March 11, 2019
The crypto lending platform BlockFi is going live with their interest accounts for Bitcoin and Ethereum. BTC or ETH loaned BlockFi will generate a 6.2% APR, with the collateral being custodied by the Wikelvoss owned and NY-State regulated Gemini exchange. The BlockFi interest account is available worldwide and interest is paid in crypto.
This offer looks to be a great example for the innovative products available for crypto-assets. It’s a very much needed first-step towards making crypto the new normal. While interest is only available for a minimum collateral of 1 BTC or 25 ETH an interest paying saving account is what will drive adoption in the real world. While bank accounts in Germany charge negative interest for savings great than, savers around the world are looking for opportunities to lock their cash and secure against central bank inflation targets of 2-5%.
While BlockFi delivers a seemingly great product there are many questions left regarding the security of the collateral. BlockFi after all is a start-up operating in a high risk market (crypto & lending). It has yet to be made clear, what happens to the collateral if BlockFi’s loan business goes bad or the volatility of Bitcoin outmatches BlockFi’s risk management systems and the collateral is used for a margin call. Lastly, as Gemini is the custodian of the Bitcoin you’re exposed to the exchange risk, where a hack of Gemini will leave you without your private keys but empty wallets.
Having said that the risk are not entirely clear yet, I applaud BlockFi for bringing interest bearing crypto accounts to market. Whether or not they deserve the name of savings accounts is a question to be explored. Invest wisely!
March 4, 2019
The are roughly 15 months left until the next halving of the Bitcoin block reward. With the current development I think those few months will be huge:
- The weekly transaction volume on localbitcoins.com for Bitcoin has leveled-out around 50 Million USD per week, after a sharp increase and subsequent drop from the all-time high in 2017
Localbitcoins.com Transaction Volume in USD
With developing and emerging economies leading the charge, Bitcoin finds usefulness where its most immediate. Hyper-inflated Venezuela is leading the charge, where citizens flee into Bitcoin as a store of value. The worlds leading economy transacts at least 5 Million USD worth of Bitcoin on localbitcoins alone. The transaction volume on localbitcoins is an important metric because it is the largest over-the-counter exchange for local currencies for bitcoin worldwide and by definiton of person to person trading offers more privacy and security through its escrow system. It is the simplest and most accessible entry into the digital age of currency and offers plebs around the world an alternative to government regulated money without intrinsic value.
JP Morgan Chase, the largest bank in the U.S., is creating a blockchain based coin. Previously JP Morgan CEO touted that Bitcoin had no value and a terrible investment. Now JP Morgan is leveraging similar technology to try and print their own currency. While JP Morgans choice for doing so is probably a nefarious one, it goes to show that there is utility and value in Bitcoin if a multi-billion company like JP Morgan tries to copy its playbook for its own riches.
Facebook, the biggest social network in the world, who also owns the leading media platforms WhatsApp and Instagram, is going to issue its own token in 2019. Whatever the #zuckcoin is supposed to be, it’s another endorsement and free marketing for the No.1 cryptocurrency, according to market cap and clout, Bitcoin. This endorsement will reach 2.7 billion people across the messenger app, WhatsApp and Instagram. There are other social networks trying to roll-out their coins this year as highlighted in a recent New York times piece, and will add fuel to the fire started and lit by Bitcoin.
Twitter is where the news networks get their news, and by extension of its CEO Jack Dorsey his other company Square, its betting on Bitcoin and the Lightning network for the longterm. Square is already selling Bitcoins to its US-customers, and Dorsey has hinted at the integration of the lightning fast Bitcoin transactions directly integrated into Bitcoin.
The moment Bitcoin becomes an integral part of Twitter, newsmaker and -breaker all over the world will be exposed to a new economic model in their pockets, enabling them to monetize themselves and their news privately and independently. Think of free speech money at an order of magnitude.
The guy who arguably built the most successful electric car company of our times, has ‘privately’ sent rockets to the ISS and smokes weed live on camera also owns Bitcoin and thinks it will be the native currency of the internet. The internet is already in everyones hands and makes it way into everything around us. If Bitcoin is the native currency of everything, its going to be the worlds reserve currency.
If 2018 wasn’t already the year of financial institutions getting into Bitcoin, they will definitely take positions in 2019. Fidelity (USD 2.5 Trillion AUM), Intercontinental Exchange, the parent company of the NYSE, Chicago Mercantile Exchange, Deutsche Boerse, pension funds (USD 20 Trillion AUM worldwide) are all getting or are already on-board with Bitcoin. Plus, we will most likely see the first Bitcoin ETF launch this year, bringing easy custody solutions to investors.
The Lightning Network is growing at ‘lightning speed’. Bitcoins solution for fast and cost-efficient transactions is growing by +15% in capacity each month. There are now around 7,000 Lightning Nodes with a capacity of 750 BTC. Lightning is the fastest growing ‘dAPP’ in the cryptosphere and will enable commercial adoption of Bitcoin and on-boarding of the next wave of HODLers.
Periphery products like ABRA and even an improved Ethereum with its popular decentralized-financial solutions will introduce people to the powers of cryptocurrencies and increase adoption of Bitcoin as a store-of-value.