Tag Archives: bitcoin

Analysts Blame Gold’s Fall On Bitcoin’s Rise

Analysts Blame Gold’s Fall On Bitcoin’s Rise

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As bitcoin’s price has surged, gold has suffered. Some market analysts see a correlation. Gold and bitcoin have both been viewed as safe havens for capital during periods of uncertainty for asset values. 

GDX price for the last three months. Source: Ycharts.com

As bitcoin’s price has soared, some analysts think investors are favoring bitcoin as an investment, causing gold to lose value.

Gold Hits Low Point

GDX, an exchange-traded fund for gold miners, has lost 15% of its value since September while gold prices have fallen to its July low point.

Larry McDonald, who oversees U.S. macro strategy at ACG Analytics, said gold’s declines have been accompanied by lower bond yields, a situation the strategist calls unusual.

McDonald told CNBC that every time rates have declined in the last two years, gold has increased. There has been an 82% correlation between bonds and gold prices, he said, but this past week, that correlation dissolved. He pointed to bitcoin as the cause for this.

The growth of bitcoin and cryptocurrencies could bring an even greater downside for gold, McDonald said.

Also read: 51% of respondents choose bitcoin over gold and fiat; Ron Paul survey

Bitcoin Eats Into Gold

Cryptocurrencies currently have a market capitalization equal to 23% of liquid tradeable gold, McDonald said. That figure has increased 2% or 3% over a year ago, so cryptocurrencies are definitely eating into the gold.

While gold has declined more than 2% in the last month, bitcoin has more than doubled its value.

Sunday’s launch of the CBOE bitcoin futures took bitcoin to close to $16,800 by Monday morning. Gold, meanwhile, has remained near its July lows.

Phillip Streible, a senior market strategist at RJO Futures, said bitcoin futures contracts will hold a key indicator for gold’s future. If bitcoin futures collapse, gold will gain, he said on CNBC’s “Power Lunch.” Gold will regain its attraction as a safe haven store of value.

CME, another exchange, will launch its bitcoin futures on Dec. 18.

Featured image from Shutterstock.

Chris Corey CMO Markethive.com

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Contributor: Lester Coleman on 12/12/2017

 

 

 

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Traditional Money on the Decline Amid Rising Interest in Digital Currencies

Paying with traditional banknotes is on the decline as interest in contactless payments and digital currencies rises.

That’s according to the co-founder of the Sohn Conference Foundation. Speaking with CNBC on the sidelines of the Sohn Conference in London, Evan Sohn said that a world without fiat money is quickly approaching, adding:

How far are we from a restaurant that says we only take online payment? If you eat here, you have to download this application and we only take electronic payment, no cash here, no check.

Even though most payments are still conducted with cash, Sohn thinks that we’re not far away from facing a reality that doesn’t include traditional banknotes.

These feelings similarly mimic those of venture capital investor Tim Draper, who believes that digital currencies, such as bitcoin, will replace fiat currency in five years time. At a conference in Portugal, last month, Draper explained:

In five years, if you try to use fiat currency they will laugh at you. Bitcoin and other cryptocurriences will be so relevant … there will be no reason to have the fiat currencies.

According to Draper, the fiat system will eventually disappear as more people turn to bitcoin and ethereum. He also believes that at some point all the digital currencies – currently numbering 1,025 – will interrelate making it simple to use them across borders compared to traditional money.

With the digital currency market increasing in value more interest will naturally turn to investing in them. At present, bitcoin’s is trading around $10,700, recovering from an earlier dip in price that saw it drop to $9,200 earlier this week, amid volatile trading. Whereas, ethereum is hovering around $461, according to CoinMarketCap.

Yet, even though bitcoin is rising in value, its acceptance at retail stores or even restaurants remains limited. Not only that, but with bitcoin’s value continuing its upward trajectory people are more than likely going to hold on to their coins rather than spend them.

One country that has embraced bitcoin payments is Japan. In May, it was reported that around 300,000 retailers and companies in the country may accept the digital currency in 2017. Earlier in the year, Japan imposed legislative changes accepting bitcoin as a legal form of payment, further highlighting bitcoin’s growing popularity in the country.

Sohn adds, though, that while he believes fiat currency will be replaced, he’s not sure if that will be by bitcoin, ethereum, Mastercard or something else, adding:

Chris Corey CMO Markethive Inc

To learn more about cryptocurrency and blockchain come join Markethive for free

Contributor: Rebecca Campbell

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Bitcoin hits record high after developers call off plans to split digital currency

Bitcoin hits record high after developers call off plans to split digital currency

  • Bitcoin was scheduled to upgrade around Nov. 16 following a proposal called SegWit2x, which would have split the digital currency in two.
  • However, more and more major bitcoin developers dropped their support for the upgrade in the last few months.
  • Developers behind SegWit2x announced Wednesday they are calling off plans for the upgrade until there is more agreement in the bitcoin community.

 

Bitcoin developers call off SegWit2x upgrade, avoiding hard fork  2 Hours Ago | 00:49

Bitcoin jumped Wednesday after the developers behind an upcoming split in the digital currency through an upgrade called SegWit2x announced they were suspending plans for the upgrade.

The digital currency hit a record high of $7,879.06, according to CoinDesk. Bitcoin gave up much of those gains Wednesday afternoon to trade near $7,212 after hitting a session low of $7,078.96.

The SegWit2x upgrade was scheduled to take effect around November 16 in an effort to increase the speed and cost of bitcoin transactions. However, more and more major bitcoin developers dropped their support in the last few months.

Bitcoin in the last 24 hours

Source: CoinDesk

"Our goal has always been a smooth upgrade for Bitcoin," a group of leaders in bitcoin development told members of the SegWit2x mailing list Wednesday. "Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin's growth. This was never the goal of Segwit2x."

As fees rise for bitcoin transactions, the developers said they hoped the digital currency community could find agreement on how to solve the problem. "Until then, we are suspending our plans for the upcoming 2MB upgrade."

The statement ended with the names of six major figures in the bitcoin business community:

BitGo CEO Mike Belshe, Xapo CEO Wences Casares, Bitmain co-founder Jihan Wu, BloqInc co-founder Jeff Garzik, Blockchain CEO and co-founder Peter Smith and ShapeShift CEO Erik Voorhees.

For most of this year, investors have had a negative view on bitcoin splits out of uncertainty over the digital currency's future. However, since bitcoin rose to record highs after its August split into bitcoin and bitcoin cash, investors began betting that subsequent splits would send the price of the original bitcoin higher. Investors at the time of a split also technically receive an equivalent amount of the offshoot currency.

Bitcoin cash traded mildly higher near $619 Wednesday, according to CoinMarketCap. Another digital currency, ethereum, rose about 4.5 percent to $307.55, according to CoinDesk.

Chris Corey CMO MarketHive Inc

Author: @chengevelyn

 

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The Blockchain Explained

Blockchain explained in plain English

 

Understanding how blockchain works and identifying myths about its powers are the first steps to developing blockchain technologies

Video: Blockchain in 60 seconds

After spending two years researching blockchain and the evolution of advanced ledger technologies, I still find a great spectrum of understanding across my clients and business at large about blockchain. While ledger superpowers like Hyperledger, IBM, Microsoft and R3 are emerging, there remains a long tail of startups trying to innovate on the first generation public blockchains. Most of the best-selling blockchain books confine themselves to Bitcoin, and extrapolate its apparent magic into a dizzying array of imagined use cases. And I'm continuously surprised to find people who are only just hearing about blockchain now.

It can seem that everyone is talking about blockchain and ledger technologies, but the truth is most people are not yet up to speed. No one should be shy to ask what blockchain is really all about.

Many blockchain primers and infographics dive into the cryptography, trying to explain to lay people how "consensus algorithms", "hash functions" and digital signatures all work. In their enthusiasm, they can speed past the fundamental question of what blockchain was really designed to do. I've long been worried about a lack of critical thinking around blockchain and the activity it's inspired. If you want to develop blockchain applications you only need to know what blockchain does, and not how it does it.

So I've written a report that explains how the blockchain works. It examines the founding principles of blockchain, describes its properties, and dispels common myths about its powers. The explanation below is an abridged excerpt from the report.

WHAT IS BLOCKCHAIN?

Blockchain is an algorithm and distributed data structure for managing electronic cash without a central administrator among people who know nothing about one another. Originally designed for the crypto-currency Bitcoin, the blockchain architecture was driven by a radical rejection of at (government-guaranteed) money and bank-controlled payments.

Blockchain is a special instance of Distributed Ledger Technologies (DLTs), almost all of which have emerged in Bitcoin's wake.

HOW DOES BLOCKCHAIN WORK?

Blockchain is a Distributed Ledger Technology (DLT) that was invented to support the Bitcoin cryptocurrency. Bitcoin was motivated by an extreme rejection of government-guaranteed money and bank-controlled payments. The developer of Bitcoin, Satoshi Nakamoto envisioned people spending money without friction, intermediaries, regulation or the need to know or trust other parties.

Technically, the original blockchain is separable from Bitcoin, but this report will show that the blockchain design is so specific to Bitcoin that it's not a good fit for much else.

The central problem in electronic cash is Double Spend. Because pure electronic money is just data, nothing stops a currency holder from trying to spend it twice. Blockchain solves the Double Spend problem without a digital reserve fund or similar form of umpire.

Blockchain monitors and verifies Bitcoin transactions by calling upon a decentralized network of volunteer-run nodes to, in effect, vote on the order in which transactions occur. The network's algorithm ensures that each transaction is unique.

Several thousand nodes make up the Bitcoin network. Once a majority of nodes reaches consensus that all transactions in the recent past are unique (that is, not double spent), they are cryptographically sealed into a block. Each new block is linked to previously sealed blocks to create a chain of accepted history, thereby preserving a verified record of every spend.

The Bitcoin blockchain's functionality and security results from the network of thousands of nodes agreeing on the order of transactions. The diffuse nature of the network ensures transactions and balances are recorded without bias and are resistant to attack by even a relatively large number of bad actors. In fact, the record of transactions and balances remains secure as long as a simple majority (51 percent) of nodes remains independent. Thus, the integrity of the blockchain requires a great many participants.

One of the Bitcoin blockchain's most innovative aspects is how it incentivizes nodes to participate in the intensive consensus-building process by randomly rewarding one node with a fixed bounty (currently 12.5 BTC) every time a new block is settled and committed to the chain. This accumulation of Bitcoin in exchange for participation is called "mining" and is how new currency is added to the total system afloat.

Posted by

Thomas Prendergast
Founder

Original article is here: http://www.zdnet.com/article/blockchain-explained-in-plain-english/

 

TP

The Millionaire Maker

Martkethive poised to go to battle. Pay attention because it has taken 20 years to prepare for this journey into crypto wealth.

I have built Markethive as a walk in faith. Sometimes it has nearly broken me financially, but the Lord kept prodding me to build it. Through treachery with previous partners, financial collapse with Trivita’s damaged income, through suffering from heart failure and actually death in the hospital from heart failure, diagnosed with diabetes 2, having to move from Wyoming to Fargo, a wife that needs special care daily, I persevered because the Lord kept inspiring and prodding me to keep building it.

Last year (July 2016) I took Markethive out for trials, utilizing the Inbound Marketing  tools  and built the Valentus opportunity and became diamond in 12 days (breaking, even shattering the records!), then I rolled Markethive out to assist in an ICO opportunity and within 3 weeks produced over $180,000 in commissions and broke records again.

Keep in mind neither of these opportunities had the longevity capacity, like Trivita did, to become a legacy lifetime income. I was still looking.

This year, I actually died (obviously recovered)then was given a sobering diagnosis which sidelined me from any work for 5 months. Living on savings off my Bitcoins, I was able to focus on recovery and 4 weeks ago was diagnosed with no heart failure and no diabetes (a miracle blessing from the Lord, walking 10 miles a day and a strict diet) and was able to actually get back in the saddle again.

I was ready to get back into the fight and had a few false starts with The Trade Coin Club and Jet-Coin. Then an associate from my Trivita down line made me aware of Bitclub. Joe Able, one of the 3 founders of Bitclub Networks called me and paid to fly me out to meet him. I went with the intentions to pitch him for Markethive investments (I am obsessed with Markethive). Boy was I in for an amazing revelation.

As he introduced me to Bitclub (he took 3 hours out of his busy schedule for me to present this companies many facets and the details) I was overwhelmed, floored actually. It was a jaw dropping experience how well this company has been built, its foundational vision and mission. There is money to be made on so many levels and this company actually has ascended above all other MLMs in so many ways.

I could go on but I made a video to really illustrate how I am engaging Markethive into this. Millionaires will be made. 100s of them in my organization perhaps even 1000s because of the raw marketing power Markethive brings to this and I own Markethive.

Please join my group to get rolling into this huge opportunity tsunami. Surf is up. Big wave surf. Wax your boards and let’s safari brothers and sisters.

https://markethive.com/group/bitclub

Thomas Prendergast
Founder

TP

Standpoint’s Ronnie Moas raises bitcoin forecast to $7,500

After calling latest surge above $4,000, Standpoint's Ronnie Moas raises bitcoin forecast to $7,500

  • The stock researcher issued a $5,000 price target on bitcoin in late July, and raised that by $2,500 on Monday after the digital currency's surge to a record high over the weekend.
  • Moas expects the market value of digital currencies to jump from around $140 billion to $2 trillion, and bitcoin to rise alongside that increase.
  • Moas said he never held any of the stocks he issued reports on, but now all of his investments are in digital currencies.

 

Standpoint's Ronnie Moas raises bitcoin forecast to $7,500    Standpoint's Ronnie Moas raises bitcoin forecast to $7,500  
1:14 PM ET Mon, 14 Aug 2017 | 00:50

Longtime stock researcher Ronnie Moas raised his price target on bitcoin by $2,500 on Monday after the digital currency hit all-time highs over the weekend.
"What's happening is the floodgates are opening," Moas, founder of Standpoint Research, said in a phone interview with CNBC on Monday. "I believe there are hedge funds and very deep-pocketed individuals going into this now, really hundreds of millions of dollars."

Moas first laid out his views on bitcoin's potential in early July and issued a formal report at the end of last month with a price target of $5,000 for next year.

He told clients Monday he now expects bitcoin to climb nearly 80 percent from the weekend's records to $7,500, and maintained the digital currency could surge to $50,000 in 2027 — representing a 28 percent annual compounded growth rate.

Bitcoin three-month performance

Source: CoinDesk

After bitcoin's uneventful split into bitcoin and bitcoin cash on Aug. 1, bitcoin has soared more than 40 percent to all-time highs.

Bitcoin climbed 5 percent Monday morning to a record high of $4,321.08, more than quadruple in value for the year, according to CoinDesk. At that price, the digital currency has gained about 50 percent in August.

As institutional investor interest in bitcoin grows, Moas expects digital currencies to become part of "strategic reserves" and "asset allocation models in the near future." He also said people in foreign countries will likely want to buy digital currencies as a more stable alternative to their national currencies.

"You can't look at this as a normal situation," he said. "We're in an industry that will probably go from $140 billion to $2 trillion and the bitcoin price will probably move with that."

The total market value of more than 800 digital coins listed on CoinMarketCap.com has climbed from around $20 billion at the start of this year to about $140 billion on Monday. Bitcoin accounts for about half of that value.

Year-to-date change in global value of digital currencies

 

Published by and fro

Source: CoinMarketCap

Another digital currency, ethereum, traded 1 percent higher near $307, according to CoinDesk. Ethereum has shot up more than 3,000 percent this year.

Bitcoin cash, an alternative version of bitcoin supported by a minority of developers, held steady near $300, according to CoinMarketCap.

Moas told CNBC that 100 percent of his investments are in digital currencies, with the majority in bitcoin and ethereum. He said he never invested in the stocks he issued reports on.

He added in his Monday note to clients:

"Any way that I look at these numbers, my forecasts are looking conservative. It looks to me as though we are at the same point in the adoption curve as we were in 1995 when we went from one million internet users to ten million. The following year the Netscape browser came online and we went from 10 million users to hundreds of millions of users overnight.

I expect that within a couple of years we will have between 50 and 100 million cryptocurrency users — up from approximately ~10 million today. We only have 0.15% market penetration right now — if that goes to 2% or 3% we will get to the $50,000 price target that I set at the beginning of July."

 

To be sure, many note that bitcoin remains like the Wild West compared with the established Wall Street market.

"People should understand they're not dealing with the NYSE right now. There's no regulation, there's no face that you can attach to these exchanges," Moas told CNBC, noting his digital currency holdings are spread across five exchanges.

Bitcoin lost more than half its value in 2014 as Mt.Gox, then the largest exchange by far, said it lost about 850,000 bitcoins (worth about half a billion U.S. dollars at the time) and filed for bankruptcy.

This July, the U.S. Department of Justice alleged in an indictment that a "sizeable portion" of the Mt.Gox losses were deposited in accounts controlled, owned and operated by an exchange called BTC-e and a Russian national named Alexander Vinnik. Vinnik was arrested in late July.

— Reuters contributed to this report.

WATCH: How practical is it to live on bitcoin in 2017? We tried it for a week

Originator and publisher:
@chengevelyn
Published 10:32 AM ET Mon, 14 Aug 2017  | Updated 11:08 AM ET Tue, 15 Aug 2017

Posted by,
Thomas Prendergast

TP

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Thomas Prendergast

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The CoinPay merchant solution

The CoinPay Marchant Customer App opportunity

The Bitclub Network is getting ready to launch CoinPay, which is a new smart payment app that has been in beta (Thailand, Hong Kong, Korea and Japan) for over 18 months now. This platform will allow merchants to easily accept Bitcoin,  ClubCoin  and more by generating invoices and setting up products within a shopping cart that can easily be paid and settled quickly.

Bitclub has created an entire business model around members getting merchants to sign up for the platform. These commissions are paid strategically through the BitClub compensation plan, and as the merchant network grows we believe this could become the most valuable piece of BitClub Network.

Do you want a piece of CoinPay?

Not only will BitClub members have an exclusive to sell the platform and earn commissions on any merchants using it, but CoinPay will also be giving away 60-70% of the company to BitClub Network members in the form of ownership shares! These shares are FREE! Just like we gave you ClubCoin free (and continue to give it) we will be giving you shares of CoinPay as well.

You cannot buy these shares, you have to earn them through your membership and we will have many different incentives for you to earn more as the platform launches. It’s just another way that we like to provide value to our membership and help you cash in.

CoinPay will be its own entity with 1 billion tokens (coins) of this 600-700 million tokens will be given away to members of BitClub for FREE and the other 300-400 million will belong to the CoinPay corporate team, investors, programmers, etc.

CoinPay will operate independently of BitClub and its main focus will be on merchant adoption and support! CoinPay has been working in a private Beta for the last year.

We are now moving to the next phase with a full Beta launch to our Founders and anyone at the Pro Builder rank or higher. This will also be a limited Beta as we test on a larger scale and get feedback before we launch it fully.

You will be hearing A LOT more about CoinPay as it moves forward… It’s finally here…

Are you part of the Club already?

If not -> http://c.oinpays.com

CoinPay makes Bitcoin Payments Easy

Coming Services for Merchants

Cart Plugins Available

Thomas Prendergast
CEO
Markethive Inc.

 

 

TP

Some Bitcoin Unlimited supports will see this as a push for SegWit adoption.

Some Bitcoin Unlimited supports will see this as a "push" for SegWit adoption.

The bitcoin network appears to be under attack once again. BitClub initiated a transaction malleability attack against the bitcoin network yesterday afternoon. Users are advised to exert caution when checking up on bitcoin transactions. It appears Jim Hilliard is the one responsible for this attack, albeit his motives remain unclear.

It seems odd to think a bitcoin mining pool would purposefully attack the network. BitClub owns 4.2% of the total hashrate, which makes them one of the largest in the world. For some reason, one of their members executed this transaction malleability attack since yesterday.All of the affected blocks were mined by the BitClub pool as well, which make it somewhat easier to find the culprit.

Network blocks 456545 and 456552 effectively halted block monitoring updates provided by popular platforms. A lot of bitcoin users had gotten concerned over this attack, albeit the motive remains unclear. It seems very likely this attack is a political move rather than a way to effectively harm the network. The tension between SegWit and Unlimited supporters has been heating up as of late.

A Successful Malleability Attack By BitClub

BitClub may try to influence developers and stakeholders to solve malleability issues. Segregated Witness is designed to address these problems once and for all, yet continues to be opposed by Bitcoin Unlimited supporters. There is a reason why companies and service providers all favor SegWit over BU, though. As a result of this BitClub-orchestrated malleability attack, a double-spend has been recorded. All transactions found within the two network blocks are double-spends.

An investigation has been launched to determine how this attack was performed. One thing is certain: malleability attacks need to be made impossible sooner rather than later. Rest assured this attack was unintentional by any means, as BitClub knew all too well what they were doing. Events like these always spark intriguing debates, even though this is a politically-tinted attack.

Some Bitcoin Unlimited supported will see this as a “push” for SegWit adoption. It is doubtful that is the case, even though BitClub identified a big flaw in the bitcoin ecosystem. If malleability persists, it will be impossible to tell which transactions are legitimate. Although it takes a lot of preparation to pull off such an attack, there is no reason to think it can’t happen again. Solving this problem needs to be the top priority right now. It appears we need SegWit for doing just that, regardless of how others may feel about this idea.

BitClub may try to influence developers and stakeholders to solve malleability issues. Segregated Witness is designed to address these problems once and for all, yet continues to be opposed by Bitcoin Unlimited supporters. There is a reason why companies and service providers all favor SegWit over BU, though. As a result of this BitClub-orchestrated malleability attack, a double-spend has been recorded. All transactions found within the two network blocks are double-spends.

An investigation has been launched to determine how this attack was performed. One thing is certain: malleability attacks need to be made impossible sooner rather than later. Rest assured this attack was unintentional by any means, as BitClub knew all too well what they were doing. Events like these always spark intriguing debates, even though this is a politically-tinted attack.

Some Bitcoin Unlimited supported will see this as a “push” for SegWit adoption. It is doubtful that is the case, even though BitClub identified a big flaw in the bitcoin ecosystem. If malleability persists, it will be impossible to tell which transactions are legitimate. Although it takes a lot of preparation to pull off such an attack, there is no reason to think it can’t happen again. Solving this problem needs to be the top priority right now. It appears we need SegWit for doing just that, regardless of how others may feel about this idea.

Published by JP Buntinx

JP is working hard to bring more credibility to the Bitcoin and blockchain news industry. Outside of being Europe Editor at Newsbtc, JP is also an active writer for the website, and does not shy away from letting his opinion be heard.

Thomas Prendergast

TP

U.S. Signals Clampdown on Red-Hot Digital Coin Offerings

U.S. Signals Clampdown on Red-Hot Digital Coin Offerings

  • SEC says ICOs, cryptocurrency exchanges subject to U.S. law
  • Startups have raised hundreds of millions through ICOs

U.S. regulators said they have jurisdiction over one of the hottest new areas of finance: initial coin offerings of digital currencies.

Companies that raise money through the sale of digital assets must adhere to federal securities laws, the Securities and Exchange Commission said Tuesday. Issuers must register the deals with the government unless they have a valid excuse, as should exchanges that offer trading of cryptocurrencies like bitcoin and ether, the regulator said.

“It’s been a long time coming and this is a big deal,” said Angela Walch, associate professor at St. Mary’s University School of Law. “People have been waiting for some kind of signal from regulators on ICOs.” This is the most detailed the SEC has been about how digital currencies and the exchanges where they trade fit into financial markets, she said. “It’s a reminder that basic consumer protection principles still apply” in the digital asset world, she added. “The tech people coming in don’t necessarily realize they’re playing with fire.”

Startups have raised hundreds of millions of dollars selling such tokens in 2017, bypassing traditional initial public offerings of shares — a process overseen by the SEC — in favor of so-far mostly unregulated ICOs. The commission examined the sale of tokens to fund a startup known as the DAO last year, which raised about $150 million over four weeks, according to the SEC’s investigative report released Tuesday.

The agency’s enforcement division was asked to decide if the DAO token sales “violated federal securities laws with unregistered offers and sales of DAO Tokens in exchange for ‘Ether,’ a virtual currency,” the report said. The SEC decided not to bring charges in the DAO token sale case.

Instead, the SEC report said it wanted “to caution the industry and market participants: the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

One recent ICO was led by Gnosis, a prediction market application based on the Ethereum blockchain. It raised $12.5 million in 12 minutes on April 24, resulting in a market value of almost $300 million. It’s generated no revenue and has little more than a white paper describing what it intends to do. Yet its tokens, which would allow users to bet on things such as election outcomes, have soared 200 percent since early May, according to Coinmarketcap.com.

Open Question

An open question is whether the SEC will apply these new standards to coin offerings that have already happened, said Walch, who is also a research fellow at the Centre for Blockchain Technologies at University College London. And while the SEC won’t pursue action related to the DAO token sale, “I don’t see anything in here that says there won’t be enforcement actions against others,” she said. Some recent ICO have been “egregious,” she said. “I’d be very surprised if they were willing to shove them all under the rug.”
The SEC decision comes a day after the U.S. Commodity Futures Trading Commission gave LedgerX LLC approval to offer options trading based on bitcoin. That could help mature the business of bitcoin trading by helping traders offset risks with derivatives. But it also underscored the fact that digital currencies, decentralized technologies that appeal to the libertarian-minded, probably cannot escape governments.

ICOs offer an attractive deal to young companies: going directly to customers for funding, avoiding venture-capital firms and other professionals. SEC Chairman Jay Clayton addressed the balance he’s trying to strike, saying in the regulator’s statement that, “We seek to foster innovative and beneficial ways to raise capital, while ensuring — first and foremost — that investors and our markets are protected.”

“What the SEC did not say is that all tokens are securities. Rather, they suggest a facts-and-circumstances test,” Peter Van Valkenburgh, research director at Coin Center, said in an email. “We believe that applying the same facts-and-circumstances test to other tokens will mean that some do not fit into the definition of securities, particularly tokens with an underlying utility rather than a mere speculative investment value.”

Exchange Registration

Markets such as Coinbase Inc.’s GDAX and Gemini Trust Co. that offer trading in digital assets so far have dealt mostly with state, not federal, regulators. The SEC now says that will likely change. “Additionally, securities exchanges providing for trading in these securities must register unless they are exempt,” the agency said.

Calling that a “big deal,” Walch said, “Those in the crypto world have been acting as if they live in an alternate universe, and the SEC has delivered a reminder that they still live in the real world, with real investors and real people making decisions that they must be accountable for.”

 

By: Matthew Leising and Camila Russo
July 25, 2017, 4:16 PM CDT July 25, 2017, 5:10 PM CDT

TP