Your Cryptocurrency Newsletter for 30 November,2020

If you are interested in cryptocurrencies, this newsletter is for you. [img]  [Learn more about RevenueStripe...](   [Learn more about RevenueStripe...]( [img]( [FeedBinary Newsletter]( [Bitcoin is Winning the Covid-19 Monetary Revolution]( The virtual currency is scarce, sovereign and a great place for the mega-rich to store their wealth.In “Shuggie Bain,” Douglas Stuart’s award-winning and harrowing depiction of alcoholism, sectarianism and deprivation in post-industrial Scotland, money is always scarce and often dirty. Deserted by her second husband and unable to hold down a job, Shuggie’s mother, Agnes, relies on her twice-a-week child benefit to feed her children — or her booze habit. As the latter nearly always wins, she and Shuggie are regularly reduced to desperate expedients to fend off starvation: Extracting coins from electricity and television meters, pawning their few valuable possessions, and ultimately selling their bodies Stuart vividly captures the miseries of a Glasgow of greasy coins and filthy banknotes. After one of many wretched copulations in the back of a taxi, one of Agnes’s lovers inadvertently showers her with coins from his pocket. Shuggie’s father briefly reappears at one point, handing his son two 20-pence pieces from his taxi’s change dispenser by way of a gift, grudgingly adding four 50-pence pieces when the boy looks nonplused.The “rag-and-bone man,” who goes from house to house buying old clothes and junk, pays “with a roll of grubby pound notes” bound by an old Band-Aid. The image is especially startling because banknotes have so rarely featured in the narrative. The only credit in this world is from rent-to-own catalogues, the Provident doorstep lender, and a few hard-pressed shopkeepers. I grew up in middle-class, mostly sober Glasgow, but I still remember the tyranny of those damned coins: the nightmare of having too few for a bus fare or the wrong sort for a phone box. To my children, all this is as much a part of ancient lore as pirate chests of doubloons once were to me. Coins are fast fading from their lives, soon to be followed by banknotes. In some parts of the world — not only China but also Sweden — nearly all payments are now electronic. In the U.S., debit card transactions have exceeded cash transactions since 2017. Even in Latin America and parts of Africa, cash is yielding to cards and a growing number of people manage their money through their phones. We are living through a monetary revolution so multifaceted that few of us comprehend its full extent. The technological transformation of the internet is driving this revolution. The pandemic of 2020 has accelerated it. To illustrate the extent of our confusion, consider the divergent performance of three forms of money this year: the U.S. dollar, gold and Bitcoin.The dollar is the world’s favorite money, not only dominant in central bank reserves but in international transactions. It is a fiat currency, its supply determined by the Federal Reserve and U.S. banks. We can compute its value relative to the goods consumers buy, according to which measure it has scarcely depreciated this year (inflation is running at 1.2%), or relative to other fiat currencies. On the latter basis, according to Bloomberg’s dollar spot index, it is down 4% since Jan. 1. Gold, by contrast, is up 15% in dollar terms. But the dollar price of a bitcoin has risen 139% year-to-date. This year’s Bitcoin rally has caught many smart people by surprise. Last week’s high was just below the peak of the last rally ($19,892 according to the exchange Coinbase) in December 2017. When Bitcoin subsequently sold off, the New York University economist Nouriel Roubini didn’t hold back. Bitcoin, he told CNBC in February 2018, had been the “biggest bubble in human history.” Its price would now “crash to zero.” Eight months later, Roubini returned to the fray in congressional testimony, denouncing Bitcoin as the “mother of all scams.” In tweets, he referred to it as “Shitcoin.” Fast forward to November 2020, and Roubini has been forced to change his tune. Bitcoin, he conceded in an interview with Yahoo Finance, was “maybe a partial store of value, because … it cannot be so easily debased because there is at least an algorithm that decides how much the supply of bitcoin raises over time.” If I were as fond of hyperbole as he is, I would call this the biggest conversion since St. Paul. Roubini is not the only one who has been forced to reassess Bitcoin this year. Among the big-name investors who have turned bullish are Paul Tudor Jones, Stan Druckenmiller and Bill Miller. Even Ray Dalio admitted the other day that he “might be missing something” about Bitcoin.Financial journalists, too, are capitulating: On Tuesday, the Financial Times’s Izabella Kaminska, a long-time cryptocurrency skeptic, conceded that Bitcoin had a valid use-case as a hedge against a dystopian future “in which the world slips towards authoritarianism and civil liberties cannot be taken for granted.” She is on to something there, as we shall see. So what is going on? First, we should not be surprised that a pandemic has quickened the pace of monetary evolution. In the wake of the Black Death, as the historian Mark Bailey noted in his masterful 2019 Oxford Ford lectures, there was an increased monetization of the English economy. Prior to the ravages of bubonic plague, the feudal system had bound peasants to the land and required them to pay rent in kind, handing over a share of all produce to their lord. With chronic labor shortages came a shift toward fixed, yearly tenant rents paid in cash. In Italy, too, the economy after the 1340s became more monetized: It was no accident that the most powerful Italian family of the 15th and 16th centuries were the Medici, who made their fortune as Florentine moneychangers. In a similar way, Covid-19 has been good for Bitcoin and for cryptocurrency generally. First, the pandemic accelerated our advance into a more digital word: What might have taken 10 years has been achieved in 10 months. People who had never before risked an online transaction were forced to try, for the simple reason that banks were closed. Second, and as a result, the pandemic significantly increased our exposure to financial surveillance as well as financial fraud. Both these trends have been good for Bitcoin.I never subscribed to the thesis that Bitcoin would go to zero after it plunged in price in late 2017 and 2018. In the updated 2018 edition of my book, “The Ascent of Money” — the first edition of which appeared more or less simultaneously with the foundational Bitcoin paper by the pseudonymous Satoshi Nakamoto — I argued that Bitcoin had established itself as “a new store of value and investment asset — a type of ‘digital gold’ that provides investors with guaranteed scarcity and high mobility, as well as low correlation with other asset classes.” What is happening is that Bitcoin is gradually being adopted not so much as means of payment but as a store of value. Not only high-net-worth individuals but also tech companies are investing. In July, Michael Saylor, the billionaire founder of MicroStrategy, directed his company to hold part of its cash reserves in alternative assets. By September, MicroStrategy’s corporate treasury had purchased bitcoins worth $425 million. Square, the San Francisco-based payments company, bought bitcoins worth $50 million last month. PayPal just announced that American users can buy, hold and sell bitcoins in their PayPal wallets. This process of adoption has much further to run. In the words of Wences Casares, the Argentine-born tech investor who is one of Bitcoin’s most ardent advocates, “After 10 years of working well without interruption, with close to 100 million holders, adding more than 1 million new holders per month and moving more than $1 billion per day worldwide,” it has a 50% chance of hitting a price of $1 million per bitcoin in five to seven years’ time. Whoever he is or was, Satoshi summed up how Bitcoin works: It is “a purely peer-to-peer version of electronic cash” that allows “online payments to be sent directly from one party to another without going through a financial institution.” In essence, Bitcoin is a public ledger shared by a network of computers. To pay with bitcoins, you send a signed message transferring ownership to a receiver’s public key. Transactions are grouped together and added to the ledger in blocks, and every node in the network has an entire copy of this blockchain at all times. A node can add a block to the chain (and receive a bitcoin reward) only by solving a cryptographic puzzle chosen by the Bitcoin protocol, which consumes processing power. Nodes that have solved the cryptographic puzzle“miners,” in Bitspeak are rewarded not only with transaction fees (5 bitcoins per day, on average), but also with additional bitcoins — 900 new bitcoins per day. This reward will get cut in half every four years until the total number of bitcoins reaches 21 million, after which no new bitcoins will be created.There are three obvious defects to Bitcoin. As a means of payment, it is slow. The Bitcoin blockchain can process only around 3,000 transactions every 10 minutes. Transaction costs are not trivial: Coinbase will charge a 1.49% commission if you want to buy one bitcoin. There is also a significant negative externality: Bitcoin’s “proof-of-work” consensus algorithm requires specialized computer chips that consume a great deal of energy — 60 terawatt-hours of electricity a year, just under half the annual electricity consumption of Argentina. Aside from the environmental costs, one unforeseen consequence has been the increasing concentration of Bitcoin mining in a relatively few hands — many of them Chinese — wherever there is cheap energy. [Read Full News]( The post [Bitcoin is Winning the Covid-19 Monetary Revolution]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [5 Reasons Ethereum Is Way More Powerful Than Bitcoin]( Why Crypto: Valuation by Productivity Traditionally stocks are evaluated through discounted cash flows, or by comparing PE ratios from different sectors. This works well for some “first-derivative” value stocks when you have a reasonable idea of top and bottom line trajectory.Another way you can calculate value is by looking at the total market size and predicting market share. For example, assuming the EV market is $160B and it grows at a CAGR 22.6% for the next 5 years, you can rationalize capturing 20% share is worth $88B [1]. Do this for all the lateral businesses of $TSLA and you come up with a much different number than looking at the income statement. But you would have extreme difficulty predicting cash flows for certain growth stocks, even combining those two above strategies. With the $WORK boom lately I’ve been approaching valuation from different angle. Look at productivity as an indicator of value. Productivity is defined as output divided by input or GDP to hours worked; how efficient a company’s workforce or nation’s economy is. Increasing productivity means cutting costs and/or boosting production, whether that’s through an optimized assembly process or in Slack’s case, improved communication. For the cost of a dozen employees, if we assume Slack manages to improve communication and reduce costs by just 1% on average, that means millions of dollars saved. In a perfect market the corporate world will buy the product. Similarly, Ethereum’s platform for smart contracts and dApps could disrupt multiple industries if executed well. 1. Comparisons as a currency Ethereum as a currency can verify transactions in 10 seconds, as opposed to 10 minutes on bitcoin’s network [2]. This is subject to statistical variation however and in the case of Ethereum, depends on how much gas reward was added.A minor advantage of ethereum over bitcoin is the concept of gas, or cost of computational power set by miners. It keeps a separate price unit between the value of a cryptocurrency and the actual computational cost, whereas the bitcoin block prize is subject to the whims of fluctuating price. In practice the difference is moot, but gas is fairer and more flexible. What does transaction time mean for adoption? Vitalik Buterin describes it in a push towards a 12-second block time from 2014:In many cases, this is fine; if you pay for a laptop online, and then manage to yank back the funds five minutes later, the merchant can simply cancel the shipping; online subscription services work the same way. However, in the context of some in-person purchases and digital goods purchases, it is highly inconvenient. And the block time will get even shorter. On December 1st, Ethereum 2.0 will be launched switching from proof of work to proof of stake.When compared to traditional centralized Point of Sale or credit card companies, decentralized cryptocurrency should be treated as an upcoming threat, or an opportunity for investment. 2. Proof of Stake vs Proof of Work When potential transactions are broadcasted to the network, Ethereum and Bitcoin miners fervently perform trial and error computation to find the nonce that yields a valid block. More powerful mining rigs can throw more compute power at the cryptographic puzzle, and are thus more likely to mine the winning block.The limitation is that proof of work is vulnerable to a 51% attack. This is where a small concentration of malicious conspirers own more than half of the computational power in the whole blockchain network. If a bad actor wanted to start injecting fraudulent transactions into the blockchain, they could outmine the other 49% of the network. Proof of work means that the longest blockchain is the true blockchain, so the attackers could write blocks where all the bitcoin in the world would be sent to their wallets. A mining pool briefly achieved this benchmark in 2014 but was voluntarily split. Today, a small concentration of compute power is growing the Shenzhen, China. An alternative protocol, proof of stake, gives more mining power to people with larger amounts of ETH. Randomly selected validators stake their ethereum onto blocks that they have validated as legitimate. A lock-in mechanism automatically “slashes” or removes that stake if they try to introduce false blocks. If they validate true blocks, they get their coins back as well as transaction fee. The advantage is a faster block time, lower transaction fees, and less energy consumption. 3. Smart Contracts Smart contracts are a key feature on the Ethereum network. They’re a public bit of code that lives on-chain to execute for anyone. Think of it like an unfeeling vending machine who’s word is final.Now think about the enormous insurance industry. All the filing claims, processed in the blockchain. It’s ripe for disruption by blockchain companies that want to develop these code contracts. This is the strongest bull case for Ethereum in my opinion. The use of smart contracts is not a question of if, but when. If I were in the health or auto insurance industry I would leverage them yesterday. You might say, there’s no way ordinary people would ever use this. We need lawyers and insurance companies, the bureaucracy is mandatory. Just like you’d accuse bitcoin of being blocked by the government because of the government’s difficulty of taxing it. Those points are valid, but the idea of smart contracts is too powerful now that it’s out of Pandora’s box. In my admittedly romantic view, these ideas could outlast the government. 4. Distributed Apps (dApps) Distributed Apps are developer created apps built on top of the blockchain that have no centralized server and do their computation on the blockchain.Ethereum is not quite the computational juggernaut to take on AWS that many had hoped in the early days. With current technology, centralized web servers is much better at hyper scaling. But some there are still intriguing possibilities available for decentralized distributed apps. 5. The Developer Community Bitcoin’s developer community consists largely of voluntary tech enthusiasts who contribute to Bitcoin’s open source repository.While Ethereum is also maintained by open source developers, there is another enterprising class of private developers who write blockchain apps leveraging the Ethereum development platform. These developers contribute to a digital app store with the opportunity to earn revenue. It’s hard for me to predict the timing of when the market will saturate, but there is still plenty of room for growth. One key thing to note is that Ethereum has more features engineered in from the start. When it comes to blockchain, being the first mover means you also make more mistakes in your design, and it’s nearly impossible for Bitcoin to implement smart contracts or distributed Apps without starting the blockchain over. Ethereum on the other hand, provides a developer platform with its own programming language and is largely extensible. [Read Full News]( The post [5 Reasons Ethereum Is Way More Powerful Than Bitcoin]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Bitcoin May See Major Price Volatility at the Start of December — Here’s why]( Bitcoin might see a spike in volatility when the new weekly and monthly candles open, especially after a large short-term correction.The price of Bitcoin (BTC) faces two crucial events on Dec. 1 right after the weekly and monthly candles close. The upcoming weekly candle close is particularly noteworthy because it could mark the first red weekly candle since late September.The monthly candle will be significant since it would mark the highest close in Bitcoin’s history if the price remains over $13,791. There are three key factors that could cause the volatility of Bitcoin to spike upon the weekly and monthly candle close. The factors are general uncertainty around the BTC price, record-high futures trading activity and open interest, as well as the overextended weekly chart.Meanwhile, traders have turned cautious anticipating a pullback in the near term despite the rebound in price from around $16,500 on Nov. 28. There are two key trends that could be fueling the recovery of BTC. First, Guggenheim Investments, a global asset management firm with over $233 billion in assets under management, secured the right to invest $500 million in the Grayscale Bitcoin Trust. In the U.S., where a Bitcoin exchange-traded fund (ETF) does not exist, the Grayscale Bitcoin Trust is the first point of entry for most institutional investors. Deribit reported that the news triggered significant buying activity in the options market. The firm said:Reports of Behemoth Guggenheim Macro Opps fund seeking to designate $500mn, promulgated over the weekend, caught shorts +TA pullback allocators by surprise as BTC bounced 2k from lows. The quiet wknd options market was ignited. Dec Calls bought, funded by Puts; hedges unwound. Second, high-net-worth investors and whales might be buying the dip in anticipation of Monday. In recent weeks, as quantitative traders pointed out, most of the buyer demand came from the U.S.Some speculate that the demand is coming from Time-weighted Average Price (TWAP) algorithms, typically used by institutions and funds. Since TWAP algorithms would get activated again on Monday, this could add to the buyer demand for BTC. Traders are generally uncertain about BTC price direction There is a high degree of uncertainty in the cryptocurrency market at the moment as traders are divided on where the price will go next.Some are confident that BTC likely bottomed during the weekend due to market trends. For instance, Avi Felman, the head of trading at BlockTower, said that on Coinbase the recent pullback caused BTC to transfer to stronger hands. Sell-offs during a bull market can become overextended, especially because traders often look for reasons to sell. As such, overleveraged buyers get caught at local tops, leading to cascading liquidations. But BTC frequently tends to recover right when traders expect more downside and market sentiment reaches a low point. Felman explained:Decent and extended Coinbase selling at the local bottom for the first time this rally suggests to me that retail is slowly picking up. Fairly obvious transfer from weak hands to strong hands over the last 48 hrs. Pullbacks in bull markets always hand you a silver platter of reasons to sell. Additionally, various technical indicators signal that Bitcoin is neither overbought nor oversold across lower timeframes.On the daily chart, as an example, the Relative Strength Index (RSI) of BTC is at around 55. An asset is considered oversold on the RSI indicator if it drops below 35. Hence, Bitcoin is in an awkward position because high time frame charts, like the weekly chart, remain overbought. This has led traders to predict a potential correction to the $13,000 to $14,000 support range could soon occur. This high level of uncertainty in the market could cause volatility to increase as the new weekly and monthly candles open.The open interest across futures exchanges would likely increase again, raising the probability of big price movements. Whales becoming more active in BTC futures Throughout the rally of Bitcoin in recent weeks, the trading activity on major BTC futures exchanges has continuously increased. Despite the recent drop, the open interest on top futures trading platforms remains above $1 billion. When the open interest is high, the likelihood of a short or long squeeze increases, which may result in large spikes in volatility. The Chicago Mercantile Exchange (CME), in particular, has seen a noticeable increase in Bitcoin futures trading activity. Interestingly, Arcane Research reported that large traders who hold a minimum position of over 25 BTC more than doubled on the CME in 2020.The researchers at Arcane explained that this trend shows increased institutional demand for Bitcoin. The heightened trading activity on CME, which tailors to accredited and institutional investors, can cause short-term volatility to increase due to the large sizes of trades. The researchers said:Large traders hold at least 5 futures contracts, equaling a minimum of 25 BTC (5 BTC per contract). The average in 2019 was 45 large traders without any notable growth throughout the year. However, this number has more doubled in 2020 and we saw a new record of 102 large traders two weeks ago. This is perhaps one of the best indications of increased institutional demand for bitcoin exposure and we already know that investors like Paul Tudor Jones is a part of this growing group on CME, currently the second largest futures market for bitcoin.Although the institutional demand for Bitcoin has been rising, the futures market remains a major factor driving volatility. Cointelegraph reported earlier this week that when BTC fell from $19,400 to $16,200 largely due to cascading liquidations, over $400 million worth of futures contracts were wiped out on Binance Futures alone. New weekly candle is a big variable Bitcoin will see a new weekly candle emerge in the next 48 hours, but the variable remains the overbought nature on the weekly time frame.The RSI of the weekly chart is at 88, and when the RSI of an asset surpasses 75, it is considered overbought. The weekly candle is also significantly above short-term moving averages (MAs), namely the 5-day, 10-day and 20-day MAs.Traders have been anticipating a correction because the weekly chart is overextended. It would make a more sustainable rally if BTC consolidates above short-term MAs, as it would give time for the derivatives market and spot buyer demand to catch up. Furthermore, the monthly candle chart of Bitcoin is even more overextended than the weekly chart. The 5-day, 10-day and 20-day MAs are at $13,129, $10,778, and $9,685, respectively, and significantly below the current market price.But whether technicals alone would cause BTC to correct in the foreseeable future remains uncertain. If institutional buyers, like Guggenheim, continue to make headlines by entering the Bitcoin market, it could attract additional buyers and retail interest in the near term. [Read Full News]( The post [Bitcoin May See Major Price Volatility at the Start of December — Here's why]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ ------------------ Connect with TheFeedBinary on Facebook and Twitter [fb](  [tw]( ------------------ You received this email because you operate or create content for a website/service and based on your website it seemed like this could be important information to you and your users. FeedBinary daily newsletter is managed by [Postbox Consultancy Services Pvt. Ltd.]( C-4/5, IBD Emporia, Kolar Road, Bhopal, Madhya Pradesh, INDIA, 462042 Want to change how you receive these emails? [Update your preferences]( or [Unsubscribe](