CryptoAM: Future Futures, Finance on the Blockchain and the NSA

Good morning everyone. Writing to you this week from Consensus, the largest blockchain and cryptocurrency conference of the year. Many announcements are on the books, and historically Consensus has bolstered the markets. Will unfortunately be taking the next 3 days off as Consensus events swallow my schedule. Back on Friday with more information than you will want to read. Follow the developments live. 

4 things you need to know: 

One: Zcash listed on Gemini. Zcash saw massive appreciation today on the news that Gemini will begin trading this Saturday at 9:30 am. They are the first regulated exchange to provide Zcash trading, and the first regulated exchange to provide any coin offering privacy on the blockchain. Historically, regulators have not been keen to support these currencies. 

• Be smart: Zcash has two types of addresses. Shielded (private) and unshielded (public). A flaw was found by researches involving unshielded addresses, meaning any transaction with an unshielded address could come compromise privacy. One caveat is that Gemini will not be allowing withdrawals to shielded addresses, making Zcash bought on Gemini not truly private. For most users, this really shouldn’t be a huge issue. 
• Read more…

Two: CME group signed a deal with Crypto Facilities to launch Ethereum price tracking. This is a big step forward for the introduction of Ethereum futures. The launch of Bitcoin futures commenced there was talk of launching other products, but the initial interest seemed to wane. 

• Why this matters: Most likely, any other crypto-derivative product is far off until clear regulation, but developments like these are promising and point towards a future that is likely to include the CME group developing more crypto related products.
• Read more…

Three: HSBC reports that they made the first trade finance transaction using blockchain. 

• “The bank issued a letter of credit for U.S. food and agriculture firm Cargill. The trade finance transaction involved a bulk shipment of soybeans from Argentina to Malaysia. The letter of credit was issued from HSBC to Dutch lender ING.”
• "The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous," Vivek Ramachandran, head of growth and innovation at HSBC, said in a statement. "The quick turnaround could mean unlocking liquidity for businesses."
• Why this matters: 2017 was the year of exploration when it came to blockchain technology. 2018 is shaping up to be the year of real use. We are seeing financial institutions, tech behemoths, and start-ups pour effort into building out true solutions. 
• Read more…

Four: Microsoft is building out an blockchain based identity system. The interesting part is that Microsoft may be using the Bitcoin blockchain. 

• Many developers have strayed away from using the Bitcoin protocol to build application on top of because it is viewed as outdated and not built for application layers. 
• Stay aware: If Microsoft based it’s identity platform on Bitcoin, then we may see a movement away from alternative platforms as people explore Bitcoin. 
• My take: Bitcoins blockchain was not built for applications, and while there have been numerous attempts to introduce Blockchain 2.0 features — they have all stalled. Microsofts head of blockchain is a Bitcoin maximalist, and they risk being left behind again. 
• Read more…

What I’m reading today: 

Tl;dr of the history of money article I mentioned last week. 

• Money has evolved from a system of physical items that hold value according to community consensus. To keep track of these physical items, early banks sprung up and introduced the concept of the “ledger” for the first time. This allowed people to deposit their “money” into a centralized system that kept track of money. 
• Eventually, Money moved from shells, to coins, to paper and now to a digitized system. The vast majority of money is not physical money, but rather money that we agree exists because it exists on the databases of banks. The value of the money is derived from the backing of the federal governments around the world
• Cryptocurrency is simply going back to the “community consensus” version of money rather than money backed by the federal government. 
• Bitcoin may or may not succeed, but some form of cryptocurrency is likely to take hold. 

To follow up this article, I suggest reading this study by the Federal Reserve Bank. Their perspective is that we are missing a digital form of money that is outside the banking system (In that you can transact without a middleman, like cash). They view a central bank cryptocurrency as filling that role. Heres a hilarious article about how the NSA may have had involvement in blockchain. Conspiracy theories are always fun. Someone put in an FOIA request to the NSA about their involvement in the creation of Bitcoin. Their response can be summed up as, “That is confidential”. 

• Seems to me that there are better ways of tackling this issue. They could have issued a statement that said “no”. The fact that the creation of Bitcoin is highly confidential is intriguing.
• There have been theories floating around for ages that the government invented blockchain technology as a way to more easily track financial transactions. If this was the case, they haven’t done so well. 
• Be smart: This is just to make your Monday a little more fun. 

Things I like: 

Releases are around the corner. Have more? Shoot an email to [email protected]. 

• Neblio is announcing a partnership this week. They are an under the radar team in term of marketing, so this is a first. 
• Switcheo (SWH) has a mainnet release planned for May 16th.
• Stratis has smart contracts in C# coming out on May 16th as well.
• Enigma is planning a major announcement tomorrow at Consensus. 

There are many more announcements and panels happening at Consensus over the next week. Here’s a list of all of them courtesy of crypto twitter. 

Bitcoin is not manipulated: 

Just kidding. The sooner you accept that the crypto-markets are heavily manipulated, the better your trading will be. 

Technicals: The large volume price increase at the beginning of Consensus brought a cross of 5D EMA and 20D EMA, indicating the start of a potential run back to 9.2k. Following consensus BTC has rallied previously. I do not expect to see as vigorous runs as previous years due to the additional amount of capital required to move BTC now. 

A note: A lot of the talk at Consensus surrounds insider trading. As insider trading is not illegal yet within the trading space, it is abundant. Early notices of exchange listings, product announcements, main-nets, etc. are commonplace. Be careful out there, and limit trading activity unless you’re trading on knowledge or are very confident in your system. Spread the knowledge. Like the format? Hate the format? Want to tell me your thoughts or send me hate mail? Reach me at [email protected].