Argentina Settles Export Deal With Paraguay Using Bitcoin

Argentina has settled an export deal with Paraguay in Bitcoin (BTC), Cointelegraph en Español reported on Thursday, Feb. 14.

In a reported first for both countries, Paraguay has bought pesticides and fumigation products  worth $7,100 from Argentina, using cryptocurrency to settle the deal. The purchase was paid for in BTC and then converted into Argentine peso to settle accounts with the exporter of the agricultural chemicals.

To proceed with the payments, Argentina applied to Bitex — a Latin American financial services provider that supports Bitcoin payments.

According to the chief marketing office of Bitex, Manuel Beaudroit, the company is a part of the Argentine government’s program Exporta Simple, which facilitates the export of goods and services worth less than $15,000. Bitex, in its turn, aims to make cross-border payments for such deals more efficient.

As Cointelegraph reported, Bitex previously participated in a crypto project initiated by Argentine bank Masventas. In May 2018, Masventas announced it was considering creating an alternative to the SWIFT payment system used between banks globally. Bitex was appointed to provide the necessary ecosystem for supporting BTC transactions.

In other news for Argentina, this month, the country’s official state transport card SUBE (Sistema Único de Boleto Electrónico) — used by over seven million people in 37 locations — has started accepting BTC.

Meanwhile in Paraguay, global blockchain tech firm and Bitcoin mining manufacturer Bitfury partnered with South Korean peer-to-peer knowledge commons research firm, Commons Foundation, to launch several mining facilities in the country.

Crypto Markets Continue to See Mixed Signals, Dow Jones Up Over 360 Points

Feb. 15 — crypto markets have continued trading sideways after hitting a multi-month high of daily trading volume of more than $36 billion yesterday, according to CoinMarketCap data.

Market visualization from Coin360

Market visualization from Coin360

Bitcoin (BTC) is slightly down over the past 24 hours, and is trading at $3,626 at press time. At press time, the biggest cryptocurrency is up around 0.41 percent over the past 7 days, while down some 0.1 on the day. On Feb. 11, Bitcoin transaction fees saw a new low point.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: CoinMarketCap

Ethereum (ETH), the top altcoin by market cap, is trading at $122.37 at press time. After surging up to $124 per coin on Feb. 10, Ethereum is holding its weekly momentum, up more than 5 percent over the past 7 days, and up around 0.11 percent on the day.

Ethereum 7-day price chart

Ethereum 7-day price chart. Source: CoinMarketCap

Ripple (XRP), the third top cryptocurrency by market cap, is seeing slight losses today, down 1.38 percent over the past 24 hours. Trading at $0.3, the coin is also down around 2.60 percent on the week.

Ripple 7-day price chart

Ripple 7-day price chart. Source: CoinMarketCap

Total market capitalization has been hovering around $120 billion, while daily trade volume exceeded $36 billion on Feb. 14 for the first time since July 2018.

Out of top 20 cryptos by market cap, Maker (MKR) is down the most, with its price tumbling almost 7 percent on the day. Binance Coin (BNB) is up more than 5 percent.

Earlier today, the United States Securities and Exchange Commission (SEC) started reviewing a rule change proposal for NYSE Arca’s Bitcoin exchange-traded fund (ETF). The regulator is now expected to provide an initial decision to approve or reject the proposal within 45 days starting from today.

Yesterday, Luxembourg authorities passed a bill that facilitates the use of blockchain tech in financial services, granting blockchain-powered transactions the same legal status and protection as those done by traditional means.

In the meantime, stocks have surged today amidst increasing anticipation over a U.S.–China  trade deal, also reportedly seeing a two-month high this week. The Dow Jones Industrial Average is up 368 points or around 1.4 percent at press time as J.P. Morgan Chase and Goldman Sachs outperformed. The S&P 500 gained 0.84 percent, led by the energy and industrials sectors.

Major oil prices are also seeing a flush of green this Friday, with the Canadian Crude Index rising rising almost 4 percent at press time, while Brent Crude is up by 2.62 percent and West Texas Intermediate (WTI) has grown by 2.19 percent, according to oilprice.com. Analysts suggested that oil prices are getting closer to breakout levels, and the final day of trading this week will give a better idea of whether crude futures can keep rallying.

This Chinese Crypto Mining Guru Predicts the Bitcoin Price Will Surge 20,000%

A Chinese crypto mining pool founder predicted that the next bull run would unleash the market’s full potential, enabling the Bitcoin price to ascend to unfathomable heights before the euphoria cools down.

Bitcoin Market Cap To $12 Trillion?

This crypto market bull isn’t ready to give up on the flagship cryptocurrency yet. | Source: Shutterstock

News 8BTC’s Lylian Teng reports:

“Zhu Fa, co-founder of crypto mining pool Poolin, recently made a bullish statement on bitcoin’s price, predicting that bitcoin would surge to new highs at 5 million Chinese yuan (roughly US$740,000).”

“From record high above $17,000 to year lows near $3,000, Bitcoin’s year-long turbulence has not discouraged crypto bulls. The operator of the world’s fourth-largest mining pool with over 11% of global hashrate still goes hyperbolic on bitcoin price forecast despite the current sluggish climate.”

Zhu said:

“Bitcoin price will be in the range of 500,000 yuan – 5,000,000 yuan ($74K-$740K) in the next round of bull run.”

If Bitcoin were to rise so dramatically as Zhu Fa suggests, he’s predicting its future market cap will be USD$12 trillion.

The Flagship Cryptocurrency’s Current All-Time High

bitcoin price

Bitcoin peaked at just under $20,000 in most BTC/USD markets, though it traded higher in South Korea and several other regions.

Bitcoin’s current price peak occurred on December 17, 2017 when buyers had to fork over 200 Benjamins (USD$20,089) to purchase 1 BTC. At that time, the coin had a market cap of USD$326,141,280,256.

Time Table For His Prediction?

bitcoin price bull

Zhu declined to give a specific timeframe for his bullish prediction. | Source: Shutterstock

Zhu didn’t give a time frame more specific than “next round of bull run” in his recent comment on another crypto influencer’s remarks on instant messaging platform WeChat.

Eyeballing the graph of Bitcoin’s last bull run, the price seems relatively level until the beginning of 2017, and that’s where it “goes parabolic,” rocketing straight up by the end of the year when it peaked at its all-time high.

Winklevoss Twins Predicted $4 Trillion in December

Winklevoss Bitcoin price bitcoin etf

The Winklevoss twins haven’t shied away from making astronomical price predictions of their own. | Featured image from Flickr/TechCrunch

Cameron and Tyler Winklevoss predicted in December that the world’s most highly valued private currency could appreciate against the U.S. Dollar by as much as 4,000% to a total market value of $4 trillion:

“The twins have often compared Bitcoin favorably to gold, forecasting that the digital asset will disrupt the yellow metal, and Cameron Winklevoss said that the recent Bitcoin price decline has not caused him to waver from this optimistic prediction.”

The Brothers Winklevoss were the first verified Bitcoin billionaires. They invested massively in Bitcoin early on when 1 BTC was priced at USD$120, and they are hodling on tight.

Tim Draper: Bitcoin to $250K By 2022, $80 Trillion Market By 2033

Bitcoin price Tim Draper

Nor has Tim Draper, who purchased a mammoth amount of bitcoin during the Silk Road auction. | Source: Flickr/Web Summit

In September, American tech billionaire, venture capitalist, and crypto bull Tim Draper stood by his April prediction that Bitcoin would reach $250,000 by 2022, which would put the total market cap of the cryptocurrency comfortably above $4 trillion.

He also predicted that the overall cryptocurrency market cap would be $80 trillion by 2033.

These People Are Just Saying Numbers

It seems to me that people are flashing around big numbers but not saying very much of substance to justify these figures. Of course, it’s tough to put together solid assumptions to make specific predictions, but if they’re going to say the figure, I think they should elaborate some solid ground to make the numbers they’re stating at least meaningful and to be more precise about what they do know and – more importantly – what they don’t.

Featured Image from Shutterstock

Interview With Crypto ‘Optimist’ Brian Kelly: Bitcoin Is Still 50 Percent Undervalued

This interview has been edited and condensed.

The author of the “The Bitcoin Big Bang — How Alternative Currencies Are About to Change the World,” Brian Kelly calls himself an optimist when it comes to the future of the cryptocurrencies. CNBC’s prominent commentator, who is also the founder and CEO of digital currency investment firm BKCM LLC, analyzes markets on an everyday basis and tends to be 50 percent right “trading-wise.”

We met with Brian Kelly at the Crypto Finance Conference in Switzerland and talked about Bitcoin ETFs, the next financial crisis, and the best and worst jobs at the same time.

Catherine Ross: The most obvious question to you is, what is 2019 going to look like for the crypto industry?

Brian Kelly: That’s a great question! The trillion dollar question. I think it’s going to be better than 2018, which is a pretty low bar.

CR: In terms of what?

BK: As an investor, my number one concern is price. I look at the price and I say that we’ve seen three or four of these kind of boom-and-bust cycles in Bitcoin. If you look at the most recent two or so, we’re following roughly the same path as we’ve had, which means we’re somewhere closer to the end. We might have another dip lower — it wouldn’t surprise me at all.

CR: Lower that $3,000?

BK: Sure.

It wouldn’t surprise me if it [Bitcoin’s price] went to $1,500.

CR: And you feel it’s going to be short term?

BK: I think very short term. And I think we’re coming to an end. Here’s the thing, the sellers that we’ve seen recently are almost forced sellers. Some CEOs had to raise cash because they say they “can’t hold it in crypto all the time.” These are signs of the end. I don’t know if it [the end of the cycle] is here or it’s a little bit lower, but those are the signs of the end.

In 2019, if I’m looking at it, the focus will be on the currency — Bitcoin, Litecoin, some of those — because we have quite a bit of geopolitical tension in the world.

CR: And you feel it is contributing to the price?

BK: Yes. We’re starting to see some global macro players use Bitcoin as an alternative to their gold position or as a way to hedge against fiat currency fluctuations and volatility.

CR: Using Bitcoin instead of gold?

BK: Yeah.

CR: But is it stable enough?

BK: No (laughs).

But they’re not looking for stability, right? They’re looking for a safe haven that’s uncorrelated to every other asset. So, for an investor and a speculator, the stability is actually not what you want.

You want that volatility because you’re trying to get good returns. You’re trying to get something that’s uncorrelated to everything else. And that persists through 2019, and it starts to get to be more of a quote-unquote mainstream asset within the investment community.

BKCM

One of the most anticipated events in the crypto industry is the approval of a Bitcoin ETF, which hasn’t happened yet, despite the numerous attempts. Last year alone, companies and institutions like the NYSE, VanEck, SolidX, Proshares and internet entrepreneurs the Winklevoss brothers (whose first attempt in 2017 failed) all filed with the United States Securities and Exchange Commision (SEC), but were rejected or are awaiting a decision.

The most recent development on the matter is the SEC’s review of a NYSE Arca’s Bitcoin ETF rule change proposal on Feb. 11. The proposal suggests “to list and trade shares of the Bitwise Bitcoin ETF Trust under NYSE Arca Rule 8.201-E.” This might end up being positive for the market, given the latest statement from SEC Commissioner Robert J. Jackson Jr. Speaking to Washington D.C.-based publication Roll Call on Feb. 6, he said, “Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”

CR: One more very important question for you — will there be an ETF in 2019?

BK: No shot.

CR: I’m going to put that in the headline! “No shot for an ETF in 2019,” says Brian Kelly.

BK: That’s fine! I would bet against it. I don’t think it’s going to happen this year. There’s too much unresolved that is going to take longer than a year to resolve and before the SEC gets comfortable with what’s going on.

CR: What kind of time frame are we talking about?

BK: I think 2020 is a very good shot.

CR: Sounds promising! But major companies, like ShapeShift and Consensys had to lay off a lot of employees recently. What does this indicate?

BK: This is a part of the maturation process. We all got caught up in the big bubble. That being said, this is just a very natural part of the process. There are, unfortunately, some very good people that had to be laid off just because of market circumstances.

It doesn’t feel great right now, but it will make the industry stronger.

CR: From the trading point of view, what are the major signs or indicators of bullish and bearish markets?

BK: You look at the bottoms and the tops.

I can remember in November and December — and even frankly in January, a year ago — I was getting phone calls daily like “How can I get into your fund?” “I need to get into that.” And we [at BKCM LLC] do a monthly entry and it’s not something that you get into every day.

That was happening at the peak. At the bottom, the phone does not ring. It’s the exact opposite. The euphoria that we saw last year is a mirror image of the pessimism we’re seeing now. And so, what you want to look for at bottoms are extreme pessimism.

CR: Are you’re talking about technical analysis?

BK: Sentiment, really.

CR: And what about fundamental analysis? How does it look for the crypto industry?

BK: It’s interesting! We have a proprietary model that gives the fair value for people.

Right now Bitcoin is about 50 percent undervalued.

So, you could have a significant upside. That being said, we’ve seen that a couple of times in the last year. We saw that in April of 2018 — a huge run in Bitcoin.

And that’s what I’m talking about sentiment. So, the sentiment in the market has pushed the price of Bitcoin well below what you would consider a fair value — or at least, what I would consider fair. And that’s another sign that we’re near a bottom.

CR: How does analyzing crypto markets differ from analyzing traditional financial markets?

BK: Sentiment wise, no difference. Human beings are human beings. Fear and greed, booms and busts. In terms of how people trade markets, how people react to price movements — also no difference.

But on the fundamental side, there is a very big difference. It’s probably closer to foreign currency analysis, where you analyze supply and demand, and what’s going to affect the supply and demand factors.

In the traditional currency world, supply and demand might be impacted by central banks. In the crypto world, the supply-demand being impacted by the miner-supply versus the investor-demand at this point in time. So, it’s a little different.

There’s a big learning curve to getting into analyzing cryptocurrencies. It’s not like if you were analyzing airlines or the auto industry and you could immediately jump over and apply the same tools — these are very different tools.

CR: And how did you start in the financial world?

BK: I started as one of those annoying cold callers back in the 1990s. And I’d describe it as the best job on the worst job I’ve ever had in my life.

CR: Can you elaborate?

BK: It was the worst job because every day I would come into the office. I worked at Lehman Brothers [Eds: Lehman Brothers was the fourth-largest investment bank and global financial services firm in the United States. In September 2008, it filed for bankruptcy, which, many believed, started a global economic crisis]. They would hand me a stack of 700 phone numbers — I was supposed to dial two phones at once. My only job was — I wasn’t allowed to pick stocks or anything like that — to connect the person on the other end with the broker.

INNER

I did that all day long as a summer internship, and then I did it a little bit after I graduated. But despite it being mind-numbingly boring, it taught me a lot about sales and human interaction. It didn’t teach me too much about the stock market. But it did give me a really good foundation in how people think about the stock market and investing. That’s where I started.

Then, I was an equity sales trader. Then, I started a company called MKM Partners, which is an institutional broker dealer. After that, I started a global macro fund, trading foreign currency — and that got me into the Bitcoin world.

CR: How many times were you right in your analysis or predictions?

BK: Generally speaking, if I’m right slightly more than 50 percent of the time, I consider that good. On a longer-term basis, trading-wise, I’m generally right about 60 percent of the time — there’s some good periods and some bad periods. But it’s important for people to understand that…

It doesn’t matter how many times you’re right and how many times you’re wrong; it matters how much you make when you’re right and how much you lose when you’re wrong.

You have to have that ratio right. You could be right only 30 percent of the time and still make a lot of money as long as you make three times more on your right predictions as you do on your losses.

CR: You’ve mentioned that you started at Lehman Brothers. Can I ask you how many years ago it was?

BK: In 1991 — 28 years ago. Long time!

CR: So, 17 years before the 2008 financial crisis, right? Did you see any signs of it coming?

BK: I wish I could say I saw that. I knew something was wrong, but I can’t say that I predicted that.

CR: Have you seen any indicators of the real estate bubble [Eds: the housing and credit bubble most analysts call the reason for the 2008 financial crisis] back then?

BK: Without question — the real estate looked like a bubble! Not too dissimilar from what we saw with the crypto ICOs bubble. So yes, you could see the signs of trouble. The problem with seeing them is that it’s very hard to predict when they’re going to end.

CR: And the real consequences, probably.

BK: Yeah, the real cost. For me, in 2007, when Bear Stearns [Eds: the now defunct New York-based investment bank, securities trading and brokerage firm] got bailed out by the Federal Reserve, that was the first signal for me that something was very, very wrong.

CR: Is it at all possible to predict the next financial crisis? There are a lot of headlines about the looming recession and upcoming financial crisis. Should we prepare ourselves for the worst?

BK: I can almost guarantee you we’ll head to another recession. There’s never been a period of time where we don’t have a recession — it’s just the business cycle. You know the Federal Reserve sometimes thinks that they can short-circuit the business cycle. But eventually, you will have another recession.

CR: It’s just the way the market works, right?

BK: Yes, but this one is going be a little different than the other ones we’ve had.

CR: How so?

Because what we’ve done lately is taken all the risk off of the private balance sheets and put them onto the government balance sheets. And so that’s a very different scenario. And that’s very positive for crypto. If you think about what backs a fiat currency — [it’s the] full faith and credit of the government.

If the government debts are to a point where they can’t pay it, then the credit of the government is in question. You may want to look for an alternative type of currency.

And so I don’t know when we’re going to have that [recession] — in 2016, I thought that was going to be the beginning of it.

CR: Do you see the signs of the start of the recession right now?

BK: There are some signs.

CR: Not major, I assume?

BK: There are some signs — but no, not major. My hesitation is that I still think the Federal Reserve has some leverage to pull, before we go into a full-blown recession. So, I think there’s still time — and I don’t know if it’s going to be a year or three years — where the Federal Reserve will be trying a bunch of things to make sure we don’t go into recession, and that could prolong this period.

CR: And it really does look positive for the crypto industry!

BK: Absolutely! I mean, you know, call me an optimist, but this looks very positive.

Even though there are signs of the bottom — when everybody says it’s going away — that’s what I love to hear.

If everybody agrees that crypto is going away — that’s the time I want to buy.

I don’t think crypto is going away. In fact, I see it becoming much more of a mainstream asset. I think the next two years could see Bitcoin — and I what I would call the other currencies, probably five or six of kind of “pure currencies” — I think you could see those play a major role in investors portfolio over the next two years.

Cointelegraph editorial team thanks Brian Kelly and the Crypto Finance Conference  for the interview.

Why the SEC’s ‘ICO Guide’ Paints a Dark Picture for Cryptocurrency in 2019

This week, the Securities and Exchange Commission tweeted out its guidelines for those launching and investing in ICOs, although many would say that over a year on from the peak of the cryptocurrency boom, the guidelines amount to too little, too late.

That said, the document still throws up several points of contention, including a rather gloomy outlook for cryptocurrency exchanges – even decentralized ones – and at least one possible violation of the First Amendment on the part of the SEC.

Cryptocurrency Promotion: A Knife’s Edge

ethereum cryptocurrency ico

Perhaps it’s no surprise that some prominent crypto executives have begun to declare themselves part of a “protocol” rather than a company in recent months. | Source: Shutterstock

The SEC defines a security as:

“A token or offering that promotes the likelihood for future returns based on the entrepreneurship or efforts of others.”

With that in mind, perhaps it’s no surprise that some prominent crypto executives have begun to declare themselves part of a “protocol” rather than a company in recent months. One example is Tron’s Justin Sun, who recently stated in an interview:

“We can see that Tron is also more like a protocol rather than a company. I think that’s also introduced like a brand new concept of the protocol rather than a company institution or profit or entity.”

A man with a reputation for marketing, Sun made a name for himself as the bombastic, bold founder who never shied away from making extravagant claims about future success. In late 2018, when Ethereum’s Vitalik Buterin was honest enough to admit that ETH’s 2017 bull-run was based on little more than hype, Sun took the opportunity to promote his own project, stating:

“Vitalik: next wave of crypto is not going to be built on hype.@VitalikButerin admits that #ETH lead the 2017 bull run built on hype. #TRON will lead next bull run built on massive adoption dapps and @BitTorrent.”

Tweets like these could be the very thing that attracts the attention of the SEC. Does this not flirt dangerously with the definition of promoting a security? It suggests that an investment in Tron will pay off thanks to the efforts of others – in this case, BitTorrent.

SEC: Exchanges May Violate Securities Laws [Even If They Don’t Know it]

SEC crypto ico blockchain

In 2018, the SEC brought the hammer down on nineteen different cryptocurrency projects. | Source: Shutterstock

According to the SEC, a cryptocurrency exchange would be in violation of securities laws even if it unknowingly facilitates the trade of security coins and tokens:

“If a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”

That explains why many “altcoin-heavy” exchanges tend to base their operations on foreign soil, such as in legal havens like Malta, or parts of South America. Yet even that might not be enough to save them, if the recent shutdown of Marshall Islands cryptocurrency exchange 1Broker is anything to go by.

Globe-hopping might not be enough to avoid the reach of the SEC, but what about exchanges that aren’t based in any physical location?

Decentralized Cryptocurrency Exchanges: Do They Violate SEC Guidelines?

cryptocurrency bitcoin crypto ethereum ripple

According to the non-profit digital civil-rights group, Electronic Frontier Foundation (EFF), prosecuting people who upload open-source bundles of code to Github would be clear violation of First Amendment rights. | Source: Shutterstock

According to the SEC, it doesn’t matter whether it’s a centralized, proprietary exchange, or a decentralized, autonomous piece of code – what matters is that unregistered buying and selling happens there:

“The activity that actually occurs between the buyers and sellers—and not the kind of technology or the terminology used by the entity operating or promoting the system—determines whether the system operates as a marketplace and meets the criteria of an exchange under Rule 3b-16(a).”

That explains the charges brought down on the EtherDelta exchange, and its creator, Zachary Coburn, last year. At the time, the SEC described Coburn’s crime as:

“[Providing] a marketplace for bringing together buyers and sellers for digital asset securities through the combined use of an order book, a website that displayed orders, and a smart contract run on the Ethereum blockchain.”

But according to the non-profit digital civil-rights group, Electronic Frontier Foundation (EFF), prosecuting people who upload open-source bundles of code to Github would be clear violation of First Amendment rights.

“This isn’t just dangerous because it could quell research; it’s unconstitutional. The free speech protections enshrined in the First Amendment and upheld through court cases across decades include the rights of individuals to publish their ideas without preemptively obtaining a license. And code itself is speech.”

The EFF sent a nine-page letter to the SEC on Tuesday, urging the commission to keep constitutional rights in mind when wielding their regulatory whip, specifically in relation to the Ether Delta and Zachary Coburn case. Read the letter here for a quick rundown on computer code’s legal status in relation to First Amendment rights.

EFF Crypto Exchanges SEC by on Scribd

What’s Next for Crypto Regulation in 2019?

It’s difficult to predict what happens next: on the one hand, the SEC has signalled its intention to refresh its focus on cryptocurrency in 2019. But at the same time, the commission is already discovering that not all branches of the U.S legal system agree with its definitions.

In 2018, the SEC brought the hammer down on nineteen different cryptocurrency projects. The number of cases in the previous five years combined was just twelve. In November 2018, the commission ruled that Paragon’s $12 million ICO, launched in 2017, must be paid back to those investors who desire it – despite the messy technicality of a 95% price drop in the intervening time period.

A Look to the Past

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SEC Chairman Jay Clayton’s stance on cryptocurrency sales hasn’t wavered over the years. | Source: Stanford Law School/YouTube

While the ICO space has changed a lot in the past year, the SEC’s view on initial coin offerings has not. As early as 2017, SEC Chairman Jay Clayton said:

“[A] token that represents a participation interest in a book-of-the-month club may not implicate our securities laws, and may well be an efficient way for the club’s operators to fund the future acquisition of books and facilitate the distribution of those books to token holders.”

That’s very different to what we have now, and the following analogy proved to be eerily accurate, despite being made before the heady peaks of the ICO gold rush:

“In contrast, many token offerings appear to have gone beyond this construct and are more analogous to interests in a yet-to-be-built publishing house with the authors, books and distribution networks all still to come.”

Featured Image from Shutterstock

How the Marshall Islands Envisions Its National Digital Currency Dubbed ‘Sovereign’

On Jan. 10, 2019, the team behind a national cryptocurrency for the Republic of the Marshall Islands (RMI) — dubbed the Sovereign (SOV) — revealed that the coin is still being actively developed, despite previous disagreements among government officials, as well as reservations expressed by the International Monetary Fund (IMF) and the United States Treasury Department on the subject.

The idea behind the SOV project lies in the RMI government’s pursuance of “manifesting our [the RMI’s] national liberty,” as well as the creation of an alternative state currency to the U.S. dollar, which the small island nation has been using for decades.

Behind the scenes of the decision to issue a national crypto

The Republic of the Marshall Islands is an island country located near the equator in the Pacific Ocean and consists of 29 atolls and five individual islands, amounting to about 1,225 islands. For a period of 40 years, the country had been administered by the U.S. as part of the Trust Territory of the Pacific islands, attaining independence in 1986 under the Compact of Free Association.

Country snapshot

Currently, the Marshall Islands uses the U.S. dollar as its official currency and is “highly dependent on receiving and spending U.S. grants,” totalling around $70 million each year in assistance, in accordance with the compact. Once issued, the SOV will circulate alongside the dollar, thus the Marshall Islands will have two coexisting legal tenders “for all debts, public charges, taxes and dues.”

The Sovereign was first introduced in February 2018, when the parliament of the Marshall Islands passed a law declaring its new national digital currency set to be released through an initial coin offering (ICO), with an initial total amount of 24 million units in order to avoid inflation. Some cash raised from the ICO will purportedly go toward health care for the country’s roughly 53,000 citizens who fell victim to the consequences of nuclear testing by the U.S. in the past.

The president of the RMI. Hilda C. Heine, said then that “this is a historic moment for our people, finally issuing and using our own currency, alongside the USD. It is another step of manifesting our national liberty.”

To implement the SOV initiative, the RMI government partnered with Israeli fintech startup Neema. Neema CEO Barak Ben-Ezer told the press that “this cryptocurrency, the Sovereign, is completely decentralized and the government cannot control the money supply. After the [crowd sale], they don’t have any control over the currency.”

Peter Dittus, chief Economist and co-founder of SOV Global and former secretary general of the Bank for International Settlements, told Cointelegraph that the decision to develop a national digital currency and not a fiat one is backed by several reasons. According to Dittus, developing countries, such as the RMI, struggle with the high costs of remittances, and having a crypto legal tender creates a situation where the solution to costly remittance is “baked into” the monetary system itself. Additionally, a central bank-managed fiat currency is costly to implement and to run, wherein “for a small country the costs clearly outweigh the benefits.”

SOV’s further development is challenged by the IMF and the U.S. Treasury Department

However, later in September, the International Monetary Fund (IMF) raised doubts about the issuance of SOV, claiming that “the potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML [Anti-Money Laundering]/CFT [Countering the Financing of Terrorism], and governance risks.”

The IMF further warned the Marshallese authorities against adopting of cryptocurrency, stating that it will pose risks to the country’s financial integrity, as well as relationships with foreign banks. The regulator urged the RMI to reconsider issuing a cryptocurrency until the government is able to provide and implement “strong policy frameworks.”

Dittus revealed that SOV will differ from most digital currencies, as it will have measures built-in to discourage misuse, outlining the need to closely cooperate with regulators, financial institutions and exchanges “to ensure that Know-Your-Customer [KYC] rules are well implemented, and that AML features cannot be circumvented.” This will purportedly allow the RMI to develop new capacities in governance and facilitate a wider adoption of the technology within the country.

Speaking about possible instability in the country’s financial system caused by cryptocurrency’s volatile nature, Dittus said that it is planned to establish a Bank of SOV in the RMI, which will help provide SOV-related services to the other banks, hedging the exposure and facilitating transactions. Dittus, however, added:

“On a fundamental level, there is no guarantee of banks or the government to provide conversion between SOV and the USD at a fixed rate, thereby limiting financial instability.”

Heine administration’s plan to issue a state cryptocurrency sparks political instability

Despite perceived advantages of the concept behind a national digital currency, RMI President Heine faced a vote of no confidence in November in connection to her administration’s plans to implement SOV. The vote was introduced by a group of eight senators, and former President Casten Nemra stated that the plans of establishing a digital currency as legal tender had a negative impact on the reputation of the country, also endorsing the arguments put forward by the IMF and the U.S. Treasury Department.

Six days later, it was reported that Heine survived the no confidence vote, with the Marshallese parliament reportedly splitting 16-16, just one vote short of the number needed to prompt Heine to resign the office of president. RMI Finance Minister Brenson Wase declared the government would move forward with SOV and is waiting to fulfill requirements from the IMF, the U.S. and Europe.

Commenting on the situation, Dittus stressed:

“The IMF has endorsed CDBCs, and its managing director, Christine Lagarde, has highlighted the potential benefits, in particular for smaller economies. But so far, there have not been implementations of sovereign cryptocurrencies. The Marshall Islands has been the first state to declare one as legal tender. The challenge is now to make it a reality. And that is highly motivating.”

The SOV team further revealed that it had made “significant progress in finding partners, investors and developers” to realize the project and aims to launch SOV in 2019. The project also announced a new partnership with “smart banknotes” firm Tangem, a startup operating from Switzerland and Singapore.

While the initiative has been receiving criticism from major financial organizations and government officials, the SOV team seems to be confident with the viability of the idea behind national digital currency and its impact on the country’s further development. Dittus also unveiled the possibility of introducing a stablecoin variant at a later stage, and added:

“The emission of the SOV will be controlled by the rules baked into the blockchain, with an initial total amount of 24 million units. Each year, the total supply will increase by four percent, implementing a proposal made by the late Prof. Milton Friedman. In addition, unlike other fiat currencies, where new money is issued to private banks, new SOV units will be distributed pro-rata, or per capita, back to the SOV holders. As the SOV supply will increase broadly in line with world GDP [Gross Domestic Product], it should tend to lead to relatively stable exchange rate against goods over time.”

Someone Please Let Jamie Dimon Know That His New Cryptocurrency is a Fraud

JP Morgan Chase and Co. announced Thursday it would be the first major institutional bank to release its own cryptocurrency. Its new JPM Coin is an almost shockingly impotent reaction to Bitcoin and other cryptocurrencies by the United States’ largest bank.

Jamie Dimon Gets a New Toy

JP Morgan says you can now give them a dollar, and they’ll give you a JPM Coin, which you can redeem for your dollar with them any time.

So they’re using JPM Coin to keep track of how much money you’ve deposited and withdrawn. So they are offering basic banking as a new crypto.

The embarrassing level of fail in this move is difficult to overstate.

It would be shocking but for the fact that we already knew for years where institutional banking’s head is at regarding cryptocurrency, how it thinks about crypto, the knowledge about crypto that it represses, and what it wants the world to think about Bitcoin.

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We know from such well-worn shibboleths as:

“We’re excited about blockchain the technology underlying Bitcoin.”

Which would be like horse-drawn carriage makers a hundred years ago saying they’re excited about some of the underlying technology of these new horseless carriages…

But not the horseless part.

And then presenting a new “automobile” to the market that looks a lot like a Model T carriage and copies some of its finer details, but it’s pulled by horses.

The Very Idea of JPM Coin as a Currency Is A Fraud

They call it “minting” a coin to mean buying a digital JPM Coin from them, and “redeeming” the coin means selling it back to them for your U.S. Dollar.

This is almost too ridiculous to criticize cogently.

To begin with, you’re not minting anything. That usage, in this case, is in the realm of 100% fluff metaphor. When bitcoin is put into your bitcoin wallet, the fact that it was transferred to your account is indelibly minted into those bits.

Once the transaction has cleared, it’s irreversible. It’s much more permanent and immutable than a design stamped into a metal blank with a coin die and press.

But all that’s happening with JPM Coin, a stablecoin pegged to the dollar at a 1 to 1 ratio, is a client gives JPM a dollar, and JPM’s computer remembers it gave them a dollar and that they’re obligated to give it back when the customer wants to withdraw it.

That is literally exactly how things were at JPM before this so-called cryptocurrency. Clients would give them their money, and they’d give it back when the clients asked for it.

That’s just called banking.

The only meaningful difference may be that they’ve worked up some solutions to manage transfers between accounts faster and can verify more quickly whether there are errors.

JPM Coin Is Just JP Morgan Optimizing Its Database Software And Calling That A Crypto

It’s 2019 and JP Morgan Chase and Co. is finally getting around to spending some of that TARP bailout money on computer software to improve its electronic record keeping.

And it has hilariously decided to pass that off as JPM Coin, a new “cryptocurrency” brought to you by Jamie Dimon, the guy who called bitcoin a fraud.

The response from the crypto community was fierce and hilarious, ranging from “nothing like Bitcoin” (MIT Technology review), to “isn’t even a real cryptocurrency” (CCN), to 2019’s most popular token for money laundering:

JPM Coin Will No Doubt Be Used to Commit financial Fraud

That tweet by Morgan Creek Capital partner Anthony Pompliano is no glib remark.

Although its billionaire CEO Jamie Dimon said “Bitcoin is a fraud” in Sept. 2017, his company has paid billions and billions of dollars in what are amazingly slap-on-the-wrist fines compared to the amount of money being manipulated by JP Morgan for nefarious purposes:

“Since 2010, the year Bitcoin first began to circulate, under the leadership of Jamie Dimon JP Morgan Chase has been charged with 48 different violations of banking and securities fraud. $28,675,456,874.00 is the total they’ve paid out just in the past 7 years in slap-on-the-wrist fines by politicians whose coffers they’ve filled with money.”

They should have just named it FraudCoin because, chances are, it will be used for that at some point.

This is also just a way for JP Morgan, which says its new bank token is designed for wholesale business-to-business financial settlement among its major clients, to inflate its reserves with new JPM bucks created out of thin air and tell its clients: “Here, give us your money for these tokens.” What’s the convertibility of JPM Coin to Schrute Bucks?

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Get Out of Here with Your So-Called ‘Bitcoin Killer,’ Jamie Dimon

The idea behind a stablecoin is an exercise in futility.

Like contemplating one of those absurdist koans.

The coin is pegged to the value of something else.

So why not just hold the something else, which ostensibly will always have the same value as the stablecoin, but is actually itself and not just something redeemable for itself?

This is just so funny because Dimon and the likes of institutional finance scoffed at Bitcoin, comparing it to the Dutch Tulip Mania, arguing that it is merely a shared hallucination of one greater fool after another of some kind of value in something with no intrinsic value.

Now they’re asking big players with a lot of money to buy their stablecoin, which they say is worth $1, but why is it worth that? Stablecoins are only worth what all the people who share the hallucination agree it’s worth, but there’s no intrinsic value in JPM Coin.

JPM Coin is so absurd it’s almost like a post-modern art project.

JP Morgan, JPM Coin, Ripple, XRP

Psst, Jamie. Your so-called cryptocurrency is an exercise in futility. | Source: REUTERS/Mike Blake/File Photo

JP Morgan just issued a digital certificate that you can redeem for another digital certificate that you haven’t been able to redeem for hard specie since Nixon was president.

Are we actually witnessing the banking system viciously satirize itself?

Forget World War 3, nuclear Armageddon, the zombie apocalypse, rising sea levels, the AI winter, gamma rays from outer space, or some kind of nano-biotic gray goo.

Is the real chthonic force that will overwhelm the world the unbearable hilarity and terrifying blindness of dinosaur legacy institutions fumbling through our brave new world?

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

Jamie Dimon Image from AP Photo / Jacquelyn Martin

Vitalik Buterin Dismisses Rumors New Constantinople Feature Allows Attack Vector

Ethereum (ETH) co-founder Vitalik Buterin and other core devs have dismissed allegations that a new smart contract creation feature set to be released in the forthcoming Constantinople hard fork will have negative security implications. The discussion was held during a Ethereum core developer call on Feb. 15.

The feature in question is called “Create2” — designated as Ethereum Improvement Proposal (EIP) EIP-1014 — and is intended to allow for interactions with a contract that does not yet exist on the blockchain — specifically, “addresses that do not exist yet on-chain but can be relied on to only possibly eventually contain code.”

Several ETH devs had voiced concerns that Create2 could introduce a potentially serious attack vector to the network, given the implication that smart contracts could purportedly be coded to change their address after being deployed. One had questioned whether the feature doesn’t “mean that any contract post-Constantinople with a self destruct [function in its code] is now more suspect than before?”

In a discussion of this and other comments, dev Jeff Coleman underscored that “one of the things that is counter-intuitive about Create2 is that theoretically redeployments can change the contract byte code, because the address is only a commitment to the init code. People need to be aware that init codes are part of auditing, […] that non-deterministic init codes are a problem.”

Coleman stressed that those who are looking to audit others’ code need to look out for potentially “weird phenomena […] especially if you combine Create2 with Create1, because the latter has a really weak assumption around address identity whatever the nonce is.” He added:

“When we look forward to where we want to end up […] it would be to have all addresses […] contracted via the init code. We need content-based addressing of contracts, and not just order-based addressing, which is what Create1 is. So if we get to the place where Create2 is standard, get rid of self destruct entirely […] we could throw out this idea of a contract nonce.”

Like Coleman, Vitalik Buterin discussed Create2 in regard to a longer-term roadmap, saying:

“The one thing we need to keep in mind is more for the future, when thinking about rents and deletion; that’s a way that can lead to contracts being in a state to being not in a state without a self-destruct operation […]. It’s not something we need to figure out in the next few weeks, but it’s still useful to keep in mind when getting the ETH 2.0 sharding to a VM spec very soon.”

Aside from Create2, the devs also noted they had found a prospective independent company for benchmark testing an application-specific integrated circuit (ASIC)-resistant proof-of-work (PoW) algorithm dubbed “ProgPoW.”

Having voted to implement the algorithm as Ethereum continues to evolve toward its eventual target of Proof-of-Stake (PoS), the devs had recently decided to delay its rollout until a third party audit would be completed. An ongoing, informal online vote over the implementation of ProgPoW shows the majority in favor.

Most Cryptos See Gentle Green Amid Exceedingly Calm Market Picture

Saturday, Feb. 16: Cryptocurrencies are seeing mild price action, with virtually all of the top 20 coins by market cap seeing fluctuations of within 2 percent in both directions on the day, as data from Coin360 shows.

Market visualization by Coin360Market visualization by Coin360

Top cryptocurrency Bitcoin (BTC) has seen fractional 0.37 percent growth on the day and is trading at $3,631 to press time, according to CoinMarketCap data. On its 7-day chart, the coin has jaggedly traded downward from an intraweek peak of almost $6,700 on Feb. 11 to a low of $3,610 on Feb. 14 — subsequently recuperating some of its losses. On the month, the coin has seen virtually no movement, trading down by a mild 0.8 percent in value.Bitcoin 7-day price chart. Source: CoinMarketCapBitcoin 7-day price chart. Source: CoinMarketCap

Ethereum (ETH) — holding on to its newly-regained position as largest altcoin by market cap — is up around 1 percent on the day to trade at roughly $123 to press time. The altcoin has seen moderate and consistent growth over the past seven days, bringing its weekly gains to just over 4 percent.

On the month, Ethereum is similarly stable, trading at virtually the same price point (0.4 percent down) as in mid-January.Ethereum 1-month price chart. Source: CoinMarketCap

Ethereum 1-month price chart. Source: CoinMarketCap

In the latest Ethereum core dev call, ETH co-founder Vitalik Buterin and others have dismissed allegations that a new smart contract creation feature set to be released in the forthcoming Constantinople hard fork will have negative security implications.

Also this week, Chicago-based crypto exchange ErisX submitted its comments to the United States Commodity Futures Trading Commission, arguing in favor of regulated ETH futures contracts.

Ripple (XRP) — like its larger market cap counterparts — is seeing virtually no price change on the day, and is trading around $0.301 at press time. Up a fractional 0.5 percent over the past 24 hours, the asset is down a mild 2 percent on the week. Monthly losses are starker, at close to 9 percent.

Ripple 7-day price chart. Source: CoinMarketCap

Ripple 7-day price chart. Source: CoinMarketCap

Industry commentators have this week discussed whether United States banking giant JPMorgan Chase’s newly-announced settlement stablecoin could pose a direct threat to XRP’s future. Ripple CEO Brad Garlinghouse has refuted these concerns, arguing that the so-dubbed JMP Coin “misses the point” of cryptocurrency.

A major exception among the remaining top 20 coins is Litecoin (LTC), which has has seen close to 4 percent in growth on the day to trade at $43.83. The altcoin has thus again dislodged EOS and Bitcoin Cash (BCH) as fourth-largest cryptocurrency by market cap, which it holds with a market cap of around $990 million.

EOS, now ranked fifth, is today seeing solid growth, up a solid 2.4 percent on the day to trade at $2.85. Privacy-focused crypto Monero (XMR), ranked 13th, is the only other major altcoin to see discernible growth — gaining about 2 percent on the day to trade at $48.16.

The heaviest top twenty loser meanwhile is Maker (MKR), ranked 17th, which is down 1.6 percent to trade at $509.65.

The total market capitalization of all cryptocurrencies is around $121 billion as of press time, up a fractional 0.25 percent on the week.

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

In other cryptocurrency news, major crypto brokerage Coinmama — which allows users to purchase Bitcoin and Ethereum using a credit card — has revealed it suffered a major data breach affecting 450,000 of its users.

And in adoption news, Liberstad — a private, anarcho-capitalist city in Norway — has adopted a cryptocurrency native to its blockchain-powered smart city platform. The new crypto will be the city’s official medium of exchange, with national fiat currencies to be prohibited.

Pepsi Thrives While Coke Fizzles in Worst Trading Day Since 2008

The legendary Coca-Cola Company has fallen on some hard times, and its officials aren’t seeing better days ahead.

Most understand its woes stem from consumers giving up their sugary soft drink addictions, but Coca-Cola is blaming something else that its main competitor, PepsiCo doesn’t see as that much of a problem.

Coca-Cola significantly lowered its outlook, saying that macroeconomics were among the headwinds that would continue to weigh on its sales. This logic seems to be unique to Coca-Cola, as PepsiCo officials didn’t call out macroeconomics as a major issue. It even raised its outlook.

Coca-Cola is the last of hundreds of companies reporting earnings. It doesn’t join the crowd of companies whose reports have helped move the stock market higher.

Dismal Days Ahead

When Coca-Cola reported its Q4 2018 earnings Thursday, it said 2019 revenue growth would be lower than it was in 2018. It said was expected to fall to 4%.

Its net revenues declined 6% to $7.1 billion for the quarter. Revenues fell 10% to $31.9 billion for the year.

Fourth quarter and full year results were impacted by headwinds of 13% and 17%, respectively, from the combined impact of currency and the refranchising of company-owned bottling operations, the company reported.

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Can Coca-Cola Really Blame The World For Fiscal Woes?

Back in the day, Coca-Cola commercials included lyrics from a song that said “we’d like to teach the world to sing….We’d like to buy the world a coke, and keep it company.”

Today, it’s singling out countries around the world as being partly to blame for its slowing sales. Coca-Cola CEO John Quincey said:

Looking ahead, we’re seeing the impact of some increasing uncertainty and volatility in global macroeconomic conditions. Clearly, there are places where weakness is apparent. Argentina went down quite strongly in the fourth quarter and that’s likely to continue in the first half of this year. Turkey, very similarly, some parts of the Middle East.

If It’s Macroeconomics, Why Is PepsiCo Doing Fine?

Coca-Cola lowered its guidance, but PepsiCo announced it was boosting its guidance when it issued its Q4 2018 earnings Friday morning.

PepsiCo’s chief financial officer Hugh Johnson discussed his company’s rosy guidance on CNBC this morning.

PepsiCo’s macros are largely fine around the world. Of course, there are always going to be one or two areas of dislocation, but by and large we think the macros are benign. Perhaps they are a little bit slower than what they’ve been for the last couple of years. But certainly, for a consumers stable company, it has not been noticeably so.

PepsiCo chairman and CEO Ramon Laguarta said in a statement on Friday morning.

Our 2019 EPS performance is expected to be impacted by incremental investments that are intended to further strengthen the business, lapping a number of 2018 strategic asset sales and refranchising gains and an increased core effective tax rate in 2019.

The tempered guidance appears to have been factored in by the market, as PepsiCo’s 1.4% decline after Coke’s earnings announcement seems to have taken the sting out of PepsiCo’s report, according to TheStreet.

Coca-Cola’s stock slumped 8% following its dismal guidance.

PepsiCo’s guidance sent its stock higher.

Chart via TradingView