I try to segregate what is happening in Capital Markets and what the cyber libertarians are up to in the crypto-space....but so many people muddy the waters by merging the two together. This is now further complicated with lots of DLT applications using Tokens (which they believe will have cryptocurrency attributes - what I now refer to as 'coin economics'). So now we have almost come full circle with decoupled DLTechnology now resurrecting some of the crypto-currency attributes.
Crypto-currencies becoming an asset class in their own right also lends to this confusion.
Then all the heat in the market about ICOs (Initial Coin Offerings) reinforces some peoples assumptions around ICOs as a real financial instrument.
So, this page (tab) is for the crypto stuff.
One of the main points I'm trying to evidence here is that Crypto is an Asset Class in it's own right.
There are some old skool principles that very, very much apply to what we're seeing in the cryptospace.
On trading:
Spreads are WIDE. Yes, margins and returns look great...but they need to be to get out of your positions profitably.
Liquidity is THIN. The prices you see may very well not be available in the quantities you want (to acquire or off load). It is easy to move the market and liquidity can vanish.
Investor....BEWARE!
So, spreads are wide and liquidity is thin. You still wanna trade? Well, transaction fees and margins are high too!
The irony! Cyber libertarians hate(?) the banks for a variety of reasons and now we have an ecosystem emerging where there is a lack of transparency on fees and margins are wide (rip off size).
Trading in and out (churn) is really going to result in a lot of burn.
Hence, we have the term HODL.
The origin of the term comes from here:
https://bitcointalk.org/index.php?topic=375643.0
Basically, Hold On for Dear Life.
All the above said....I've still gone ahead and bought some.
Dip your toes in the water!
For me, one of the best ways to learn (and understand) is to 'give it a go'.First of all, (and sorry for stating the obvious), let's unpack the equity transaction value chain.
Trading / Price discovery: To trade, you go to an exchange for the price discovery process.
Clearing: Post execution, you immediately enter into the clearing space (novation). Basically you're matching and offsetting all the risks between buyers and sellers. Providing certainty that the 'other side' of the trade will perform. (You know that feeling when you 'buy' some crypto for fiat and nervously wait for the crypto funds to appear in your wallet- that goes away when the market is 'cleared').
Settlement: This is the finality of exchange. Cash versus shares, fiat versus crypto etc.
Custody. This is where you keep your shares. The crypto equivalent would be a vault.
If you want to buy some crypto-currency, and I recommend you research a couple and buy into one, you need to start off with a wallet (i.e. mini vault to hold your asset).
Ethereum
For Ether (ETH). The wallet I use is:
https://www.myetherwallet.com/
If you want, you can try sending me some Ether. My address is:
0x68920647d0f059676dAeD31A144cC57B480E30D0
or, thanks to the Ethereum Name Service (ENS) I've reserved:
scottriley.eth
...now that's a whole lot friendlier!
https://ens.domains/
Observations on Crypto markets
So then you want to buy some crypto...which exchange do you use?There are a few of them and other google searches will provide better responses than I wish to promote (or I fear someone may think a link here is an endorsement - that's something I don't want to be seen to be differentiating / promoting right now).
What does interest me is the activity around this space. It reminds me a lot of European Equity Markets pre-MiFID and market fragmentation.
Some observations:
Crypto is now material enough to be an asset class in it's own right. Love it or loath it, respect it or fear it. Crypto is here to stay (just like the internet and the railroads before then). The challenge is picking / differentiating those that will survive and flourish.
Fund management 101 means a portion of my portfolio needs exposure to crazy / moonshot events.
There is volatility in the crypto markets that is the envy of every equity trader.
Cryptocurrency companies forced to bank outside UK
Follow my fork.
BTC has forked 69 times...so far..
https://forkdrop.io/
This report from MS at least attempts to put some context around it:
i.e Market Size of 3.5byn with 250 Crypto Asset Managers.
The message here is the formal recognition of crypto as an asset class and the market is measurable.
Don't hold anyone accountable to this figures, it's just trying to take some guess wear out of the rhetoric.
https://www.macrobusiness.com.au/wp-content/uploads/2018/06/82012860.pdf
Russian Court Bans Telegram, Founder Pavel Durov Defiant
Russian security services ordered Telegram to hand over access to encrypted user messages, but the messaging application (app) refused. Founder Pavel Durov didn’t bother to send lawyers to Moscow’s Tagansky court in response, and the court dutifully ruled against his company, taking less than 20 minutes in decreeing an immediate ban.
https://news.bitcoin.com/russian-court-bans-telegram-pavel-durov-defiant/
Japan
Japan had 16 licensed crypto exchanges and 16 “quasi-operators” of cryptocurrencies, also called “deemed dealers.”
On March 8, the FSA issued business improvement orders to six companies. Four of them were quasi-operators – Mister Exchange, Bitcrements, Bit Station, and FSHO. The other two were fully licensed – Tech Bureau and GMO Coin
On April 6, the agency issued administrative punishment orders to three exchanges – Lastroots, Eternal Links, and another to FSHO. The latter two were also ordered to suspend operations – Eternal Links from April 6 to June 5 and FSHO from April 8 to June 7.
Six crypto exchanges are reportedly withdrawing their applications following the inspections by the FSA – Tokyo Gateway, Mr. Exchange, Raimu, Bitexpress, Bit Station, and now Campfire.
Nine cryptocurrency exchanges in Japan have suspended their operations so far.
Blue Dream Japan Co. Ltd must halt all activities related to its crypto exchange business from April 11 to June 10, 2018.
Campfire announced the withdrawal of its application with the FSA to operate a crypto exchange.
https://news.bitcoin.com/nine-japanese-crypto-exchanges-have-suspended-operations-so-far/
Through its wholly owned subsidiary Z Corporation, Yahoo! Japan confirmed the purchase of a 40 percent stake in a crypto exchange called Bitarg Exchange Tokyo Co. Ltd. A person familiar with the matter said that the deal is likely to “total 2 billion to 3 billion yen ($18.6 million to $27.9 million),” Reuters reported. The remaining 60% is still owned by CMD Lab, the parent company of Bitarg.
https://news.bitcoin.com/yahoo-japan-confirms-entrance-into-crypto-space/
Vietnam.
provisions of the government’s Decree No. 101/2012 / ND-CP on non-cash payment instruments, the document reiterates, “bitcoin and other similar virtual currencies are not legal means of payment in Vietnam; The issuance, supply, use of bitcoin and similar virtual currency is prohibited in Vietnam.”
https://news.bitcoin.com/hanoi-prohibits-use-cryptocurrencies-e-commerce-transactions/
Tax
These Countries Won’t Tax Your Bitcoins Too Much
https://news.bitcoin.com/these-countries-wont-tax-your-bitcoins-too-much/
e.g.
Germany, Europe’s economic locomotive, has been quite careful with crypto taxation. Last month the Federal Ministry of Finance issued a notice which treats bitcoin as a currency. The Bundesrepublik is not going to tax cryptos when exchanged with euros. Purchases with bitcoin are subject to VAT, just like any other. No tax will be imposed, however, on long-term investments in cryptocurrency. If a trader sells a bitcoin more than a year after its purchase, the profit is exempt from taxation. The same applies to yearly profits of less than €600.
BTC has forked 69 times...so far..
https://forkdrop.io/
Size of Crypto Market
Of course there are all sorts of highs and lows on the Crypto express.This report from MS at least attempts to put some context around it:
i.e Market Size of 3.5byn with 250 Crypto Asset Managers.
The message here is the formal recognition of crypto as an asset class and the market is measurable.
Don't hold anyone accountable to this figures, it's just trying to take some guess wear out of the rhetoric.
https://www.macrobusiness.com.au/wp-content/uploads/2018/06/82012860.pdf
Regional Round Up
RussiaRussian Court Bans Telegram, Founder Pavel Durov Defiant
Russian security services ordered Telegram to hand over access to encrypted user messages, but the messaging application (app) refused. Founder Pavel Durov didn’t bother to send lawyers to Moscow’s Tagansky court in response, and the court dutifully ruled against his company, taking less than 20 minutes in decreeing an immediate ban.
https://news.bitcoin.com/russian-court-bans-telegram-pavel-durov-defiant/
Japan
Japan had 16 licensed crypto exchanges and 16 “quasi-operators” of cryptocurrencies, also called “deemed dealers.”
On March 8, the FSA issued business improvement orders to six companies. Four of them were quasi-operators – Mister Exchange, Bitcrements, Bit Station, and FSHO. The other two were fully licensed – Tech Bureau and GMO Coin
On April 6, the agency issued administrative punishment orders to three exchanges – Lastroots, Eternal Links, and another to FSHO. The latter two were also ordered to suspend operations – Eternal Links from April 6 to June 5 and FSHO from April 8 to June 7.
Six crypto exchanges are reportedly withdrawing their applications following the inspections by the FSA – Tokyo Gateway, Mr. Exchange, Raimu, Bitexpress, Bit Station, and now Campfire.
Nine cryptocurrency exchanges in Japan have suspended their operations so far.
Blue Dream Japan Co. Ltd must halt all activities related to its crypto exchange business from April 11 to June 10, 2018.
Campfire announced the withdrawal of its application with the FSA to operate a crypto exchange.
https://news.bitcoin.com/nine-japanese-crypto-exchanges-have-suspended-operations-so-far/
Through its wholly owned subsidiary Z Corporation, Yahoo! Japan confirmed the purchase of a 40 percent stake in a crypto exchange called Bitarg Exchange Tokyo Co. Ltd. A person familiar with the matter said that the deal is likely to “total 2 billion to 3 billion yen ($18.6 million to $27.9 million),” Reuters reported. The remaining 60% is still owned by CMD Lab, the parent company of Bitarg.
https://news.bitcoin.com/yahoo-japan-confirms-entrance-into-crypto-space/
Vietnam.
provisions of the government’s Decree No. 101/2012 / ND-CP on non-cash payment instruments, the document reiterates, “bitcoin and other similar virtual currencies are not legal means of payment in Vietnam; The issuance, supply, use of bitcoin and similar virtual currency is prohibited in Vietnam.”
https://news.bitcoin.com/hanoi-prohibits-use-cryptocurrencies-e-commerce-transactions/
Tax
These Countries Won’t Tax Your Bitcoins Too Much
https://news.bitcoin.com/these-countries-wont-tax-your-bitcoins-too-much/
e.g.
Germany, Europe’s economic locomotive, has been quite careful with crypto taxation. Last month the Federal Ministry of Finance issued a notice which treats bitcoin as a currency. The Bundesrepublik is not going to tax cryptos when exchanged with euros. Purchases with bitcoin are subject to VAT, just like any other. No tax will be imposed, however, on long-term investments in cryptocurrency. If a trader sells a bitcoin more than a year after its purchase, the profit is exempt from taxation. The same applies to yearly profits of less than €600.
Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain
A microfinance firm based in Indonesia, Blossom Finance, published a 22-page working paper that concludes that “bitcoin qualifies as Islamic money, except where it is banned by a local government.”
https://news.bitcoin.com/research-paper-declares-bitcoin-compliant-with-shariah-law/
*** 21 page paper available here:
https://blossomfinance.com/is-bitcoin-halal-shariah-analysis-of-bitcoin-cryptocurrency-and-blockchain
For instance in Germany, Martin explains that bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. But the Republic of Indonesia published guidelines this past January that declared all payments within Indonesia must be in Indonesian Rupiah. (“However, this clarification should not be seen as an anti-bitcoin stance — the same legal tender laws in Indonesia also forbid gold, silver, US Dollars, and Euros — It remains legal to buy and sell Bitcoin in Indonesia,” Blossom Finance details.)
A microfinance firm based in Indonesia, Blossom Finance, published a 22-page working paper that concludes that “bitcoin qualifies as Islamic money, except where it is banned by a local government.”
https://news.bitcoin.com/research-paper-declares-bitcoin-compliant-with-shariah-law/
*** 21 page paper available here:
https://blossomfinance.com/is-bitcoin-halal-shariah-analysis-of-bitcoin-cryptocurrency-and-blockchain
For instance in Germany, Martin explains that bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. But the Republic of Indonesia published guidelines this past January that declared all payments within Indonesia must be in Indonesian Rupiah. (“However, this clarification should not be seen as an anti-bitcoin stance — the same legal tender laws in Indonesia also forbid gold, silver, US Dollars, and Euros — It remains legal to buy and sell Bitcoin in Indonesia,” Blossom Finance details.)
ICOs
So many ICOs....A word...of course be careful.
In the 'old' equity world you would have heard the term 'pump and dump'.
(part of the reason why analysts need to disclose if they have any interest in the stock they're covering). Basically, you buy the stock cheap, write a few articles about how great the stock is...maybe even a tip sheet...thin liquidity means the market moves easily...so you've pumped the stock and as soon as there appears to be some buying interest you dump it! WooHoo. Buy low, sell high...and no disclosure.
ICO world...advisors typically get token rewards in turn for promoting (pumping) the relevant token. There is no regulatory obligation for them to declare their interest. Pump and dump is rampant in ICOs.
I find this a useful site for ICO updates:
Smith + Crown is a research group focused on the revolutionary technologies in the emerging field of cryptofinance.
https://www.smithandcrown.com/smith-crown-the-exciting-future/
How do you keep track of the various ICOs that are being planned and launched?
https://www.coindesk.com/the-ultimate-list-of-resources-for-researching-and-launching-icos/
How have ICOs performed:
https://icostats.com/roi-since-ico
Interesting ICOs
Sparkle Coin, VCoin Exchange and VCoinMall.com make up a unique economic ecosphere that connects the latest blockchain technologies with existing business platforms and networks to drive adoption of cryptocurrencies for real business transactions.
http://victorwongaustin.com/
(**This one piqued my interest due to:
1. SparkleCoin is asset backed by (GIA) diamonds;
2. It includes an ecosytem for 2ndry market liquidity - VCoin exchange; and
3. They use their own 'fabric' / ie. created their own distributed ledger)
Exchanges
There Are Now More Than 500 Cryptocurrency Exchangeshttps://news.bitcoin.com/the-number-of-cryptocurrency-exchanges-has-exploded/
Stable Coins
Stable coins are worth a mention.
Many crypto-exchanges still don't have a fiat money gateway. i.e. you can trade all you want in 'unregulated' crypto assets, but the moment you want fiat currency (many exchanges remain fearful of the scope of banking/cash regulations) the only alternative you have to a hedge your 'native' currency is a stable coin.
https://news.bitcoin.com/meet-the-stablecoins-taking-on-tether/
https://news.bitcoin.com/meet-the-stablecoins-taking-on-tether/
Usual suspects...more common...crypto exchanges.
https://www.reddit.com/r/BitcoinMarkets/
Before you choose an exchange, read some reviews.
Of course a) typically people that have a bad experience punch above their weight and want to air their grievances (rightly or wrongly) and b) we have no idea of any affiliation between the person posting rave 'reviews' and the exchange itself.
On which note, for good orders sake, I declare I have no interest in any crypto exchange!
Final comment (if not made elsewhere). I'm not a fan of leaving large deposits on account with exchanges (a la MtGox). Have a 'hot' wallet with an exchange where you can deposit what you need to trade but keep the balance of your funds 'cold' in a more long term wallet/vault.
When you buy equities, do you leave your funds on deposit with the exchange? Nope. Just another nuance to the crypto markets.
Kraken
Sail the high seas of success.....
(***shudder, my personal feeling on this strap line)
https://www.kraken.com/
https://www.bestbitcoinexchange.io/kraken-review/
https://www.reddit.com/r/Kraken/
Bitfinex
Bitfinex is the world's largest and most advanced bitcoin trading platform.
(***Their strap line...ummm, self praise is no praise at all)
https://www.bitfinex.com/
https://www.cryptocompare.com/exchanges/bitfinex/reviews/USD
Bitfinex has been hacked. I can't see anything on their website that clearly explains the nature of the hack and the subsequent security measures.
In terms of compensation they have outlined this process:
http://blog.bitfinex.com/announcements/bitfinex-recovery-right-tokens/
This 'archived' post explains why the hack was not supposed to happen:
Bitfinex and BitGo Partner to Create World’s First Real-Time Proof of Reserve Bitcoin Exchange
https://blog-archive.bitgo.com/bitfinex-and-bitgo-partner-to-create-worlds-first-real-time-proof-of-reserve-bitcoin-exchange/
The Bitfinex Bitcoin Hack: What We Know (And Don't Know)
https://www.coindesk.com/bitfinex-bitcoin-hack-know-dont-know/
Bittrex
The next generation digital currency exchange
https://bittrex.com/
https://news.bitcoin.com/bittrex-exchange-is-back-annnnnnd-its-gone-again/
Coinbase
Coinbase is the world’s most popular way to buy and sell bitcoin, ethereum, and litecoin.
(*** Really?)
https://www.coinbase.com/
CFTC Investigating Ether Crash on Coinbase Exchange
https://www.coindesk.com/cftc-investigating-ether-crash-on-coinbase-exchange/
GDAX is now Coinbase Pro
https://blog.coinbase.com/gdax-is-now-coinbase-pro-b062a12758a0
Poloniex
We are a US-based digital asset exchange offering maximum security and advanced trading features.
https://poloniex.com/
Decentralized EXchanges (DEX)
EtherDelta
EtherDelta is a decentralized trading platform that lets you trade Ether and Ethereum-based tokens directly with other users. You are responsible for your own account, funds, and private keys.
https://etherdelta.com/
BitShares
Once bitcoin’s basic blockchain consensus technology became established and stable, people began to discuss whether blockchain technology could also be applied to enable the trade of multiple assets without the need for a broker or centralized clearinghouse. BitShares has created such a technology, and has coined the term “decentralized exchange” (DEX) to describe our Bitcoin 2.0 platform. Currently, it supports trade not only in digital assets, but also traditional financial instruments and securities on the blockchain.
https://bitshares.org/technology/
http://docs.bitshares.eu/bitshares/papers/index.html
Waves DEX
What is Waves’ DEX?
https://blog.wavesplatform.com/what-is-waves-dex-7c311d1360a1
https://wavesplatform.com/product
The BarterDEX
Explanations About The Komodo BarterDEX
https://medium.com/@komodoplatform/mega-post-updates-information-and-explanations-about-the-komodo-barterdex-a27dea784918
The DEX (Decentralized Exchange) Thread
https://bitcointalk.org/index.php?topic=1338970.105;wap2
Atomic swaps, or atomic cross-chain trading, is the exchange of one cryptocurrency to another cryptocurrency, without the need to trust a third-party.
https://www.cryptocompare.com/coins/guides/what-are-atomic-swaps/
These are other initiatives I'm watching in the space. There is still plenty to play for!
Kryptos-X
Singapore-based cryptocurrency exchange Kryptos-X has secured $1 million in seed funding from ASX-listed Fatfish Internet Group. The new exchange is founded and led by Tony Mackay, the Australian entrepreneur behind Chi-X Global, a network of alternative stock trading platforms.
http://www.asx.com.au//asxpdf/20171128/pdf/43pnphnpvm8hl1.pdf
DMM Bitcoin
DMM Bitcoin will launch a new service site for virtual currency trading on January 10, 2018
https://news.bitcoin.com/japanese-dmm-crypto-exchange-launch/
Gibraltar Stock Exchange
Gibraltar Stock Exchange Plans Blockchain-Powered Trading System
https://www.coindesk.com/gibraltar-stock-exchange-plans-blockchain-powered-trading-system/
The GBX is a subsidiary of the EU-regulated Gibraltar Stock Exchange
https://gbx.gi/
Quantave
Quantave simplifies access to liquidity in the digital assets market for professional market participants by providing a robust and secure infrastructure for managing the complete trade-lifecycle.
https://www.quantave.com/
TokenMarket
TokenMarket is a marketplace for tokens, digital and blockchain based assets.
https://tokenmarket.net/
Bity
Not an exchange, rather a broker. Swiss based.
https://bity.com/
trade.io
A blockchain trading platform.
https://trade.io/
**Their USP? 50% revenue share with users. (Dunno why you wouldn't just reduce fees by half?)
https://kyber.network/
** Looks like a broker to me.
WEX.nz
BTC-e, the Russian exchange platform closed by the FBI recently, has officially reopened for users on the new domain name WEX.nz
https://cointelegraph.com/news/former-bitcoin-exchange-btc-e-reopens-as-wexnz
WEX has bought out the BTC-e user base and their digital profiles.
WEX issued tokens that compensate for the lost fiat balances of users of the BTC-E exchange.
https://wex.nz/news/4
https://cointelegraph.com/tags/btc-e
Quoinex
I guess this will be an exchange...driven by QASH tokens.
https://quoine.com/
https://quoinex.com/
https://liquid.plus/
AirSwap
Airswap is an on chain peer to peer ERC20 token exchange. It has no order book. It supports only P2P exchanges, i.e. you must know where your tokens are being sent and what the other party is offering in exchange, before committing the transaction.
https://medium.com/@kay_tech_design/airswap-not-just-another-dex-3a791c3da25f
https://www.airswap.io/
https://blog.airswap.io/the-airswap-token-42855fe5e120
https://swap.tech/pdfs/SwapWhitepaper.pdf
United Traders
https://investment-prod.s3.amazonaws.com/whitepaper/Whitepaper_Full-version_en.pdf
https://uttoken.io/
Kryondo
Support: Nita
Nita is a 8 year old french bulldog and brings good working flavour into the Kryondo team.
http://www.kryondo.net/
** Yep, for avoidance of doubt, Nita is a dog (as in canine woof, woof). See the rest of the team on page 12 of their white paper.
http://kryondo.net/whitepaper_kryondo.pdf
Exchange Hacks
https://news.bitcoin.com/bitgrails-170m-hack-continues-to-provide-drama/Liquidity Providers
GSRProprietary market-making technology
http://gsr.io/
B2C2
https://www.b2c2.com/
Brokers
RoboForexhttps://www.roboforex.com/
RoboForex Ltd is an international broker, which is a member of RoboForex group.
RoboForex Ltd has a special brokerage license IFSC Belize "Trading in financial and commodity-based derivative instruments and other securities" under the number IFSC/60/271/TS/17.
***So although Russian based...it is regulated in Belize
RoboForex Ltd is an official participant of The Financial Commission, an international organization, which resolves disputes between its participants and their clients.
RoboForex Ltd, which is an "A" category member, also is a participant of The Commission’s Compensation Fund. The Fund provides insurance coverage for the traders, who work with the participants of the Financial Commission, and pay them compensations up to 20,000 USD.
Banking
The simple ability to open bank accounts has in itself become a barrier to entry. Banks simply taking the view that Crypto carries too much perceived regulatory risk. The irony, the crypto community getting it's own taste of the 'unbanked'.Malta
Binance will soon start a “fiat-to-crypto exchange” ..in Malta.., and is close to securing a deal with local banks that can provide access to deposits and withdrawals
https://www.bloomberg.com/news/articles/2018-03-23/the-world-s-biggest-cryptocurrency-exchange-is-moving-to-malta
Chile
Cryptocurrency Exchanges in Chile Call Out Banks for Denying Them Services
https://news.bitcoin.com/cryptocurrency-exchanges-in-chile-call-out-banks-for-denying-them-services/?utm_source=OneSignal%20Push&utm_medium=notification&utm_campaign=Push%20Notifications
Wallets
Blockchain (wallet)
Details of USD 70myn investors.
https://www.blockchain.com/about/index.html
An ECN for BTC payments...Thunder
https://blog.blockchain.com/2016/05/16/announcing-the-thunder-network-alpha-release/
Miners
Genesis Mining
https://www.genesis-mining.com/pricing
** I love this. Rent some hardware!
Fund Managers
(None of these are recommendations. This is just to evidence that Crypto stands as an asset class on it's own merits)Unlike traditional hedge funds, which often have strict requirements for potential investors, Blockweather's Managed Accounts and digital currency funds are available to the public, as well as to family offices and institutional investors....
https://www.blockweather.com/
Advisors
Digital Currency Holdings Advisoryhttp://www.dchadvisory.com/team.html
** This one piqued my interest as I used to know Steve Bellotti during his mother Merrill days.
Learning Resources
http://badcryptopodcast.com/
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