CryptoAM: Tethering, BitMain & HODL on...if you're rich

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3 things you need to know:

One: Tether is Dominating Trading Volumes. Tether trading volume currently makes up nearly a quarter of the entire market trading volume. In the past twenty four hours, Bitcoin has had $4.8b in volume while Tether has had $4.1b in volume. Another $250m worth of Tether was issued a couple hours prior to the publishing of this newsletter, this is the first such injection in over a month.

  • What this means: Bitcoin is still king in the castle when it comes to trading pairs, however, I would expect crypto-to-stable coin pairings to overtake crypto-btc pairings volume in the near future. Especially in a bear market, people will want to reduce their exposure to falling prices. Another factor to consider is that a more retail and institutional investors enter the space, they will be more concerned with the accumulation of fiat, not the accumulation of BTC, as many people in the space are today.

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Two: Bitmain owned mining pools now control over 45% of Bitcoin’s hashing power. Bitmain, manufacturer of mining hardware and owner of some of the largest Bitcoin mining pools in the world, is just 6% shy of controlling 51% of Bitcoin’s network power.

  • Why this is important: Not only does this put Bitmain in a position of nearly being able to take over the BTC network, it also means Bitmain has the power to 51% any other SHA-256 cryptocurrency. It is probably not in Bitmain’s financial interest to attack any of these coins unless they can orchestrate a massive short, but hackers could absolutely profit from taking over Bitmain’s network. As the difficulty to mine Bitcoin increases and the rewards decrease, the incentive to mine Bitcoin will only remain for the largest operations with the most efficient set ups. This will only serve to further increase the amount of hashing power controlled by the mega pools.

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Three: Rich countries HODL, poor countries sell. Researchers at Ukrainian startup, REMME, conducted some analysis on their token sale. They found that investors from poorer countries like Nigeria, Brazil, and Turkey, tended to flip their tokens within four months of the ICO while investors from the US, Sweden, and Switzerland, overwhelmingly decided to hold their tokens four months after the sale.

  • The Tale of Telegram: If you spend any time at all in ICO Telegram groups this is not news to you. Hundreds of people in broken English asking the developers why the price isn’t increasing is common place.

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Also in the news:


What I’m reading today:

Consensus: Permissioned vs Permissionless Blockchains

When you hear people talking about enterprise blockchain applications, they are likely talking about private, permissioned blockchains, and not public, permissionless blockchains.

Why is that? Well first, let’s break down the differences in a chart form.

The issue with public + permissionless blockchains is that they are relatively inefficient comparitively. Something talked about quite regularly in the blockchain space is the “scalability” trilemma.

Public & permissionless blockchains skew towards decentralization, whereas private & permissioned blockchains are firmly on the scalability side. No one (thank god) gives up security!

Enterprises do not really care about the decentralization of blockchains, and therefore are more likely to adopt centralized & scalable solutions like Hyperledger. The interesting thing here, is that technologies similar to private blockchains have existed for years!

What do I mean…? Well, the idea of distributed databases was understood for a very long time, and blockchains are merely an extension of that technology that are immutable and write only. Distributed ledgers achieve consensus between n number of parties, where n is finite and the parties are known. The real breakthrough of Bitcoin was the implementation of a consensus mechanism that works in the case where n = infinite and parties are unknown. Proof of work combined with blockchain was the real breakthrough here.

It seems as though hype about proof of work + bitcoin have brought renewed interest to an old technology, and people are discovering massive use cases for it everyday. Makes you wonder what other technologies out there are prime for a re-brand and catchy name?


Around the corner:

Tell us what we should add!


Market Outlook:

Well, I was in the middle of putting together a gloomy market outlook when the market decided to do something unexpected, and break 6.3k with conviction. We’re now looking at 6.2k as support and break of that would likely send up back down to 5.9k and below.

Looking for a break above where the previous November bull run started (6.39k) which would indicate a potential reversal. The longer we trade in the box, the more likely it is that we are facing a retest of 5.3k (the lowest we got before out parabolic run)

We are also still pretty fearful — making it more likely than not (60/40) we will continue this run. There is room for the market to get greedy again, and it’s clear that many people have ben scared off by recent price action.


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