It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
EOS is highly undervalued because there was so much FUD
Because so much FUD has been produced in the last year (including by coindesk), the price of EOS has dropped quite a bit against other coins like Ethereum. But the technology, the developers and the community are still growing in secret. The community is just waiting for the big breakthrough to come. Very good Collection against EOS FUD: eosbasecamp . com A lot of people are saying the network is congested, but it is working as designed. You can rent EOS on REX very cheap. Much cheaper than ETH gas fees. Or you just use a wallet like anchor from Greymass and you can continue with free transactions (as designed the big players offers free transactions for their users). BP's were never and are not a chinese cartel. There are a lot of big players competing against each other. The government is improving with token holders and big proxies starting to set criterias for the Block Producers. In fact the block producers developed a Framework for exchanges, so the users can vote if they have their token on a exchange: medium . com/@generEOS/open-source-exchange-voting-portal-ede575090ee3 BlockProducers have a contract to perform. If one miss too much blocks, he can get temporarily removed from 15 out of 21 BP's. BP's and block one working together to improve the IT infrastructure for EOS regularly. Just check the huge improvement in the last 6 month with the EOS benchmark: alohaeos . com/tools/benchmarks#networkId=1&timeframeId=12 Block one is continuously developing EOSIO Software. With EOS 2.0 the network is able to process around 10'000 tx/s (Proved on the testnet). EOS 3.0 is in development. With eosio.evm (Ethereum virtual machine) there is now a possibility for Ethereum developers to take advantage of the speed from EOS. BOSIBC just created interblockchain communications between the EOSIO chains. Dan is working on IBC as well with 4 chains (private EOSIO chains interacting with the EOS mainchain). With Voice coming out this summer, there will come out as well a KYC method/solution with face ID without the need for government documents. There are several promising products who start the DeFi development on EOS. Interview with Yves La Rose June 2020: esatoshi . club/satoshi-club-x-eos-ama-recap-from-june-8 And with the DAPP Network you can do unlimited scaling with childchains and sharding (Yes this îs already a working product!), develop/connect with any or multiple blockchains, universal account - one user account for all blockchains you want to use, maximal affordable decentralized storage, decentralized and trustless oracle similar to chainlink, but without needing a separate blockchain and with never seen low latency, easily create scheduled tasks and timers, boundless computational power, Easily implement randomness without resorting to vulnerable, complex, or expensive methods… As a developer with DAPP Network you can do whatever you want and whatever you need and connect anything with everything. There was just so much FUD about EOS and everybody fell for it! I think that whoever started the EOS FUD is just scared like shit, that EOS actually delivers what they promised! Everybody who is a little bit smart understand the potential from EOSIO and DAPP Network. EOS is now there, where Ethereum will be in 5 years. And no, there are not only Gambling Dapps on EOS: everypedia . org: everyone’s decentralized encyclopedia peos . one: private & untraceable transactions on EOS (Monero tech combined with the speed from EOS) eosdt . com: over-collateralized stable coin (like MAKER) vigor . ai: world's first multi-collateral insured token protocol available everywhere chintai . io: issuance and management and secondary trading of tokenized securities eosoptions . com: low latency on-chain options platform prediqt.everipedia . org: prediction market protocol and #DeFi platform acueos . io: decentralized moneymarket protocol for lenders and borrowers pizza . live: PIZZA-USDE generate USDE stablecoin, decentralized financial ecosystem liquidapps . io and dappsolutions . app: DAPP Network with LiquidOracles, LiquidChain (childchains and sharding), LiquidX (Connect any blockchain), vRam, vCPU, universalAccounts, LiquidScheduler, LiquidRandomness newdex . io: the world's leading decentralized exchange eosfinex . com: A high-performance exchange built on EOSIO dexeos . io: EOS-based Decentralized Exchange ive . one: global investment & issuing platform for digital assets dgoods . org: A digital, distributed, open standard for virtual items on blockchain sense . chat: Messenger built to communicate, organize, and reward your communities and friends wordproof . io: wordpress plugin to protect website content joinseeds . com: ecosystem to empower humanity and heal our planet emanate . live: instantly rewards artists and music lovers for their creative expression travala . com/payment/eosio-eos: Book Hotels and Accommodations, Worldwide marketcap . one: EOS Pricefeeds gallery . pixeos. art: International Marketplace for Collecting Art prospectors . io: exciting strategy game on EOS and WAX (IBC connected) gives players endless opportunities to earn crypto darkcountry . io: NFT Card Game with export functions to all possible blockchains turncoatgalaxies . com: Turncoat Galaxies Strategy game blankos . com: Huuuge Mythical NFT Game voice . com: freedom of Speech. where truth has a voice effect . ai: earn with the perfect combination of human and machine Piña: eoslongisland . com/pina : is a restaurant review, rate reward app Lifebank: youtube . com/watch?v=tgbZWs5vE5s : blood donation app Fabblink: youtube . com/watch?v=AynFqe7GBAw : enable transparent, secure and reliable distributed automated manufacturing Qure: devpost . com/software/qure-d3ihje : economic virtual meetup community Kyros: youtube . com/watch?v=TwVbfJNvvGA : certificates Hub transledger . io: Move Bitcoin, Litecoin or Bitcoincash to faster networks (EOS) For sure I forgot some and a lot more will follow for sure... vc . eos . io: PartneInvestments and Grants Overview from EOS VC and partners Galaxy Digital, EOS Global, SVK Crypto and FinLab And EOS VC Grants Program continues investing in projects (today 34 companies) who use EOSIO software which will all benefit EOS in some ways: eos . io/news/blockone-announces-eos-vc-grants-recipients and other investments to grow the EOSIO ecosystem: Gapless receives 5.5 million euros after support from the FinLab EOS VC Fund and Porsche AG, Expects 100,000 Listed Vehicles by EOY: chainbulletin . com/car-app-gapless-holds-successful-funding-round-expects-100000-listed-vehicles-by-eoy/ Major U.S. accounting firm Grant Thornton has announced a new platform for its clients to handle their intercompany transactions using the EOSIO blockchain. By doing this, they capture a small slice of an area worth $40 trillion annually: cointelegraph . com/news/grant-thornton-moves-intercompany-transactions-to-eosio sparrowexchange . com Singapure based options trading platform. Stefan Schuetze, Managing Director of FinLab EOS VC Fund, said, "We are excited to invest in Sparrow, which is developing the next generation of financial products by leveraging EOSIO for their on-chain settlement layer." prnewswire . co.uk/news-releases/sparrow-raises-usd-3-5-mil-in-series-a-funding-874437988.html
dxDAO aims to power DeFi protocols through decentralized governance
I found this article on internet. It's repost of it to help educate people about all DXDao advantages: These are positive and necessary steps for DeFi. The new governance structures are intended to help coordinate across community stakeholders and make better decisions. These dynamics are influenced by the issues covered in Dose of DeFi, but I believe they deserve their own focused analysis. Govern Thisaims to educate token holders and make them better voters. Emphasis will be placed on specific governance proposals and relaying community governance discussions on forums and weekly calls. Governance is a coordination technology that has helped countries and companies build more than the sum of their parts. Blockchains are also a coordination technology, but for computers, not humans***.*** Govern Thiswill track the development of the melding of these two over the coming years. Like governance,Govern Thisis a work in progress. I would appreciate any feedback on format, topics covered or any other suggestions to make the newsletter better. Just hit reply. The first issue ofGovern Thisis below. Pleaseclick here to subscribe. Thanks for reading, Chris 📷 dxDAO aims to power DeFi protocols through decentralized governance Gnosis launched a long-awaited DEX last week with batched auctions for low-liquidity trade pairs. The front-end, Mesa.Eth.Link is owned and operated by dxDAO, a decentralized collective that hopes to power other DeFi protocols. While dYdX does not have any specific governance plans (yet), this tweet from dYdX founder Antonio Juliano is a common approach to governance. 📷Antonio Juliano @AntonioMJuliano3) 0x should focus less on governance in the short term. It’s way more important to first build something with a large amount of adoption that’s worth governing December 6th 2018 3 Retweets62 Likes The tweet at the end of 2018 was in response to 0x and its native token, ZRX. The project was popular but the token had no use case outside of governance. This governance strategy – build now, decentralize later – is widely accepted in the space and is perhaps best exemplified by the A16Z’s Jesse Walden’s post, “Progressive Decentralization: A Playbook for Building Crypto Applications”, which the A16Z-backed Compound has essentially implemented (more in the section below). dxDAO, on the other hand, maintains that decentralization must come at the beginning or else the core team and investors will have an outsized influence on the project in formal (token voting) or informal ways (dictators for life). Background dxDAO was launched in May 2019, spun out of a collaboration between Gnosis and DAOstack over managing the DutchX platform. dxDAO’s key governance design is separating financial rights to the DAO (DXD) from voting power over the DAO (Reputation). It used an Edgeware-style lock drop to distribute reputation to stakeholders in May of last year. Any user could lock up ETH or an accepted ERC-20 for a month and receive Reputation, which are voting rights in dxDAO, even though it is not a token and cannot be transferred. Over 400 unique Ethereum addresses participated in the distribution scheme. Gnosis went through a pretty extensive process in July 2019 to “step back” from its involvement in the DAO, and since then, the community and dxDAO have aligned behind a mission of “putting the ‘De’ in Decentralized Finance”. Following on last week’s launch of Mesa.ETH.Link, dxDAO is conducting a fundraiser or (“DAICO”?) to help fund its new slate of DeFi products, including a prediction market platform (Omen) and a privacy-centric DeFi dashboard (Mix). Project launch is typically when a project is most centralized. Execution is hard and direction and accountability are important. dxDAO’s approach will be an interesting counterexample to the “decentralize later” trend and may provide insight into new governance strategies. Click here for more information about the dxDAO fundraiser. Here’s what is on the dxDAO docket this week:
There are no explicit plans yet, but the widely held assumption is that the COMP distribution will be determined by the interest earned and paid by users on the protocol since its inception. This is a clever way that only incentivizes more use of the protocol and is hard to game because interests accrues over time. But the question still remains, what will the COMP community look like and what values will it espouse? Can emergent cultures arise out of Silicon Valley too? Here’s what is on the Compound docket this week:
Governance AMA with Compound CEO Robert Leshner - Robert answered a variety of questions on ETH2.0 (staking yield is of great interest), Chainlink (Compound’s oracle system is better), contentious forks (Compound would signal a preference on chain) and how Covid-19 changed his mind about remote work. They also announced…
Proposal: Add USDT Support – announced on the AMA, USDT was approved by Compound users in a poll last September but had yet to be included. The proposal to add the largest stablecoin in the world is the first test for the new governance portal. (Very) notably, the proposal does not allow USDT to be used as collateral, as Compound currently does with wBTC. It’s not clear if Compound wants to be in the largest stablecoin market or not and underscores the governance challenges of straddling both worlds.
Head of Community Rich started off with a new meme for governance: the path from intent to implementation, discussing how forums, polls and other initiatives are designed to capture the intent of the community, and then “empowered people” are tasked with implementing that, foreshadowing upcoming changes.
Half of the call was devoted to the addition of WBTC as collateral with representatives from WBTC, Bitgo and CoinList in attendance. CoinList’s WBTC announcement gives WBTC the type of liquidity needed for Maker’s auctions (“can redeem WBTC in less than 2 minutes and burn less than that”). Most of the discussion revolved around the circular loop from BTC->DAI in times of high volatility. While there was some concern that WBTC liquidity was dependent on acceptance as Maker collateral, most on the call seemed to support the addition. The strongest support seemed to come from the Maker Foundation’s market making team, who is reportedly the largest market maker for WBTC. There’s more in the Maker forum thread.
State of the peg – Vishesh’s overview (graphs can be seen here) showed that the peg had come down to $1.01x area but most of the discussion was around the debt ceiling. At the time of the call it was 4 million away from its 90m debt ceiling. Vishesh advocated for a more programmatic lifting of the debt ceiling. Update: Dai hit the 90m debt ceiling Friday evening ET. Should help the peg.
Single Collateral Dai shutdown – the process has begun. A poll passed with May 12 as the official SCD shutdown. Just yesterday, an executive just passed yesterday to make the MKR oracle fee-less, which will help with migration. Many in the community think the migration of debt from SCD will do more than enough to restore the peg. 13 MIPs and 2 sub proposals – Core to the new Maker governance process is the “Maker Improvement Proposals (MIPs), which are modeled off of BIPs (for Bitcoin) and EIPs (for Ethereum). The two sub-proposals are to appoint the Smart Contracts Team and assign Charles St. Louis as the MIP editor. The 13 MIPs are listed below:
By and large, the MIPs codify many of the informal Maker governance processes. There is currently a request for comments period (MIP forum) and there will be an informal poll on Monday, April 27 on whether to proceed with the 13 MIPs and 2 sub proposals. If it’s a “Yes”, than an executive for an official ratification vote would start on May 1 and lasts for 4 days. If it passes, the official governance cycle will begin and the rest of the MIPs will likely be approved from May 4 – 6. Other Governing Things
Synthetix trials incentivzation program to encourage ETH shorts to balance debt position Link
PieDAO community call on audit and post imBTC actions Link
Coinbase Custody double downs on DeFi governance Link
Terra considers punishing validators that don’t vote Link
0x governance proposal to decrease epoch length to 7 days Link
That’s it! Feedback definitely appreciated. Just hit reply. Written in Brooklyn where it rained all day. No euchre today, but yesterday was epic. Govern This is written byChris Powers. Opinions expressed are my own. All content is for informational purposes and is not intended as investment advice.
Crypto-Powered - The Most Promising Use-Cases of Decentralized Finance (DeFi)
A whirlwind tour of Defi, paying close attention to protocols that we’re leveraging atGenesis Block. https://reddit.com/link/hrrt21/video/cvjh5rrh12b51/player This is the third post ofCrypto-Powered— a new series that examines what it means forGenesis Blockto be a digital bank that’s powered by crypto, blockchain, and decentralized protocols. Last week we explored how building on legacy finance is a fool’s errand. The future of money belongs to those who build with crypto and blockchain at their core. We also started down the crypto rabbit hole, introducing Bitcoin, Ethereum, and DeFi (decentralized finance). That post is required reading if you hope to glean any value from the rest of this series. 97% of all activity on Ethereum in the last quarter has been DeFi-related. The total value sitting inside DeFi protocols is roughly $2B — double what it was a month ago. The explosive growth cannot be ignored. All signs suggest that Ethereum & DeFi are a Match Made in Heaven, and both on their way to finding strong product/market fit. So in this post, we’re doing a whirlwind tour of DeFi. We look at specific examples and use-cases already in the wild and seeing strong growth. And we pay close attention to protocols that Genesis Block is integrating with. Alright, let’s dive in.
Stablecoins are exactly what they sound like: cryptocurrencies that are stable. They are not meant to be volatile (like Bitcoin). These assets attempt to peg their price to some external reference (eg. USD or Gold). A non-volatile crypto asset can be incredibly useful for things like merchant payments, cross-border transfers, or storing wealth — becoming your own bank but without the stress of constant price volatility. There are major governments and central banks that are experimenting with or soon launching their own stablecoins like China with their digital yuan and the US Federal Reserve with their digital dollar. There are also major corporations working in this area like JP Morgan with their JPM Coin, and of course Facebook with their Libra Project.
Stablecoin activity has grown 800% in the last year, with $290B of transaction volume (funds moving on-chain).
USDC($1B): This is the most reputable USD-backed stablecoin, at least in the West. It was created by Coinbase & Circle, both well-regarded crypto companies. They’ve been very open and transparent with their audits and bank records.
DAI ($189M): This is backed by other crypto assets — not USD in a bank account. This was arguably the first true DeFi protocol. The big benefit is that it’s more decentralized — it’s not controlled by any single organization. The downside is that the assets backing it can be volatile crypto assets (though it has mechanisms in place to mitigate that risk).
Three of the top five DeFi protocols relate to lending & borrowing. These popular lending protocols look very similar to traditional money markets. Users who want to earn interest/yield can deposit (lend) their funds into a pool of liquidity. Because it behaves similarly to traditional money markets, their funds are not locked, they can withdraw at any time. It’s highly liquid. Borrowers can tap into this pool of liquidity and take out loans. Interest rates depend on the utilization rate of the pool — how much of the deposits in the pool have already been borrowed. Supply & demand. Thus, interest rates are variable and borrowers can pay their loans back at any time.
So, who decides how much a borrower can take? What’s the process like? Are there credit checks? How is credit-worthiness determined?
These protocols are decentralized, borderless, permissionless. The people participating in these markets are from all over the world. There is no simple way to verify identity or check credit history. So none of that happens. Credit-worthiness is determined simply by how much crypto collateral the borrower puts into the protocol. For example, if a user wants to borrow $5k of USDC, then they’ll need to deposit $10k of BTC or ETH. The exact amount of collateral depends on the rules of the protocol — usually the more liquid the collateral asset, the more borrowing power the user can receive. The most prominent lending protocols include Compound, Aave, Maker, and Atomic Loans. Recently, Compound has seen meteoric growth with the introduction of their COMP token — a token used to incentivize and reward participants of the protocol. There’s almost $1B in outstanding debt in the Compound protocol. Mainframe is also working on an exciting protocol in this area and the latest iteration of their white paper should be coming out soon.
There is very little economic risk to these protocols because all loans are overcollateralized.
Buying, selling, and trading crypto assets is certainly one form of investing (though not for the faint of heart). But there are now DeFi protocols to facilitate making and managing traditional-style investments. Through DeFi, you can invest in Gold. You can invest in stocks like Amazon and Apple. You can short Tesla. You can access the S&P 500. This is done through crypto-based synthetics — which gives users exposure to assets without needing to hold or own the underlying asset. This is all possible with protocols like UMA, Synthetix, or Market protocol. Maybe your style of investing is more passive. With PoolTogether , you can participate in a no-loss lottery. Maybe you’re an advanced trader and want to trade options or futures. You can do that with DeFi protocols like Convexity, Futureswap, and dYdX. Maybe you live on the wild side and trade on margin or leverage, you can do that with protocols like Fulcrum, Nuo, and DDEX. Or maybe you’re a degenerate gambler and want to bet against Trump in the upcoming election, you can do that on Augur. And there are plenty of DeFi protocols to help with crypto investing. You could use Set Protocol if you need automated trading strategies. You could use Melonport if you’re an asset manager. You could use Balancer to automatically rebalance your portfolio. With as little as $1, people all over the world can have access to the same investment opportunities and tools that used to be reserved for only the wealthy, or those lucky enough to be born in the right country.
You can start to imagine how services like Etrade, TD Ameritrade, Schwab, and even Robinhood could be massively disrupted by a crypto-native company that builds with these types of protocols at their foundation.
As mentioned in our previous post, there are near-infinite applications one can build on Ethereum. As a result, sometimes the code doesn’t work as expected. Bugs get through, it breaks. We’re still early in our industry. The tools, frameworks, and best practices are all still being established. Things can go wrong. Sometimes the application just gets in a weird or bad state where funds can’t be recovered — like with what happened with Parity where $280M got frozen (yes, I lost some money in that). Sometimes, there are hackers who discover a vulnerability in the code and maliciously steal funds — like how dForce lost $25M a few months ago, or how The DAO lost $50M a few years ago. And sometimes the system works as designed, but the economic model behind it is flawed, so a clever user takes advantage of the system— like what recently happened with Balancer where they lost $500k. There are a lot of risks when interacting with smart contracts and decentralized applications — especially for ones that haven’t stood the test of time. This is why insurance is such an important development in DeFi.
Insurance will be an essential component in helping this technology reach the masses.
Decentralized Exchanges (DEX) were one of the first and most developed categories in DeFi. A DEX allows a user to easily exchange one crypto asset for another crypto asset — but without needing to sign up for an account, verify identity, etc. It’s all via decentralized protocols. Within the first 5 months of 2020, the top 7 DEX already achieved the 2019 trading volume. That was $2.5B. DeFi is fueling a lot of this growth. https://preview.redd.it/1dwvq4e022b51.png?width=700&format=png&auto=webp&s=97a3d756f60239cd147031eb95fc2a981db55943 There are many different flavors of DEX. Some of the early ones included 0x, IDEX, and EtherDelta — all of which had a traditional order book model where buyers are matched with sellers. Another flavor is the pooled liquidity approach where the price is determined algorithmically based on how much liquidity there is and how much the user wants to buy. This is known as an AMM (Automated Market Maker) — Uniswap and Bancor were early leaders here. Though lately, Balancer has seen incredible growth due mostly to their strong incentives for participation — similar to Compound. There are some DEXs that are more specialized — for example, Curve and mStable focus mostly only stablecoins. Because of the proliferation of these decentralized exchanges, there are now aggregators that combine and connect the liquidity of many sources. Those include Kyber, Totle, 1Inch, and Dex.ag.
These decentralized exchanges are becoming more and more connected to DeFi because they provide an opportunity for yield and earning interest.
As it relates to making payments, much of the world is still stuck on plastic cards. We’re grateful to partner with Visa and launch the Genesis Block debit card… but we still don’t believe that's the future of payments. We see that as an important bridge between the past (legacy finance) and the future (crypto). Our first post in this series shared more on why legacy finance is broken. We talked about the countless unnecessary middle-men on every card swipe (merchant, acquiring bank, processor, card network, issuing bank). We talked about the slow settlement times. The future of payments will be much better. Yes, it’ll be from a mobile phone and the user experience will be similar to ApplePay (NFC) or WePay (QR Code).
But more importantly, the underlying assets being moved/exchanged will all be crypto — digital, permissionless, and open source.
Someone making a payment at the grocery store check-out line will be able to open up Genesis Block, use contactless tech or scan a QR code, and instantly pay for their goods. All using crypto. Likely a stablecoin. Settlement will be instant. All the middlemen getting their pound of flesh will be disintermediated. The merchant can make more and the user can spend less. Blockchain FTW! Now let’s talk about a few projects working in this area. The xDai Burner Wallet experience was incredible at the ETHDenver event a few years ago, but that speed came at the expense of full decentralization (can it be censored or shut down?). Of course, Facebook’s Libra wants to become the new standard for global payments, but many are afraid to give Facebook that much control (newsflash: it isn’t very decentralized). Bitcoin is decentralized… but it’s slow and volatile. There are strong projects like Lightning Network (Zap example) that are still trying to make it happen. Projects like Connext and OmiseGo are trying to help bring payments to Ethereum. The Flexa project is leveraging the gift card rails, which is a nice hack to leverage existing pipes. And if ETH 2.0 is as fast as they say it will be, then the future of payments could just be a stablecoin like DAI (a token on Ethereum). In a way, being able to spend crypto on daily expenses is the holy grail of use-cases. It’s still early. It hasn’t yet been solved. But once we achieve this, then we can ultimately and finally say goodbye to the legacy banking & finance world. Employees can be paid in crypto. Employees can spend in crypto. It changes everything.
Legacy finance is hanging on by a thread, and it’s this use-case that they are still clinging to. Once solved, DeFi domination will be complete.
At Genesis Block, we’re excited to leverage these protocols and take this incredible technology to the world. Many of these protocols are already deeply integrated with our product. In fact, many are essential. The masses won’t know (or care about) what Tether, USDC, or DAI is. They think in dollars, euros, pounds and pesos. So while the user sees their local currency in the app, the underlying technology is all leveraging stablecoins. It’s all on “crypto rails.” https://preview.redd.it/jajzttr622b51.png?width=700&format=png&auto=webp&s=fcf55cea1216a1d2fcc3bf327858b009965f9bf8 When users deposit assets into their Genesis Block account, they expect to earn interest. They expect that money to grow. We leverage many of these low-risk lending/exchange DeFi protocols. We lend into decentralized money markets like Compound — where all loans are overcollateralized. Or we supply liquidity to AMM exchanges like Balancer. This allows us to earn interest and generate yield for our depositors. We’re the experts so our users don’t need to be. We haven’t yet integrated with any of the insurance or investment protocols — but we certainly plan on it. Our infrastructure is built with blockchain technology at the heart and our system is extensible — we’re ready to add assets and protocols when we feel they are ready, safe, secure, and stable. Many of these protocols are still in the experimental phase. It’s still early.
At Genesis Block we’re excited to continue to be at the frontlines of this incredible, innovative, technological revolution called DeFi.
--- None of these powerful DeFi protocols will be replacing Robinhood, SoFi, or Venmo anytime soon. They never will. They aren’t meant to! We’ve discussed this before, these are low-level protocols that need killer applications, like Genesis Block. So now that we’ve gone a little deeper down the rabbit hole and we’ve done this whirlwind tour of DeFi, the natural next question is: why?
Why does any of it matter?
Most of these financial services that DeFi offers already exist in the real world. So why does it need to be on a blockchain? Why does it need to be decentralized? What new value is unlocked? Next post, we answer these important questions. To look at more projects in DeFi, check outDeFi Prime,DeFi Pulse, orConsensys. ------ Other Ways to Consume Today's Episode:
Is bitcoin really un-tethered? this paper looks at the btc / tether connection; it examines if tether is not back by dollars and is printed to pump prices mainly btc
here is the paper, its quite long but a good read. below ive added some quotes. If you read this paper it will likely just confirm want most who have been in this space for a while think about tether, its centralised with no accountability and is likely not backed 1:1 and is likely an instrument to pump / manipulate prices most noteably bitcoin. Is Bitcoin Really un-tethered? some snippets from the paper: flow of tether between exchanges, the main players:
Figure 1 plots the aggregate flow of Tether among major market participants on the Tether blockchain from its conception in October 6, 2014 until March 31, 2018. The size of the nodes is proportional to the sum of coin inflow and outflow to each node, the thickness of the lines is proportional to the size of flows, and all flow movements are clockwise. Tether is authorized, moved to Bitfinex, and then slowly distributed to other Tether-based exchanges, mainly Poloniex and Bittrex. The graph shows that almost no Tether returns to the Tether issuer to be redeemed, and the major exchange where Tether can be exchanged for USD, Kraken, accounts for only a small proportion of transactions. Tether also flows out to other exchanges and entities and becomes more widespread over time as a medium of exchange. A similar analysis of the flow of coins on the much larger Bitcoin blockchain shows that the three main Tether exchanges for most of 2017 (Bitfinex, Poloniex, and Bittrex) also facilitate considerable cross-exchange Bitcoin flows among themselves.6 Additionally, we find that the cross-exchange Bitcoin flows on Bitcoin blockchain closely matches the Tether flows on Tether blockchain.
a large player is likely responsiblle for a lot of this:
we find that one large player is associated with more than half of the exchange of Tether for Bitcoin at Bitfinex, suggesting that the distribution of Tether into the market is from a large player and not many different investors bringing cash to Bitfinex to purchase Tether
people who worked on the inside even admit tether isnt backed 1:1
in response to legal motions, on April 30, 2019, Bitfinex’s former General Counsel admitted that Tether does not have cash reserves equal to 100% of the outstanding Tethers. In a May 15, 2019 court hearing, a Bitfinex attorney also admitted that Tether did invest in instruments beyond cash, including Bitcoin, something clearly at odds with Tether’s longstanding claims.
The well-known and respected PayPal payment system and its Venmo mobile payment service are likely to provide the ability to buy and sell various tokens with their system tools. This innovation is expected in the next quarter.
CoinDesk talked to an unnamed, but in their opinion, reliable source. They said PayPal would add functions that will allow any member of the system to buy, sell, and even store cryptocurrency with. To provide the ability to conduct these operations, the payment system will cooperate with cryptocurrency exchanges. The exact list of these exchanges as well as the list of cryptocurrencies is unknown, but it can likely be Coinbase and Bitstamp. At the end of 2018, Coinbase, the largest cryptocurrency exchange in the U.S., made available the option of fiat currencies withdrawal to a PayPal account without any fee. Hunter Horsley, CEO at BitwiseInvest, believes the launch of cryptocurrencies support by PayPal and Venmo in the 3rd or 4th quarters of 2020 is quite real. In addition, he is optimistic and compares impressive PayPal figures with other close companies:
Paypal: 300 million users and about $700 billion of funds.
Venmo: 50 million users and about $100 billion of funds.
Coinbase: 40 million users.
Robinhood: 13 million users.
The historical change in PayPal's attitude towards blockchain and cryptocurrencies
In mid-August 2017, Bitcoin outperformed PayPal in market capitalization for the first time. At the beginning of 2018, PayPal CEO Dan Schulman declared that Bitcoin is not an effective way to transfer value. Therefore, PayPal does not intend to support Bitcoin as a payment tool on its site. At least until the moment of widespread distribution of cryptocurrencies. At the same time, he paid tribute to the blockchain: he did not exclude the use of distributed registry technology in a number of areas PayPal deals with: from real estate contracts to financial services. In spring 2019, PayPal mentioned it had already tested the possibility for merchants to accept Bitcoin for payment, but so far the company is extremely wary of this and continues to study it. It is noteworthy that the founder of PayPal Peter Thiel conducts active venture activities in the cryptocurrency sector. This refers to assistance to the Blockfolio project and the Harbor startup from the Founders Fund, where he is the main partner. In spring 2020, the company placed the vacancy of a blockchain expert who would counteract financial crimes. Also, PayPal is searching for a blockchain developer for the company's research department and a technical director for crypto development. Also, in spring 2020, PayPal CTO Sri Shivananda shared an opinion that for the success of cryptocurrencies, people must clearly understand their advantages. The client, he said, will be followed by business. All the above-mentioned makes it possible to believe PayPal will start operations with cryptocurrencies by the fall or the end of the year.
Blockchain in Insurance: Use Cases and Implementations
This article was first posted on Medium:https://medium.com/swlh/blockchain-in-insurance-use-cases-and-implementations-a42a00ebcd91 Almost all major insurers are planning to integrate blockchain by 2021, according to PwC. At first glance, such a high level of commitment to new tech may seem surprising in an old and traditional industry such as insurance. However, enterprise blockchain adoption is poised to help insurers significantly cut costs, become more responsive to customers, and write more business. Two recurring themes throughout this post are that:
Blockchain can lower costs for insurers and lower insurance premiums for customers.
Blockchain can help insurers understand & price risks better by allowing customer, risk and policy information to be shared more quickly and securely across parties the insurance ecosystem. This will increase revenue and growth prospects by allowing insurers to price insurance products more accurately.
Costs are becoming an issue for insurers. Life insurers in Asia and the US have seen cost ratios climb above 30% and 20% respectively over the past few years. This figure should ideally be below 20%. Part of this is due to increased compliance costs such as Know Your Customer (KYC) and Anti-Money Laundering (AML) laws. A bigger reason is that selling and servicing insurance policies is still a complex and labor intensive process. Insurance Growth Rates (CAGR) 2012–17. Source: EY A recent EY insurance market report showed low growth rates for Life insurance and Non-Life insurance outside Asia Pacific. Digging deeper, Life insurance premiums in the US declined by 0.4% from 2012–17. Insurers find themselves needing to reduce operating costs and write business more effectively. While blockchain is not a magic elixir, proper adoption will help address these needs.
What is Blockchain?
In their book “Blockchain Revolution,” authors Don and Alex Tapscott describe blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Organizations need secure ways to record transactions and manage information flows, making blockchain’s appeal easy to see. Blockchains ensures that:
All participants have a copy of the digital ledger and that each copy is updated in real-time when transactions occur;
There is no centralized server, making hacking next to impossible;
A recorded transaction theoretically cannot be reversed, which makes the ledger an immutable source of truth no matter how many participants hold copies;
Transaction data, records, and participant identities can be authenticated while remaining private.
Enterprise blockchains used by companies are different from public blockchains such as Bitcoin and Ethereum. Public blockchains are too clunky and slow for enterprise purposes. Enterprises require scale and speed — the ability to process hundreds of thousands of transactions very quickly. Public blockchains suffer from very low transaction speeds. Their verification process is cumbersome because participants are unknown and untrusted. Private enterprise blockchains don’t suffer from this limitation since all participants are known and trusted. Enterprise blockchains have the following characteristics:
Participation requires invitation: all participants in the blockchain network are trusted
Data is private and secure: you don’t have access to transactions that you are not a party to, even though you’re on the same blockchain network
Enterprise blockchains are fast and light: the network can handle thousands of transactions per second and numerous participants working in tandem
‘Smart contracts’ automate processes: transaction rules and process flows can be programmed to execute automatically, allowing payments and transfers to execute without human intervention, for example
The insurance industry will benefit from blockchain because most underwriting and claims activity requires cooperation among multiple parties. Some of these parties are from outside the firm, making data security important. Reconciling data from multiple sources during claims investigation, for example, is time and resource intensive and prone to manual error. Putting this data on a blockchain would streamline operations.
Blockchain Use Cases in Insurance
Industries have always adopted technology that has made it easier, faster and cheaper to conduct business. Blockchain tech promises to deliver on all three fronts, especially in the insurance industry, which is seen as slow and complex. Let’s face it, insurance customers don’t enjoy interacting with insurance companies. Customers often deal with time-consuming paper forms when applying for a policy or submitting a claim. They may have to speak with people at insurance companies and hospitals, for example, to get medical insurance claims reimbursed. On the flip side, insurance companies have to deal with the high costs of managing and servicing policies. Many of these costs are administrative — claims administration, verification and reconciliation of information, and paperwork. Insurance also requires coordination among many parties — consumers, brokers, insurers and reinsurers. This introduces overhead costs that translate to higher premiums paid by customers. Blockchain can help make selling and servicing insurance better, faster and cheaper by improving fraud prevention,claims management, health insurance, and reinsurance. The end result could be lower prices and better experiences for customers.
According to the FBI, non-health insurance fraud in the US is estimated to be over $40 billion per year, which can cost families between $400–700 per year in extra premiums. Common types of insurance fraud can be eliminated by moving insurance claims onto a blockchain-based ledger that is shared among insurance companies and cannot be modified. It can prevent criminals from collecting money from different insurers for the same claim, for example. Blockchain will make coordination easier among insurers. If all insurers access a shared blockchain ledger, they would know if a claim has already been paid. Since all insurers use the same historical claims information, it would also be easier to identify suspicious behavior. Insurers currently try to detect fraud by using publicly available data as well as data acquired from private companies. The problem is that these data sets are incomplete due to legal constraints around sharing personally identifiable information of individuals. Blockchain, by cryptographically securing data, would allow claims information to be shared across insurers without divulging personally identifiable information.
Putting insurance policies on a blockchain as smart contracts can radically improve the efficiency of Property & Casualty (P&C) insurance, saving insurers more than $200B a year in operating costs according to BCG. Let’s use car insurance to illustrate this. If you get into a car accident and it was the other driver’s fault, you must submit a claim to your insurance company to recover your loss. Your insurance company investigates your claim and tries to recover money from the other driver’s insurance company. The other insurance company has its own claims processes, which leads to duplicated work, delays, and possible human error. The end result is that you get paid much later than you’d like, and insurers spend time and money on unprofitable activities. Putting insurance policies and claims data on a blockchain that different insurers, reinsurers, brokers, and other parties can access reduces duplicate manual work by different parties. Insurance policies as smart contracts on a blockchain automatically execute programmed claims processing actions, automating information transfers between insurers and other parties, and releasing payments to policyholders. Additional info such as claims forms and supporting evidence supplied by policyholders can later be added to the blockchain so that all parties have the same information, making disputes unlikely.
Blockchain enables fast, accurate, and secure sharing of medical data among healthcare providers and insurers. This will translate into faster health insurance claims processing and lower health insurance costs for customers. Privacy laws around sharing patient data among hospitals and health insurance providers makes it time-consuming and expensive to process health insurance claims. Lack of data can even lead to insurance claim denials. Patients deal with numerous doctors, hospitals and insurers over time and across borders. A patient’s medical history exists in fragments across healthcare providers and insurers. Worse, the way in which insurers and healthcare providers cooperate, share patient data, and process claims involves complex manual work & reconciliation. Even the technical infrastructure for medical records is outdated. Putting encrypted patient records on a blockchain allows healthcare providers and insurers to access a patient’s medical data without sacrificing patient confidentiality. An industry-wide synchronized database of patient data can save the industry billions annually. Patient privacy is ensured because the blockchain stores cryptographic signatures for each medical record, which verifies the authenticity of the record without having to actually store any sensitive info on the blockchain. Changes to a patient’s medical records are also stored on the blockchain, which creates an audit trail.
Data sharing among insurers and reinsurance companies is complex, time consuming, and requires inefficient manual work. Blockchain can streamline information flows between insurers and reinsurers. Reinsurers provide insurance to insurance companies. That way, insurance companies won’t get wiped out when many claims occur at once, such as during a hurricane or earthquake. The problem is that reinsurance processes are lengthy, inefficient, manual and are based on one-off contracts. Insurance companies generally engage multiple reinsurers for the same risk, which means that data has to be shared among many companies to settle claims. When reinsurers and insurers share a blockchain ledger, data related to policies, premiums and losses can exist on insurers’ and reinsurers’ systems simultaneously. This takes away the need for reconciliation, which saves everyone time and money. Reinsurers can also automate claims processing and settlement. PricewaterhouseCoopers estimates that blockchain can save the reinsurance industry up to $10 billion, which can then lead to lower insurance premiums for customers.
Blockchain Implementation in Insurance
Saving the best for last, here are just some examples of how the insurance industry is using blockchain. Keep in mind that at this point, there are more prototypes and POCs than full-scale implementations.
R3 is an enterprise blockchain company. It maintains an ecosystem of over 300 firms across industries that build blockchain software apps on top of its Corda platform. These apps can be used across industries from insurance to banking to healthcare. R3 maintains 2 versions of Corda; an open source platform and an enterprise-specific version called Corda Enterprise. Both versions of Corda are compatible with each other. Insurance-specific applications on Corda are designed to help insurers automate back office activities, streamline operational flows, and generally spend less time on things like claims admin and data processing. There are also apps being development to speed up underwriting and enable faster data sharing among insurers and reinsurers. Basically, Corda wants to host a common set of insurance apps that the entire industry can use to cut costs and boost revenue. Corda currently boasts over 15 insurance-specific apps, with a few of these deployed into production such as:
Blocksure OS: solves problems related to legacy systems, slow manual processes and high rates of error by automating policy admin and claims activities. Policyholders can access all policy and claims info in one app.
MIDAS: is a motor insurance authentication platform designed to serve 80 motor insurance companies in Hong Kong. It provides real-time authentication of motor insurance policies, verification, and audit trails. This can help with fraud detection and reduce time required for certain verification activities when it comes to policy and claims management.
B3i was a blockchain consortium, now an independent software company, supported by leading insurers and reinsurers including Swiss Re, AXA, Zurich, Munich Re, and Allianz. They develop blockchain-based applications for insurers and reinsurers and aim to create industry-wide standards. B3i aims to use blockchain tech to streamline back office processes and claims management — basically lower costs and do things faster. In 2018, B3i switched from IBM’s Hyperledger Fabric to R3’s Corda platform. In July 2019, they launched a Catastrophe Excess of Loss product on Corda. The product is designed for brokers, insurers and reinsurers to negotiate and place risks more efficiently by reducing manual activities related to placing, renewing and managing treaties.
In 2017, AXA launched Fizzy, a blockchain platform for flight delay insurance. Customers purchase flight delay insurance, which is recorded in a smart contract. The platform is connected to global air traffic databases and receives flight statuses. If a customer’s flight is delayed for more than two hours, the smart contract automatically triggers payment to the customer. Customers don’t have to fill out claims forms or speak to service reps. The claim is deposited directly to their bank account. Customer satisfaction: maximized. AXA does not have to spend time processing claims, verifying flight data, or enduring paperwork for payment authorizations. They save on time & cost and can deploy these resources to more profitable activities. Update: Fizzy has since been discontinued after 2 years, possibly due to lack of appetite from the travel/airline industry. Regardless, Fizzy was a pioneer of sorts and has laid the groundwork for future blockchain insurance platforms.
Hong Kong insurer Blue Cross is using blockchain since April 2019 to speed up medical insurance claims processing and prevent fraud. Blue Cross’ blockchain platform validates claims data in real-time, which greatly reduces fraud potential from duplicate claims filing, for example. Claims are also processed faster for their 200,000+ customers. The platform also removes the need to reconcile claims data across parties such as insurers and medical service providers. Medical practitioners such as doctors and chiropractors who don’t employ many admin support staff could save time and money by partnering with Blue Cross. Blue Cross’ blockchain platform is built on Hyperledger. Blue Cross is owned by Bank of East Asia.
Insurwave is a blockchain-based marine hull insurance platform launched in 2018. The platform was a collaboration among Ernst & Young, Guardtime, Maersk, Microsoft, and ACORD. It was built on R3’s Corda platform. Insurwave provides real-time information on ships’ location, condition, and safety factors that both insurers and customers can access. If ships enter high-risk areas, Insurwave automatically factors this into underwriting and pricing calculations. Premium calculations for this type of insurance are very complex. Having an immutable audit trail for ship-specific information substantially eases this calculation, enables accurate pricing, and speeds up underwriting. Insurers are also able to better account for ship-specific risks.
The Future of Blockchain in Insurance
These are still early days. Most of the work around blockchain in insurance is in the Proof of Concept stage and regulation is slowly catching up. However, we have already seen some applications that have gone live. The ‘quickest win’ for blockchain in insurance is in the area of cost control. Rising costs are hitting insurers across most markets. Blockchain platforms and Dapps that allow firms to free up resources by automating claims management, fraud detection and data reconciliation, for example, will be heartily endorsed by executives. The real win will be when blockchain platforms enable insurers to create better products and onboard customers faster — things that bring in revenue. For this to happen, we need a more robust ecosystem of insurers, reinsurers, tech companies and service providers working together on industry-standard blockchain platforms. This has already started with software companies like R3 launching enterprise-grade blockchain platforms such as Corda Enterprise. We also have leading insurers involved in B3i that share common goals related to blockchain development. It remains to be seen if these natural competitors share enough long-term interests to sustain the initiative. If not, industry-wide blockchain adoption may take longer and become more fragmented. However, the benefits are too obvious to ignore. We will probably see a few committed companies invest early in blockchain and enjoy a short period of above-normal performance, with early adoption coming from mature markets burdened with high costs as well as some parts of Southeast Asia (e.g. China, which proactively adopts tech). The rest of the industry will follow.
Article in reponse to this Coindesk Post by Jill Carlson Hi dear Jill, My name is Sofia. Several days ago I read your article and I tried to summarize a series of thoughts about what a "freedom tool" is for me and for you it is a "most useful tool for breaking laws" DOCTRINES In a voracious struggle to encompass territories and establish patterns for citizen development in a globalized world, doctrines have been erected from the most dominant empires throughout the history of societies, which have allowed, among many things, to guide and trace the individual actions in different ways through persuasion methods, which we are not all specific to identify or escape from them, possibly due to lack of education (most cases) or by omission, in a way: cultural, economic, religious and political. Throughout history it has been seen as products created for certain purposes have been used by people or groups for another purpose, finding in these a way to obtain personal benefits. It is incredible how the detention of Ross Ulbritc is still sustainable for only being the creator of a network that was deformed by the use of a few, putting Ross's reputation at stake and to this day his freedom. CONVENIENCE There are countless examples about the appropriate use or not of the inventions of man, an illustrative example from my point of view is that of the telephone designed as a device to facilitate communication between people, allowing proximity to others regardless of distance . This form of communication has been used to facilitate illegal activities, extortion and kidnapping, among others. Despite this, it has evolved into an intelligent tool that allows you to control work, home, finances, among other things from a single device in real time (smartphones), its performance is no longer measured only for the purpose it was created. say make or receive calls, but as a versatile and essential tool. A TOOL OF FREEDOM During this social evolution, “A tool of freedom” has emerged, among its many benefits, has allowed citizens to be freed from financial systems, from the wrong decisions made by their political leaders, isolate them from Dynamite Economies and even give access to the unbanked , putting in the hands of people a system that allows them to carry out transactions in a fast, efficient and secure way, which is constantly evolving through protocols based on blockchain and without the need to expose your privacy to make daily exchanges. Just as the BTC and its evolutionary forks arrived, a cryptocurrency series also arrived to strengthen the ecosystem. All with the purpose of being used through cryptography as a means of exchange between people, from their different stream of conception, they are additionally useful for encrypting messages, combating censorship, ensuring privacy and even establishing smart contracts through same. Among many of its uses, they have tried to evolve to make them faster and more efficient in the context of handling more information in the shortest possible time, in a decentralized way and without discrimination. MIRAGE It is an alternative for which a large number of citizens around the world have decided to opt, observing cases of corruption and monitoring through regular channels, which are dominated by governments and transnational corporations of different services that only want to sustain their monopoly and hegemony around world. It is incredible to talk about money laundering, financing of irregular groups, human trafficking white and selling drugs directly related to cryptocurrencies, (they have stigmatized their use, no doubt) when these actions have existed even before the existence of them and even with the endorsement of governments that highlighted their neatness or justified their immoral actions under the premise of a masked struggle for "freedom". Here are a few examples of how everything is not what it seems: IranGate Drugs and Justice Youtube Censorship Spy Social Networks Everything that has been mentioned before has been done since all times and is a problem of human morality not of cryptocurrencies, they have masked these illicit actions with banks in tax havens, offshore accounts and any other channel that the banks themselves have hidden and has been used for money laundering and other illegal activities. Without implying that it is the responsibility of banks or corporations. The use is the sole responsibility of each user. FAKE-NEWS It cannot be guaranteed that cryptocurrencies are only a useful tool for breaking laws, just because people or groups have changed from using existing means to using cryptocurrencies to launder money or make illicit payments. I am also aware that the great global banking elite has television channels, newspapers, journalists, singers and others at your service. They serve as funded puppets to sustain their model and grab attention through their great social influence. This motivates me even more to ensure that in its evolution through cryptography, cryptocurrencies allow and allow to cover all financial spaces in an intelligent, fast, secure and uncensored way from the north pole to the south pole. FEARS Do you know what I'm afraid of, dear Jill?(if one day you read that article), to live in this world of espionage, monitoring and political-economic persecution towards citizens. Large financial groups have chosen to attack cryptocurrencies in the face of the obvious independence they represent, using the means they have to discredit everything concerning them. Cryptocurrencies do not seek the disappearance of banking systems, but rather be an alternative investment and payments without implying high payment commissions and fees for their use. I can assure you that the BitcoinCash as a cryptocurrency that I use in most of my transactions (95%) has allowed me to send collaborations to needy groups in Southern Africa and Venezuela, donate to help those who do not have clothes or shelter , thank you for a comment to a person in Japan, receive a payment from Oceania for doing a good job, send a shipment to a family member thousands of km away and everything has been completed in a matter of seconds, without moving from my home, without discriminate against me because of my nationality or how much money I have in my bank account. Imagine doing this in the current banking system is impossible, I can not do it because my credit cards in Venezuela do not allow me to make transactions in dollars, the exchange markets are all speculative and dominated by mafias, or because I simply need to have at least 500 $ and be a US citizen to be able to open an international account, and have access to send money from one continent to another. Reasons that fortunately still dear Jill, you have not had to experience, and let me assure you that cryptocurrencies meet all the requirements to take the forefront in global exchanges. I fear this world where everything seems to be what it is not, where many citizens are invisible. I will not give up trying to change it! I invite you to visit the modest YouTube channel of the group to which I belong Cultura BCH and observe that the BitcoinCash is fast, reliable and secure. Please do it before it is censored. If you feel identified with our efforts and activities as a independent group, your collaboration will be grateful for helping us meet the goals around the BCH in 2020.
1)It is possible to change the code through a miner vote or a fork and change the total supply or anything. DASH did it : they reduced the total supply from 84M to 18.9M a few years ago. They could also increase it to 999 Trillions if they wanted to so that millions of DASH are mined every week. 2)You can also fork bitcoin anytime , start over from 0 and claim it's the real bitcoin. (BCH , BSV , BTG , LTC , BCD etc) 3)Why would you pay $10,000 for a digital collectible unit called BTC when you can use BCH or TRX or LTC .. you name it. They work just as fine and cost less. There is no rarity like in gold. 4)Think of any amount you hold in ethereum as a gift card to use smart contracts on the ETH blockchain. Ridiculous. You’d rather hold a wal mart gift card or even simply cash. 5)Private keys may be bruteforced as we speak. Quintillions entries a second. When they’ll have enough bitcoins under control , they could move them all at once instantly.(At least 45,000 ETH have been stolen this way for now through ethereum bandit)SHA 256 is too old , bitcoin is 10 years old , it is not secure enough , quantum computing could potentially break it. 6)And that’s if people don’t find a way to create an infinite amount of coins to sell on exchanges.. it happened with monero , stellar , bitcoin , zcash , zcoin , eos , etc.. proofs : “Bitcoin , Coindesk : “The Latest Bitcoin Bug Was So Bad, Developers Kept Its Full Details a Secret”an attacker could have actually used it to create new Bitcoin — above the 21 million hard-cap of coin creation — thereby inflating the supply and devaluing current bitcoins.” Stellar : “Stellar Inflation: Glitch Leads to 2.25 Billion Extra XLM Printed” Monero : “A bug in the Monero (XMR) wallet software that could enable fake deposits to exchanges has been recently brought to public attention through a Medium post” Zcoin : Forged coins were created, but not exceeding 1% of the circulating supply. We will release further details on exact numbers when Sigma is released. EOS : “Hackers Forge Billion EOS Coins to Steal Real Crypto From DEX “ Zcash : “Zcash Team Reveals It Fixed a Catastrophic Coin Counterfeiting Bug” etc.. 7)Segwit , and especially Lightning network is a very complex technology and it will inevitably have flaws , bugs , it will be exploited and people will lose money. That alone can cause bitcoin to drop very low levels. 8)Then miners may be losing millions so they will stop mining , blocks may be so slow , almost no transaction will come though , and bitcoin may not have enough time to reach the next difficulty adjustement. This is reffered to as a death spiral. Then every crypto even those with no mining involved may crash hard. 9)Many crypto wallets are unsafe and have already caused people to lose all their investment , including the infamous “parity wallet”. 10)It is NOT trustless. you have to trust the wallet you’re using is not just generating an address controlled by the developper , you have to trust the node the wallet connects to is an honest node , you have to trust a Rogue state or organization with enough computing power will not 51% attack the network. etc.. 11)Bitcoin is NOT deflationary. Bitcoins are created every blocks (roughly every 10 minutes) and you wil be dead by the time we reach the 21 million current hard cap. 12)Bitcoin price may artificially be inflated by Tether. 13)It’s an energy waste , an environmental catastrophy. 14)The only usecases are money laundering , tax evasion , gambling , buying on the dark net , evading sanctions and speculation. 15)Governments will ban it if it gets too big , and they have a big incentive to do so , not only for the obscure usecases but also because it threatens the stability of sovereign currencies. Trump could kill bitcoin with one tweet , force fiat exchanges to cease activity. 16)Most cryptos are scams , the rest are just crazy speculative casino investments. 17)It is pyramidal : early adopters intend to profit massively while last comers get crushed. That's not how money works. The overwhelming majority of crypto holders are buying it because they think they will be able to sell it to a higher price later. Money is supposed to be rather stable. That's why the best cryptocurrencies are USDT USDC etc.. 18)The very few stores accepting bitcoin always have the real price in the local currency , not in bitcoin. And prices like 0.00456329 BTC are ridiculous ! 19)About famous brokers listing bitcoin : they have to meet the demand in order to make money , it doesn't mean they approve it , some even short it (see interactive broker's CEO opinion on bitcoin) 20)People say cash is backed by nothing and losing value slowly , and yes it is very flawed , but there is a whole nation behind it , it's accepted everywhere , you can buy more things with it. 21)Everybody in crypto thinks that there will be a new bullrun and that then , they will sell. But because everybody thinks it will happen , it might not happen. The truth is past performance doesn’t indicate future performance and it is absolutely not guaranteed that there will ever be another bullrun. The markets are unpredictable. 22)Also BTC went from about $0.003 to the price it is today , so don’t think it’s cheap now. 23)There is no recourse if you’re scammed/hacked/made a mistake in the address etc. No chargebacks. But it might be possible to do a rollback (blockchain reorganization) to reverse some transactions. BSV did it. 24)In case of a financial crisis , the speculative assets would crash the most and bitcoin is far from being a non speculative safe heaven ; and governments might ban it to prevent fiat inflation to worsen. 25) Having to write down the private key somewhere or memorize it is a security flaw ! It’s insane to think a system like this will gain mass adoption. 26) The argument saying governments can not ban it because it is decentralized (like they banned drugs) doesn’t work for cryptos. First , drugs are much harder to find and much more expensive and unsafe because of the ban , and people are willing to take the risk because they like it. But if crypto is banned , value will drop too much , and if you can’t sell it for fiat without risking jail , goodluck to find a buyer. Fiat exchanges could close. Banks could terminate every crypto related bank account. And maybe then the mining death spiral would happen and kill all cryptos. 27) Crypto doesn’t exist. It’s like buying air. It’s just virtual collectibles generated by a code. Faguzzi, fugazzi, it’s a whazzie, it’s a whoozie.. it’s a.. fairy dust. It doesn’t exist. It’s never landed. It’s no matter, it’s not on the elemental chart. It… it’s not fucking real! 28) Most brilliant guys have come out and said Bitcoin was a scam or worthless. Including Bill Gates , Warren Buffet , The Wolf Of Wall Street… 29) Inflation is necessary for POW , BTC code will have to be changed to bypass the 21M cap or mining will die ! If BTC code is not changed to allow for miners to be paid reasonably , they will cease mining when the bitcoin block reward gets too low.Even monero understood it ,the code will have to be changed to allow for an infinite bitcoin supply (devaluating all current bitcoins) or the hash will decrease and the security of bitcoin will decrease dramatically and be 51% attacked 30) Don’t mix up blockchain and cryptos. Even blockchain is overrated. But when you hear this or that company is going blockchain , it doesn’t mean they support cryptocurrencies. 31) Craig Wright had a bitcoin mining company with Dave Kleinman (he died) and on january 1 2020 he claims he will be able to access the 1.1M BTC/BCH/BTG from the mining trust. He may or may not dump them on the market , he also said BTC had a fatal flaw and that by 2019 there will be no more BTC. 32) Hacks in cryptos are very common and usually massive. Billions of dollars in crypto have been stolen in the last 6 years. In may 2019 Binance was hacked and lost 7,000 BTC (and it’s far from being the biggest crypto hack). 33) Bitcoin was first. It's an ancient technology. Newer blockchains have privacy, smart contracts, distributed apps and more.Bitcoin is our future? Was the Model T the future of the automobile? (John Mc Afee) 34) IOTA investiguating stolen funds on mainnet. IOTA shuts down the whole network to deal with trinity wallet attack. While the native language of the writter is not english , I think you get the point and it doesn't make it any less relevant.
1)It is possible to change the code through a miner vote or a fork and change the total supply or anything. DASH did it : they reduced the total supply from 84M to 18.9M a few years ago. They could also increase it to 999 Trillions if they wanted to so that millions of DASH are mined every week. 2)You can also fork bitcoin anytime , start over from 0 and claim it's the real bitcoin. (BCH , BSV , BTG , LTC , BCD etc) 3)Why would you pay $10,000 for a digital collectible unit called BTC when you can use BCH or TRX or LTC .. you name it. They work just as fine and cost less. There is no rarity like in gold. 4)Think of any amount you hold in ethereum as a gift card to use smart contracts on the ETH blockchain. Ridiculous. You’d rather hold a wal mart gift card or even simply cash. 5)Private keys may be bruteforced as we speak. Quintillions entries a second. When they’ll have enough bitcoins under control , they could move them all at once instantly.(At least 45,000 ETH have been stolen this way for now through ethereum bandit)SHA 256 is too old , bitcoin is 10 years old , it is not secure enough , quantum computing could potentially break it. 6)And that’s if people don’t find a way to create an infinite amount of coins to sell on exchanges.. it happened with monero , stellar , bitcoin , zcash , zcoin , eos , etc.. proofs : “Bitcoin , Coindesk : “The Latest Bitcoin Bug Was So Bad, Developers Kept Its Full Details a Secret”an attacker could have actually used it to create new Bitcoin — above the 21 million hard-cap of coin creation — thereby inflating the supply and devaluing current bitcoins.” Stellar : “Stellar Inflation: Glitch Leads to 2.25 Billion Extra XLM Printed” Monero : “A bug in the Monero (XMR) wallet software that could enable fake deposits to exchanges has been recently brought to public attention through a Medium post” Zcoin : Forged coins were created, but not exceeding 1% of the circulating supply. We will release further details on exact numbers when Sigma is released. EOS : “Hackers Forge Billion EOS Coins to Steal Real Crypto From DEX “ Zcash : “Zcash Team Reveals It Fixed a Catastrophic Coin Counterfeiting Bug” etc.. 7)Segwit , and especially Lightning network is a very complex technology and it will inevitably have flaws , bugs , it will be exploited and people will lose money. That alone can cause bitcoin to drop very low levels. 8)Then miners may be losing millions so they will stop mining , blocks may be so slow , almost no transaction will come though , and bitcoin may not have enough time to reach the next difficulty adjustement. This is reffered to as a death spiral. Then every crypto even those with no mining involved may crash hard. 9)Many crypto wallets are unsafe and have already caused people to lose all their investment , including the infamous “parity wallet”. 10)It is NOT trustless. you have to trust the wallet you’re using is not just generating an address controlled by the developper , you have to trust the node the wallet connects to is an honest node , you have to trust a Rogue state or organization with enough computing power will not 51% attack the network. etc.. 11)Bitcoin is NOT deflationary. Bitcoins are created every blocks (roughly every 10 minutes) and you wil be dead by the time we reach the 21 million current hard cap. 12)Bitcoin price may artificially be inflated by Tether. 13)It’s an energy waste , an environmental catastrophy. 14)The only usecases are money laundering , tax evasion , gambling , buying on the dark net , evading sanctions and speculation. 15)Governments will ban it if it gets too big , and they have a big incentive to do so , not only for the obscure usecases but also because it threatens the stability of sovereign currencies. Trump could kill bitcoin with one tweet , force fiat exchanges to cease activity. 16)Most cryptos are scams , the rest are just crazy speculative casino investments. 17)It is pyramidal : early adopters intend to profit massively while last comers get crushed. That's not how money works. The overwhelming majority of crypto holders are buying it because they think they will be able to sell it to a higher price later. Money is supposed to be rather stable. 18)The very few stores accepting bitcoin always have the real price in the local currency , not in bitcoin. And prices like 0.00456329 BTC are ridiculous ! 19)About famous brokers listing bitcoin : they have to meet the demand in order to make money , it doesn't mean they approve it , some even short it (see interactive broker's CEO opinion on bitcoin) 20)People say cash is backed by nothing and losing value slowly , and yes it is very flawed , but there is a whole nation behind it , it's accepted everywhere , you can buy more things with it. 21)Everybody in crypto thinks that there will be a new bullrun and that then , they will sell. But because everybody thinks it will happen , it might not happen. The truth is past performance doesn’t indicate future performance and it is absolutely not guaranteed that there will ever be another bullrun. The markets are unpredictable. 22)Also BTC went from about $0.003 to the price it is today , so don’t think it’s cheap now. 23)There is no recourse if you’re scammed/hacked/made a mistake in the address etc. No chargebacks. But it might be possible to do a rollback (blockchain reorganization) to reverse some transactions. BSV did it. 24)In case of a financial crisis , the speculative assets would crash the most and bitcoin is far from being a non speculative safe heaven ; and governments might ban it to prevent fiat inflation to worsen. 25) Having to write down the private key somewhere or memorize it is a security flaw ! It’s insane to think a system like this will gain mass adoption. 26) The argument saying governments can not ban it because it is decentralized (like they banned drugs) doesn’t work for cryptos. First , drugs are much harder to find and much more expensive and unsafe because of the ban , and people are willing to take the risk because they like it. But if crypto is banned , value will drop too much , and if you can’t sell it for fiat without risking jail , goodluck to find a buyer. Fiat exchanges could close. Banks could terminate every crypto related bank account. And maybe then the mining death spiral would happen and kill all cryptos. 27) Crypto doesn’t exist. It’s like buying air. It’s just virtual collectibles generated by a code. Faguzzi, fugazzi, it’s a whazzie, it’s a whoozie.. it’s a.. fairy dust. It doesn’t exist. It’s never landed. It’s no matter, it’s not on the elemental chart. It… it’s not fucking real! 28) Most brilliant guys have come out and said Bitcoin was a scam or worthless. Including Bill Gates , Warren Buffet , The Wolf Of Wall Street… 29) Inflation is necessary for POW , BTC code will have to be changed to bypass the 21M cap or mining will die ! If BTC code is not changed to allow for miners to be paid reasonably , they will cease mining when the bitcoin block reward gets too low.Even monero understood it ,the code will have to be changed to allow for an infinite bitcoin supply (devaluating all current bitcoins) or the hash will decrease and the security of bitcoin will decrease dramatically and be 51% attacked 30) Don’t mix up blockchain and cryptos. Even blockchain is overrated. But when you hear this or that company is going blockchain , it doesn’t mean they support cryptocurrencies. 31) Craig Wright had a bitcoin mining company with Dave Kleinman (he died) and on january 1 2020 he claims he will be able to access the 1.1M BTC/BCH/BTG from the mining trust. He may or may not dump them on the market , he also said BTC had a fatal flaw and that by 2019 there will be no more BTC. 32) Hacks in cryptos are very common and usually massive. Billions of dollars in crypto have been stolen in the last 6 years. In may 2019 Binance was hacked and lost 7,000 BTC (and it’s far from being the biggest crypto hack). 33) Bitcoin was first. It's an ancient technology. Newer blockchains have privacy, smart contracts, distributed apps and more.Bitcoin is our future? Was the Model T the future of the automobile? (John Mc Afee) 34) IOTA investiguating stolen funds on mainnet. IOTA shuts down the whole network to deal with trinity wallet attack. While the native language of the writter is not english , I think you get the point and it doesn't make it any less relevant.
Over the past 100 days, Grayscale has bought every third bitcoin
Over the past 100 days, Grayscale has bought every third bitcoin The Grayscale Investments cryptocurrency investment fund acquired every third bitcoin mined in the last 100 days. And in April, the fund bought 50% of all ETH mined. At the same time, despite the financial crisis and the fall of the cryptocurrency market in March, shares of Grayscale crypto funds in the first quarter of 2020 attracted record investments, which indicates a growing interest of institutional investors in the crypto industry. Why does the company need so many coins, what is its current position regarding the crypto market and what role does it play on it?
Aggressive Grayscale crypto purchases have recently been spotted with respect to ether. So, by April 24, the company had bought about 756 539 ETNs (accurate data are not publicly available) for its Ethereum Trust fund. This is about 48.4% of all 1.5 million coins mined since the beginning of this year. As a result, the company already owns 1% of all coins in circulation and only increases the pace of purchases. The first user to notice this was Reddit under the nickname u/nootropicat. According to the latest quarterly report by Grayscale, the flow of investments in ETN reached a record level for the first three months of 2020 — $110 million. This is a very sharp increase, given that total investments in ETN for the previous two years amounted to $95.8 million. The total demand for the Ethereum fund grew over the quarter is almost 2.5 times compared with the fourth quarter of 2019. From the beginning of the year until the end of April, the company issued 5.23 million shares of the fund at 0.09427052 ETN apiece. At the same time, shares are traded with a premium of 420% relative to the current price of the coin — $92 against $17.70. That is, investors are willing to pay extra pretty much not to deal with cryptocurrency on their own. Most likely, the increase in the rate of purchase of the coin is associated with the upcoming upgrade of the network to the state of Ethereum 2.0. It can take place at the end of July, but, most likely, it will happen not earlier than the end of the year. After the upgrade, the network will become more scalable and there will be the possibility of staking — validators will be able to receive passive income for providing their funds to confirm the blocks. The crypto market, by the way, is also preparing for the transition of the ecosystem to a new stage. ETH has grown 55% since the crash in March, from $110 to $202 on the day of publication. At the end of April, CoinDesk drew attention to the increase in the number of long positions in ETH futures — this indicates expectations for further growth of the coin.
Last quarter — the most successful in the history of the company
In May, Grayscale released a report on the results of the first quarter of this year. “Despite the decline in risky assets this quarter, Grayscale’s assets continue to approach record highs, as does our share of the digital asset market,” the document says. And this despite the coronavirus pandemic, the global recession and the traditional cryptocurrency market volatility. A record $503.7 million investment was raised in the first quarter. This is almost twice the previous quarterly maximum of $254 million in the third quarter of last year and accounts for 83% of the total capital of $1.07 billion raised for the entire 2019. New investors accounted for $160 million of raised funds. The main products of Grayscale Bitcoin Trust and Grayscale Ethereum Trust raised $388.9 million and $110 million, respectively. It is noteworthy that the company reduced the premium on stocks of funds relative to the price of assets. 88% of investments came from institutional investors, among which hedge funds prevail; 5% — from accredited individuals, 4% — from pension accounts (yes, pension funds are extremely conservative in nature, but also invest in bitcoin against the background of a decrease in the profitability of other assets); 3% came from family offices, and 38% of customers invested in several products at once. It is noteworthy that two years ago the share of institutional investors was about 50% — it is obvious that they no longer consider bitcoin as something criminal. “Many of our investors see digital assets as medium and long-term investment opportunities and the main component of their investment portfolios. Quarterly inflows doubled to $ 503.7 million, demonstrating that demand is reaching new peak levels even in conditions of “risk reduction”, the document says. Today, more than 46.5% of the inflow of funds was attracted from multi-strategic investors. Crypto investors accounted for only 11.2% of the inflow, according to the report. Grayscale currently operates ten cryptocurrency investment products targeted at institutional investors. They cover PTS, ETN, ETS, BCH, ZEC, XRP, LTC, ZEN, XLM. The value of the assets under his management is more than $3.8 billion. GBTC is the most demanded product, most investors invest in it and it takes about 1.7% of the total volume of circulating bitcoins. Aggregate quarterly flow of funds to different Grayscale products. Pay attention to the growing share of investors diversifying portfolios with products tied to altcoins. Since January of this year, the Grayscale Bitcoin Trust has been registered with the US Securities and Exchange Commission (SEC). According to it, the company provides quarterly and annual reports in the form of 10-K. The status makes it possible to sell shares of a trust in the secondary market after 6 months, rather than 12, as before, and also increases the confidence of conservative investors. Other products comply with OTCQX reporting standards in the OTC market and are approved by the US Financial Services Regulatory Authority (FINRA) for public offering. Amount of assets managed by Grayscale as of May 20, 2020. It is noteworthy that the news about the success of Grayscale comes amid news of how panicky investors in traditional assets are fleeing from market turmoil. So, the largest fund managers — BlackRock, Vanguard and State Street Global Advisors — lost several trillion in capitalization of their assets, and BlackRock in the first quarter for the first time in five years saw a net outflow of funds from its long-term investment products.
Bitcoin is the best asset for hedging portfolios in crisis
At the end of April, Grayscale also released a separate report on the analysis of the impact of regulators during a pandemic and the crisis caused by it and how it affected the bitcoin and cryptocurrency market as a whole. The document said fiat currencies are at risk of devaluation as central banks print more and more money. Even the US dollar, which is the world’s reserve currency, risks being devalued if the US Federal Reserve continues to print the currency in trillions. A decrease in interest rates to zero and negative values deprives government bonds of the status of “safe haven” during the crisis. Therefore, investors are trying to diversify their portfolios with alternative instruments. Cryptocurrencies are the best choice for this, according to the authors of the report. The text emphasizes the historical significance of gold as a global standard, but it is noted that in the modern digital world it is becoming increasingly burdensome for investors — it has complex logistics. Bitcoin seems resistant to the problems that other assets face. Therefore, in times of economic uncertainty, the first cryptocurrency is one of the best assets that investors can use to hedge their portfolios. The coin performs better than any other asset, including fiat currencies, government bonds, and traditional commodities like gold. The authors of the report emphasize that Bitcoin has already begun to show signs of becoming a protective asset. At the same time, the company believes that bitcoin is an excellent asset not only in times of crisis. So, in December 2019, Managing Director of Grayscale Investments Michael Sonnenshine said that the company expects an influx of investments in bitcoin after the transfer of $68 trillion of savings between generations in the next 25 years. Today, this capital is invested in traditional assets, but a significant part of these wealth millennials will invest in cryptocurrencies. Already, according to him, investments in GBTC are among the five most popular among young people, ahead of, for example, investments in Microsoft and Netflix.
The unprecedented financial measures taken by the US Federal Reserve, as well as the worsening recession, are forcing even the most conservative investors to rethink their current strategies and portfolio composition. Many of them are increasingly beginning to appreciate the fixed emission and non-correlation of Bitcoin — it is becoming a tool for risk diversification. Growing institutional interest is driving the acceleration of coin prices. Subscribe to our Telegram channel
Crypto Long & Short: Bitcoin ’s Quiet Progress Is Pointing Toward a Better Future
Inequality is not specific to the U.S. Nor is it limited to a handful of relatively well-off geographies. It stratifies societies within borders, trapping the majority within a narrow income band while markets pour wealth into the accounts of the few. It also divides the haves from the have-nots on a spectacularly global scale, relegating some countries to the back of the hand-out queue while others, blessed by nature and exploited luck, centralize their advantage with technology moats and resource supply chains. You’re reading Crypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesk’s head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week – with insights and analysis – from a professional investor’s point of view. You can subscribe here. Technology is part of the problem. It has widened the chasm between those that can harness it and those that as yet cannot. It has enthralled populations, who are now captive to its influence. It has sped up flows of capital, while further concentrating its distribution. So many of us fervently hope it can also be part of the solution. But sending in trained mechanics to fix cars they designed rarely produces a meaningful change in the way cars work. Asking innovators to re-think the shape of a system that is all they’ve ever known is unlikely to result in a totally new approach. If the fix is part of the problem, we shouldn’t be surprised when the problem doesn’t go away – at best, it will just change form. And then there’s the motivation. Fear can produce results, but generally unplanned, incomplete and undesired ones. For unity and clarity, passion can work, by giving a glimpse of a better world. But although it captures hearts, passion is hard to define and harder to implement. Sometimes it takes a slow, methodical tinkerer to emerge from the back room with a bewildered expression and a unique prototype. Enter stage left Just over 11 years ago, bitcoin quietly made its presence known as a defiant workaround to the concentration of financial authority. Clouded in code, it sang as a more muted and less lyrical echo of John Perry Barlow’s “Declaration of the Independence of Cyberspace,” unleashed from Davos in 1996 on the widening cracks in the definition of progress. The stirring document opened with this: “Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.” The opening paragraph of the white paper that introduced bitcoin to the world, authored by a pseudonymous Satoshi Nakamoto, did not carry quite the same level of energy: “Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.” Both Barlow’s Declaration and Satoshi’s* white paper stem from an inherent resistance to unjust control. Both propose harnessing technology to give freedom to those who want it. Both identify the reliance on centralized trust as a vulnerability. Both understand that the progress of civilization stands on the liberty to transact and communicate. But there the similarities end. In terms of style, Barlow harnessed the flourish of rhetoric to evoke a generational call to arms, to fight with words the tyranny of the past. Satoshi talked about timestamps and hashes. Barlow set up a defiant barricade between the terrestrial and the ideological, between mundane rules and the magic of ideas. Satoshi wanted to solve the double-spend problem. Barlow’s work is inspiring but has limited practicality – he assumed that regulations could not shape the reach of the new web infrastructure, that property had to be physical and that jurisdictions didn’t matter online. Satoshi’s document oozes practicality, with digital signature diagrams two paragraphs in. Barlow had no concrete proposals; Satoshi had nothing but. Both wanted to create something without access barriers. Only Satoshi seemed to have a strong grasp of what those actually are. The most notable and poignant difference, however, is in the relative weight of each today. The freedoms that Barlow promised have become intensifiers of social pressure. They have connected us in ways we don’t yet fully understand; but they also remind us of the widening gaps and the shortage of bridges. Rather than reinforce the platforms of free speech, they have turned them into divisive weapons to which we cannot see an alternative. Barlow wrote: “We cannot separate the air that chokes from the air upon which wings beat.” Even he probably didn’t expect how relevant that would become. Slow and steady And bitcoin? Like Barlow’s Declaration, things haven’t turned out as expected. Bitcoin is not yet used as a widespread alternative payment mechanism, and many doubt that it ever will be. Yet the journey of bitcoin is still just beginning. Use cases – some expected, some not – are emerging in pools of innovation across industries, geographies and philosophies. For now, its compelling narrative has given it a role in asset portfolios of all types, as speculators and investors bet on the spread of its nascent use cases. But scrolling through CoinDesk headlines, every week there are developments that hint at real world impact, adaptation, progress and hard work. This week, for instance, a lawmaker in Iran urged the country’s central bank to support bitcoin as a currency and take over its oversight, which could reduce the country’s reliance on unavailable U.S. dollars. And we interviewed an author who is focusing on how bitcoin can enable independent local communities to work around the rules that, either intentionally or unintentionally (and often unfairly), disadvantage some over others. The fun exercise of picking out these nuggets of hope and potential serves as a constant reminder that there is no going back. There is need for change, even beyond the causes of the deep rifts we are seeing today. And the technological leap forward presented in Satoshi’s paper has inspired hundreds of thousands of brilliant people to focus on building, testing and teaching applications on both a local and global scale. Headline scrolls also serve as a welcome reminder that all solutions bring new problems. This week, as in most, the security of digital assets shows weaknesses, surveillance is a double-edged sword and official organizations seek to better understand rather than suppress, which also implies more control. Yet unlike Barlow, builders in the crypto industry are aware that regulations matter, and that changing a system is often best done from within. Behind the scenes The first cryptocurrency emerged quietly 11 years ago; since then, it has been softly gathering strength as its powerful message gains momentum, without flourish and rhetoric. Price surges and plunges may grab our attention for a hot second; but they pass. Calls for bitcoin to replace the current system trigger feverish enthusiasm on Twitter, but they are simplistic misuses of a megaphone. Bitcoin’s relative quietness not only allows serious work to continue behind the scenes. It not only gives the experiments time to mature and evolve. It’s also just what the world needs right now, with so much noise and confusion in our feeds, on our screens and in our hearts. Investment in quiet progress builds the stairs that will be there when the dust settles and we start to get a clearer idea of what our future will look like. This is one thing these days that is a privilege to watch.
https://preview.redd.it/kkhj7agzz5251.png?width=875&format=png&auto=webp&s=f47007e7923d8f40d98e3ba7d08a31c3729a0bd3 Hello everyone, thank you for your continued interest and support. In the past two weeks, various tasks of TokenClub have been progressing steadily. The product development and community operation progress this week are as follows: 1. TokenClub Events 1)TokenClub & 499Block reached strategic cooperation in live broadcasting On May 28th, TokenClub and 499Block reached a strategic cooperation to jointly build a live broadcast ecosystem in the vertical field of blockchain. 2)520e events When 520 comes, TokenClub launches live interactive interaction. During the event, participate in interactive questions in the live broadcast room or forward the live poster to Twitter and the telegram group, and upload a screenshot to have the opportunity to extract 520, 1314 red envelope rewards https://preview.redd.it/apyee28406251.png?width=1080&format=png&auto=webp&s=9c9798db931ad6611d6c258907120610ae11ff11 3)Text version of live content is abailable on Medium In order to better understand the live broadcast of TokenClub by overseas communities, we translated the live broadcast content into English and uploaded it to TokenClub’s Medium official account, so that the community’s small partners can view it. https://preview.redd.it/hhmu3pl506251.png?width=1080&format=png&auto=webp&s=fae9d42dcdee9d079219d1ffe612fc573bad01e8 4)Preview: TokenClub’s self-media grandma is invited to participate in the golden financial theme live event From May 29th to June 4th, Golden Finance will hold a five-day live broadcast of the theme of “Finding Double Coins”. Grandpa Coin will express his views on June 3, welcome to pay attention. 2.TokenClub Live 1) Summary Recently, Binance Co-founder He Yi, TRON founder Sun Yuchen, Hobbit HBTC founder Ju Jianhua, OSL chairman Dave, BlockVC founding partner Xu Yingkai, Outlier Ventures founder amie Burke, Bitribe founder SKY, CryptoBriefing CEO Han Kao , Huarai Group / Vice President, Global Market and Business Leader Ciara, Guosheng Securities Blockchain Research Institute Sun Shuang, Tongtongtong Research Institute CEO Song Shuangjie, Jin Tiancheng Law Firm Senior Partner Yu Bingguang, Binance China Jiang Jinze, principal researcher of Blockchain Research Institute, Meng Yan, vice president of Digital Asset Research Institute, co-founder of Primitive Ventures & director of Coindesk advisory board-Dovey Wan, founding partner of Genesis Capital & co-founder of Kushen Wallet Ocean Liao Yangyang, Binance C2C-Kathy, Binance OTC-Coco, Binance Contract & Options-Justin, Binance VIP-Jennifer, Binance Broker-Jess, Binance Mining Pool-Denny, Harbin Institute of Technology Blockchain Research Executive Deputy Director Xu Zhifeng, dForce founder Yang Mindao, Mars Finance co-founder Shang Silin, Cobo & Yuchi co-founder Shenyu, well-known investor Xu Zhe, CasperLabs CEO Mrinal Manohar, CasperLabs co-founder Scott Walker, Chairman of Rock Tree Omer Ozden, Nova Club incubation team leader & Waterdrop Capital partner Zheng Yushan, Rolling Stone miner founder Alex Lam, BitUniverse coin founder Chen Yong, Odaily Planet Daily founder and CEO Mandy Wang Mengdie, Binance stablecoin BUSD project responsible Helen Tu and senior expert of TokenClub blockchain and cryptocurrency investment strategy-Zao Shen talks with you about blockchain things ~ On May 18, Block 101 Binance Key Account Manager Luna talked to Primitive Ventures co-founder, non-profit bitcoin development fund Hardcore Fund executive director, and Coindesk advisory board director-Dovey Wan, to understand “C and C How is the Goddess of Crypto Assets made? “Dovey Wan shared with us on asset allocation, investment judgment, entrepreneurship, DCEP, etc. https://preview.redd.it/0dsry36906251.png?width=1080&format=png&auto=webp&s=a7f6f4b852547d2e43114f81a981f7aa6ea10f61 On May 19, Block 101 Yingge talked with Sun Zeyu, the founding partner of Genesis Capital and co-founder of Kushen Wallet, to share the theme of “Blockchain Investment Experience”. This investor, who is rated as “reliable” by insiders, recommends that novices try not to touch contracts, do not stay overnight even when making contracts, be alert to risks, refuse gambling, and rationally analyze investments. On May 20th, 499Block ’s two-year birth