Crescent Talks Crypto



Weekly Newsletter

04/09/2018 - 04/15/2018


Market Recap: Winners & Losers

Crypto assets gained 25% over the last week, adding nearly $70 billion, bringing the market's total value to ~$325 billion. Among assets with at least $100 million in market cap, Mithril (MITH), Golem (GNT), and Bytecoin (BCN), were the largest gainers, while Dent (DENT) was the only crypto asset within this market cap threshold in the red, down just 1%, according to data complied by Coinmarketcap. All of the top 10 current largest crypto assets posted gains over the last seven days, led by Cardano, IOTA, and Stellar. Litecoin, Bitcoin Cash, and Bitcoin lagged the group.



Blockchain & Crypto Continues To Attract Investment Interest


Source:  TheBitcoinNews

What happened?

Last newsletter, we touched on Coinbase’s plans to invest in seed stage cryptocompanies by launching a venture capital arm called “Coinbase Ventures”. It looks like the Rockefeller family’s venture capital arm, Venrock, will be joining in on the fun according to Fortune. Venrock is partnering with the cryptocurrency investor group, CoinFund, to help entrepreneurs launch blockchain-based businesses. Later last week, Bloomberg reported that yet another major investment fund, Soros Fund Management, had its eyes on investing in cryptocurrencies. This was interesting given that its founder, George Soros, had described cryptocurrencies as a “bubble” earlier this year.

Why does this matter?

Soros Fund Management and Venrock manage $26 billion and $2.6 billion, respectively. They are both very well respected firms with a history of taking unpopular bets which sometimes pay off. While Soros Fund Management is known for betting against the British pound right before the Black Wednesday crisis, Venrock invested in Intel and Apple early on. These firms seem to be less concerned about short term profits within the space, and instead are focused in making a long-term investment in Blockchain technology and the cryptocurrency industry. As we said last week, continued investment in companies that aim to improve the infrastructure of the space as well as those that look to serve or improve a particular function will be paramount for widespread adoption. Unlike Coinbase, who already had exposure to the space, these two firms are fresh faces for the community, with Soros previously being bearish about the market. It’ll hopefully push other funds to reconsider their stance on Bitcoin and Cryptocurrencies in general going forward.

What’s the word on the street?

Some speculators within the crypto community seem to be uncomfortable with Soros entering their market given his infamous image as a “short seller”. Nonetheless, these funds opening up to crypto shows how promising the underlying technology is. Keep in mind, this comes right after top business schools like Wharton and Stanford announced they have expanded their MBA course offerings to include classes on bitcoin, crypto, and blockchain. As more resources are allocated towards blockchain and crypto, we get closer to fully functioning projects which will ultimately lead to widespread adoption.

New ASIC Mining Rig Outperforms Bitmain's Antminer S9


Source: Halong Mining

What happened?

Samsung will now be providing Application-Specific Integrated Circuit (ASIC) chips to Hardware manufacturer Halong Mining. Rumors were circulating back in January when Samsung was said to be working with a Chinese mining company, and they were validated on April 10th with a tweet from mining merchant MyRig. Historically, Samsung was mostly a secondary player in the mining space through its GPU production because those chips are still primarily used for graphics processing. Although this isn’t the first time Samsung will be producing chips for mining rigs, the Samsung chips used in the Dragonmint T1 will help make it the world’s most efficient mining rig, even ahead of Bitmain’s Antminer S9, according to Halong. 

Why does this matter?

Samsung’s growth in the crypto mining space, particularly with mass production of chips used in ASIC rigs, should bode well for the mining community. People generally associate ASIC’s with centralization and GPU mining with decentralization, so it’s ironic that Samsung’s ASIC chip production will actually help reduce centralization. One of the contributing factors to ASIC centralization is limited supply of the ASIC rigs themselves. Bitmain both produces ASIC mining rigs and controls the two largest mining pools, giving them ~40% of global bitcoin hashing power. With mining rig supply increasing from new incumbents, this could help both mining pools and individual miners take some of that share and reduce mining centralization. This competition should also help drive technological improvements in the mining rigs themselves.

What’s the word on the street?

Peer reviews of the product have been positive with widespread acknowledgement that the DragonMint T1 is more efficient than Bitmain’s Antminer S9 when looking at Terra hash per second capability relative to energy consumption. At the same time, the efficiency differential doesn’t appear to be significant enough to render the S9 obsolete by any means. The fact that the demand for the DragonMiner T1 has made it difficult to get your hands on shows the significant demand that still exists for these mining rigs, hopefully opening the door for new competitors and continued innovation in the space.

Tim Draper's 2022 BTC Prediction: $250K


Source: Tech Crunch

What happened?

TIm Draper, renowned venture capitalist, has a new price target on Bitcoin this week: $250,000 by 2022. Draper tweeted out his price prediction, accidentally predicting $25K initially before correcting his substantial typo.

Why does this matter?

Tim is part of a growing number of investor tycoons recognizing the potential of Bitcoin, and other digital currencies, as alternative means for payment. Draper's prediction may sound extreme, but he also predicted Bitcoin to reach $10,000 by the end of 2017 over three years ago. We all know how that forecast turned out.

What’s the word on the street?

As with any prediction, pundits on both sides have come out to defend or ridicule Bitcoin's longevity. Robert Shiller, a Nobel Prize laureate and professor of economics at Yale University, claimed the "Bitcoin bubble" may be around for a long time, and recognizes smart people have invested in the space. On the other hand, Brian Kelly, founder of BKCM and commentator on CNBC's Fast Money, supported Draper's ambitious price target, adding his own thoughts on how institutional money may pull that target forward a couple years. 


Golem Releases their Beta on the Ethereum Mainnet


Source: CryptoPost

What happened?

Golem, a dApp built on Ethereum which enables users to rent out their excess computing power, launched their mainnet beta, referred to as Brass Golem, on April 10. This marks a major milestone for a project that, when it ICO’ed in 2016, was one of the largest fundraising efforts to date receiving 820,000 ETH, or ~$410m based on current market prices. While this initial release allows for CGI rendering to be done on the network, future releases will support other use cases such as machine learning.

Why does this matter?

There are a few important aspects to monitor now that the beta is live which include i) how well does the Golem network perform outside of a test environment, ii) does this network offer an improvement over current computing methods, iii) will the economics prove to be more than just theory and work within a real marketplace, and iv) whether Ethereum’s current lack of scalability hinders what the project can achieve at this stage. While the goals for this project are certainly ambitious, only time, testing, and development will prove whether or not Golem can deliver on its vision.

What’s the word on the street?

Early believers in Golem were becoming impatient given the lack of development progress, but as with any project built on a new technology, good software takes time. The market has responded positively to the release, and, as of Monday morning, Golem is up +95% over the past 7 days, making it the second biggest gainer in the top 100 coins by market cap over that period.


Regulatory Update


Global Regulatory Landscape

The Korean Blockchain Association announced that thirty-three exchanges were asked to conduct a self-regulatory review and added that twenty-three agreed to standards. The ten exchanges that did not cooperate were kicked out of the association. Jeon Jae-jin, the chairman of the self-regulatory committee, was quoted saying “We will focus on establishing the safety and transparency of the exchanges.” The Association is working with the Korean Fair Trade Commission (KFTC) which recently ordered twelve crypto exchanges to revise their terms of service. The results and recommendations of the Association are expected to be released by the end of the month. 

Latvia entered the crypto-regulatory fray last week by recognizing ‘taxable’ cryptocurrencies with the hope that legitimizing such transactions would bring in tax revenue and help the country become a leader in the asset class. Essentially capital gains recognized from cryptocurrency trading are taxed at 20%. It is important to note however that while cryptocurrencies have been recognized as taxable assets there is still very little in terms of codified legislation. The new laws would have to be prepared by the office of the prime minister and then passed by the Latvian parliament. Unsurprisingly, all of this news coincides with tax season in Latvia as returns must be filed between March 1st and June 1st.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) announced a new suite of regulations last week in an attempt to bring more legitimacy to the asset. The regulator took a similar approach to Japan by asking companies that operate in cryptocurrencies to register with the authorities and implement know-your-customer (KYC) and anti-money laundering (AML) standards that pass government scrutiny. While this does help Australian investors get more clarity behind regulation, registering in any way is seen as antithetical to what cryptocurrencies are all about. 

Kathryn Huan is an assistant U.S. Attorney for northern California and has investigated fraud and theft in the cryptocurrency space since 2015. She has prosecuted federal agents who stole bitcoin and was involved in the criminal settlement with Ripple. And those were just her top cases in 2015. Quartz interviewed her at length about what she thinks is next for U.S. regulation and it is worth reading. 

Anything Else?


Source: Merkle

On April 10th, Bittrex (the 7th largest cryptocurrency exchange by trading volume) announced they were reopening their registration portal for new user accounts. This is coming a few months after an increase in demand forced them to start turning away new users in December 2017. Bittrex CEO, Bill Shihara, had the pleasure of delivering the news to the crypto community and even added that they would be launching an “enhanced website” with improved security. This shouldn’t come as a surprise given how vocal and focused the US-based crypto exchange and its founders (who have a background in security at Microsoft) have been in recent months regarding their commitment to compliance.
Funny enough, Bittrex had to pause the new registrations shortly after their announcement due to “an overwhelming response from new users.” Nonetheless, this announcement triggered a celebration throughout the crypto-community as many excited investors started claiming that the wait for alt season was almost over.

Things we're reading this week:

Soros Prepare to Trade Cryptocurrencies
Winklevoss Twins Win Crypto Related Patent
Square One Podcast With Guest Tim Draper
Tim Draper "Everyone Wants to Leave California"
ICE CEO Won't Rule Out Crypto Futures Launch
Bitmain Gets Go-Ahead for US Bitcoin Mining Operation
Zcash Completes 'Powers of Tau' Privacy Ceremony
Moody's: Blockchain Could Save US Mortgage Industry $1 Billion

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