"Even cowards can endure hardship; only the brave can endure suspense."
- Mignon McLaughlin
Happy Friday! More news keeping us on edge today, but we'll take it in our stride. We're back for another instalment of our crypto deep dive today, and a bonus "crowdsourced investment advice" segment taken from our poll yesterday. This is why I love you guys – thanks for sharing your thoughts with me always! 💙
(Yeah I know, it's kind of a longer read today, I have to give you more to think about over the weekend, don't I? 😎 And, don't forget to respond to my poll!)
After the storm
It’s a relatively quiet day in the markets. Everyone seems to be taking the Bitcoin ETF rejection news well, almost as if it was anticipated and priced in (which it probably was 🤷)
Markets bounced back slightly from yesterday’s dip, with total market capitalization up about ~1.5% to $211 billion.
Similarly, BTC is seeing a small ~1.43% recovery to $6,544 and is once again approaching and about to contest the 21-day EMA resistance line of ~$6,600, which it previously failed to close above on Aug 22. So let’s keep our fingers crossed this time!
The other top 19 cryptocurrencies by market capitalization are also seeing gains no more than 5%, with the exception of TRX (currently up ~5.93%). Notable movers outside the top 20 would be LSK, NANO and ICX, each up ~13.04%, ~14.44% and ~10.53% respectively.
One more chance
Speaking of ETFs: After the SEC rejection of the 9 Bitcoin ETF proposals from Proshares, Direxion and GraniteShares, the Commission may now review the staffs’ decision. Although the rejection decision currently still stands, the SEC will review the delegated action, and any relevant action will be made known after 🤔
It’s worth noting that these are all derivative-backed ETF proposals, and things could be different for a BTC-backed ETF such as the VanEck-SolidX proposal.
The plot thickens
It seems that the Chinese regulator are on a roll, coordinating a crackdown on crypto-related entities and activities. Today, they are moving to block domestic access to 124 foreign crypto exchanges 😨
The China National Fintech Risk Rectification Office will track and block the 124 trading platforms by IP. The office is also currently working with third-party payment vendors, who are legally obliged to freeze accounts suspected of handling cryptocurrency transactions, to enforce this 🔦
This comes just days after the agency began shutting down several official crypto media accounts on the popular Chinese messaging app, WeChat, and the ban on cryptocurrency activities in Chaoyang, Beijing.
The World Bank has priced its first blockchain-based public bond, “Bondi”, worth ~$73 million on Aug 28, which will be created and managed solely via blockchain ⛓ The Commonwealth Bank of Australia will be overseeing the deal: It is a two-year bond, structured to bring about a 2.25% return over that duration 💰
This is a pioneering World Bank blockchain initiative with automated issuance across multiple parties, and is the first step away from manual bond sale processes, and towards faster and cheaper automation techniques 🤖
Rialto, the alternative trading system provider, has announced a partnership with Bittrex to create a trading platform for blockchain-backed securities; they are working together with regulators on this proposal.
Indiegogo, the popular crowdfunding platform, offered its first security token ICO today on its ICO-focused crowdfunding offering.
Entrepreneur First (EF), the UK government-recognized pre-seed investment company, is now funding blockchain-related startups.
Crypto deep dive: EOS
Cryptocurrency: EOS (no consensus on what it really stands for: Earth Operating System? Ethereum On Steroids? Evolution of Scalability? I need to know!! 🤣)
Market Capitalization Rank: 5th
Consensus: Delagated Proof-of-Stake (dPoS)
Notable Supporters: Brock Pierce, Dan Larimer, Akon, Bitmain, Galaxy
How it happened ⚙️
The EOSIO platform was developed by the private company “block.one” that specializes in high performance blockchain technology. Its open source code was released to the public in 2018. EOS seeks to remove transaction fees for users, achieve faster transactions, achieve a high throughput of millions of transactions per second, and enable a host of dApps with snappy performance. Dan Larimer, who created Bitshares and Steemit, is also one of the original founders of the DPoS consensus.
Why people love it 😘
EOS only has 21 block producers who are responsible for validating blocks, and are voted into their roles every round (hence the "delegation"). Having such a small number of producers means that the number of transactions that can be processed each second increases significantly.
Inflation is built and accounted for in the token model – The block producers are paid out in inflation of 5% annually, of which 1% goes to block producer rewards and 4% goes to worker proposals.
EOS scales horizontally compared to other PoW coins, meaning that it processes things in parallel. This is currently one of the more effective scaling mechanisms available.
Strong reserve fund because of their large ICO, which can be used to further improve on the EOS ecosystem and weather market cycles.
Why people doubt it 🤔
Centralization concerns such as the top 100 account holders (excluding exchanges), equating to 0.03% of the total accounts, hold ~51% of tokens. Compare this to BTC, whose 100 account holders (excluding exchanges) hold only about ~13.5% of tokens.
The process of account creation can be difficult for new users as they need to acquire EOS RAM.
Due to the dPoS consensus mechanism, the centralization issue may be exacerbated over time, as the larger token holders are likely to amass tokens at a faster rate than the smaller ones. Increased centralization increases the risk of single point of failure.
Entering the dApp market might be hard, as Ethereum is holding its position as a strong first mover and many other infrastructure coins popping up. Incentivizing developers to move and develop on the EOS platform might be tough.
Poll of the Day
How much do you agree: "The world should be run by robots." 🤖
And... would you buy a blockchain-issued bond over a regular bond? Plus, your chance to tell me what you do on the weekends! 😝
What you said
“When I face a setback in the crypto markets, my first reaction is to cry buy.” – 6.3, a mix across the whole spectrum from 2 to 10! 😆We clearly all respond to things differently.
Crowdsourced investment advice (use at your own risk 😉)
Based on the responses, the HODL sentiment is the strongest; several said they would wait and hold their positions, especially when it comes to the good stuff, during times without the guarantee that prices will rise 🗿 Of course, that depends on the long term prospects of the asset, so if it goes up over some time the strategy is to HODL, and if it’s going down, the strategy is to buy more. However, when a bad investment is identified, it’s better to sell immediately (or at the next available opportunity).
Others have figured that they should buy at a predetermined price that is based on rigorous research and analysis, otherwise sit tight and don’t make rash moves. Also, being in a bear season right now, being patient is necessary, especially for those who are deeply invested. (To our friend who said you could have cashed out earlier: Don’t worry! All will be good, I’m sure the next bull run will be beautiful too 😄) Some are dollar-cost averaging into the market, buying a bit every week or fortnight. One of our friends said his/her strategy was to buy £100.00 every week on average, but £200 - £2000 when there are dips 😎
Most of all, it’s important to learn from the setback and figure out how to get back on track. The idea is to look at all possibilities and weigh all probabilities, and make informed decisions free from emotions. Last but not least, someone’s final advice: Buy some BTC or BCH! 😂
Okay, back to ETFs: 100% of all respondents believe the SEC will only approve the first ETF in 2019 (me too). Hence, it makes sense that 58% expected the rejections anyway, 25% weren’t that angry, 8% were a little mad, and 8% are feeling complicated 😅
On the Chaoyang crypto ban, the general feeling is that it doesn’t exactly mean anything, since crypto is already outlawed everywhere else. It is also not fatal, in that there might be a bigger jump when the government reverses its decision, since increasing crypto adoption worldwide will force their reconsideration to stay competitive in financial markets 💪 Besides, people will just go underground, as seen from people who want to buy crypto circumventing the bans… the only thing that it could affect is general investor confidence, as uncertainty does cause some doubt 😶
All in all, we seem to be pretty understanding of the government decisions in the past week, just knowing that we have to push for more adoption. And that’s my positive closing for the week. Have a great one you guys! 😘
See you next week! 😍 our newsletter? Share with a friend! 😡 our newsletter? Spam your enemy!