Long version.

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Three: VeChain partners up with French winery to track wine on the blockchain. VeChain has partnered with Pierre Ferraud & Fils to track its “2017 Beaujolais Nouveau” red wine on the VeChain network. Each bottle of wine has a QR code with data about the wine including the grape type, bottling data, and shipping details. 10,000 bottles have already been shipped.

  • Walimai: VeChain intends to include anti-counterfeiting technology in the cork so consumers can verify that the wine has not been tampered with. Maybe they will partner with WaBi who happens to make this exact product…

  • My thoughts: As someone who used to resell sneakers in high school, I can’t help but imagine how transformative this technology could be for the sneaker market. As it stands, most of the hyped shoes that are sold online are fake. If sneaker companies were to implement this kind of technology into their supply chain it could benefit both the customers who want authentic products and the companies who are losing money to knockoffs.

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Four: Maersk using blockchain platform to insure its vessels. Maersk has begun using Insurwave to manage and trade maritime insurance. Maersk joins AP Moller-Maersk, Willis Towers Watson, XL Catlin and MS Amlin in adoption of this platform. Insurwave is based off of Microsoft Azure’s DLT. In it’s first year Insurwave will manage risk for over one thousand vessels.

  • The CIO of XL Catlin commented, “Ultimately, through the use of IoT and smart contracts, policies will be updated automatically to reflect the risks covered; and this combination of technologies will help improve efficiency in claims assessment and payment. Those are tangible wins for our clients, no matter their industry.”

  • Why this is important: The maritime shipping industry is massive, carrying about 90% of world trade. To see the giants of the industry adopt blockchain so readily speaks to the vast advantages a distributed ledger can offer.

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What I’m reading today:

The citizens of Venezuela are turning to cryptocurrency mining in order to supplement their income. Power in Venezuela is so heavily subsidized that it costs about 30 cents a month to cover a single home’s electricity costs. If power is virtually free and will remain so for the foreseeable future, there really is no reason not to mine crypto (it seems that I have worked out a similar arrangement pertaining to mining Ethereum in my parents basement). Some families are making $100 a month, others are making $1000 a month, both significant when you take into account that a Venezuelan family can live off of $500 a month. In a country with an inflation rate upwards of 15,000%, you can see why most would be jumping at the gun to have a source of revenue that won’t hyper inflate.

In honor of the anniversary of the infamous transaction

Around the corner:

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No one sent us in any questions yesterday… do any of you guys even read all the way through? 😥 Please validate me at