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Blockchain Bites: Clearing the Record on Yellen’s Crypto Concerns and the Bitcoin Double-Spend Fracas

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After dropping 13% yesterday, bitcoin is once again on the ascent. Meanwhile, Janet Yellen has offered a more nuanced view of crypto and small Ethereum mining pools are organizing a campaign against a potential network upgrade.

Top shelf

Miners revolt!
Eight Ethereum mining pools amounting to around 30% of the network’s hash power have formed a quasi-cartel to push back against a proposed blockchain update that would reduce their mining fees. Ethereum Improvement Proposal (EIP) 1559, floated by Vitalik Buterin, would burn mining fees to help reduce transaction cost volatility. While larger mining pools, like BitFly, F2Pool and Sparkpool, are ambivalent about the upgrade, smaller miners are calling to nix EIP 1559, according to CoinDesk tech reporter Will Foxley.

Trust progress?
Grayscale Investments is laying the groundwork for what could be five new cryptocurrency trusts, for chainlink, basic attention token, decentraland, livepeer and tezos. Preliminary paperwork was filed by the firm’s “statutory trustee,” though it does not guarantee any of these investable products will see the light of day, according to reporting from CoinDesk’s Dan Palmer. (Digital Currency Group owns both CoinDesk and Grayscale.)

Banking deposits
Signature Bank disclosed $10 billion in deposits from its cryptocurrency company clients, in an earnings call Thursday. Representing 16% of the New York firm’s total deposits, this sum is also twice that of competitor Silvergate Bank, which is widely considered the first crypto-forward bank, CoinDesk’s Nathan DiCamillo reports. Without revealing names, Signature’s chief executive said it now banks the “top five crypto exchanges.”

Crypto sweep
The U.S. government’s top investments watchdog flagged a series of unregistered cryptocurrency companies for allegedly duping mostly international investors with false corporate information. Of the 28 suspect investment firms the U.S. Securities and Exchange Commission (SEC) called out Thursday, CoinDesk reporter Danny Nelson found eight that appear to target would-be cryptocurrency investors.

Big in Japan
Following the U.S. Securities Exchange Commission’s (SEC) lawsuit against Ripple, Japanese XRP-stans are left wondering. The cryptocurrency has gained traction in the country as a remittance tool, is backed by one of the largest Japanese financial firms, SBI, and is considered a “cryptocurrency” – not a security, arguably – by Japan’s economy regulator. “The crypto community, I feel, sees this as a big blow to them and as kind of a precursor to what could come in the future, that other companies are also vulnerable,” Mike Kayamori, Liquid Global CEO, told CoinDesk’s Sandali Handagama.

Quick bites

BITCOIN ETF: Five reasons it should be approved. (Bloomberg opinion)

HUMAN TRADERS: A quant fund (not crypto-specific) is giving people a chance. (Bloomberg)

FOR THE FAITHFUL: Joe Weisenthal thinks bitcoin is a religion. Who’s the Pope? (Bloomberg)

BLUE SKIES? Jack Dorsey’s open-source social media platform released a 6o-page overview of the decentralized ecosystem. (Blog)

CUT TO THE CORE: A notable Bitcoin Core dev reflects on his time building and argues Bitcoin needs to decentralize. (Blog)

Market intel

Efficient markets?
Two events batted around to explain bitcoin’s 13% price drop on Thursday are a bit more complicated than they appear on the surface. Yesterday, bitcoin saw its biggest intraday drop since March 12, 2020, when bitcoin tumbled 39%.

Looking for cause, some suggested the markets threw a temper tantrum in response to a rumor that a double-spend appeared in the wild, on the Bitcoin blockchain. That story was picked up by the mainstream press. Others, that traders were spooked by comments made by Treasury Secretary nominee Janet Yellen, who raised concerns about crypto’s use in the criminal underground. That story was picked up by the mainstream press, too.

CoinDesk tech reporter Colin Harper set the record straight: The transaction that looked like a double-spend – the very phenomenon Bitcoin was created to address – was a normal occurrence. The trouble bubbled up after BitMEX researchers found an orphan block containing a 0.00062063 BTC transaction that was also included in a valid block mined to the blockchain.

But it really was no big deal. In what’s called a block reorganization, Bitcoin programmatically dealt with the issue. While the bitcoin was technically “double-spent,” Harper notes, “no new coins were added to Bitcoin’s supply.”

Meanwhile, following a U.S. Senate hearing where Yellen spoke briefly about money laundering and terrorist funding issues that plague bitcoin on Wednesday, the former Federal Reserve Chair disclosed a nuanced opinion of crypto in a letter to the Senate Finance Committee a day later.

To wit: “I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities,” she wrote. “If confirmed, I intend to work closely with the Federal Reserve Board and the other federal banking and securities regulators on how to implement an effective regulatory framework for these and other fintech innovations.”

She is likely to be confirmed today, CoinDesk regulatory reporter Nikhilesh De said.

While neither the rumored double-spend nor Yellen’s concerns are nonevents, they were both based on limited or faulty information that was picked up, (including in yesterday’s Blockchain Bites).

That said, neither news items should be blamed for the market spat, nor should the new information in the public register be seen as leading to today’s price appreciation. As Nic Carter as written, the efficient market hypothesis, the idea that states that asset prices reflect all available information, is complicated.

For now, like during the panic in March, it’s best to keep in mind that “time in the market beats timing the market.”

At stake

Bitcoin’s support
Yesterday was a show of solidarity in the Bitcoin community, after nChain Chief Scientist Craig Wright pushed for cultural touchstones, Bitcoin.org and Bitcoincore.org, to pull the first cryptocurrency white paper off their sites.

Wright, who has long claimed to be Bitcoin’s pseudo-anonymous creator, Satoshi Nakamoto, has filed for patents over Bitcoin’s earliest documentation and intellectual property. The notably rambunctious developer, law student and academic is also the creator of Bitcoin SV (for Satoshi’s Vision), a fork of Bitcoin Cash and competitor coin.

Bitcoin.org rebutted Wright’s legal challenge and kept the document up, though Bitcoincore.org – the main repository for the Bitcoin code base – took it down.

No matter, as CoinDesk Managing Editor Zack Seward reported, some of crypto’s most prominent voices have decided to host a mirror copy. These include Square, Coin Center, Facebook subsidiary Novi and CoinDesk, among dozens more companies, nonprofits and individuals. It has also been uploaded to the “uncensorable” Arweave platform as well as internet alternative the InterPlanetary File System (IFPS), Seward notes.

According to Bitcoin.org, the Bitcoin white paper was published under an open MIT license by Nakamoto, making it a public domain document. “There is no doubt” people have the legal right to host the white paper, the nonprofit said.

Wright has long been a thorn in the Bitcoin community’s side, launching several lawsuits against prominent personalities who questioned his claims of being the authentic Nakamoto. Hodlnaut, the pseudonymous account behind the lightning torch experiment and who was sued for defamation, was vaulted into the spotlight in 2019 with a wave of bitcoin enthusiasts adopting his cartoon cat avatar for their Twitter profile photos.

While the event shows Bitcoin is still capable of rallying together, the real issue at play is much bigger than Wright’s copyright claims. Dozens of businesses have patent key technologies off of, or that support, this open-source system. In some sense, some would argue, a copyright is simply anathema to Bitcoin’s core ideal of permissiveness.

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Coinbase S1-Filing with US SEC for Direct Stock Listing Goes Public

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In the S-1 filing, Coinbase has made crucial disclosures to the public with its plans of launching direct stock listing on Nasdaq. As per its recent valuations, Coinbase pegs a value of over $100 billion.

Crypto exchange Coinbase is inching closer to its direct stock listing on Nasdaq. On Thursday, February 25, Coinbase submitted its S-1 filing with the US Securities and Exchange Commission (SEC), thereby making it public for the first time.

The recent submission is a crucial step for Coinbase’s direct stock listing on Nasdaq. The S1 filing with the SEC offers a deeper insight into Coinbase’s business. All the disclosures effectively work as a pitch to the investors. Before this, Coinbase submitted its confidential draft document to the US SEC in mid-December.

The rumors of Coinbase’s public listing first emerged during last summer of 2020. Over the last few weeks, Coinbvase has been releasing its shares in the secondary market to investors. As per its latest share offering, Coinbase’s valuations spiked above $100 billion with a per-share price value of $373. The official blog post for Coinbase notes:

“Coinbase Global, Inc. today announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (the “SEC”) relating to a proposed public direct listing of its Class A common stock. Coinbase intends to list its Class A common stock on the Nasdaq Global Select Market under the ticker symbol “COIN”.

Coinbase has confirmed that it will take the help of Goldman Sachs, JPMorgan Securities and Citigroup to “assist us with respect to certain matters relating to our listing.”

Coinbase’s Strong Growth Story

Over the last two years, Coinbase has registered strong growth with a major spike in the customer base. By the end of 2018, Coinbase valuations stood at $8 billion and have multiplied 12x by now. As Coinbase noted:

“We have grown quickly and in a capital-efficient manner since our founding. For the years ended December 31, 2020 and December 31, 2019, we generated total revenue of $1.3 billion and $533.7 million, respectively, net income (loss) of $322.3 million and $(30.4) million, respectively, and Adjusted EBITDA of $527.4 million and $24.3 million, respectively.”

After registering a $30 million loss in 2019, Coinbase reported $322.3 million net income as its first positive year in 2020. However, Coinbase has noted that as it expands its operations, its expenses will continue to grow simultaneously. The crypto exchange said:

“We expect our operating expenses to increase significantly in the foreseeable future and may not be able to achieve profitability or achieve positive cash flow from operations on a consistent basis, which may cause our business, operating results, and financial condition to be adversely impacted”.

Other business news can be found here.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.



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HODLCommunity: Holy Grail of FinTech

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Despite the substantial gains that HODLC guarantees, the project is not for gambling investors seeking the coveted “lambos on the moon” or anything else pie in the sky, it is for sensible investors who want a secure asset to preserve wealth and hedge against inflation.

The recent GameStop saga brought to the minds of many people the manipulation of markets. This standard practice, typically on the part of the exceedingly wealthy, can spell death to companies and can leave struggling retail-investors drained. The need for an alternative to preserve and grow wealth is keenly felt by many.

HODLCommunity provides a unique asset in a world where market manipulation and uncertainty are the norms. The fundamentals of HODLC not only let us predict value over time, but know the trajectory without leaving anything to chance. Predictable wealth is built within the smart contract.

The principle is simple but profound. The value increases with every transaction. Moreover, every 24 hour period also is auspicious as an upward movement in valuation is made.

HODLC grants us a holy grail in the realm of finance, as it has the best features of stablecoins and traditional cryptocurrencies, both price stability and the possibility (though in HODLC’s case, the actuality) that one’s asset will increase in value.

HODLC offers a substantial and secured return on investment, Essentially doubling in value in the first year with a 100 percent ROI, and gradually decreasing the percentage by which it increases 5% every subsequent year until reaching a 5 percent annual ROI. This will be a 30-year process that begins with a token predictably and substantially increasing in value and ending with a prime asset that maintains sensible growth.

Despite the substantial gains that HODLC guarantees, the project is not for gambling investors seeking the coveted “lambos on the moon” or anything else pie in the sky, it is for sensible investors who want a secure asset to preserve wealth and hedge against inflation.

Moreover, given its predictability, gains can be readily calculated, and at an opportune moment liquidate a portion of one’s profits without loss of capital. This is a simple but transformative principle.

As awareness of the innovation HODLCommunity has introduced to finance continues to grow, we shall see not only the success and security conferred on retail investors but an enormous benevolent impact on a multitude of industries. As HODLCommunity founder Jean-Philippe Beaudet stated, “the core feature of HODLC makes it the perfect instrument for disrupting industries such as payments, loans, financing, insurance, mutual funds, even charities.”

HODLCommunity comes as a welcome chapter in the history of finance, with all the necessary elements to transform global commerce and finance, as our world continues to move nearer to the obsolescence of fiat currencies and towards widespread adoption of digital assets.

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Author: John Ryan

John is an independent writer and an avid enthusiast of blockchain technology. He received his University education at Northern Michigan University, as a history major, where he was inducted into the Phi Beta Kappa Society for academic excellence. While in Michigan, he also trained as an athlete at the United States Olympic Education Center, where he achieved the status of a multiple-time University All-American in Greco-Roman wrestling. He has authored several plays and a collection of poetry. Some of his major areas of interests includes: Finance, Literature, and Religious Studies.



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GameStop (GME) Surges by Over 50% Now amid C-suite Shake-Up

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GameStock (GME) stock has started its way higher again, gaining over 100% yesterday.

GameStop Corp (NYSE: GME) saw its share price surging by 103% on Wednesday as investors reacted positively to the resignation of the financial chief officer of the company. The shares also took another 83% surge in the after-hours trade of Wednesday according to the available data. The investors proceeded to push the price of the premarket trade on Thursday with a 44% surge. As the trading is going on today, GME stock is rising by 51% now.

It is said that investors and traders are hoping for a resurgence amid the expected resignation of the financial Chief Officer Jim Bell. It was disclosed that the decision was forced by the board and Ryan Cohen, a GameStop Corp investor and the co-founder of Chewy, an online pet and food retailer. This is expected to be done on March 26.

In a filing with the Securities and Exchange Commission (SEC), the company denied all allegations of forcing Bell out due to a disagreement on something related to the company’s operation. They stated emphatically that the resignation has nothing to do with contention relating to GameStop’s policies, operation, or practices which include accounting principles and practices. This is contrary to the reports that Cohen spearheaded an attack to get him out of the company to execute the transition online.

Cohen owns over 12% of the stocks of GameStop Corp through his company RC Ventures. Somewhere in November 2020, Cohen allegedly wrote a letter to the board of GameStop criticizing the executive team to force them to build a perfect e-commerce platform. In the letter, he stated that GameStop (GME) needs to evolve into a technological company that delights investors. Not just that, it should also deliver a top-notch digital experience instead of priding itself in being just a video retailer that only focuses on a brick-and-mortar footprint. Bell was the first casualty of Cohen’s leadership shakeup.

Jeffery Equity Thinks Bell Have No Issue with GameStop (GME)

Jefferies Equity analyst, Stephanie Wissink in a statement to the client’s acknowledged the effort of Bell during his tenure in the administrative setup of the company. It can be recalled that there was a sharp fall in sales during the late stages of the final hardware cycles. During that period, Mr. Bell led a series of actions that helped to protect the GME equity.

Wissink believes that the expected resignation of Bell was mutual, none Immediate, and not a product of misunderstandings or disagreement between him and the board as activist settlement mostly follows leadership changes. It was also disclosed that instead of looking for a CFO replacement with a retail background, the company will consider someone with a tech background as their primary focus is on e-commerce growth.

Bell refused to comment on the reports of his resignation. Currently, the company has consulted an executive search firm to find a Financial Chief who has the ability and the qualification to drive the company to its expected transformation.

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Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.



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