Tag Archives: Crypto

NBA Top Shot: An Overnight Succcess 8 Years in the Making

NBA Top Shot’s popularity is exploding. Users pay to own an iconic basketball image or video clip, such as Lebron James dunking on someone (plenty of those choose from!). Their ownership is recorded on the blockchain in what’s called a Non-Fungible Token (NFT).

NBA Top Shot is a creation of Dapper Labs, a Canadian blockchain company. It started selling NFTs of cats called CryptoKitties. From these humble beginnings, Dapper Labs has grown to a million users on NBA Top Shot alone and recently raised $300 million in venture capital at a $2.4 billion valuation.

In an interview with CEO Roham Gharegozlou, angel investor Jason Calacanis marveled at how far this company has come:

Another 8 year overnight success in the making. It’s so funny how, as a founder, you can go from being like a punchline of a joke to the absolute belle of the ball.

Calacanis noted that video games have already sold digital items for real money for years, so the NFT business model is really not that much of a stretch. What’s more, for the young, owning a digital asset feels much more natural than owning a baseball card.

Dapper Labs plans to branch out to other sports leagues, and ultimately to recording ownership of items beyond video clips and images. If Dapper controlled the ownership records of, for example, cargo, this could be a truly massive company.

I was impressed with Gharegozlou’s perseverance over nearly a decade, going from obscurity to a partnership with a top sports league and a unicorn valuation. I was also impressed by how forward thinking the NBA is. If the creator of CryptoKitties came up to most major businesses with a proposition, they wouldn’t even get a reply. In its work in the crypto industry, as well as its highly successful COVID protocols, the NBA is clearly doing something right.

Give this intriguing interview a listen!

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Photo: “LeBron James New York City More Than a Game 3 by David Shankbone” by david_shankbone is licensed under CC BY 2.0

The First Stock Trades On the Blockchain Just Happened

Credit Suisse and Nomura just did the first stock trades settled via blockchain technology:

This week Credit Suisse cut some US equities trades with the Nomura-owned broker Instinet, using blockchain. This technology has been used before to verify other kinds of transactions. But these trades were a “first” because settlement occurred in hours and not the two days needed with America’s Depository Trust and Clearing Corporation, the industry-owned utility that normally settles stock trades.

This long settlement period is inefficient and costly:

“This is an incredibly inefficient way to operate,” Charles Cascarilla, Paxos’s chief executive tells me, pointing out that $15bn to $30bn of industry capital and twice as much liquidity are tied up in DTCC systems.

The two day settlement period was the key factor behind Robinhood stopping buy orders for GameStop shares earlier this year. The price had become so volatile that it could move against Robinhood a great deal in those two days. Given that, brokers insisted Robinhood post a large amount of colatteral. That expense was too great, so instead, Robinhood blocked buy orders for the stock. In a world where trades settled in hours via the blockchain, this would be much less likely.

However, blockchain technology is incredibly energy hungry. If we moved the massive volume of stock trading onto it, I suspect the energy needed might be prohibitive. I think instant, or at the very least faster, trade settlement is likely. But I expect that to happen via more standard computer systems, rather than blockchain technology.

I think instant, or at the very least faster, trade settlement is likely. But I expect that to happen via more standard computer systems, rather than blockchain technology.

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Photo: “Crypto Kitties on Blockchain” by marcoverch is licensed under CC BY 2.0

Major Financial Firms Start a Bitcoin Lobby

Fidelity Investments, Square Inc. SQ +1.30% and several other financial firms are forming a new trade group that aims to shape the way bitcoin and other cryptocurrencies are regulated.

The Crypto Council for Innovation will lobby policy makers, take up research projects and serve as the burgeoning industry’s voice in championing the economic benefits of digital currencies and related technologies. Crypto investor Paradigm and Coinbase Global Inc., which operates a cryptocurrency exchange, also signed on as initial members of the group.

More here.

These companies are serious financial heavyweights. Fidelity has $10 trillion in assets under management. Square’s market cap is over $100 billion. And Coinbase expects to IPO soon as a valuation of nearly $70 billion.

I suspect these corporate giants are trying avoid the possible banning of bitcoin anonymity that I wrote about here on March 5. A proposed regulation from the last days of the Trump administration could have removed one of bitcoin’s most appealing features, its untraceability.

A major lobbying group, a Fidelity ETF…bitcoin is really becoming institutionalized. Although I don’t trade cryptocurrencies myself, I view this is a significant positive for the technology. Every step towards establishment adoption and away from crippling regulation helps.

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Photo: Coinbase CEO “Brian Armstrong – Caricature” by DonkeyHotey is licensed under CC BY 2.0

The Stimulus is Headed into Bitcoin

Even as Bitcoin sits near record highs, a new survey by Mizuho Securities finds that many Americans plan to put their stimulus check into the hot cryptocurrency:

…the Mizuho survey found around 20% of check recipients expected to allocate as much as 20% of their checks to bitcoin and/or stocks, while 13% expected to allocate 20% to 80%, and 2% expected to put 80% or more into the markets.

Bitcoin even outranked stocks, another popular choice:

“Bitcoin is the preferred investment choice among check recipients. It comprises nearly 60% of the incremental spend, which may imply $25 billion of incremental spend on bitcoin from stimulus checks,” wrote Mizuho analysts Dan Dolev and Ryan Coyne, in a Monday note (see chart above). “This represents 2-3% of Bitcoin’s current $1.1 trillion market cap.”

The graph below shows the extent to which bitcoin is favored over stocks as a home for stimulus funds:

This survey was small, so we shouldn’t put too much stock into it, but this could be a major shot in the arm for the cryptocurrency. I also expect a pop in other cryptocurrencies like Ethereum and Dogecoin, along with meme stocks like GameStop and AMC. But I’d advise my fellow Americans to buy stock/bond index funds instead.

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Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0

Who Is the Secret Dogecoin Billionaire?

Someone owns $2.1 billion worth of dogecoin. And no one knows who it is:

Records show that a person, or entity, owns about 28% of all of the cryptocurrency in circulation—a stake worth about $2.1 billion at current prices. The holder’s identity isn’t known, which is common in the opaque world of digital currencies.

The account could belong to an exchange on which dogecoin is traded, or to the individuals and groups who run the software that keep the digital currency’s network going, researchers say.

There is some speculation that the secret dogecoin billionaire could be the not-so-secret Tesla billionaire Elon Musk, but the evidence is thin:

The address also offers an intriguing “Easter egg” for people trying to decipher the identity of the owner: the account has on multiple occasions received 28.061971 dogecoins. Mr. Musk’s birthday is on June 28, 1971.

Despite his interest in dogecoin, the major holder’s address is unlikely to belong to Mr. Musk, said Elias Ahonen, author of “Blockland.” Anyone can send dogecoin to a publicly listed address, which could explain the amounts linked to Mr. Musk’s birthday.

Having 28% of the currency in the hands of a single, unknown person makes dogecoin very susceptible to wild swings in price. If that holder sells suddenly, it could crash the currency. One has to balance that against a major positive for dogecoin: it uses the same technology as bitcoin but is a tiny fraction of the price.

Any guesses on who it is? Leave them in the comments!

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Photo: “Doge Meme: Japanische Hunderasse Shiba und Vorbild für den DogeCoin” by marcoverch is licensed under CC BY 2.0

How Alex Jones Lost Bitcoin Worth $563 Million

Ten years ago, when bitcoin was worth only $5 each, cryptocurrency proponent Max Keiser gave conspiracy theorist Alex Jones a laptop. It contained 10,000 bitcoin, which would now be worth over $500 million.

That laptop has gone missing:

Alex Jones, the founder of the right-wing media group Infowars, has revealed that he has lost the laptop containing 10,000 bitcoins given to him by television personality and bitcoin proponent Max Keiser. During the Flagrant 2 show with Andrew Schulz and Akaash Singh on Tuesday, he said that Keiser gave him 10K BTC on a laptop 10 years ago.

This highlights a real problem with cryptocurrencies. Unless you use an application to manage and store your crypto, you can lose the USB or laptop, forget the password, etc. Do that and the money is gone forever.

Better starting looking, Alex!

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Photo: “Alex Jones” by seanpanderson is licensed under CC BY 2.0

The US Government Is Selling Its Bitcoin

The US government is selling its bitcoin…all $38,000 worth:

Tucked away among the Ford, Dodge and Chevy sedans, the 12,000-gallon storage container and the inoperable Caterpillar tractor being auctioned off by the U.S. government is an unusual item: 0.7501 of a Bitcoin.

The federal government did not reveal the source of its cryptocurrency holdings, but I imagine they were probably seized in a bust of some sort. Indeed, a far larger collection was sold off when the Silk Road was shut down:

The government doesn’t say where its surplus digital currency came from. And while it’s a far cry from the 30,000 Bitcoins auctioned off by the U.S. Marshals Service in 2014 after they were seized from the Silk Road marketplace, the GSA auction is one more indication of how Bitcoin is becoming more and more mainstream.

This does make me wonder if eventually states and sovereign wealth funds will buy crypto and hold it. Can the day be far in the future?

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Photo: “Vice President Joe Biden visit to Israel March 2016” by U.S. Embassy Jerusalem is licensed under CC BY 2.0

This New Indicator May Tell You Where Bitcoin Is Headed

For many years, investors in stocks have been able to see how volatile the market is expected to be by relying on a gauge called the CBOE Volatility Index, or VIX. This measure, often called the “fear gauge,” reads how much volatility investors are expecting based on option prices.

Nothing like this has ever existed for cryptocurrencies. Until now:

A bitcoin “fear gauge,” similar to the Cboe Volatility Index (VIX) investors use to gauge volatility in the stock market, saw its first trades on Wednesday.

The T3i BitVol Index measures the expected 30-day implied volatility in bitcoin derived from tradable bitcoin option prices.

The index goes two years back so far. Current expected volatility appears higher than normal.

A high VIX tends to correlate with a drop in stocks. A low VIX tends to predict calm, gradually rising markets. This pattern may hold with Bitcoin as well, giving crypto holders a chance to see a bit into the future.

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Photo: “Winklevoss Twins – Caricature” by DonkeyHotey is licensed under CC BY-SA 2.0

Bitcoin Anonymity Could Become A Thing of the Past If This Regulation Passes

In the waning days of the Trump administration, the government proposed regulations that would ban anonymity for holders of cryptocurrencies:

Users whose wallets now are only identified with codes would have their true identities recorded with the financial institutions they zealously avoided.

This proposed regulation has now been passed on to the Biden administration. There’s no timeline for a decision, but removing anonymity from crypto transactions could hammer the price:

If adopted, the regulations could cause a sharp fall in the prices of virtual currencies like Bitcoin, said Matthew Maley, chief market strategist for Miller Tabak & Co., adding that he thinks Bitcoin’s price will continue to rise in the long term.

There are some major companies like Fidelity and Coinbase pushing to retain anonymity, and I think their political influence may stop such regulations. But on the other hand, the possibility for anonymity to facilitate drug deals and terrorism could push the government in the opposite direction.

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Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0

How Bitcoin Could Reach $400,000

I came across an interesting stat today: the estimated value of all the gold in the world is $7.5 trillion. Gold and bitcoin are often compared as stores of value with a limited supply. What if bitcoin became as widely accepted and highly valued as gold?

At the current market cap of $949 billion, bitcoin would have to multiply in value eight fold in order to equal the value of all gold reserves. Bitcoin’s price is already heady at over $50,000, up from under $9,000 a year ago. But this stat makes me think it may have more room to run. If it reached parity with gold, one bitcoin would be worth $400,000.

Bitcoin is much easier to store and exchange than gold. On the other hand, gold has a much longer track record as a store of value and also has some industrial uses.

I prefer cash flowing stocks, bonds and real estate to either one, but for someone like me who is used to dismissing cryptocurrencies, this information did give me pause.

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