Crypto Billionaires Among China’s Wealthiest

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There is no question that the entire cryptocurrency sector is in a bear market, with many cryptocurrencies losing over 50% of their value.  However, this certainly hasn’t prevented individuals from becoming very wealthy through cryptocurrency-related ventures.

Specifically, despite the decrease in market capitalization of various cryptocurrencies, several Chinese businessmen have landed onto a list of China’s wealthiest individuals thanks to companies associated with cryptocurrency.

Notable Figures

The Hurun report is released annually, and 13 cryptocurrency-related businessmen have made the list, which includes individuals with at least a net worth of 2 billion yuan, or $289 million USD.

The highest entry belongs to Micree Zhan Ketuan, the founder of Bitmain Technologies, and the only cryptocurrency-related businessman to penetrate the list of the 100 wealthiest people in China, with an estimated net worth of 29.5 billion yuan.  This is not surprising, considering Bitmain – the largest bitcoin mining company in the world – is on track to reach $10 billion in revenue by the end of this year, and is valued at over $10 billion already.  Another high entry belongs to the other co-founder of the same company, Bitmain, Wu Jihan, who comes in at #204, with an estimated worth of 16.5 billion yuan.

China has been known to dominate the bitcoin mining sector.  In fact, Bitmain, and its two main competitors, Canaan Creative and Ebang International Holdings, have all applied to go public on the Hong Kong Stock Exchange (HKEX).  Nine of the thirteen entries on the Hurun report come from these three companies alone.

China Crackdown

This is even more interesting considering the fact that China has been cracking down on the cryptocurrency sector in general.  The Chinese Central Bank has repeatedly warned bitcoin exchanges about their activity, and went on to ban initial coin offerings, which led to the iconic cryptocurrency exchange BTCC closing, which many in the cryptocurrency community felt was a symbolic end to an era where China seemed to tolerate cryptocurrency – and that the tides were shifting.

Ironically, it was this crackdown that actually helped Binance, the world’s largest exchange by daily volume, adapt and expand to countries such as Japan and Singapore, rather than keep China as headquarters.  Zhao Chenpeng, 41, also makes the list, at #230, with an impressive 15 billion yuan.

It is clear that despite the crackdowns on cryptocurrency in China, and the volatility of the markets – the leaders in the cryptocurrency market have certainly been able to accrue substantial wealth in 2018.

The ICO market is a highly volatile terrain, being that there are new ICOs being put out constantly and they are all in competition in every sector there is for investors to choose. It can be easily said that ICO investment is a sort of a gamble since investors buy into the ICO either through fiat currency or preexisting digital tokens in the hope that the ICO will perform exceptionally well in the future and provide great returns. ICOs have been particularly useful for startups that are avoiding the vigorous traditional funding process stipulated by banks or venture capitalists.

In this case, ICOs are very much like IPOs only difference is that with ICOs, it is purely a hoe and pray whereas with IPOs, the investors have a better understanding of the well set up venture that they are putting their money into and they actually own part of the business they are investing into in form of shares. As such, IPOs are regulated, centralized and are mainly for the purpose of advancing the operations of the venture. As for ICOs, the tokens being issued have no inherent value, are largely unregulated and function on a decentralized blockchain platform.

The best and actual only benefit of ICOs is their potential for amazing returns. And they have indeed made a lot of millionaires from investors. In 2017 for example, there were over 435 successful ICOs that raised about $5.6 billion, 25% of which was raised by the top ten ICOs in that list. Here are the best performing ICOs of 2018 that gave the best returns on investment.

 

ICO Dates

Country

Initial Token Price

 ROI

Tezos XTZ 7th -13th July 2017

Switzerland

$0.4000

253.7%

Dent DENT 12th–26th July 2017

China

$0.0005

538.52%

Tron TRX 31st Aug- 2nd Sep 2017

China

$0.0019

1,221.29%

Ethbits ETB 15th Apr-13th May 2017

United Kingdom

$0.8800

604.55%

Humanic HMQ 6th-27th Apr 2017

Luxembourg

$0.0035

1,494.79%

OmiseGo OMG 7th July 2017

Singapore

$0.2742

1,533.7%

OX ZRX 15th-20th August 2017

United States

$0.0480

1,546.49%

Populous PPT 24th June-24th July 2017

United Kingdom

$0.2522

1,635.15%

QTUM 12th-17th March 2017

China

$0.1500

3,049.76%

NEO 8th Aug-7th September 2016

China

$0.1590

14,177.50%

Stratis STRAT 21st June-26th July 2016

United Kingdom

$0.0073

23,629.35%

These ICOs are termed as best performing because of the return of investments that they have brought about. It does not however negate the probability of risk that is basically the trademark of the cryptocurrency market. It is however my opinion that for those of you who are interested in investing into crypto, it is easier to start with more stable coins like Ethereum and Bitcoin, then diversify as you learn more about trading and the potential to make good on your investments so as to take intelligent risks.

There are quick steps to follow where one is interested in ICO investments:

  • Sign up on a digital currency exchange.
  • Buy and stock up on the currency that supports the ICO.
  • Once you have stocked up as much as you intend to invest, transfer the holdings into a digital wallet that supports the ICO you are investing in.
  • Make sure to access the whitepaper that outlines everything regarding the ICO and be certain that you are able to get to the ICO’s official website.
  • Once you have entered the token sale, register for the ICO by providing your public wallet address as required by the site.
  • Follow the ICO buying instructions on launch day, where at the end you will receive the ICO cryptocurrency at the specified rates offered.
  • Once you have received the tokens, you can exchange them for USD or other digital currencies if you please.

There are no specifics to locating upcoming ICOs since there are new ones coming up almost constantly. However, having online curiosity or using cryptocurrency bots is a good option where they have key words like ICOs or crypto news for example on their social features to give you information on ICOs. There is a site like ICO Watchlist that allows you to look at new ICOs or news of preexisting ones and the trading prices as well as if they are viable options or potential scams.

 

In January of 2018, Bloomberg posted an article regarding the cryptocurrency prices which were a staggering 43% higher than those of cryptocurrency in the US. Bitcoin for example surged to such highs towards the end of 2017 and at the same time the rules and regulations on cryptocurrency exchanges and trading in China, Korea, Japan and other Asian countries tightened much to the delight of crypto bulls. The opportunity to purchase cryptocurrency and re-sell it to Asian entrepreneurs at a high profit margin presented itself on a silver platter and boy did they sell!

Background

In a country like Japan, the market was open at the time and crypto enthusiasts would buy there and resell in regulated markets like South Korea for up to 30-40% profit margins. In fact Reuters reported that at the time when Bitcoin was selling for $17,000, in South Korea (remember the Kimchi Premium phenomenon we discussed earlier) effected a $23,000 price quote. It was a field day on peer to peer exchanges like Alipay and Taobao where the exchanges were basically done over the counter before price correction came up and burst the bubble.

This arbitrage season can be classified as purely geographical; traders buy their coins in crypto friendly countries and sell them to banned or rather frustrated markets desperate to indulge. Yes, I know it seems unfair but at that point, everyone was in a mad rush to cash in on cryptocurrency considering the booming prices at the time, which many mistakenly assumed would last. In China, come September 2017, the country had banned all ICOs, all cryptocurrency activity and exchanges until they came up with regulation on how cryptocurrency would help their economy.

As such, following this notice, a bunch of cryptocurrency businesses moved their activities to friendlier jurisdictions and even adjusted their business models in an attempt to escape the harsh Chinese stance. South Korea suffered a great deal because of all the scandals, they had the most problems with the crypto boom towards the end of 2017. From Ponzi schemes, to traders selling their own orders, to fake demand where scammers would place large orders that were never to be filled, it was pandemonium. The CEO of Coinnest got indicted along with over 24 others for swindling around 18,000 investors of close to $250 million.

Why Does Asia Have Such An Impact on Cryptocurrency?

It is worth mentioning that Asia dominates mining and cryptocurrency exchange, despite the harsh conditions and crackdowns by China, South Korea, Hong Kong and Japan, Asia is still crypto king. In this article, we are going to try and explain some of the reasons why this is the case and if Asia will maintain this trend in the long run.

China has a work ethic that is almost unbeaten worldwide. The country is addicted to technology and has some of the best inventions on just about anything you can come up with, China has it. It is literally a one stop shop for everything technology. So that being said, it is in their culture and digital trading is not something new. In fact, for the last two decades, China has had the notion in all their online gaming ideas.

Secondly, the country does not suffer electricity bills like the rest of the world do. Their electricity is cheap and considering that crypto mining requires tons of electric energy, it is obvious that they are in the lead. Mining companies like Antpool, BTCC and Bitfury generate two thirds of all Bitcoins generated per day which testifies to their superior hardware manufacturing industry. And these coins are connected to various exchanges across Asia and circulated worldwide.

China is a communist and centralized republic. Meaning the cryptocurrency market for them is a threat to this ideal. The volatility and unregulated nature of blockchain and crypto in general serves only to frustrate the economy of the country unless they can figure out how to make it serve to advance their economy.   

Another reason is that Asia alone covers the largest global cryptocurrency volume. Morgan Stanley, banking giant posted a report quoting that the majority of Bitcoin trading with fiat is dominated by the Japanese Yen, standing at 55.7% compared to 21.8% in USD.

South Korea has proved to be a heavy hitter in matters cryptocurrency with a shocking third place position in the global crypto market size, despite the country having a GDP less than a third that of Japan. Current research dictates that one out of every fifty South Koreans trades daily with cryptocurrency.

Asia’s economy can be hailed as low growth but highly motivated savings principles. Like japan only in the last few years has been recovering from a near decade long economic stagnation and shares the high savings ideals with South Korea as it is almost impossible to fault these countries’ GDPs. This leaves them at an advantage should they decide to heavily invest in cryptocurrency, by supplying Bitcoins when they are on demand.

Market Conditions Now

The cryptocurrency market is not what it was at the end of 2017 and early 2018, the demand for Bitcoins and cryptocurrency has fallen significantly but these does not mean that there are no arbitrage opportunities, you can still make profits.

The 30-40% profits that were once made by the underground crop of cryptocurrency mules who would literally carry physical cash across borders to make crypto purchases, has now fallen to lows of less than 7%, especially with the conditions of the markets as 2018 progressed. Bitcoin has shown some gains at the start of the second week of January but was not able to sustain the $4,000 mark.

The volatility of the crypto market is one of the reasons why arbitrage could be profitable to investors. Taking advantage of the turbulent market conditions is something experienced traders do and do well as they are used to taking these kinds of risks which to them translate as money making opportunities.

One of the best placed profiteers in the current crypto market are corporates like hedge funds for example. Such big players have the advantage of numbers compared to individual investors. Corporates are making money via arbitrage through a method known as ‘short squeezing’. It’s a market manipulation tactic fellow junkies and it works since arbitrage opportunities do not last long.

In China, Tether is one of the cryptocurrencies that are used to move funds discreetly due to its minimum volatility and the fact that Tether pegs itself to the U.S Dollar only makes it more popular. It also helps that the coin is not very popular compared to other coins with larger trading volumes. Even though the profit margins are not extreme, the 2.5-3.5% is not meaningless even though it needs careful observation to detect the arbitrage opportunities.

The other way to make profits is over the counter (OTC). It is illegal however and it is worth mentioning before we proceed. With the tough market conditions, people came up with ingenious ways to still make profits by conducting trades outside of formal exchanges and under the nose of regulators.

Conclusion

Cryptocurrency arbitrage opportunities are not as numerous as they used to be but they are not non-existent. There are many ways to still make a profit via arbitrage and the best way for regulated markets is by the use of arbitrage bots that we had discussed earlier. It is also prudent to know the risks involved in arbitrage such as hidden costs and exchange policies that may not have been communicated beforehand.  

 

 

 

 

 

China’s Central Bank deputy governor has denounced STOs terming them as illegal activities in China following the slow progress from Initial Coin Offerings to the newer ICO called Security Token Offerings. STOs represent an ICO backed by tangibles such as assets, or profit or revenue of a company. Ultimately more lucrative than an ICO. However, both are still currently banned in China. 

Pan Gongsheng, the deputy governor of the People’s Bank of China said that financing activities through STOs and ICOs were illegal, even though the activities continue to be rampant in the mainland following a nationwide crackdown of cryptocurrency markets from 2017. 

Companies have been looking at moving to STOs following the lack of success with ICOs recently, companies in China may think that this loophole allows them to promote their business as ICOs are currently illegal in China. However, the governor announced, “The STO business that has surfaced recently is still essentially an illegal financial activity in China, Virtual money has become an accomplice to all kinds of illegal and criminal activities.”

Gongsheng admits that most ICO and STO fundraising projects in China are linked to possible illegal fundraisings and pyramid schemes, among other financial fraud.

China’s crackdown on ICOs in 2017 came after 80% of all ICO financing was taking place in China. The clamp-down in a bid to curb crime within the industry appears to have had a positive effect on the industry. China took steps to stop ICO operations and participation within the country due to the negative effect the potentially illegal activities could have on the countries overall financial industry.

Huo Xuewen, Chief of financial watchdog Beijing Bureau of Financial Work, issued a stern warning to anyone trying to operate an STO in China “I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”

China remains one of the massive players in the cryptocurrency space and is taking steps to prevent companies from taking advantage of citizens and damaging the financial industry in the country.

Cryptocurrencies and the technology behind it can be realistically considered to be one of the most driven advances in the financial sector. Not only because of the nature of the assets but the entire working idea behind it, the transactions and the virtual lack of regulation surrounding digital currencies.

Fast forward to say a decade or two, money will be virtual globally. Meaning walking around with actual cash will be a rare occurrence. Digital currencies have skipped that hurdle and are completely encased in a system that is complicated for most people to understand.

Moreover, the blockchain system is a complete opposite of the traditional financial system around the world which are already regulated. It doesn’t mean that cryptocurrencies are a mystery. It is gaining more knowledge and assimilation worldwide. So with higher popularity, comes the need for regulation.

Crypto has seen its fair share of multiple scams and fraud incidences. Different countries have different stands on cryptocurrencies. Let us have a look at a few economies around the world and analyse the regulations they have put in place.

1.China

China was once the biggest cryptocurrency market worldwide and used to dominate Bitcoin trading. As of last year, their stand on cryptocurrency trading became harsh and they banned ICOs. The reason behind this move was the volatile Bitcoin prices. In 2017, Bitcoin soared to levels of $20,000, raising the interests of the US, South Korea and Japan. In 2018, they dropped to lows of $7,000.

China supports the underlying blockchain technology but states that the use of the technology has raised significant concerns especially because the trades are unregulated and have been used for fraudulent and questionable purposes before. In August 2018, five different Chinese government bodies; People’s Bank of China, Banking Regulatory Commission, State Administration for Market Regulation, Central Cyberspace Affairs Commission and Ministry of Public Security issued a warning regarding the use of cryptocurrencies and ICOs for risky illegal use.

The Chinese government wants to protect its financial stability and regards the unregulated use of cryptocurrencies and the unlimited trading of the same as a threat to its economy. Crypto mining is not banned however, and individual investors have not been badly affected by the current bans.

2.U.S

To begin with, even the term cryptocurrencies in the U.S is subject to different definitions in different jurisdictions. The Financial Crimes Enforcement Network only recently acknowledged crypto trading as some sort of currency which they term as ‘money transmitters’ and tokens as ‘other value that substitutes for currency’. The IRS has issued a tax guidance and legally recognizes cryptocurrencies as property.

The SEC (Securities and Exchanges Commission) considers cryptocurrencies as securities and earlier this year were looking forward to setting up comprehensive securities laws that would govern digital assets and the transaction of the same.

The Commodities Futures Trading Commission (CFTC) approach is that it allows cryptocurrencies to trade publicly and describes Bitcoin as a commodity. As of two days ago, American Cryptocurrency enthusiasts are awaiting the first ever Bitcoin Exchange Traded Fund (ETF) from the SEC. ETFs trade like stocks by tracking groups of assets or indices. If the ETF goes through, it may auger well for the future of bitcoin and other cryptocurrencies at large.

3.U.K

Cryptocurrencies in the U.K are not really legally defined as legal tenders but the trade of cryptocurrencies have specific registration requirements. Cryptocurrencies in the U.K are required to register with the Financial Conduct Authority (FCA) and has set up trading guidance that ensures that entities engaged in cryptocurrencies which fall under pre-existing financial regulations for futures and options and other derivatives require authorization.

The FCA is working closely with the Bank of England as recommended by UK’s Treasury Committee to establish well worked out framework around cryptocurrencies and ICOs so that consumers can be protected seeing that cryptocurrencies are under limited FCA jurisdiction.

4.Australia

Australia was among the first countries to institute cryptocurrency regulations. In fact, it was the second after Japan to declare cryptocurrencies and Bitcoin as legal tender in 2017.

In 2018, on the sole motivation of consumer protection, Australia’s Financial Intelligence Agency (AUTRAC), laid down actionable guidelines to be flowed by any ICOs under anti-money laundering and counter-terrorism laws.

5.South Korea

The Asian country has had a confusing stand on cryptocurrencies altogether. In September of 2017, there were rumours of blanket ban on all ICOs, which were consequently dismissed in January 2018. The ban did not happen and it seems that South Korea has had a change of attitude towards crypto.

This came with harsh regulations;

  • Banning anonymous trading
  • Substantial Taxation of exchanges
  • Forbidding minors and government officials from trading
  • Banned local financial institutions from hosting trades of bitcoin futures

6.Japan

Japan is the first country to regulate bitcoins and cryptocurrency trading overall. However, as time has gone by, their grip has become tighter and tougher. In recent months, investors have lost sums of up to 7 billion Yen.

A recent hacking scheme led to the loss of approximately $61 million stolen from Osaka based trader Zaif being operated by Tech Bureau Corp. this is not to mention what happened to Coincheck, the world’s leading crypto exchange in January.

Revision of the existing regulations require more frequent audits and taxation of the exchanges as crypto is treated as an income for the business.

7.Canada

Canada has not been very quick to jump on the cryptocurrency bandwagon but has undoubtedly become one of the more favourable countries to trade crypto. Their government has been working on a regulatory document but it will be revealed in early 2019. As such, crypto is not considered a legal tender but trading is very much allowed in the state.

There are high hopes that the regulations will be favourable as compared to the initial imposed rules that had been proposed in June 2018.

8.India

The Reserve Bank of India banned Indian banks from serving Bitcoins and cryptocurrency exchanges. India used to issue subliminal threats to investors and entities and businesses as well through official statements regularly, so maybe the ban was not a complete surprise.

The most telling threat came worded like this;

‘The government does not recognize cryptocurrencies as legal tender or coin. As such it will take all measures necessary to eliminate the use of these crypto assets in financing illegitimate activities.’

I may point out that the stand is completely unreasonable and unjustified. This leaves the question as to the future of cryptocurrencies in India.

Conclusion

Matter of fact, crypto regulations are only just beginning to unravel. On the one hand, it is a prerequisite since the idea is to make sure people have faith in the digital assets trading ground. This also means that it will take a long time to come up with highly effective legal framework to regulate crypto since the technology behind it is what runs the transactions altogether, eliminating the need for a legal intermediary.

Countries inherently look to preserve their financial stability and functional economies and may adapt crypto regulation at different speeds depending on their technological abilities. My take is that the scrutiny of crypto as a whole is a real playing factor before regulations can be set up.

 

 

 

 

 

The past week has seen the cryptocurrency bear market thrive on its position with prices plummeting to their lowest since October 2017. In August 2018, Bitcoin prices had started the downward freefall with prices threatening to hit below the $5,000 mark, and they eventually did in November. Cryptocoinjunky has posted articles on the reasons behind the Bitcoin crash which had been highly anticipated due to the splitting up of Bitcoin SV and Bitcoin ABC.

Back in August, cryptocurrency experts were markedly optimistic about Bitcoin prices recovery. Meltem Demoirs of CoinShare actually compared Bitcoin to internet stock prices. According to him, new technologies that capture the attention of many usually tend to face incredibly challenges severally before being fully utilized and prospering. He envisioned crypto technology as such an invention.  

Expert analysis

Since Bitcoin took off in 2009, cryptocurrencies have made significant strides in the digital currency world. But the question still lingers on the worth of digital assets investments in the future. Let us have a look at a few comments and market predictions from crypto experts on the current cryptocurrencies state.

Bitmex’s crypto expert Arthur Hayes believes that Bitcoin prices will hit $50,000 by the end of the year. This is despite the severe plummet of prices across the board that has been experienced in the last few months.

A sitting panel put together by investment company Finder analyzed the top performing coins by market cap. The predictions were set on an overview of 2018/2019 market price analysis.

  • Bitcoin (BTC),
  • Ether (ETH),
  • XRP (XRP),
  • Bitcoin Cash (BCH),
  • EOS (EOS),
  • Stellar Lumens (XLM),
  • Litecoin (LTC),
  • Cardano (ADA),
  • Monero (XMR) and
  • TRON (TRX)

In summary, the panel was optimistic that XRP, ETH, and EOS will increase in value by almost 200% by the end of 2019. Bitcoin will follow suit by an increase of 177% and Bitcoin cash by 77%.

Jeet Singh boldly compared crypto to Apple and Microsoft stating that it is completely normal that cryptocurrencies fluctuate by 70-80%. The volatile market may be unappealing to most investors but according to the investment portfolio manager, the more stable business models and crypto technology becomes, the more confidence it should inspire. Is he right? Is it a short term or long term prediction?

Kristjan Dekleva, a Swiss-based financial analyst and asset investment expert seems to see the future in crypto will be a long time coming; a decade, but will surely be worthwhile. He seems to echo the sentiments by Meltem Demoirs as far as cryptocurrency market stability is concerned. According to him, crypto downfalls have ‘been caused by emotions and misinformation where small rumors have a big impact.’

Kenneth Rogoff shades the sentiments of Kristjan and says that the price of Bitcoin will be worth $100 in ten years. Rogoff based his argument on the regulation of cryptocurrencies that he is sure will cause the market to plummet. In his expert opinion, governments and regulatory bodies hardly seem to grasp the technology behind digital assets and for this reason, the market will be hard hit as financial bodies come up and design regulatory frameworks regarding crypto transactions.

Gemini co-founder, Cameron Winklevoss is also optimistic, although on the drawn outside of things. He is sure that the price of Bitcoin could go up by 40%, in a decade or so. He also stated that the crypto market is highly underappreciated and it is one of the reasons why the market is so volatile.

Bobby Lee, co-founder of BTCC made a lauding comment on twitter regarding the value of Bitcoin compared to that of gold. On November 20th, 2018, he tweeted that Bitcoin is currently 1/8 the value of gold. He predicts that Bitcoin’s ‘rise to the top’ will not come easy but is definitely an outcome to look forward to. Only ‘true believers’ will survive to reap exceedingly great profits from Bitcoin after the bear season subsides.

John McAfee, the ever bullish supporter of Bitcoin came out hard on panic sellers today and asked them to relax or just get out of the market altogether. His tweet is unprintable (the cursing alone) but he has a point. According to him, the cycle of investment markets is always the same. Cyclical. It has ups and downs; at times the down being brutal and it does not help that investors are panicking. ‘Bear markets are like winter, it’s always followed by a glorious spring.’ He points the recent crash on fear, ignorance, misinformation, and uncertainty.

Conclusion                                                                              

With the sentiments above and numerous others not posted, I think it is safe to say that yes, indeed the market is notoriously volatile, unpredictable, but not uncertain. Bitcoin prices will rise. For one, the crypto market is in constant expansion. For example, Saudi Arabia and the UAE are developing a cryptocurrency that will be launched mid-2019. Intercontinental Exchange, owner of the NY stock exchange has plans underway to open a Bitcoin futures product, the Bakkt Bitcoin Daily Futures Contract, which will be launched in early 2019.

Cryptocurrency regulation will aid the digital assets market to stabilize, even though short term, it will and is currently causing prices to drop (refer to recent developments in South Korea and China).

Francesco Fusetti CEO of AidCoin stated today that the drop in prices is actually beneficial to the market as it weeds out weak performers and strengthens knowledge of digital assets trading. Bitcoin has been the top performing coin in blockchain technology since its inception and has set a standard for virtual currencies.

This week, Bitcoin mining equipment manufacturer and blockchain software firm Bitfury secured a valuation of $1 billion from billionaire investor Mike Novogratz and Korelya Capital’s $80 million investment in the firm.

The multi-million dollar funding round comes after the release of Bitfury Clarke, the firm’s new Bitcoin ASIC miner, designed to compete against Bitmain’s new equipment, the 7nm Antminer.

Valery Vavilov, the CEO of Bitfury, stated that the demand for the blockchain and crypto in general from companies and institutions had increased significantly over the past 11 months.

“We see a lot of demand from companies and public institutions to put their services or products in the blockchain — especially in emerging markets, where administrative systems can be very inefficient.”

Rising Activity in Mining and Blockchain

Throughout the past four months, despite the sideways market of Bitcoin (BTC) and the 70 percent correction experienced by the cryptocurrency market since January, the hash rate of the Bitcoin blockchain network has increased substantially from 15 million TH/s to over 50 million TH/s.

The increase in the hash rate of the Bitcoin network, which represents the strength of the blockchain’s computing power, led to a surge in the breakeven cost of crypto mining.

In July, cryptocurrency analyst Barclay James reported that the breakeven cost of mining Bitcoin is around $6,900, based on the hash rate of the Bitcoin network at the time which was 35 million TH/s.

According to Blockchain, the most popular cryptocurrency wallet platform in the sector, the hash rate of Bitcoin currently remains above 50 million TH/s, up 42 percent since July. Since the $6,900 breakeven cost of Bitcoin mining was calculated based on 35 million TH/s,  the breakeven cost of mining has well surpassed $7,500 even in regions with naturally cold climates and cheap electricity like China that reduces operational costs.

“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage,” James wrote.

Due to the rise in the breakeven cost of mining, miners are generating BTC at a fairly large loss. Until BTC breaks out of the $7,000 resistance level and to the high region of $7,800 to $8,000, miners will continue to mine BTC with a loss of around 20 to 30 percent.

Still, the hash rate of BitcoinEthereum, and other major cryptocurrencies continues to surge, as does the demand for mining-focused ventures like Bitfury, Bitmain, and Samsung’s new foundry.

Lucrative Business Models of Mining Companies

Bitmain is finalizing a $15 billion IPO, and, earlier this year, Bloomberg reported that if Bitfury IPOs, it will target a valuation of $3 to $5 billion.

Mining companies and mining equipment manufacturers like TSMC and Samsung remain confident in the long-term development of the industry, and the investment of a major venture capital firm in Korelya is considered a confirmation of strength of the industry in a period of uncertainty and doubt.

Korelya is an investment firm financed by Naver, the largest search engine operator in South Korea that is more widely utilized than Google in the region. Bitfury is the first indirect investment in crypto from Naver.

Andreas M. Antonopoulos, the author of “Mastering Bitcoin” and a self-proclaimed “computer geek” who has dedicated his career to bitcoin, has a bone to pick with Bitly, the web-link shortening service.

Bitly has seemingly blacklisted cryptocurrency sites from its service, prompting readers with a warning prior to redirecting to the original website, a Twitter thread between the bitcoin expert and one of his readers reveals.

Antonopoulos is close to publishing his fourth book, which is comprised of hundreds of crypto-related bit.ly links that Bitly is blocking. A reader seemingly brought this to his attention, questioning why Bitly was issuing a warning when the sites “don’t point to any harmful location at all.”  Antonopoulos asks the company for an explanation, threatening to remove and replace all of the bit.ly links with a competitor. The fourth book he references appears to be “Mastering Ethereum”, which comes out in less than four weeks.

The “Mastering Bitcoin” author went on to canvas the crypto community for a solution, asking: “What (reliable, neutral, established) link-shortening service can I use that doesn’t filter/block links based on a broken blacklisting service? I need to replace all @Bitly links in my book ASAP.” While he wasn’t looking for “roll your own” suggestions, this is largely what he received from the Twitter sphere.

Other followers suggested that Antonopoulos avoid shortening links in his new book altogether, saying that readers aren’t keen on clicking on a link shrouded in mystery anyway. Others still suggested taking a more decentralized approach by using an archive system at the end of the page or chapter to avoid relying on a third-party altogether.

Crypto Ban Deja Vu

Antonopoulos is an influencer in the cryptocurrency community and probably someone that Bitly doesn’t want to alienate, as it would likely trigger a ripple effect among blockchain-content publishers.  He is an early bitcoin investor who previously sold his holdings to pay his rent, in response to which he became in a millionaire thanks to donations by the crypto supporters inspired by Roger Ver.

His books, which also includes “The Internet of Money”, are best sellers. Most recently, “Mastering Bitcoin” has made its way into China’s media programming, though they replaced Bitcoin in the title with Blockchain. Antonopoulos said that “even with a slightly sanitized title…the content is the same.”

Meanwhile, tech leaders including Facebook and Google earlier this year attempted to officially block crypto-related ads but those bans have since been lifted. Investors cried foul at the time, pointing out how tech giants continued to allow ads for other risky sites like gambling. Meanwhile, ads are a key component to the tech revenue model.

It’s unclear if Bitly has taken an official position on crypto-related links, and the company has yet to respond to an email seeking comment.

Bitcoin (BTC) turned ten on Oct. 31, but there were no fireworks to mark the celebrations: the cryptocurrencies continue to trade in a tight range. Arthur Hayes, CEO of BitMEX, believes that the current period of low volatility can remain for another 12 to 18 months and can drag the price of the leading cryptocurrency to the $2,000–$3,000 zone.

However, we have a different opinion. We believe that the volatility is unlikely to stay subdued for long. Within the next few weeks, we should get a large range move that will start a new trend, either up or down.  

BCH/USD

This week, we have a new leader, Bitcoin Cash, that has risen about 9 percent during the past week. Until Thursday, the price of the digital currency was languishing similar to the other cryptocurrencies. However, on Friday, prices soared following an announcement by crypto exchange Binance that it would support the impending hard fork on Nov. 15. After the initial bump up, can the rally continue? Let’s find out.

BCH

The long-term trend on the BCH/USD pair is clearly down. Throughout this year, it has failed to hold on to the support levels and has continually made a lower low. Though the bulls have held onto the $408.32 mark for the past seven weeks, they haven’t been able to push prices higher. This shows a lack of demand at higher levels.

The current pullback will face a stiff resistance in the zone of $591.41–$660.0753. If price sustains above this zone, it can climb to $891.4634 and thereafter to $1,200.

On the downside, $408.32 is the critical support, below which the fall can extend to $282. The longer the virtual currency stays in a tight range, the sharper the next move will be. It has a history of vertical rallies; therefore, the traders can buy when a reliable buy setup forms.

XLM/USD

After the recent listing of BAT on crypto exchange and wallet Coinbase, will Stellar be the next cryptocurrency that will make the cut? Many believe that XLM has the requisite credentials to be listed on Coinbase. If that happens, we might see a rally. What are the key levels to watch?

XLM

The XLM/USD pair has formed a large descending triangle pattern that will complete on a breakdown and close (UTC time frame) below $0.184. Currently, the bulls are attempting to break out of the downtrend line of the triangle, which will invalidate the bearish pattern. Failure of a bearish pattern is a bullish sign.

We like the way the digital currency has stayed above $0.2 levels for the past five weeks, which shows demand at lower levels. If the bulls succeed in sustaining above the downtrend line, a rally to $0.36 followed by a move to $0.47 is likely. Traders can wait for prices to sustain above $0.30 before buying. That is because if the prices turn down sharply after a break out of the downtrend line, the probability of a break down of $0.184 increases.

Featured cryptocurrency* – ARK/USD

ARK is currently ranked 71st in terms of market capitalization. It is about to release the much-anticipated new core code base, making it faster and modular with full plugin capabilities similar to WordPress.

Anyone can create their own fully customizable cross chain compatible blockchain using ARK. It will also be the first delegated proof of stake (DPOS) with a switch from static/flat fees to a customizable dynamic fee structure. There are a number of new features and partnerships being added regularly whose details can be accessed on its blog.

ARK

Similar to the other cryptocurrencies, the ARK/USD pair has also been in a strong downtrend since topping out in early-2018. The bulls attempted to stall the decline around the $2 mark, which was a strong support. However, the bears broke below it in early-June, resulting in a sharp fall.

The virtual currency bottomed out in mid-August at $0.50712042. Since then, the price has gradually inched higher, which is a positive sign. On the upside, $1.02093420 might act as a stiff resistance. If the bulls scale this level, a rally to the overhead resistance zone of $1.68–$2 is probable. The digital currency is likely to pick up momentum above $2.

On the downside, if the bears sink prices below $0.50712042, a fall to $0.40 and $0.30 is possible.

XMR/USD

Monero rose by just over 1 percent in the past seven days, claiming the third spot in the list of top performing cryptocurrencies with a market capitalization of more than $1 billion.

XMR

Since early July, the XMR/USD pair has been trading in the range of $81–$150. For the past seven weeks, the range has shrunk to $100.453–$128.65. From last week, the weekly range has reduced further. The tighter and longer the range, the stronger the eventual breakout or breakdown will be.

However, the first move is often a false one. Therefore, traders should wait for the breakout to sustain and show follow up buying before jumping in to buy. There are no significant resistances above $150 until $300.

Conversely, a break below $100.453 will increase the probability of a fall to $81. This is a major support, as it has not been breached convincingly for more than a year. Hence, if this level gets broken, the digital currency can quickly correct to $52–$58.

EOS/USD

EOS again received the top standing in China’s 6th global public blockchain technology assessment index. On the other hand, research conducted by benchmarking firm Whiteblock for ConsenSys concluded that EOS lacks “the fundamental components of a blockchain or peer-to-peer network” and is “fundamentally same as a centralized cloud computing architecture.”

EOS

The EOS/USD pair has been trading inside the range of $4.493–$6.8299 since August. For the past five weeks, the range has tightened further. This shows a balance between the bulls and the bears. Currently, neither party is making a major move and new investors are sitting on the sidelines.

If the price breaks out of the tight range, it can move up to $6.8299. Above this, we anticipate buying to resume that can carry the digital currency to $9.4456 and $15. However, if the price breaks below the current tight range, it can drop to $4.49, which is a minor support. $3.8723 is the critical support, below which the price might plummet to $2.40 and $1.70.

XRP/USD

Ripple has been making progress in signing various institutions to its platforms, mainly targeting cross-border payments. The Middle East is a lucrative market for the company because of the high level of payments that go in and out of the region. Ripple has already tied up with a few banks in Saudi Arabia, Kuwait, Bahrain and Oman, and the company now reportedly plans to open an office in Dubai by the end of the year. How does its chart look?

XRP

The XRP/USD pair rallied sharply in mid-September. However, the bulls could not sustain the momentum and the pullback extended to 78.6 percent retracement levels. Usually after such a deep retracement, a range bound action for a few weeks is likely. For the past two weeks, the 20-week EMA is acting as a resistance. If the bulls break out of the immediate resistance zone at $0.475–$0.5, a move to $0.62 and $0.7644 is plausible. We expect a new uptrend to begin above $0.76440.

If the bears sink the price below $0.37185, the virtual currency will complete a 100 percent retracement and drop to the critical support at $0.24508.

As reported by the trusted news source in China, CnLedger, the country’s merchants can legally accept cryptocurrency as payment. According to reports by the Shenzhen Court of International Arbitration, Bitcoin is now officially recognized property, which allows individuals as well as businesses to transfer and own BTC without conflicting with current financial regulatory protocol.

Circulation of Bitcoin in China: Not Illegal

Crypto researcher, Catherine Wu, who also analyzed court documents by the Shenzhen Court Of International Arbitration, delved into the reason behind the decision by the courts.

Wu explained that due to the decentralized nature of BTC in which it can provide economic value and financial freedom to the owner, the asset is therefore recognized as personal property.

The court also emphasized that regardless of the legality behind the Bitcoin and other cryptocurrencies, the circulation and payment of BTC is not illegal. Bitcoin does not have the same rights as fiat currency, however that doesn’t mean that holding or paying with cryptocurrency is the illegal.

Several hotels located in China have also started to accept cryptocurrency. One such hotel has branded itself as the “Ethereum Hotel” which provides discounts to those who pay for their services utilizing Ethereum.

China’s Optimistic Stance

China’s stance towards blockchain technology and cryptocurrency seem to be positive overall. It’s becoming more and more apparent that the Chinese government has temporarily placed a blanket ban on cryptocurrency trading only, in order to prevent the devaluation of Chinese Yuan. Overall, the government remains open to cryptocurrency usage as well as the implementation of blockchain to improve existing infrastructures as well as issues pertaining to software and data protocol.

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Crypto Billionaires Among China’s Wealthiest

Crypto News | Latest News

There is no question that the entire cryptocurrency sector is in a bear market, with many cryptocurrencies losing over 50% of their value.  However, this certainly hasn’t prevented individuals from becoming very wealthy through cryptocurrency-related ventures.

Specifically, despite the decrease in market capitalization of various cryptocurrencies, several Chinese businessmen have landed onto a list of China’s wealthiest individuals thanks to companies associated with cryptocurrency.

Notable Figures

The Hurun report is released annually, and 13 cryptocurrency-related businessmen have made the list, which includes individuals with at least a net worth of 2 billion yuan, or $289 million USD.

The highest entry belongs to Micree Zhan Ketuan, the founder of Bitmain Technologies, and the only cryptocurrency-related businessman to penetrate the list of the 100 wealthiest people in China, with an estimated net worth of 29.5 billion yuan.  This is not surprising, considering Bitmain – the largest bitcoin mining company in the world – is on track to reach $10 billion in revenue by the end of this year, and is valued at over $10 billion already.  Another high entry belongs to the other co-founder of the same company, Bitmain, Wu Jihan, who comes in at #204, with an estimated worth of 16.5 billion yuan.

China has been known to dominate the bitcoin mining sector.  In fact, Bitmain, and its two main competitors, Canaan Creative and Ebang International Holdings, have all applied to go public on the Hong Kong Stock Exchange (HKEX).  Nine of the thirteen entries on the Hurun report come from these three companies alone.

China Crackdown

This is even more interesting considering the fact that China has been cracking down on the cryptocurrency sector in general.  The Chinese Central Bank has repeatedly warned bitcoin exchanges about their activity, and went on to ban initial coin offerings, which led to the iconic cryptocurrency exchange BTCC closing, which many in the cryptocurrency community felt was a symbolic end to an era where China seemed to tolerate cryptocurrency – and that the tides were shifting.

Ironically, it was this crackdown that actually helped Binance, the world’s largest exchange by daily volume, adapt and expand to countries such as Japan and Singapore, rather than keep China as headquarters.  Zhao Chenpeng, 41, also makes the list, at #230, with an impressive 15 billion yuan.

It is clear that despite the crackdowns on cryptocurrency in China, and the volatility of the markets – the leaders in the cryptocurrency market have certainly been able to accrue substantial wealth in 2018.

The ICO market is a highly volatile terrain, being that there are new ICOs being put out constantly and they are all in competition in every sector there is for investors to choose. It can be easily said that ICO investment is a sort of a gamble since investors buy into the ICO either through fiat currency or preexisting digital tokens in the hope that the ICO will perform exceptionally well in the future and provide great returns. ICOs have been particularly useful for startups that are avoiding the vigorous traditional funding process stipulated by banks or venture capitalists.

In this case, ICOs are very much like IPOs only difference is that with ICOs, it is purely a hoe and pray whereas with IPOs, the investors have a better understanding of the well set up venture that they are putting their money into and they actually own part of the business they are investing into in form of shares. As such, IPOs are regulated, centralized and are mainly for the purpose of advancing the operations of the venture. As for ICOs, the tokens being issued have no inherent value, are largely unregulated and function on a decentralized blockchain platform.

The best and actual only benefit of ICOs is their potential for amazing returns. And they have indeed made a lot of millionaires from investors. In 2017 for example, there were over 435 successful ICOs that raised about $5.6 billion, 25% of which was raised by the top ten ICOs in that list. Here are the best performing ICOs of 2018 that gave the best returns on investment.

 

ICO Dates

Country

Initial Token Price

 ROI

Tezos XTZ 7th -13th July 2017

Switzerland

$0.4000

253.7%

Dent DENT 12th–26th July 2017

China

$0.0005

538.52%

Tron TRX 31st Aug- 2nd Sep 2017

China

$0.0019

1,221.29%

Ethbits ETB 15th Apr-13th May 2017

United Kingdom

$0.8800

604.55%

Humanic HMQ 6th-27th Apr 2017

Luxembourg

$0.0035

1,494.79%

OmiseGo OMG 7th July 2017

Singapore

$0.2742

1,533.7%

OX ZRX 15th-20th August 2017

United States

$0.0480

1,546.49%

Populous PPT 24th June-24th July 2017

United Kingdom

$0.2522

1,635.15%

QTUM 12th-17th March 2017

China

$0.1500

3,049.76%

NEO 8th Aug-7th September 2016

China

$0.1590

14,177.50%

Stratis STRAT 21st June-26th July 2016

United Kingdom

$0.0073

23,629.35%

These ICOs are termed as best performing because of the return of investments that they have brought about. It does not however negate the probability of risk that is basically the trademark of the cryptocurrency market. It is however my opinion that for those of you who are interested in investing into crypto, it is easier to start with more stable coins like Ethereum and Bitcoin, then diversify as you learn more about trading and the potential to make good on your investments so as to take intelligent risks.

There are quick steps to follow where one is interested in ICO investments:

  • Sign up on a digital currency exchange.
  • Buy and stock up on the currency that supports the ICO.
  • Once you have stocked up as much as you intend to invest, transfer the holdings into a digital wallet that supports the ICO you are investing in.
  • Make sure to access the whitepaper that outlines everything regarding the ICO and be certain that you are able to get to the ICO’s official website.
  • Once you have entered the token sale, register for the ICO by providing your public wallet address as required by the site.
  • Follow the ICO buying instructions on launch day, where at the end you will receive the ICO cryptocurrency at the specified rates offered.
  • Once you have received the tokens, you can exchange them for USD or other digital currencies if you please.

There are no specifics to locating upcoming ICOs since there are new ones coming up almost constantly. However, having online curiosity or using cryptocurrency bots is a good option where they have key words like ICOs or crypto news for example on their social features to give you information on ICOs. There is a site like ICO Watchlist that allows you to look at new ICOs or news of preexisting ones and the trading prices as well as if they are viable options or potential scams.

 

In January of 2018, Bloomberg posted an article regarding the cryptocurrency prices which were a staggering 43% higher than those of cryptocurrency in the US. Bitcoin for example surged to such highs towards the end of 2017 and at the same time the rules and regulations on cryptocurrency exchanges and trading in China, Korea, Japan and other Asian countries tightened much to the delight of crypto bulls. The opportunity to purchase cryptocurrency and re-sell it to Asian entrepreneurs at a high profit margin presented itself on a silver platter and boy did they sell!

Background

In a country like Japan, the market was open at the time and crypto enthusiasts would buy there and resell in regulated markets like South Korea for up to 30-40% profit margins. In fact Reuters reported that at the time when Bitcoin was selling for $17,000, in South Korea (remember the Kimchi Premium phenomenon we discussed earlier) effected a $23,000 price quote. It was a field day on peer to peer exchanges like Alipay and Taobao where the exchanges were basically done over the counter before price correction came up and burst the bubble.

This arbitrage season can be classified as purely geographical; traders buy their coins in crypto friendly countries and sell them to banned or rather frustrated markets desperate to indulge. Yes, I know it seems unfair but at that point, everyone was in a mad rush to cash in on cryptocurrency considering the booming prices at the time, which many mistakenly assumed would last. In China, come September 2017, the country had banned all ICOs, all cryptocurrency activity and exchanges until they came up with regulation on how cryptocurrency would help their economy.

As such, following this notice, a bunch of cryptocurrency businesses moved their activities to friendlier jurisdictions and even adjusted their business models in an attempt to escape the harsh Chinese stance. South Korea suffered a great deal because of all the scandals, they had the most problems with the crypto boom towards the end of 2017. From Ponzi schemes, to traders selling their own orders, to fake demand where scammers would place large orders that were never to be filled, it was pandemonium. The CEO of Coinnest got indicted along with over 24 others for swindling around 18,000 investors of close to $250 million.

Why Does Asia Have Such An Impact on Cryptocurrency?

It is worth mentioning that Asia dominates mining and cryptocurrency exchange, despite the harsh conditions and crackdowns by China, South Korea, Hong Kong and Japan, Asia is still crypto king. In this article, we are going to try and explain some of the reasons why this is the case and if Asia will maintain this trend in the long run.

China has a work ethic that is almost unbeaten worldwide. The country is addicted to technology and has some of the best inventions on just about anything you can come up with, China has it. It is literally a one stop shop for everything technology. So that being said, it is in their culture and digital trading is not something new. In fact, for the last two decades, China has had the notion in all their online gaming ideas.

Secondly, the country does not suffer electricity bills like the rest of the world do. Their electricity is cheap and considering that crypto mining requires tons of electric energy, it is obvious that they are in the lead. Mining companies like Antpool, BTCC and Bitfury generate two thirds of all Bitcoins generated per day which testifies to their superior hardware manufacturing industry. And these coins are connected to various exchanges across Asia and circulated worldwide.

China is a communist and centralized republic. Meaning the cryptocurrency market for them is a threat to this ideal. The volatility and unregulated nature of blockchain and crypto in general serves only to frustrate the economy of the country unless they can figure out how to make it serve to advance their economy.   

Another reason is that Asia alone covers the largest global cryptocurrency volume. Morgan Stanley, banking giant posted a report quoting that the majority of Bitcoin trading with fiat is dominated by the Japanese Yen, standing at 55.7% compared to 21.8% in USD.

South Korea has proved to be a heavy hitter in matters cryptocurrency with a shocking third place position in the global crypto market size, despite the country having a GDP less than a third that of Japan. Current research dictates that one out of every fifty South Koreans trades daily with cryptocurrency.

Asia’s economy can be hailed as low growth but highly motivated savings principles. Like japan only in the last few years has been recovering from a near decade long economic stagnation and shares the high savings ideals with South Korea as it is almost impossible to fault these countries’ GDPs. This leaves them at an advantage should they decide to heavily invest in cryptocurrency, by supplying Bitcoins when they are on demand.

Market Conditions Now

The cryptocurrency market is not what it was at the end of 2017 and early 2018, the demand for Bitcoins and cryptocurrency has fallen significantly but these does not mean that there are no arbitrage opportunities, you can still make profits.

The 30-40% profits that were once made by the underground crop of cryptocurrency mules who would literally carry physical cash across borders to make crypto purchases, has now fallen to lows of less than 7%, especially with the conditions of the markets as 2018 progressed. Bitcoin has shown some gains at the start of the second week of January but was not able to sustain the $4,000 mark.

The volatility of the crypto market is one of the reasons why arbitrage could be profitable to investors. Taking advantage of the turbulent market conditions is something experienced traders do and do well as they are used to taking these kinds of risks which to them translate as money making opportunities.

One of the best placed profiteers in the current crypto market are corporates like hedge funds for example. Such big players have the advantage of numbers compared to individual investors. Corporates are making money via arbitrage through a method known as ‘short squeezing’. It’s a market manipulation tactic fellow junkies and it works since arbitrage opportunities do not last long.

In China, Tether is one of the cryptocurrencies that are used to move funds discreetly due to its minimum volatility and the fact that Tether pegs itself to the U.S Dollar only makes it more popular. It also helps that the coin is not very popular compared to other coins with larger trading volumes. Even though the profit margins are not extreme, the 2.5-3.5% is not meaningless even though it needs careful observation to detect the arbitrage opportunities.

The other way to make profits is over the counter (OTC). It is illegal however and it is worth mentioning before we proceed. With the tough market conditions, people came up with ingenious ways to still make profits by conducting trades outside of formal exchanges and under the nose of regulators.

Conclusion

Cryptocurrency arbitrage opportunities are not as numerous as they used to be but they are not non-existent. There are many ways to still make a profit via arbitrage and the best way for regulated markets is by the use of arbitrage bots that we had discussed earlier. It is also prudent to know the risks involved in arbitrage such as hidden costs and exchange policies that may not have been communicated beforehand.  

 

 

 

 

 

China’s Central Bank deputy governor has denounced STOs terming them as illegal activities in China following the slow progress from Initial Coin Offerings to the newer ICO called Security Token Offerings. STOs represent an ICO backed by tangibles such as assets, or profit or revenue of a company. Ultimately more lucrative than an ICO. However, both are still currently banned in China. 

Pan Gongsheng, the deputy governor of the People’s Bank of China said that financing activities through STOs and ICOs were illegal, even though the activities continue to be rampant in the mainland following a nationwide crackdown of cryptocurrency markets from 2017. 

Companies have been looking at moving to STOs following the lack of success with ICOs recently, companies in China may think that this loophole allows them to promote their business as ICOs are currently illegal in China. However, the governor announced, “The STO business that has surfaced recently is still essentially an illegal financial activity in China, Virtual money has become an accomplice to all kinds of illegal and criminal activities.”

Gongsheng admits that most ICO and STO fundraising projects in China are linked to possible illegal fundraisings and pyramid schemes, among other financial fraud.

China’s crackdown on ICOs in 2017 came after 80% of all ICO financing was taking place in China. The clamp-down in a bid to curb crime within the industry appears to have had a positive effect on the industry. China took steps to stop ICO operations and participation within the country due to the negative effect the potentially illegal activities could have on the countries overall financial industry.

Huo Xuewen, Chief of financial watchdog Beijing Bureau of Financial Work, issued a stern warning to anyone trying to operate an STO in China “I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”

China remains one of the massive players in the cryptocurrency space and is taking steps to prevent companies from taking advantage of citizens and damaging the financial industry in the country.

Cryptocurrencies and the technology behind it can be realistically considered to be one of the most driven advances in the financial sector. Not only because of the nature of the assets but the entire working idea behind it, the transactions and the virtual lack of regulation surrounding digital currencies.

Fast forward to say a decade or two, money will be virtual globally. Meaning walking around with actual cash will be a rare occurrence. Digital currencies have skipped that hurdle and are completely encased in a system that is complicated for most people to understand.

Moreover, the blockchain system is a complete opposite of the traditional financial system around the world which are already regulated. It doesn’t mean that cryptocurrencies are a mystery. It is gaining more knowledge and assimilation worldwide. So with higher popularity, comes the need for regulation.

Crypto has seen its fair share of multiple scams and fraud incidences. Different countries have different stands on cryptocurrencies. Let us have a look at a few economies around the world and analyse the regulations they have put in place.

1.China

China was once the biggest cryptocurrency market worldwide and used to dominate Bitcoin trading. As of last year, their stand on cryptocurrency trading became harsh and they banned ICOs. The reason behind this move was the volatile Bitcoin prices. In 2017, Bitcoin soared to levels of $20,000, raising the interests of the US, South Korea and Japan. In 2018, they dropped to lows of $7,000.

China supports the underlying blockchain technology but states that the use of the technology has raised significant concerns especially because the trades are unregulated and have been used for fraudulent and questionable purposes before. In August 2018, five different Chinese government bodies; People’s Bank of China, Banking Regulatory Commission, State Administration for Market Regulation, Central Cyberspace Affairs Commission and Ministry of Public Security issued a warning regarding the use of cryptocurrencies and ICOs for risky illegal use.

The Chinese government wants to protect its financial stability and regards the unregulated use of cryptocurrencies and the unlimited trading of the same as a threat to its economy. Crypto mining is not banned however, and individual investors have not been badly affected by the current bans.

2.U.S

To begin with, even the term cryptocurrencies in the U.S is subject to different definitions in different jurisdictions. The Financial Crimes Enforcement Network only recently acknowledged crypto trading as some sort of currency which they term as ‘money transmitters’ and tokens as ‘other value that substitutes for currency’. The IRS has issued a tax guidance and legally recognizes cryptocurrencies as property.

The SEC (Securities and Exchanges Commission) considers cryptocurrencies as securities and earlier this year were looking forward to setting up comprehensive securities laws that would govern digital assets and the transaction of the same.

The Commodities Futures Trading Commission (CFTC) approach is that it allows cryptocurrencies to trade publicly and describes Bitcoin as a commodity. As of two days ago, American Cryptocurrency enthusiasts are awaiting the first ever Bitcoin Exchange Traded Fund (ETF) from the SEC. ETFs trade like stocks by tracking groups of assets or indices. If the ETF goes through, it may auger well for the future of bitcoin and other cryptocurrencies at large.

3.U.K

Cryptocurrencies in the U.K are not really legally defined as legal tenders but the trade of cryptocurrencies have specific registration requirements. Cryptocurrencies in the U.K are required to register with the Financial Conduct Authority (FCA) and has set up trading guidance that ensures that entities engaged in cryptocurrencies which fall under pre-existing financial regulations for futures and options and other derivatives require authorization.

The FCA is working closely with the Bank of England as recommended by UK’s Treasury Committee to establish well worked out framework around cryptocurrencies and ICOs so that consumers can be protected seeing that cryptocurrencies are under limited FCA jurisdiction.

4.Australia

Australia was among the first countries to institute cryptocurrency regulations. In fact, it was the second after Japan to declare cryptocurrencies and Bitcoin as legal tender in 2017.

In 2018, on the sole motivation of consumer protection, Australia’s Financial Intelligence Agency (AUTRAC), laid down actionable guidelines to be flowed by any ICOs under anti-money laundering and counter-terrorism laws.

5.South Korea

The Asian country has had a confusing stand on cryptocurrencies altogether. In September of 2017, there were rumours of blanket ban on all ICOs, which were consequently dismissed in January 2018. The ban did not happen and it seems that South Korea has had a change of attitude towards crypto.

This came with harsh regulations;

  • Banning anonymous trading
  • Substantial Taxation of exchanges
  • Forbidding minors and government officials from trading
  • Banned local financial institutions from hosting trades of bitcoin futures

6.Japan

Japan is the first country to regulate bitcoins and cryptocurrency trading overall. However, as time has gone by, their grip has become tighter and tougher. In recent months, investors have lost sums of up to 7 billion Yen.

A recent hacking scheme led to the loss of approximately $61 million stolen from Osaka based trader Zaif being operated by Tech Bureau Corp. this is not to mention what happened to Coincheck, the world’s leading crypto exchange in January.

Revision of the existing regulations require more frequent audits and taxation of the exchanges as crypto is treated as an income for the business.

7.Canada

Canada has not been very quick to jump on the cryptocurrency bandwagon but has undoubtedly become one of the more favourable countries to trade crypto. Their government has been working on a regulatory document but it will be revealed in early 2019. As such, crypto is not considered a legal tender but trading is very much allowed in the state.

There are high hopes that the regulations will be favourable as compared to the initial imposed rules that had been proposed in June 2018.

8.India

The Reserve Bank of India banned Indian banks from serving Bitcoins and cryptocurrency exchanges. India used to issue subliminal threats to investors and entities and businesses as well through official statements regularly, so maybe the ban was not a complete surprise.

The most telling threat came worded like this;

‘The government does not recognize cryptocurrencies as legal tender or coin. As such it will take all measures necessary to eliminate the use of these crypto assets in financing illegitimate activities.’

I may point out that the stand is completely unreasonable and unjustified. This leaves the question as to the future of cryptocurrencies in India.

Conclusion

Matter of fact, crypto regulations are only just beginning to unravel. On the one hand, it is a prerequisite since the idea is to make sure people have faith in the digital assets trading ground. This also means that it will take a long time to come up with highly effective legal framework to regulate crypto since the technology behind it is what runs the transactions altogether, eliminating the need for a legal intermediary.

Countries inherently look to preserve their financial stability and functional economies and may adapt crypto regulation at different speeds depending on their technological abilities. My take is that the scrutiny of crypto as a whole is a real playing factor before regulations can be set up.

 

 

 

 

 

The past week has seen the cryptocurrency bear market thrive on its position with prices plummeting to their lowest since October 2017. In August 2018, Bitcoin prices had started the downward freefall with prices threatening to hit below the $5,000 mark, and they eventually did in November. Cryptocoinjunky has posted articles on the reasons behind the Bitcoin crash which had been highly anticipated due to the splitting up of Bitcoin SV and Bitcoin ABC.

Back in August, cryptocurrency experts were markedly optimistic about Bitcoin prices recovery. Meltem Demoirs of CoinShare actually compared Bitcoin to internet stock prices. According to him, new technologies that capture the attention of many usually tend to face incredibly challenges severally before being fully utilized and prospering. He envisioned crypto technology as such an invention.  

Expert analysis

Since Bitcoin took off in 2009, cryptocurrencies have made significant strides in the digital currency world. But the question still lingers on the worth of digital assets investments in the future. Let us have a look at a few comments and market predictions from crypto experts on the current cryptocurrencies state.

Bitmex’s crypto expert Arthur Hayes believes that Bitcoin prices will hit $50,000 by the end of the year. This is despite the severe plummet of prices across the board that has been experienced in the last few months.

A sitting panel put together by investment company Finder analyzed the top performing coins by market cap. The predictions were set on an overview of 2018/2019 market price analysis.

  • Bitcoin (BTC),
  • Ether (ETH),
  • XRP (XRP),
  • Bitcoin Cash (BCH),
  • EOS (EOS),
  • Stellar Lumens (XLM),
  • Litecoin (LTC),
  • Cardano (ADA),
  • Monero (XMR) and
  • TRON (TRX)

In summary, the panel was optimistic that XRP, ETH, and EOS will increase in value by almost 200% by the end of 2019. Bitcoin will follow suit by an increase of 177% and Bitcoin cash by 77%.

Jeet Singh boldly compared crypto to Apple and Microsoft stating that it is completely normal that cryptocurrencies fluctuate by 70-80%. The volatile market may be unappealing to most investors but according to the investment portfolio manager, the more stable business models and crypto technology becomes, the more confidence it should inspire. Is he right? Is it a short term or long term prediction?

Kristjan Dekleva, a Swiss-based financial analyst and asset investment expert seems to see the future in crypto will be a long time coming; a decade, but will surely be worthwhile. He seems to echo the sentiments by Meltem Demoirs as far as cryptocurrency market stability is concerned. According to him, crypto downfalls have ‘been caused by emotions and misinformation where small rumors have a big impact.’

Kenneth Rogoff shades the sentiments of Kristjan and says that the price of Bitcoin will be worth $100 in ten years. Rogoff based his argument on the regulation of cryptocurrencies that he is sure will cause the market to plummet. In his expert opinion, governments and regulatory bodies hardly seem to grasp the technology behind digital assets and for this reason, the market will be hard hit as financial bodies come up and design regulatory frameworks regarding crypto transactions.

Gemini co-founder, Cameron Winklevoss is also optimistic, although on the drawn outside of things. He is sure that the price of Bitcoin could go up by 40%, in a decade or so. He also stated that the crypto market is highly underappreciated and it is one of the reasons why the market is so volatile.

Bobby Lee, co-founder of BTCC made a lauding comment on twitter regarding the value of Bitcoin compared to that of gold. On November 20th, 2018, he tweeted that Bitcoin is currently 1/8 the value of gold. He predicts that Bitcoin’s ‘rise to the top’ will not come easy but is definitely an outcome to look forward to. Only ‘true believers’ will survive to reap exceedingly great profits from Bitcoin after the bear season subsides.

John McAfee, the ever bullish supporter of Bitcoin came out hard on panic sellers today and asked them to relax or just get out of the market altogether. His tweet is unprintable (the cursing alone) but he has a point. According to him, the cycle of investment markets is always the same. Cyclical. It has ups and downs; at times the down being brutal and it does not help that investors are panicking. ‘Bear markets are like winter, it’s always followed by a glorious spring.’ He points the recent crash on fear, ignorance, misinformation, and uncertainty.

Conclusion                                                                              

With the sentiments above and numerous others not posted, I think it is safe to say that yes, indeed the market is notoriously volatile, unpredictable, but not uncertain. Bitcoin prices will rise. For one, the crypto market is in constant expansion. For example, Saudi Arabia and the UAE are developing a cryptocurrency that will be launched mid-2019. Intercontinental Exchange, owner of the NY stock exchange has plans underway to open a Bitcoin futures product, the Bakkt Bitcoin Daily Futures Contract, which will be launched in early 2019.

Cryptocurrency regulation will aid the digital assets market to stabilize, even though short term, it will and is currently causing prices to drop (refer to recent developments in South Korea and China).

Francesco Fusetti CEO of AidCoin stated today that the drop in prices is actually beneficial to the market as it weeds out weak performers and strengthens knowledge of digital assets trading. Bitcoin has been the top performing coin in blockchain technology since its inception and has set a standard for virtual currencies.

This week, Bitcoin mining equipment manufacturer and blockchain software firm Bitfury secured a valuation of $1 billion from billionaire investor Mike Novogratz and Korelya Capital’s $80 million investment in the firm.

The multi-million dollar funding round comes after the release of Bitfury Clarke, the firm’s new Bitcoin ASIC miner, designed to compete against Bitmain’s new equipment, the 7nm Antminer.

Valery Vavilov, the CEO of Bitfury, stated that the demand for the blockchain and crypto in general from companies and institutions had increased significantly over the past 11 months.

“We see a lot of demand from companies and public institutions to put their services or products in the blockchain — especially in emerging markets, where administrative systems can be very inefficient.”

Rising Activity in Mining and Blockchain

Throughout the past four months, despite the sideways market of Bitcoin (BTC) and the 70 percent correction experienced by the cryptocurrency market since January, the hash rate of the Bitcoin blockchain network has increased substantially from 15 million TH/s to over 50 million TH/s.

The increase in the hash rate of the Bitcoin network, which represents the strength of the blockchain’s computing power, led to a surge in the breakeven cost of crypto mining.

In July, cryptocurrency analyst Barclay James reported that the breakeven cost of mining Bitcoin is around $6,900, based on the hash rate of the Bitcoin network at the time which was 35 million TH/s.

According to Blockchain, the most popular cryptocurrency wallet platform in the sector, the hash rate of Bitcoin currently remains above 50 million TH/s, up 42 percent since July. Since the $6,900 breakeven cost of Bitcoin mining was calculated based on 35 million TH/s,  the breakeven cost of mining has well surpassed $7,500 even in regions with naturally cold climates and cheap electricity like China that reduces operational costs.

“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage,” James wrote.

Due to the rise in the breakeven cost of mining, miners are generating BTC at a fairly large loss. Until BTC breaks out of the $7,000 resistance level and to the high region of $7,800 to $8,000, miners will continue to mine BTC with a loss of around 20 to 30 percent.

Still, the hash rate of BitcoinEthereum, and other major cryptocurrencies continues to surge, as does the demand for mining-focused ventures like Bitfury, Bitmain, and Samsung’s new foundry.

Lucrative Business Models of Mining Companies

Bitmain is finalizing a $15 billion IPO, and, earlier this year, Bloomberg reported that if Bitfury IPOs, it will target a valuation of $3 to $5 billion.

Mining companies and mining equipment manufacturers like TSMC and Samsung remain confident in the long-term development of the industry, and the investment of a major venture capital firm in Korelya is considered a confirmation of strength of the industry in a period of uncertainty and doubt.

Korelya is an investment firm financed by Naver, the largest search engine operator in South Korea that is more widely utilized than Google in the region. Bitfury is the first indirect investment in crypto from Naver.

Andreas M. Antonopoulos, the author of “Mastering Bitcoin” and a self-proclaimed “computer geek” who has dedicated his career to bitcoin, has a bone to pick with Bitly, the web-link shortening service.

Bitly has seemingly blacklisted cryptocurrency sites from its service, prompting readers with a warning prior to redirecting to the original website, a Twitter thread between the bitcoin expert and one of his readers reveals.

Antonopoulos is close to publishing his fourth book, which is comprised of hundreds of crypto-related bit.ly links that Bitly is blocking. A reader seemingly brought this to his attention, questioning why Bitly was issuing a warning when the sites “don’t point to any harmful location at all.”  Antonopoulos asks the company for an explanation, threatening to remove and replace all of the bit.ly links with a competitor. The fourth book he references appears to be “Mastering Ethereum”, which comes out in less than four weeks.

The “Mastering Bitcoin” author went on to canvas the crypto community for a solution, asking: “What (reliable, neutral, established) link-shortening service can I use that doesn’t filter/block links based on a broken blacklisting service? I need to replace all @Bitly links in my book ASAP.” While he wasn’t looking for “roll your own” suggestions, this is largely what he received from the Twitter sphere.

Other followers suggested that Antonopoulos avoid shortening links in his new book altogether, saying that readers aren’t keen on clicking on a link shrouded in mystery anyway. Others still suggested taking a more decentralized approach by using an archive system at the end of the page or chapter to avoid relying on a third-party altogether.

Crypto Ban Deja Vu

Antonopoulos is an influencer in the cryptocurrency community and probably someone that Bitly doesn’t want to alienate, as it would likely trigger a ripple effect among blockchain-content publishers.  He is an early bitcoin investor who previously sold his holdings to pay his rent, in response to which he became in a millionaire thanks to donations by the crypto supporters inspired by Roger Ver.

His books, which also includes “The Internet of Money”, are best sellers. Most recently, “Mastering Bitcoin” has made its way into China’s media programming, though they replaced Bitcoin in the title with Blockchain. Antonopoulos said that “even with a slightly sanitized title…the content is the same.”

Meanwhile, tech leaders including Facebook and Google earlier this year attempted to officially block crypto-related ads but those bans have since been lifted. Investors cried foul at the time, pointing out how tech giants continued to allow ads for other risky sites like gambling. Meanwhile, ads are a key component to the tech revenue model.

It’s unclear if Bitly has taken an official position on crypto-related links, and the company has yet to respond to an email seeking comment.

Bitcoin (BTC) turned ten on Oct. 31, but there were no fireworks to mark the celebrations: the cryptocurrencies continue to trade in a tight range. Arthur Hayes, CEO of BitMEX, believes that the current period of low volatility can remain for another 12 to 18 months and can drag the price of the leading cryptocurrency to the $2,000–$3,000 zone.

However, we have a different opinion. We believe that the volatility is unlikely to stay subdued for long. Within the next few weeks, we should get a large range move that will start a new trend, either up or down.  

BCH/USD

This week, we have a new leader, Bitcoin Cash, that has risen about 9 percent during the past week. Until Thursday, the price of the digital currency was languishing similar to the other cryptocurrencies. However, on Friday, prices soared following an announcement by crypto exchange Binance that it would support the impending hard fork on Nov. 15. After the initial bump up, can the rally continue? Let’s find out.

BCH

The long-term trend on the BCH/USD pair is clearly down. Throughout this year, it has failed to hold on to the support levels and has continually made a lower low. Though the bulls have held onto the $408.32 mark for the past seven weeks, they haven’t been able to push prices higher. This shows a lack of demand at higher levels.

The current pullback will face a stiff resistance in the zone of $591.41–$660.0753. If price sustains above this zone, it can climb to $891.4634 and thereafter to $1,200.

On the downside, $408.32 is the critical support, below which the fall can extend to $282. The longer the virtual currency stays in a tight range, the sharper the next move will be. It has a history of vertical rallies; therefore, the traders can buy when a reliable buy setup forms.

XLM/USD

After the recent listing of BAT on crypto exchange and wallet Coinbase, will Stellar be the next cryptocurrency that will make the cut? Many believe that XLM has the requisite credentials to be listed on Coinbase. If that happens, we might see a rally. What are the key levels to watch?

XLM

The XLM/USD pair has formed a large descending triangle pattern that will complete on a breakdown and close (UTC time frame) below $0.184. Currently, the bulls are attempting to break out of the downtrend line of the triangle, which will invalidate the bearish pattern. Failure of a bearish pattern is a bullish sign.

We like the way the digital currency has stayed above $0.2 levels for the past five weeks, which shows demand at lower levels. If the bulls succeed in sustaining above the downtrend line, a rally to $0.36 followed by a move to $0.47 is likely. Traders can wait for prices to sustain above $0.30 before buying. That is because if the prices turn down sharply after a break out of the downtrend line, the probability of a break down of $0.184 increases.

Featured cryptocurrency* – ARK/USD

ARK is currently ranked 71st in terms of market capitalization. It is about to release the much-anticipated new core code base, making it faster and modular with full plugin capabilities similar to WordPress.

Anyone can create their own fully customizable cross chain compatible blockchain using ARK. It will also be the first delegated proof of stake (DPOS) with a switch from static/flat fees to a customizable dynamic fee structure. There are a number of new features and partnerships being added regularly whose details can be accessed on its blog.

ARK

Similar to the other cryptocurrencies, the ARK/USD pair has also been in a strong downtrend since topping out in early-2018. The bulls attempted to stall the decline around the $2 mark, which was a strong support. However, the bears broke below it in early-June, resulting in a sharp fall.

The virtual currency bottomed out in mid-August at $0.50712042. Since then, the price has gradually inched higher, which is a positive sign. On the upside, $1.02093420 might act as a stiff resistance. If the bulls scale this level, a rally to the overhead resistance zone of $1.68–$2 is probable. The digital currency is likely to pick up momentum above $2.

On the downside, if the bears sink prices below $0.50712042, a fall to $0.40 and $0.30 is possible.

XMR/USD

Monero rose by just over 1 percent in the past seven days, claiming the third spot in the list of top performing cryptocurrencies with a market capitalization of more than $1 billion.

XMR

Since early July, the XMR/USD pair has been trading in the range of $81–$150. For the past seven weeks, the range has shrunk to $100.453–$128.65. From last week, the weekly range has reduced further. The tighter and longer the range, the stronger the eventual breakout or breakdown will be.

However, the first move is often a false one. Therefore, traders should wait for the breakout to sustain and show follow up buying before jumping in to buy. There are no significant resistances above $150 until $300.

Conversely, a break below $100.453 will increase the probability of a fall to $81. This is a major support, as it has not been breached convincingly for more than a year. Hence, if this level gets broken, the digital currency can quickly correct to $52–$58.

EOS/USD

EOS again received the top standing in China’s 6th global public blockchain technology assessment index. On the other hand, research conducted by benchmarking firm Whiteblock for ConsenSys concluded that EOS lacks “the fundamental components of a blockchain or peer-to-peer network” and is “fundamentally same as a centralized cloud computing architecture.”

EOS

The EOS/USD pair has been trading inside the range of $4.493–$6.8299 since August. For the past five weeks, the range has tightened further. This shows a balance between the bulls and the bears. Currently, neither party is making a major move and new investors are sitting on the sidelines.

If the price breaks out of the tight range, it can move up to $6.8299. Above this, we anticipate buying to resume that can carry the digital currency to $9.4456 and $15. However, if the price breaks below the current tight range, it can drop to $4.49, which is a minor support. $3.8723 is the critical support, below which the price might plummet to $2.40 and $1.70.

XRP/USD

Ripple has been making progress in signing various institutions to its platforms, mainly targeting cross-border payments. The Middle East is a lucrative market for the company because of the high level of payments that go in and out of the region. Ripple has already tied up with a few banks in Saudi Arabia, Kuwait, Bahrain and Oman, and the company now reportedly plans to open an office in Dubai by the end of the year. How does its chart look?

XRP

The XRP/USD pair rallied sharply in mid-September. However, the bulls could not sustain the momentum and the pullback extended to 78.6 percent retracement levels. Usually after such a deep retracement, a range bound action for a few weeks is likely. For the past two weeks, the 20-week EMA is acting as a resistance. If the bulls break out of the immediate resistance zone at $0.475–$0.5, a move to $0.62 and $0.7644 is plausible. We expect a new uptrend to begin above $0.76440.

If the bears sink the price below $0.37185, the virtual currency will complete a 100 percent retracement and drop to the critical support at $0.24508.

As reported by the trusted news source in China, CnLedger, the country’s merchants can legally accept cryptocurrency as payment. According to reports by the Shenzhen Court of International Arbitration, Bitcoin is now officially recognized property, which allows individuals as well as businesses to transfer and own BTC without conflicting with current financial regulatory protocol.

Circulation of Bitcoin in China: Not Illegal

Crypto researcher, Catherine Wu, who also analyzed court documents by the Shenzhen Court Of International Arbitration, delved into the reason behind the decision by the courts.

Wu explained that due to the decentralized nature of BTC in which it can provide economic value and financial freedom to the owner, the asset is therefore recognized as personal property.

The court also emphasized that regardless of the legality behind the Bitcoin and other cryptocurrencies, the circulation and payment of BTC is not illegal. Bitcoin does not have the same rights as fiat currency, however that doesn’t mean that holding or paying with cryptocurrency is the illegal.

Several hotels located in China have also started to accept cryptocurrency. One such hotel has branded itself as the “Ethereum Hotel” which provides discounts to those who pay for their services utilizing Ethereum.

China’s Optimistic Stance

China’s stance towards blockchain technology and cryptocurrency seem to be positive overall. It’s becoming more and more apparent that the Chinese government has temporarily placed a blanket ban on cryptocurrency trading only, in order to prevent the devaluation of Chinese Yuan. Overall, the government remains open to cryptocurrency usage as well as the implementation of blockchain to improve existing infrastructures as well as issues pertaining to software and data protocol.

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