After losing its major upwards momentum roughly ten days ago when Bitcoin failed to break above $5,400, BTC has been able to hold steady above $5,000 and has tepidly clawed its way upwards towards $5,300.Now, one analyst believes that Bitcoin will incur just enough buying pressure to propel its price up towards $5,800, at which point it will face significant selling pressure that may lead to a large drop.Bitcoin (BTC) Slowly Climbs Towards $5,400At the time of writing Bitcoin is trading up marginally at its current price of $5,300, up slightly from its daily lows of $5,230.Although Bitcoin has been able to post minor gains over the past several days, it is important to note that is strongest confirmed level of resistance currently exists at $5,400, as BTC has failed to make any decisive advances past this level without being swiftly pushed lower.Despite this, Bitcoin may be currently incurring strength that will allow it to surge up towards $5,800 – at which point it will likely find greater levels of selling pressure.XC, a popular cryptocurrency trader on Twitter, shared his thoughts on Bitcoin in a recent tweet, explaining that he expects BTC to see another “scam move” up to the upper-$5,700 region, at which point it will be pushed back down.“Seeing weak bearish moves all across the board here, think we get one more scam move up with a harsh peak around 5777,” he explained.Seeing weak bearish moves all across the board here, think we get one more scam move up with a harsh peak around 5777. $BTC pic.twitter.com/s1Ezm55mYK— XC (@runtheirstops) April 19, 2019Bitcoin May Be on The Verge of Incurring Massive VolatilityOne pattern that traders and analysts alike have been closely watching is the “golden cross” that Bitcoin is currently en route to forming. Previously, this pattern was only hypothetical, but it now appears that BTC will in fact make this formation, which would be highly bullish for the cryptocurrency.One analyst believes that the formation of this pattern will lead to massive volatility that could either send Bitcoin’s price surging upwards or reeling downwards – depending on whether bulls or bears take this opportunity to strike.“$BTC. Golden cross trajectory now April 24. (Was previously April 25). Should be interesting. Lot of hype that this is the “bull run” signal. If I were a bear or bull whale, that’s when I’d strike. Bull whale rides momentum of GC traders. Bear whale destroys their morale,” B.Biddies, another popular crypto analyst, explained in a recent tweet.$BTC. Golden cross trajectory now April 24. (Was previously April 25).Should be interesting. Lot of hype that this is the “bull run” signal.If I were a bear or bull whale, that’s when I’d strike.Bull whale rides momentum of GC traders. Bear whale destroys their morale. pic.twitter.com/wwDWxJ5dJh— B.Biddles (@thalamu_) April 19, 2019Assuming that there are not any massive price movements over the next several days that change the timing of the golden cross formation, investors and traders alike should not take the current stability in the crypto markets for granted, as it may not last for very long.Featured image from Shutterstock.
By CCN: John McAfee continues to trumpet a bitcoin price that will hit $1 million by the end of the decade. He isn’t even afraid of betting his manhood on the same. Nonetheless, crypto bears keep coming back to spoil the party. One such doubter is UBS analyst Kevin Dennean.
UBS Analyst: Bitcoin Price Faces a Long Road to Recovery
According to Forbes, Dennean recently wrote:
“We’re struck by how long it took other asset bubbles to recover their peak levels (as long as 22 years for the Dow Jones Industrials) and how pedestrian the annualized returns from trough to the recovery often are.”
Dennean went on to add that “crypto-bull contingents should consider what happens after the bubble–not every bubble that bursts recovers the old highs.”
The analyst believes that just like other asset classes, the BTC price faces a slow and painful path to recovery. He likened the bitcoin price “bubble” to the 1929 Dow Jones collapse, suggesting he thinks it might take slightly more than two decades for the cryptocurrency to reach its highs of $20,000.
That’s a bold prediction to make considering the BTC price has rallied this year and now sits at approximately $5,300.
A Flawed Strategy that McAfee Would Disapprove
John McAfee recently reminded his followers that bitcoin is not a stock.
Come on people!!! It’s time to brush up your basic math skills and run some f*^#$ng numbers!!!! It is mathematically impossible for Bitcoin to be less than $1 mil by the end of 2020. Bitcoin is not an effing stock!!! You can’t apply stock paradigms or formulas and expect answers! pic.twitter.com/KM6qVX204R
— John McAfee (@officialmcafee) April 15, 2019
That’s why it is futile to value the cryptocurrency in the same way as stocks.
Bitcoin is not a stock. At its heart, bitcoin is a digital currency independent of any centralization. It’s designed to make peer-to-peer payments. So the mechanics of bitcoin prices are completely different than that of a stock, which is why Dennean’s throwback to the Dow Jones crash isn’t an apples-to-apples comparison.
Bitcoin’s Rally Is Here to Stay
Bitcoin prices could keep soaring because both technicals and fundamentals are intact.
Bitcoin’s two-week moving average convergence divergence (MACD) indicates a positive trend for the cryptocurrency for the first time since May 2015. As it turns out, the bitcoin price has not tested its lows for 123 days and could be gearing up for a sustained rally.
On the fundamental side, rising demand could fuel more gains. Of course, McAfee’s prediction for $1 million BTC by 2020 seems like a huge stretch, but perhaps in the long run.
Wences Casares, a director at PayPal, is of the opinion that bitcoin’s success as a decentralized currency will be the key to its growth. The lack of developed financial systems in certain economies could lead to an increase in the number of people holding bitcoin.
Bitcoin is a big hit in African nations as it is turning out to be the preferred means of sending and receiving payments abroad in place of the U.S. dollar.
Critics sometimes miss the point that bitcoin is not a stock but rather a digital currency whose aim is to enable peer-to-peer payments independent of any central authority. That’s why analysts should never value it using the mechanics of stock valuation or else they might have to eat their words and will look foolish in the long run.
By CCN: Bitcoin Unlimited’s Chief Scientist Peter Rizun finally made it onto the What Bitcoin Did podcast, after initially having his interview canceled amid pressure from Bitcoin Maximalists who don’t want to hear his opinions on Lightning Network.
Bitcoin Unlimited Dev: Ignore Craig Wright and He’ll Go Away
Rizun discussed a range of issues, primarily Lightning. He also spoke to the problem of Craig Wright, who is currently suing podcast host Peter McCormack. Rizun says the best way to deal with Craig Wright is to ignore him and he’ll go away. Continuing to discuss Wright’s exploits by publishing articles such as this one, he said, only feeds into the self-declared Satoshi Nakamoto’s egotistical agenda.
“I think what we’re seeing right now is the death thralls from a person who is about to fade into obscurity. I think he wants people to pay attention and that’s why he’s doing these lawsuits. But I think the best strategy is just to ignore him and he’ll eventually go away.”
Self-Appointed Bitcoin ‘Creator’ Sues Podcaster $140,000 for Satoshi Libel; Who’s Next? https://t.co/lhj29j48Xd
— CCN.com (@CCNMarkets) April 19, 2019
Rizun further spoke of the fundamental differences between Bitcoin Cash and what he calls Bitcoin Core. He explained his view of the fork, and pointed out that it doesn’t matter how the fork happens – a hard fork is a hard fork, and when it happens, it’s a new reality. That both chains have sustained enough hashpower to keep operating, with Bitcoin Core retaining the majority of the hash that was originally on the network, is evidence enough that both chains should exist.
McCormack said during the interview that he believes Bitcoin Cash should have gone with a different name, but that he views its existence as “useful.”
Problems With Lightning Network from Rizun’s Point of View
Rizun believes that Lightning Network will lead to a more centralized, painful user experience for users. He points out that several technical limitations with Lightning mean that people who want to use Bitcoin will ultimately have to trust others to do so. McCormack says that if his father were to use Bitcoin, he would prefer that he use something like Coinbase. Rizun responds:
“I think there will always be a use-case for custodial wallets. But I would like to do is make using non-custodial as painless and safe as possible, so that people opt for them as opposed to custodial wallets whenever possible, and Lightning makes that hard where SPV wallets make that easier.”
Rizun admitted there are some legitimate criticisms as regards SPV wallets. An SPV (simplified payment verification) wallet is also called a “light wallet.”
“Lightning makes it more difficult to just be a user, to run a non-custodial Lightning node. It’s much harder to manage your own keys as a Lightning user than a traditional Bitcoin user with an SPV wallet. For me, it’s more important to have users all across the world being able to easily run non-custodial wallets and use Bitcoin directly, than to have a smaller subset of people being able to cheaply run full validating nodes.”
Rizun’s comments, in general, do not address the growing chorus of former Bitcoin Unlimited developers who believe that Bitcoin Unlimited is in the process of being co-opted by Bitcoin SV supporters. At least three developers have left the project, including Bitcoin ABC lead developer Amaury Sechet. That Rizun views Wright and SV as essentially teetering on the edge of obscurity should be heartening to those who held those concerns.
Listen to the episode in full below.
It’s no secret that over the past several decades politics in the United States have become increasingly about appealing to voter blocks, and regardless of whether or not this is good or bad, this trend may ultimately prove to be beneficial for the crypto industry.Because the number of cryptocurrency investors in the United States is actually quite large on a percentage basis and will likely continue growing along with the markets, it is highly likely that more and more candidates for influential public offices will begin placing cryptocurrencies on their list of priorities to address.Crypto Advocates May Ultimately Represent a Large Voter BlockAccording to a study published in March of last year, 8% of Americans are currently invested in cryptocurrencies. Although it is highly likely that this number has changed in the year since the report was first published, the lack of any significant changes in the overall markets has probably led this number to remain relatively stable.Some candidates for elected offices are already taking note of the portion of citizens who are invested in the nascent technology, and although 8% seems like a small number, gaining a voter block of that magnitude for a national election could sway the results.Moreover, as this number grows – which it undoubtedly will, assuming that the crypto markets continue to expand – it will be critical for candidates to acknowledge these investors by presenting solutions to the regulatory problems the industry currently faces.Presidential Candidate Andrew Yang Advocates for “Do No Harm” Crypto RegulationsRecently, Andrew Yang – a candidate running for the presidential office in the 2020 race as a Democrat – laid out his thoughts on cryptocurrencies, lambasting New York state’s BitLicense while advocating for a “do no harm” approach that allows the United States to remain on the forefront of innovation in the rapidly evolving industry.In the post, Yang explains that the crypto market’s growth over the past several years has outpaced the government’s response, making now a critical time to begin implementing regulatory frameworks.“Cryptocurrencies and digital assets have quickly grown to represent a large amount of value and economic activity. This quick growth, however, has outstripped the government’s response… It’s time for the federal government to create clear guidelines as to how cryptocurrencies/digital asset markets will be treated and regulated so that investment can proceed with all relevant information,” Yang explained.Although the term “regulation” may scare some ardent cryptocurrency advocates, Yang further explained his position by describing the controversial BitLicense in New York as “onerous.”“Some states have onerous regulations in the space, such as NY’s BitLicense. Navigating this has had a chilling effect on the US digital asset market,” he wrote.As to how he plans to go about implementing the proposed regulatory framework, Yang explains that if he were to be elected, he would offer better definitions for what a token is and when it is a security, and would clarify the tax implications of buying, selling, and trading crypto, among other things.All this would be done with the goal of creating “clear guidelines in the digital asset world so that businesses and individuals can invest and innovate in the area without fear of a regulatory shift.”Although Yang may currently be somewhat of a dark horse in the presidential elections, his friendliness towards cryptocurrency has already garnered him publicity and support amongst crypto investors and may spark a larger trend of other mainstream presidential candidates laying out similar frameworks to incubate growth within the crypto markets.Featured image from Shutterstock.
The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury, has imposed its first-ever penalty on a peer-to-peer crypto exchange for violating AML regulations, among other violations.
FinCEN announced the penalty on its website on April 18, 2019, declaring that it had levied a civil money penalty against bitcoin trader Eric Powers for “[failing] to register as a money services business (MSB), [having] no written policies or procedures for ensuring compliance with the BSA [Bank Secrecy Act], and [failing] to report suspicious transactions and currency transactions.”
In other words, Powers was acting as an unregistered exchange by carrying out a number of peer-to-peer transactions in crypto assets. In the course of his various peer-to-peer transactions, FinCEN claimed that Powers exchanged a total sum of BTC worth approximately $5 million, carrying out individual transactions worth more than $10,000 over 200 times.
Though FinCEN noted that this is its first enforcement action against a peer-to-peer cryptocurrency exchange, this is not the first prosecution of this sort lately. Earlier this month, Jacob Burrell Campos was charged by the U.S. Department of Justice for similar crimes, acting as an unregistered exchange. A key difference between the two cases, however, is that FinCEN quoted a civil penalty of $35,350 dollars for Powers while Campos was sentenced to two years’ imprisonment. Both men were required to forfeit $100,000 and $800,000 in crypto assets.
The initial sentencing of Campos came with commentary from regulatory officials such as David Shaw, a special agent for Homeland Security investigations in San Diego, who called the trial “a reminder to those illegal and unlicensed money transmitters that the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions,” signaling that the U.S. government would begin prosecuting these financial crimes more harshly.
The FinCEN announcement noted that Powers’s sentence was loosened due to his cooperation with law enforcement, including an agreement “to an industry bar that would prohibit him from providing money transmission services or engaging in any other activity that would make him a ‘money services business’ for purposes of FinCEN regulations.”
By CCN: The bitcoin bear market might be over, but it hasn’t finished claiming victims. Coinnest — South Korea’s fifth-largest cryptocurrency exchange — shut down this week. Users have until April 30 to withdraw any remaining funds.
The closure comes months after a series of scandals roiled the crypto platform.
In a notice to users on its website, Coinnest did not explain why it was shuttering, but thanked customers for their encouragement and patronage.
Bribery and $5 Million Accidental Bitcoin Airdrop
As CCN reported, Coinnest has suffered a series of embarrassing, self-destructive scandals over the past year.
In April 2018, two Coinnest executives were charged for accepting bribes to list multiple cryptocurrencies on the exchange.
Then, in January 2019, Coinnest accidentally airdropped more than $5 million in bitcoin and Korean won to customers due to a computer error. The exchange asked users to return the misdirected funds, but were unable to recover much of the lost money.
Oops! South Korean Crypto Exchange Accidentally Sends Traders $5 Million in Bitcoin https://t.co/Xb4OIPPmU8
— CCN.com (@CCNMarkets) January 22, 2019
South Korean Government Banned ICOs
All this is unfolding as the South Korean cryptocurrency industry remains mired in a struggle with federal regulators.
The South Korea government, under liberal President Moon Jae-in, recently banned ICOs and stripped crypto businesses of tax breaks following several high-profile crypto scams.
The government’s harsh legislative stance has alarmed South Korea’s crypto community, which has mushroomed despite the country’s anti-growth policies.
Vitalik Buterin Champions Blockchain in Korea
However, that may change in time, thanks to the intervention of some influential members of the international crypto community.
Earlier this month, Ethereum co-founder Vitalik Buterin and a bipartisan group of lawmakers urged the South Korean government to deregulate the blockchain industry. They say the current laws are overly restrictive and inhibit innovation.
— ethereum.network (@EthereumNetw) April 7, 2019
Ethereum Creator: You Can’t Separate Crypto from Blockchain
While speaking at a meeting of the South Korean parliament on April 3, Buterin underscored that you cannot separate crypto from blockchain.
“Blockchain is a technology that can be run without cryptocurrencies, but there is no crypto without blockchain. Public blockchains rely heavily on cryptography. Therefore, cryptocurrencies are absolutely necessary.”
Buterin was reacting to the Korean government’s “blockchain, not bitcoin” stance. South Korean officials have promoted blockchain while undermining cryptocurrencies. But Buterin said crypto and blockchain are too intertwined and cannot be separated.
Craig Wright Threatens to Sue Vitalik
Meanwhile, Vitalik Buterin has remained curiously silent in response to threats of lawsuits by Australian crypto entrepreneur Craig Wright.
As CCN reported, Wright says he’s planning to sue Buterin and crypto podcaster Peter McCormack for defamation after the two called Wright “a fraud” on separate occasions.
They were responding to Wright’s repeated claims that he is bitcoin creator Satoshi Nakamoto.
‘Bitcoin Creator’ Craig Wright Drags Critics to Court to ‘Prove’ He’s Satoshi https://t.co/Z4nkNGitaQ
— CCN.com (@CCNMarkets) April 18, 2019
Wright Files $130,000 Libel Suit Vs. Podcaster
Craig Wright followed through on his threat by filing a libel lawsuit against McCormack in the U.K. on April 18.
Interestingly, Wright is only seeking damages of £100,000 (or roughly $130,000). That’s a small amount of money for a libel suit.
Wright has not yet formally sued Buterin, even though Vitalik has been far more vocal about slamming Wright’s claims that he’s Satoshi.
The story of what Binance CEO Changpeng Zhao has been able to accomplish a little under two years has been nothing short of incredible. Having launched in July of 2017 amidst stiff competition from well-established rivals and a feverishly bullish market driven by Bitcoin hype, rather than pose a challenge for Zhao, the combination was a catalyst for wild success.
Bitcoin fund Adamant Capital is convinced that the bottom of the bear market is in, and true to its name, the firm has laid out an unwavering case for this position with some persuasive hard data and fundamental analysis.
The report, authored by Adamant founders Tuur Demeester and Michiel Lescrauwaet, argues that bitcoin is undervalued at its current price, mirroring sentiments held in Adamant’s 2012 and 2015 reports during bitcoin’s previous downtrends. Weak hands were shaken out in November of 2018, it says, and this capitulation has laid the groundwork for the next market cycle.
As such, its underlying thesis is that bitcoin has entered the accumulation phase of the bear market — the first stage of a bull market when forward-thinking investors begin loading up in preparation for the next run.
How Do They Know?
As the disclosure in the report cautions, Adamant Capital is not an oracle and its research isn’t a crystal ball, so it should go without saying that neither the firm nor anyone else knows for sure what bitcoin will do tomorrow or the next day or a year from now. That said, the firm lays out a convincing argument that we’ve experienced the worst of this bear market’s carnage.
In fact, it believes that overall sentiment has morphed from despair to hope. To support this claim, Adamant plotted bitcoin’s booms and busts using unrealized profits and unrealized losses. This metric is derived by taking the value of each bitcoin when it last moved (presumably, when each was purchased/changed hands), aggregating all of these into what is called “realized capitalization” and then subtracting it from bitcoin’s actual market capitalization; this gives you unrealized profits/losses.
According to the report, November 2018’s sell-off tanked both portfolios and investor confidence in what could reasonably be considered market capitulation.
“Unrealized losses doubled in mere weeks” from this episode, causing “expectations of a swift market recovery [to be] torpedoed by the market,” according to the report. Essentially, with the market shedding 48 percent of its value in one month, people high on “hopium” became drunk on despair, signaling capitulation.
We can see the effects of this in Google Trends, the report suggests, as searches for “buying bitcoin” dipped lower than the same queries did in March 2017. Toxic sentiments pervaded crypto social media, as well. The optimism and bullish vibes that led many to believe $6,000 was a firm bottom — and, on the converse, those who took these good spirits as a sign that the bottom had yet to drop out — morphed into pessimism, bearish despondency and even hostility (Adamant and its founders received a lot of hate mail during this time, the report claims).
Proof Is in the Blockchain
To further support its analysis, the report details how the November capitulation altered the landscape of long- and short-term holders.
During the beginning of 2018, many bitcoin holders clung to their assets because of the disposition effect — the tendency for investors to hold on to an asset that has lost value in hopes of selling it at a higher price.
November’s price drop shook out many of these holders. Between November 14 and 16, 2018, the market saw more old bitcoin flood its sell walls than on February 23 of the same year. This finding is similar to the unspent transaction analysis Delphi Digital published in January 2019, which likewise claims that bitcoin is in an accumulation phase (and calling for a bottom in Q1 of 2019).
With its analysis, Adamant believes that the situation “visibly improved by the start of 2019” and more investors have begun holding again. On April 1, for example, CME Group’s bitcoin futures saw a significant uptick in longs.
The report continues to buttress these findings by drawing comparisons to previous bitcoin market cycles. While previous performance is not indicative of future performance, it admits, Adamant also writes that “the parallel with previous cycles is sufficient to validate [the] thesis that we are back in undervalued territory.”
One final way it can validate this thesis: volatility. At the time of the report, bitcoin’s 60-day volatility was below 5 percent, something it hasn’t seen since 2016. This corroborates Adamant’s hypothesis that retail investors have largely left the market, meaning “agnostic traders and long-term value investors” are sticking around to buy up their bags.
The report makes it clear that this analysis doesn’t mean bitcoin can’t drop to November lows — or even lower still. It reasonably expects the cryptocurrency to trade between $3,000 and $6,500 until the accumulation phase graduates to the next bullish run-up.
A few factors could drive prices lower, it states, such as exchange hacks like the one Mt. Gox suffered, which partly fueled the 2013 to 2014 sell-offs (though admittedly, it goes on, exchange volume and market share are more evenly distributed now than they were back then). Macroeconomic downturns could also affect prices, though Adamant also believes that in the long run, bitcoin will prove itself as a safe haven for value akin to gold and other hedges. Other potential risks include miner capitulation (though this is mitigated by difficulty adjustments), regulatory threats, litigation like the ongoing Mt. Gox civil rehabilitation and hard fork contentions.
The report doesn’t take a crack at guessing when the next bull market will take off. But it does give some more indicators as to how to spot a proper accumulation phase, such as the higher lows in price that are caused by weak hands selling during rallies (keeping price semi-subdued) and strong hands buying these supplies and the dips they cause (keeping price from tanking further).
It also ends with fundamental analysis of technical innovations justifying a higher value proposition. The Lightning Network continues to grow up to 45 percent monthly, sidechains have become an increasingly viable scaling solution and mining chips are becoming more efficient, it notes. On the institutional side, futures products and platforms like Bakkt are proliferating, and institutional custody has seen rising interest with newcomers like Fidelity.
Lastly, the report cites millennials as potential significant drivers of adoption. Born into a debt-addled economic landscape and coming to financial literacy during the 2008 Great Recession, millennials’ mistrust of bankers and governments make them ripe to be Bitcoin’s greatest proponents. In fact, we’re already seeing this, the report notes, as a 2013 survey indicates that Bitcoin’s earliest adopters and whales are mostly millennials.
With all of this in mind, the report ends on a high note and does make a bit of a prediction.
“Supported by over 10 years of infrastructure development, we believe the stage is set for mass market adoption in the coming 5 years,” the report concludes. “In our assessment, during this phase (its ‘Windows Moment’) Bitcoin will become widely recognized as a portfolio hedging instrument and reserve asset, and will begin making significant inroads as a payment network.”
By CCN: Stablecoins on the surface might seem boring. After all, most don’t come with the volatility that’s inherent with most cryptocurrencies, especially bitcoin, and therefore have an entirely different risk/return profile. Stablecoin Tether (USDT) has been an exception to this rule after it lost parity with the U.S. dollar last year amid questions about its reserves.
Make no mistake, however, stablecoins, most of which are pegged 1:1 to fiat currencies such as the U.S. dollar, are a vital part of the crypto ecosystem, one that will help to unlock the institutional capital that has been trapped on the sidelines and bring crypto closer to wide-scale adoption.
If anybody knows this, it’s crypto exchange CEOs such as ShapeShift’s Erik Voorhees. ShapeShift doesn’t have its own stablecoin, nor does it plan to create one. But they don’t have to, considering there are plenty of good current projects,” according to Voorhees, who stated:
“Stablecoins are important in the same way that a bridge is important. You may not care much about the bridge, but without it, the beautiful land beyond is much harder to get to.”
100% agree, we need to create bridges between the old work of finance to the new world of digital finance
— Yoni Assia (@yoniassia) April 19, 2019
The “beautiful land”, of course, is crypto, and the migrants are investors and consumers. Voorhees previously stated:
“A stable crypto coin is super useful… Both for the rich finance person who needs stable collateral against smart-contracts, and the poor Venezuelan trying to take shelter from currency debasement. Not a replacement for BTC or true cryptos, but a helpful augment to them.”
Navigating Choppy Waters
One Twitter follower asked Voorhees if this includes controversial Tether, saying “it’s like a boat on choppy water.” Voorhees responded:
“Better than no boat in choppy water.”
What the leaders of the crypto space continue to point out is the importance of connecting traditional global finance with crypto. There’s $140 trillion in assets under management that has yet to make its way into crypto, the latter of which has a combined market cap is $179 billion. If stablecoins are the bridge to do it, bring it on. Venture capitalists like them too, and have reportedly poured $350 million into stablecoin projects.
People will poo poo this, but it’s a big deal and an important step. Global finance is becoming further integrated with crypto finance. All that crypto needs in order to win is for this to continue. https://t.co/WKVsHKEqpR
— Erik Voorhees (@ErikVoorhees) September 10, 2018
Year of the Stablecoin
For a while, Tether was the defacto stablecoins in the market. Last year, a flood of new stablecoins came on the scene, including the regulated Gemini Dollar (GUSD) by the Winklevoss twins and Paxos Standard Token (PAX), both of which are backed by the U.S. dollar. Gemini explained its stablecoin:
“Essentially, the Gemini dollar allows you to send and receive USD through the blockchain.”
Not one to be outdone, Tron Founder Justin Sun also caught stablecoin fever. He teamed up with Tether for a “USD-pegged stablecoin USDT on the Tron blockchain.”
— Justin Sun (@justinsuntron) April 18, 2019
Stablecoins may be “crypto light” given their tie to fiat but they’re still cryptocurrencies. Users gain access to the agility of the blockchain without having to worry about risk associated with erratic price movements or rely on banks. This is attractive to users inside and outside of the crypto ecosystem.
By CCN: Spencer Bogart, a partner at crypto investment firm Blockchain Capital, argued in a new blog post that over the next two years Facebook, Telegram, and stablecoins will create the largest on-ramps to crypto that the Bitcoin industry has ever seen.
Facebook & Telegram Could Fuel Rabid Crypto Expansion
With the on-boarding of two of the largest networks in the world – Facebook and Telegram – the crypto economy is likely to grow a great deal in the coming few years. Regardless of whether these platforms are integrating Bitcoin directly, all cryptos will be in higher demand as a result. Further, more people than ever will be familiar with the ability to send money quickly and cheaply using blockchain technology. Bogart says:
“It’s a virtuous cycle: As more users onboard to crypto, more developers build more incredible things to do with programmable money which drives more users and more capital to the industry. The net result is more growth. And a lot of it.”
While the Telegram Open Network token and Facebook cryptocurrency are likely to be the “gateway drug” for many people, once they get exposed to crypto, they’ll have the ability to trade these tokens for more established cryptocurrencies like Bitcoin, Ethereum, or Tron, depending on what they’re interested in doing in the blockchain world.
“Importantly, what initially attracts these new users to crypto may not be the same as what retains them. For example, Telegram’s native currency TON may serve as an on-ramp to crypto but, once users have TON, it will be easy to exchange it for other cryptoassets with a stronger value-prop and more established track record — and it’s likely that some non-negligible percentage of users will actually do so.”
New-Wave Stablecoins Offer a Key Feature: Trustworthiness
Bogart also points out that there’s a fundamental difference in the latest stablecoins as opposed to those that have long existed (like Tether) as digital proxies for fiat currencies.
“While models of fiat coins have existed for years, two aspects — trust and convenience — are changing. First, they’re increasingly issued from more trusted originators and, second, they’re moving closer to where capital resides today (at financial institutions) — making it quicker and easier to move from USD to digital, blockchain-based USD.”
The post mentions that Blockchain Capital estimates the current crypto userbase to be around 100 million, saying it took ten years to reach this point. The network effect teaches us that the pace of growth will hasten the larger the userbase is.
When Will Bitcoin Adoption Finally Reach Critical Mass?
Mass adoption is a great mystery for the cryptosphere. Many thought it might have happened by now, and some see it as the only definition of success for Bitcoin and the cryptocurrency industry at large.
The concept of “hyperbitcoinization” has been making the rounds again recently – an indeterminate reality where Bitcoin becomes the base currency for the whole of the world’s economic functions.
There’s no evidence that any amount of user adoption will necessarily lead to such a situation, but certainly, the more that crypto pervades into mainstream society, the greater both its value and demand will be.