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Abra CEO Bill Barhydt on How Bitcoin Can Still Democratize Finance

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Bitcoin was supposed to help the unbanked. Almost since its inception, boosters have been claiming this new kind of stateless, borderless money holds the key to financial inclusion, that it can help billions of people plug into the global economy. With traditional financial institutions, under pressure from regulators, continuing to pull out of parts of the world deemed too high-risk to serve, it’s tempting to think that cryptocurrency is the answer. But its tantalizing promise has yet to be fulfilled.

Bill Barhydt is working to make sure it will be. A former CIA cryptographer and early Netscape employee, Barhydt gave the first ever TED Talk on bitcoin, in 2012, when bitcoin was trading at only $4. Like many early enthusiasts, he saw right away the potential for cryptocurrency to provide the world’s poor with an alternative to Western Union and MoneyGram, while giving people of every income bracket a new kind of sound money, free from government interference. It took him several years more to hit on the right business model to make it happen.

Barhydt is the CEO of Abra, a digital wallet provider that aspires to be a “global bank” for people who may not have any other bank account. Right now, though, it’s primarily an investment platform, having gone through several iterations that reflect the changing narrative of bitcoin itself, from digital cash and borderless payment method to speculative asset. Abra allows retail investors to buy, sell, and hold 30 different crypto assets and 50 national currencies. It has 500,000 users across more than 100 countries, according to Barhydt, and has processed close to $1 billion in transactions so far.

But capitalizing on crypto mania is only the beginning. Using bitcoin smart contracts—agreements couched in, and executed by, computer code—Barhydt plans to launch credit services on the app later this year, on his way to doing even wilder things. I catch up with him by phone in mid-January, while he’s in Miami to attend the North American Bitcoin Conference. I want to know how an investment app can promote social good, what it will take to help immigrants more easily send money back home, and why Barhydt thinks the future of crypto may lie in collateralizing old-school assets.

What did you do before Abra?
I’ve been working in tech and financial services and payments for almost 30 years. I’ve done everything from working at the CIA as a cryptographer in secure messaging, to working at Goldman [Sachs] as a quantitative analyst in fixed income, to working on internet software at Netscape, and a lot of other stuff. It all led to Abra, including a lot of work in developing markets and mobile payments. Abra is the culmination of many decades of work to try to improve the banking system via software, the internet, and mobile.

When we pitched our Series A investors, it was basically to build a global bank using crypto.

You worked at the CIA?
Oh, God, this was a long time ago—this was like late ’80s, maybe 30 years ago.

So even before you got into financial services and payments, you were already involved in tech.
Absolutely. My background is in computer science by education, but I’ve done a lot of work in banking, as well as financial cryptography, over the last 10 years.

What was your initial concept for Abra, and what inspired it?
I wanted to build a single, smartphone-based application that would allow consumers in every country in the world to access financial services. The same way you can use WhatsApp or Instagram to share multimedia messages with people in 150-plus countries, I wanted to do that for banking services—whether it was investing, payments and money transfer, or credit. There is no single smartphone app that allows you to do those things in every country in the world today. There are obviously reasons why that’s the case, but I believe all the pieces are now in place to change that.

Tell me about Abra’s pivot away from borderless, frictionless money transfers to become an investment platform. What caused it?
We’re definitely committed to the overall payments, money-transfer space, just as much as we are to credit and investing. We just decided that the complexity of launching a global network for money transfers with crypto was too much for a startup. It was going to cost us way more money than we had in the bank. It’s like launching Uber in 100 countries when you have to sign up drivers. That’s why Uber raises so much money. When we pitched our Series A investors, it was basically to build a global bank using crypto. It included lots of different services—some of which we’re going to launch this year. But we just didn’t know at the time the best way to bring the services to market. We realized that we could add value very quickly with this model, build out a global network, and then over time layer in services like money transfer [and] credit, which we’ll be launching later this year.

Today, the process of sending money internationally is costly and opaque. Why is this so hard to do well?
Money transfers have a couple of different [aspects]. There are remittances, but there’s also the middle-class consumer, bank-wire perspective, or domestic services like Venmo or WePay. Most people associate remittances with migrant workers sending money home. [That’s where] the recipient usually wants cash in hand, and doesn’t really care about the technology. Most people who receive remittances don’t actually know which service the sender used, because they just receive cash. That is highly problematic for launching a mobile-to-mobile service. The reality is, if the recipient of a money transfer to India from somebody working oil fields in Saudi Arabia wants cash, then storing cryptocurrency on a smartphone doesn’t really make a lot of sense. Nobody really knows how to deal with that last-mile problem of remittances as it relates to crypto, because the recipient has a very different expectation in their mind [than] the techies.

What will it take to crack crypto remittances?
We have some ideas on how to scale that solution and how to address that over time, but that’s not our focus right now. We just want to build out services that take advantage of this synthetic-asset platform in order to get, literally, millions of users in the system. Then, eventually we’ll be able to provide services to more bottom-of-the-pyramid markets, where things like remittances or low-cost microloans are really going to move the needle. First things first.

What do you mean by “synthetic-asset platform”? Is “synthetic asset” just another term for crypto asset?
It’s not a crypto asset; it’s a crypto-backed asset. If you store a dollar—or invest in Zcash or Monero—through Abra, what you’re actually doing is entering into a multi-signature bitcoin smart contract that uses bitcoin as collateral to peg the value of bitcoin to that other asset. But the consumer doesn’t have to understand that. It’s super easy from the consumer’s perspective, but very complex in terms of what’s going on behind the scenes.

Nobody in Haiti says, “My problem is that I’m unbanked.” Most people in Haiti don’t know what the eff that word means.

Does the consumer know he’s holding bitcoin in a smartphone wallet, or—
They can know, via the terms of service, but they don’t need to know, and they don’t need to understand if they don’t want to. That would be like saying, “I’m at the counter at Walmart, and I want to know what happens when I swipe my credit card.”

But if this is a crypto investment app, it must be for people who want exposure to these assets. Don’t they want to see the actual assets in their wallet?
They do. They see their investment exposure to the asset. It’s an investing app. And it’s not just crypto assets; there are 30 crypto assets and 50 fiat assets [available], and you’re going to see more asset classes this year beyond fiat and crypto—all based on the same synthetic-asset model. So whether I’m investing in silver or Zcash or Mexican pesos, Abra works 100 percent the same way. And when I convert from pesos to XRP, or from XRP to Monero, or from Monero to Australian dollars, it all works the same way. It’s all a conversion of one bitcoin-based smart contract to another.

And that model can be extended to accommodate new assets and services?
The Abra model that I’m describing will work—using that same conversion of synthetic assets—whether it’s investing, payments and money transfer, or credit. We have users doing money transfer with Abra today, and the only difference between converting your dollars on the phone into Monero and sending money to somebody else is that the conversion of smart contracts happens on a different phone. In the investment use case, if I convert my dollars to Monero, it’s all happening in my Abra app. In the other use case, if I send dollars from my phone and [the money] lands as Zcash or euros on your phone, the conversion happens on your phone instead of on my phone.

Does Abra take conversion fees?
Yeah, we set the exchange rate between any two assets in the system, and we usually make a small spread on that conversion. That’s our revenue.

You mentioned the cost and the difficulty of Uber growing its network. I recall your plan a year and a half ago was to build out a network of on-the-ground agents in different places to provide cash to recipients of crypto money transfers. Did you run into trouble?
No, we actually did it. As a matter of fact, we have a running network in the Philippines. We simply stopped because we realized that the cost of deploying it—going beyond the tests that we were doing—was going to cost us $1 billion. And that didn’t make sense. Over time, we think we can build it out at much lower cost if we integrate it into other services. The cost of customer acquisition in the remittance space is incredibly high. The likes of Western Union, Xoom, [and] Remitly spend anywhere from $75 to $125 to acquire a customer in that space. Abra spends almost nothing on marketing today, because we’re adding value for people who want to use our app the way it is.

Why is it so costly to acquire a remittance customer?
It’s because there are 25 companies trying to acquire the same customers. When Xoom pioneered the online digital acquisition model for remittances, the cost of acquisition was very low. Then Western Union got into the digital business; so did MoneyGram, Remitly, and a whole bunch of other companies. So the cost went up 10X. At scale, a model like Abra’s, which is phone-to-phone, has a lower cost of acquisition because it’s more viral. But that’s going to work less in the remittance space than it will in the banking consumer space. Because if you’re going to use something like Abra to send a bank wire, you’re going to get the recipient to download Abra. They’re going to be incentivized by the fact that you’re sending a transaction which will result in more money in [their] wallet, since the cost of the transaction is close to zero. That makes the app kind of virally distributed. But in remittances, when the recipient is receiving cash, it’s very hard to create a viral model, because there is no tech on the receiving side. It’s a different business, with low stickiness and low loyalty and high acquisition costs. Whereas what Abra is doing has high loyalty, high stickiness, and very low cost of acquisition.

Abra is billed on its website as “the simplest way to invest in cryptocurrencies.” Are you trying to compete with Coinbase and Binance?
Since we launched the app into beta about a year ago as a very simple crypto wallet to buy, sell, hold, and exchange among crypto and fiat assets, that’s all we’ve been focused on. Now, we will be adding more asset classes to the app beyond fiat and crypto. I can’t say yet what those are, but they’re going to be coming very soon. Most of our users are non-trader retail investors. We don’t really compete with the exchanges, because most of our users aren’t really interested in using exchanges. They want a very simple retail consumer experience.

I liken what we do to Travelex at the airport, as opposed to doing forex trading at Goldman Sachs. You go to the airport with your leftover euros, put them on the counter, and leave the counter with a bunch of dollars. You go to the Abra app with a bunch of dollars and leave the app with a bunch of ether or XRP, or any combination. It’s simple. I don’t know of any app in the world, besides Abra, that gives you 80 assets, all 80 of which can be exchanged for all 79 of the others, with a simple one-click retail experience.

How many countries do you support now?
We have users in way more than 100 countries. Abra is in the iOS and Android app stores in almost every country in the world. About 50 percent of our users use the app by depositing bitcoin as the basis for their trading, and about 50 percent use their bank account. That we have so many users depositing bitcoin gives us a long tail of users in different countries, because in a lot of places it’s easy for them to get access to bitcoin now.

Almost since bitcoin was invented, people have been talking about how crypto could “bank the unbanked” and save the world’s poor from the high fees of Western Union and MoneyGram. But it still hasn’t happened in a big way. Can you explain why?
This is a very complex question, but I think I know the answer. There are basically three key pillars to providing banking in developing markets. Nobody in Haiti says, “My problem is that I’m unbanked.” Most people in Haiti don’t know what the eff that word means. You go to Mexico, you go to the Philippines, you go to Indonesia—nobody says, “Oh, my God, if only I wasn’t unbanked.” Nobody cares about that, except maybe people with great intentions at NGOs.

What people care about is, “Can I get credit in a pinch? Can I send or receive money at reasonably low cost? And can I invest? If I’m saving my family’s money, even if it’s only $50 a month, can I invest that money, or do I have to leave it under the mattress? And can I invest it in something other than my country’s failing currency?” In Venezuela or Argentina, if you’re older than 40 you’ve probably seen this rodeo 10 times: currencies failing and getting propped up, or failing and starting over. So all three of those models are relevant in developing markets.

There are only 100,000 investment accounts in the entire country of Mexico for tens of millions of people. That’s insane.

Now, this is where crypto starts to get interesting. For two reasons. One is bitcoin’s ability to serve as hard money. But, and this is a big one, it’s only going to become useful for the average consumer in the short term—the next five years—if you can take that hard money and use it to collateralize other asset classes. Because the average consumer does not have the mental capacity right now to understand what a cryptocurrency means. It would be like explaining TCP/IP to your grandmother so that she can watch Netflix. It’s not going to happen. But if you can collateralize real-world assets using crypto, [without] introducing new third-party custodians, you’re onto something really interesting. Because now you can represent fiat currencies, stocks, bonds, commodities in a way that doesn’t require you to become a bank. That’s interesting. You’ve got a combination of hard money and regulatory arbitrage to solve real consumer problems. That’s what I think it’s going to take to break into developing markets.

What do you mean by “regulatory arbitrage”?
I mean that if you can actually have the keys to your funds on a smartphone, there is no third-party bank required to help you manage those funds. And if the app is developed correctly, I can do things with those crypto-collateralized assets—my cash, my stocks, my mutual funds—that I couldn’t do in Haiti today. According to my research, there are only 100,000 investment accounts in the entire country of Mexico for tens of millions of people. That’s insane. People just don’t trust, or don’t have access to, [those financial channels]. But they all use WhatsApp. So if you could give them an app that is as easy as WhatsApp—where they don’t have to trust the banks, they don’t have to trust the government, they can be in control, they can get access to U.S. or European markets for investing, they can receive money from their family in the U.S.—using this crypto-collateralized model that bypasses the banking system, the consumer all of a sudden is using bitcoin but doesn’t know it. That’s the key to success, in my opinion. So you have to understand not only how to take advantage of this new digital hard money, but also how to build services that hide its complexity from the average consumer. Whether they’re in Mexico or the Philippines or Indonesia, it makes no difference. The viability and demand for what I’m talking about is global.

The complexity of your model seems counterintuitive. This is what it’s going to take to gain worldwide adoption?
I think that’s what it’s going to take. Most people say, “Use bitcoin to do money transfer and the world will be great.” Well, obviously that’s a bunch of nonsense. It’s not happening. I can actually explain to you right now how to invest in stocks using bitcoin in a way that doesn’t require any banks or any regulated exchanges, and you wouldn’t do it—because it would be so complex, it would make your head spin. But if you could do it in a way that hid the complexity from the average consumer, and all they [knew] was “Oh, I just received pesos,” or “I just got a low-cost loan against the assets that I’m holding in the simple banking app on my Android phone,” then people would use it. I promise you.

In this model, crypto becomes the bank. When you’re holding dollars, you’re actually holding crypto-collateralized dollars rather than dollars in a bank vault. Now, a crypto-collateralized dollar is a very complex instrument, but the consumer doesn’t have to understand it. They can just look at the app and see that it’s a dollar.

And they can still send that dollar to someone and have that person receive it and spend it as a dollar?
Exactly. The person who receives it would be receiving a crypto-collateralized dollar, but then he can use on-ramps and off-ramps that we’ll be providing over time to go to the store and spend that dollar.

Or even potentially deposit it into a bank account?
Exactly.

I know you have large ambitions to benefit people all over the world. But when most people think of social good, crypto investment schemes aren’t the first thing that comes to mind.
Nor should they be. The focus for us this year is: What is the next generation of assets that are really going to add huge value to the everyday average investor at global scale? That’s where I’m spending my time right now. We want to make credit services available to rural China and core parts of Central America as well as to [middle-class] people in the West.

So you haven’t given up, then, on the idea of bitcoin—or any crypto—helping the unbanked?
“Unbanked” is such a horrible term. It’s such a useless phrase. The services we’re [launching] are going to be very useful in developing markets that aren’t traditionally targeted by large retail banks. Whether [our users are] banked or unbanked, or people with a bank account that has a zero balance, doesn’t really matter to me. If you look at the markets that we’re interested in, with the services we’re launching this year, it’s going to be places like Mexico, the Philippines, Indonesia. It’s not going to be the very bottom of the pyramid, places that are literally relief and disaster zones. We’ll get there eventually. But I think that up-and-coming developing countries are the ones that are really going to take advantage of this.

How has the crypto winter affected your business?
This year, I think most of our revenue will not come from crypto trading; it will come from other asset classes that use crypto in the background, as a synthetic asset, but where people aren’t [explicitly] saying, “Oh, I want Zcash.” They’re going to be saying, “I want some real-world asset.”

That leaves me particularly bullish on the future of crypto, because I think the single biggest opportunity to grow the crypto market—bar none—is not institutional investors coming in, it’s crypto collateralizing real-world assets to enable all kinds of banking services. Nobody seems to get that but Abra—and that drives me insane, to be honest. Think about this for a second. What we’re doing, we’re doing in 100 countries, all based upon bitcoin collateralizing assets. Now, there’s simply not enough bitcoin in the world to collateralize the assets that we are going to be collateralizing. What is that going to do to the price of crypto as a result?

Collateralization of real-world assets is going to drive the demand [for crypto] through the roof.

You think it will drive up the price?
If I’m right, it has to. Every single transaction done in the Abra system is completely, 100-percent collateralized in bitcoin. And at the rate we’re scaling, there’s simply not enough bitcoin to collateralize all of those assets. But if the price of bitcoin were 100X higher, there would be more than enough.

Because you’d simply use small fractions of each bitcoin?
Exactly. You’d be able to divvy it up to a lot more people. But that won’t happen, in my opinion, simply because some investors arbitrarily decide it’s a great idea. Investors are going to decide it’s a great idea because collateralization of real-world assets is going to drive the demand through the roof.

Interesting. And why have you chosen to use bitcoin smart contracts instead of Ethereum smart contracts?
When we started Abra, bitcoin was really the only way to do this. Ethereum was basically a beta project. The market capitalization was very low, it wasn’t globally liquid, and a lot of the wallet implementations have had big security issues. Ethereum itself hasn’t had big security issues, but if you look at DAO and other complex wallets, they’ve had security issues. The scripting language of bitcoin can’t really do much, and that’s why it’s so secure. The liquidity of bitcoin, the security, the market cap—all those things together led us to the conclusion that it’s the right model for Abra. It does exactly what Abra needs. No more, no less.

What is your five-year vision for Abra?
My five-year vision is that Abra democratizes access to financial services for every consumer in the world. Whether it’s investing, payments and money transfer, or access to credit. By combining [smartphones] with a crypto-based platform, [you can] democratize true access to real financial services for everyone, not just for the wealthy.

This interview has been edited and condensed.

Source: breakermag.com

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Bitcoin

Billionaire Tim Draper Reacts to Jamie Dimon Launching His Own Cryptocurrency

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Tim Draper

Nearly two years after JPMorgan Chase chief Jamie Dimon famously bashed bitcoin, calling it a “fraud” and “worse than tulip bulbs,” he announced Opens a New Window. that his bank has created its own cryptocurrency Opens a New Window.

Dubbed JPM Coin, the new tokens, are set to be tested on clients of the big bank’s wholesale payments Opens a New Window. The news comes as big switcheroo to some, who thought Dimon was against the new technology.

“Not many bitcoin knock offs have worked particularly well, but they all add to the interest in bitcoin,” Draper told FOX Business on Sunday. He compared the news to “a bellwether akin to Apple welcoming IBM into the PC business.”

While the price of bitcoin did not have any immediate reaction to JPMorgan’s news last week, it has jumped more than 5 percent over the last 24 hours, according to CoinMarketcap.com.

Draper, a longtime venture capitalist, who has been right about investing in big companies such as Skype, Hotmail and Tesla, has poured hundreds of millions of his wealth into bitcoin over the years because he believes its technology blockchain will be the centerpiece of our new “virtual world.”

“This is going to be the biggest change in the history of the world and it’s so exciting,” Draper told FOX Business last May. Opens a New Window. “I thought the internet was super exciting, but this is going to completely change everything and the government itself is going to change.”

And despite bitcoin’s rapid price decline from a record high of about $20,000 in December 2017 to about $3,900 today, he believes by 2022, bitcoin will hit $250,000.

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Chinese Bitcoin Bull Predicts Bitcoin to Hit $740,000

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Bitcoin

Zhu Fa, co-founder of crypto mining pool Poolin, recently made a bullish statement on bitcoin’s price, predicting that bitcoin would surge to new highs at 5 million Chinese yuan (roughly US $740,000).

From record high above $17,000 to year lows near $3,000, Bitcoin’s year-long turbulence has not discouraged crypto bulls. The operator of the world’s fourth-largest mining pool with over 11% of global hashrate still goes hyperbolic on bitcoin price forecast despite the current sluggish climate.

There’s some consensus in the industry that the highs will be 10-20 times what they were in the previous bull run, that means, the new highs in the next bull would be 1 million to 2 million yuan, and 500,000 to 4 million yuan with a 50-200 percent margin of error, he says, however, bitcoin price will not always go up like this. Some claim that the next bull will be the last run, in this sense, an extra one million yuan can be added.

He posted the prediction on instant messaging platform WeChat on Feb.10, commenting another bitcoin billionaire Zhao Dong’s statement that bitcoin right now is the cheapest. Zhu continued that “likes and comments on crypto posts in the community keep going low these days, it now feels more like a bear market”. At the same period last year, numerous WeChat groups on crypto have been emerging and crypto climbed as one of the most talked about topics last Spring Festival in the country.

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Analyst Research: A Comparative Study Between PrimeXBT and BitMEX

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The current crypto winter of 2018-2019 has brought with it a number of dramatic changes to the cryptocurrency market. Some altcoins have fallen over 90% from their all-time high. Crypto firms have been forced to lay off employees and restructure. And gone are the days when investors would simply HODL their assets and reap enormous gains.

With profits far more difficult to come by using traditional strategies, many traders have turned to BitMEX due to the platform offering advanced trading features such as 100x leverage and the ability to short-sell assets and profit off of falling crypto prices.

Over time, BitMEX has earned itself a leadership position as a result and boasts some of the highest trading volume in the entire crypto space. However, a newcomer backed by decades of brokerage experience has entered the market, offering not only the same features that helped BitMEX ascend to the top, but a wealth of other benefits that BitMEX cannot claim to offer.

A comparative study was conducted in order to find out if PrimeXBT will take the throne from BitMEX and capture crypto market share by attracting traders seeking more out of their trading experience.

PrimeXBT Versus BitMEX: Important Features Compared

The research starts with a focus on the features the two exchanges offer that are similar, and are part of what helped make BitMEX a success during the current crypto bear market.

Short-Selling

Both BitMEX and PrimeXBT offer traders the ability to short-sell assets, allowing traders to profit during downtrends. The feature is what helped put BitMEX on the map and is already part of what attracted over 150,000 users to sign up to PrimeXBT before the platform’s launch, with more rapidly joining each week.

Low Fees

While the two platforms appear very similar at first glance, this is where the differences between the two become more apparent.

Compared to Bitfinex’s 0.1% to 0.2% fees on trades, BitMEX offers low 0.075% fees on Bitcoin trading, but charges a staggering 0.25% on other trading pairs. PrimeXBT easily trumps them both with a standard 0.05% fee across all trading pairs. To incentivize new users joining the platform, PrimeXBT offers a discounted fee of 0.025% during a trader’s first month using the platform. Users must register for a free PrimeXBT account before March 10, 2019 to take advantage of the 50% off promotion.

100x Leverage

Trading with leverage is an extremely attractive option that allows a trader to risk less capital but multiply potential gains by 100 times. Both PrimeXBT and BitMEX offer industry-best 100x leverage, however, BitMEX only offers this level of high leverage on Bitcoin-based trading pairs. PrimeXBT, on the other hand, offers 1:100 leverage across all available assets including Bitcoin, Ethereum, EOS, Ripple and Litecoin.

PrimeXBT Versus BitMEX: Which Platform Offers The Most to Traders?

The study also focused on any features unique to each platform. Research shows that PrimeXBT boasts a number of features that BitMEX simply does not. The one “feature” BitMEX users routinely report that isn’t found on PrimeXBT are “order submission errors.”

Technical Analysis Tools

PrimeXBT has all the required tools to perform advanced technical analysis across crypto assets. The robust toolset includes a number of important indicators that can help traders gain an edge in the market and become more profitable.

Aggregated Liquidity

Only PrimeXBT offers aggregated liquidity from 12 industry-leading suppliers. BitMEX doesn’t even come close.

Multiple Funding Methods, No Minimum Deposit

BitMEX only allows traders to fund their accounts using Bitcoin and all contracts are settled in Bitcoin. PrimeXBT, however, lets traders deposit USD, EUR, and other cryptocurrencies in addition to Bitcoin. On Prime XBT, there is no minimum deposit. BitMEX requires a 0.001 BTC minimum.

Customizable Experience

PrimeXBT invites traders to make the platform their own by customizing it with a variety of widgets. In addition, PrimeXBT supports multiple-screens for the most advanced traders who demand the best experience the crypto industry has to offer.

Unmatched Affiliate Program

PrimeXBT is hands down an industry leader with its affiliate program, which has helped the platform “go viral” and generate significant buzz surrounding the platform’s launch. PrimeXBT’s 4-level referral program offers ten times the payouts of any other platform in the industry, including BitMEX. The program also offers lifetime payouts and referrers will even earn revenue on 2nd, 3rd, and 4th tier referrals.

PrimeXBT Versus BitMEX: Conclusion

With features like 100x leverage and the ability to short-sell assets during a bear market, it’s no surprise that BitMEX has enjoyed a comfortable position as an industry leader. But with the emergence of PrimeXBT, many of BitMEX’s key features are being overshadowed by the newcomer.

Once the market full of traders at large catch wind of PrimeXBT’s features and its potential to drive profitable trades, it won’t be long until PrimeXBT challenges BitMEX for the throne.

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Altcoins

Crypto Survivors Find a Rare Lifeline

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Michael Novogratz

Desperate to survive the collapse of their market, cryptocurrency diehards are reaching into the financial tool kit to raise some old-fashioned cash.

They’ve begun selling derivatives linked to digital tokens to squeeze something out of their depreciating assets. Their need is so acute that ventures run mainly by software developers and tech experts are negotiating the terms with financial pros who earned their chops on Wall Street.

It’s the cost of surviving what’s come to be known as the crypto winter—and a stunning turnaround from the mania that drove Bitcoin up by 1,400 percent in 2017. The most valuable token is down about 80 percent from its peak. For the other side of the trade, it’s an inexpensive way to bet on a rebound.

“Anyone sitting on a stockpile of tokens saw in the bear market of 2018 that their business is at the mercy of crypto prices,” said Sam Bankman-Fried, chief executive officer of Alameda Research, a quantitative trading firm for digital assets in San Francisco. “It can be crucial for those players’ survival to have some cash if digital asset prices go down.”

Miners, who produce new coins and verify transactions, as well as companies that raised money in the initial coin offering boom of 2017, are having to get creative to keep the lights on. They are among the main sellers of derivatives similar to covered call options, a trade popular among stock investors.

Options trading has also been propelled by a growing crowd of ex-Wall Street professionals who have quit traditional assets for crypto. Key players include QCP Capital and Akuna Capital, firms staffed by former employees of hedge funds and high frequency trading shops.

While Bitcoin futures, which were introduced in late 2017, trade on public markets managed by regulated companies such as CME Group Inc., most options trades, which began appearing about six months ago, are private bilateral contracts. That means official statistics are hard to come by.

Interviews with a dozen crypto traders and investors from New York to Sydney yielded a variety of estimates on sales volumes, from $125 million per month to $500 million, and differing views on whether the main users are professional counterparties trading between themselves, or the miners who create the digital assets and other large token holders.

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Altcoins

Why Do the Youth Choose Crypto Currency?

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One of the answers can be found in the book “Generations” published in 1991 by Neil Howe and William Strauss known as the founders of the generational theory. The authors of this theory proposed to define 20-year generational periods, but these are just approximate intervals, they can vary within several years and are a little bit different from the intervals described by other researchers. Certain features developed under specific conditions of child‑raising environment characterize each generation. For example, habits and needs related to quality, speed and amount of information form values and a certain attitude towards life in general. For millennials known as Generation Y (born between 1984 and 2000), digital technologies and the absence of territorial boundaries are an integral part of everyday life. They decide whether a certain topic is interesting in 8–10 seconds. They easily manage their money using mobile apps, receive education in master classes and online courses and prefer flexible working hours and co‑working over office work.

In its research, the Markswebb Rank & Report analytical agency cites numbers, which show the differences in attitudes of Baby Boomers and Generations X, Y and Z towards new technologies. Baby Boomers (born between 1943 and 1963) are tradition-bound people, face‑to‑face communication plays an important role in their lives, and only 11.9% of them pay for goods and services online. The representatives of Generation X (born between 1963 and 1984) are always busy, they actively take part in development of the Internet as they were born at the time of its emergence. Founders of Google, Tesla, Facebook and Amazon belong to Generation X. When it comes to using the Internet, whether it is buying clothes, booking tickets, looking for a job or even buying an apartment or a house, they are about as good as millennials. Today, 53% of all online purchases are made by Generation Y. But Generation X prefers to spend more time on social media than millennials, they like being in front of a personal computer and viewing news feeds on Facebook about 7 hours per week. Social networks as a free way of communication with the outside world have a huge potential for further development of digital civilization.

Generation Z, i.e. those people who were born after 2000, are the main users of new technologies. The digital world belongs to Homelanders, who absorb information faster than modern technologies provide it. According to Marc Prensky, who also studied the generational theory, the oldest representatives of the digital generation are still teenagers between the ages of 14 and 15, and they will have to use, develop and improve the technologies, which are currently being created by millennials.

Choice of the Youth — Crypto Industry

Millennials are inherently multi-tasking, they quite willingly learn about new things, have no experience of financial losses and easily see income opportunities. Such characteristics partially explain the interest shown by Generation Y towards the crypto industry. Technological awareness of millennials also contributes to frequent use of high technologies, execution of various operations using crypto currency, from its creation and mining to raising digital capital.

The youth are more interested in creating and using programs, apps and services for estimating financial strategies and managing funds via smartphones. Unwillingness to spend time on studying complex financial schemes and lack of fundamental knowledge inherent to Baby Boomers and Generation X, who are always engaged in the economic and financial fields, do not mean that Generation Y is losing out to other generations. Millennials simply spend time and resources more efficiently and are very good at high technologies.

The emergence of online investment companies, services and digital platforms greatly facilitates the processes related to carrying out financial operations both for personal use and professional activity.

For example, Wealthfront (2008) makes it possible to transfer options to a diversified portfolio of funds traded on the exchange. In addition, it allows accumulating desired savings (for education, travelling, etc.), groups together all accounts and provides an opportunity to analyze expenses and incomes.

The Betterment functionality (2008) provides an opportunity to automatically accumulate and allocate assets.

Motif Investing (2010) is both an investment broker and a social network where every person can invest in a project according to their own interests.

Oval, startup company (2016), offers to deposit a small amount of money to the user’s digital account for each incoming or outgoing transaction. Thus, regular passive income is ensured.

The Bitbon System (2017) is a digital platform providing an opportunity to invest money or find investors for projects.

Most digital services and platforms issuing their own crypto currencies and tokens, which are based on a democratic and decentralized nature of Blockchain technologies, raise no objections from the youth. Blockchain is a perfect environment for developing a social network: it stores personal data, no intermediaries are necessary to carry out transactions, and interaction among the network participants is absolutely transparent.

Digital currency and blockchain-based platforms are becoming a tool for financial independence of Generations Y and Z as they meet all requirements of freedom and equality.

Reasons to choose crypto currency:

  1. Financial crisis of 2008 created a sense of disappointment in the stock markets. This was also the year when the first crypto coin, Bitcoin, emerged, which gave a new hope to the youth.
  2. Seeming simplicity of investing. You can invest a small amount of money and receive passive income by using your personal computer or other devices (telephone or smartphone).
  3. The decentralized Blockchain system ensures independence from the influence of public corporations on the financial system.
  4. Digital freedom erases boundaries and provides access to information at any time and via any device.
  5. Crypto industry completely changes the labor market.
  6. The value of money changes. Generation Y pays more attention to solving environmental issues, whereas “mining” money is considered to be a computer game.

In 2019, the crypto industry marks its tenth anniversary, and there is a solid foundation for its further development. Principles of the Blockchain functioning and possibilities of its use in various fields are already clear to all generations. The rate of use and acceptance of digital technologies in everyday life mostly depends on understanding their functioning principles. Crypto currency has become a symbol of social justice and a key to the new global financial system.

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First U.S. Pension Funds Take the Plunge on Crypto Investing

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Morgan Creek Digital has scored what it says is probably the first investment in the crypto asset universe from a U.S. pension fund. Two pension plans in Fairfax County, Virginia are anchor investors in a new $40 million venture-capital fund, according to a statement from the company. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano, who declined to provide further details.

Many institutional investors, which crypto enthusiasts believe will be drawn to digital assets because of their volatility and potential out-sized gains, have been deterred by market manipulation and a lack of regulation. The Virginia pension funds join a handful of institutions to invest in the crypto world, including Yale University, the second-largest endowment in higher education that invested in a digital assets fund last year.

Fairfax County Retirement Systems manages three separate defined benefit plans, two of which invested in the Morgan Creek Digital fund, said Pompliano. Katherine Molnar, chief investment officer of one of the funds, said in a statement that blockchain technology, which was first developed to record the movement of Bitcoin, is an “emerging opportunity” that offers an “attractive asymmetric return profile.’’

Pompliano said his new fund is structured like a traditional venture capital fund that will invest in the equity of companies in the blockchain and digital assets industry. The fund will also hold a small percentage of its value in liquid cryptocurrencies, such as Bitcoin, said Pompliano. Bitcoin lost about 75 percent of its value in 2018.

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable,’’ Pompliano said in a phone interview. “The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

Morgan Creek Digital, which is an affiliate of the investment manager Morgan Creek Capital Management LLC, exceeded its original target of $25 million for the fund. Its pitch: all traditional assets will eventually be represented by digital tokens, while the influx of intellectual capital into digital assets will create positive returns. It also argues that cryptocurrencies are not correlated to traditional assets, giving investors unique exposures.

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Philippines UnionBank Launches First Crypto ATM

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Aboitiz-led Union Bank of the Philippines is launching the country’s first two-way virtual currency automated teller machine (ATM), allowing customers to purchase and sell virtual currencies for cash via an ATM machine as part of its sandbox.

UnionBank said the bank’s continued collaboration with the Bangko Sentral ng Pilipinas (BSP) has allowed it to provide Filipinos with innovative solutions in line with all applicable regulations.

“In the bank’s continued quest to cater to the evolving needs and tastes of customers, including clients who use virtual currency, the ATM will provide these clients an alternative channel to convert their pesos to virtual currency and vice versa,” it said in a statement.

Cryptocurrency is a type of virtual currency that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. Bitcoin is the first and most popular cryptocurrency to date introduced in 2009

Following the rise in the use of virtual currencies for payments and remittances in the Philippines, the BSP established a formal regulatory framework for virtual currency Exchanges through Circular 944 dated Feb. 6 2017.

The circular requires virtual currency exchanges to register with the BSP as remittance and transfer companies. These exchanges are also required to put in place adequate safeguards to address the risks associated with virtual currencies, including control measures to counter money laundering/terrorist financing, technology risk management systems, and consumer protection mechanisms.

Earnings of UnionBank slipped 13.1 percent to P7.32 billion last year from P8.42 billion in 2017 amid the double-digit increase operating expenses as well as change in reporting standards.

Edwin Bautista, president and chief executive officer at UnionBank, said P1.2 billion in retained earnings did not pass the fair value changes recognized in profit or loss due to the shift to the Philippine Finance Reporting Standards 9.

Bautista said the listed bank has been posting returns over the past three years, while making major investments in technology and people.

According to Bautista, 2019 would usher the third phase of the digital transformation journey by scaling up the touchpoints through enhanced features in the mobile app as well as the roll-out of more The Ark branches.

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100X Bitcoin Leverage: PrimeXBT Platform Goes LIVE!

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Today signals a turning point in global cryptocurrency markets and the direction that the sites supporting them are taking, as the doors to one of the world’s most sophisticated new trading platforms swing open, and a waitlist of over 150,000 traders from 175 countries around the world are finally able to see what all of the hype has been about.

PrimeXBT won’t be competing with existing crypto-asset exchanges – instead they’re positioned to use technological foresight and connections within the industry to be dominant, both in the retail and institutional sectors of the market. 

This comes in no small part from the powerful combination of advanced functionality and strategy-driven options, such as leverage-trading of up to 100x, the ability for traders to short-sell cryptos and by providing aggregated liquidity from 12 separate providers, concurrently and instantaneously.

By providing this functionality-suite initially for Bitcoin, Ethereum, Ripple, Litecoin and EOS, opportunities to short-sell Litecoin or to leverage EOS at 1:100 are uniquely available now on PrimeXBT.  With the addition of many more crypto-assets planned, the potential to enact similar trades on an even broader range of assets will be possible over the coming months.

Unsurprisingly, much of what has already been publicized about PrimeXBT in the lead up to today’s launch outlines the creation of a trading toolset more closely in alignment with large traditional asset trading platforms. 

While only a tiny minority of crypto-based exchanges allow traders to leverage trade assets like Bitcoin or Ethereum, and even fewer provide the ability to short-sell during bear conditions, PrimeXBT has embraced the mantra of selecting and combining the widest range of options available for traders to-date.

12

Advanced Features Providing Traders with a Competitive Edge

Incumbent crypto-asset platforms have been slow to realize the market demand for modern features that are suitable for a growing user-base, consisting of ever more sophisticated investors.

Where once simple functionality was enough for a new and developing industry, explosive adoption throughout the past few years and the potential for 2019 to be the biggest growth year yet has seen a maturation of typical trader and the strategies being used.

This, coupled with a move by hedge funds and other institutional traders into crypto-asset markets recently, has created the clear need for next generation trading platforms offering features in-sync with higher-powered trading strategies.

PrimeXBT has taken this challenge in its stride, bucking the trend to produce yet another cookie-cutter exchange, and dramatically superseding what has come before by tailoring a feature-driven interface for modern traders:

  • Fluidly-adjustable leveraging from 1:1 up to an industry-leading 1:100
  • Mechanisms provided for short-selling, not only for BTC pairs, but for ALL assets.
  • Instantly-available volume aggregated from 12 providers simultaneously, ensuring optimal price-acquisition and mitigating against slippage.
  • Lower trading fees than any other major trading platforms, with early-adopters securing fees at ¼ of the cost of trading at Bitfinex.
  • A wide range of specialized order types, including stop-loss, OCO (one-cancels-the-other) and protection orders.
  • The complete removal of any KYC requirements, and anonymous sign-up using an email alone, all within less than 1 minute until accessing trading accounts.
  • Unlike many other platforms, deposits can be made in fiat and cryptocurrencies via Changelly’s integration with PrimeXBT systems.
  • Easy-to-use and easy-to-customize professional user interface, providing multi-screen support, advanced charting software and a comprehensive walkthrough tutorial.
  • Robust financial-industry-grade security protocols, utilizing cold-wallet storage, address whitelisting, cryptographic password hashing and 2-factor authentication as standard on all accounts.

Any one of these features provides greater power to develop profitable strategies – when combined together, they provide the unprecedented ability to access crypto-asset markets with a versatile and comprehensive toolset.

The value of the addition of a broad range of functionality isn’t in the functionality itself, but in the new and untapped opportunities that are provided for traders and investors.

A Unique Feature-Set Facilitating Unique Opportunities

Professional traders understand that opportunity predominantly falls within outlier situations, away from the pack, and by discovering and developing an edge over competitors using any resources available.

What are some of the edge-case opportunities open to the 130,000-strong army marching into PrimeXBT today?

Ability to Short and Leverage ALL of the 6 largest-marketcap cryptocurrencies

No other platform in the world provides the distinct opportunity to generate returns on the top 6 cryptocurrencies, irrespective of market conditions. While shorting is commonplace in traditional markets, PrimeXBT provides the cryptocurrency industry’s widest selection of high-liquidity shortable pairs. 

When combined with the ability to leverage trades at a rate of up to 100 times the initial deposit amount, opportunities that would not be possible otherwise and that have the potential to yield incomparable ROI’s, are available exclusively at PrimeXBT.


Lower fees exposure opportunities in High-Frequency Trading (HFT)

Advanced strategies such as arbitrage and market-making use the cost of platform fees as a determining factor to profitability, and the potential to execute on a particular trader. 

By providing a fee structure lower than other major platforms, PrimeXBT allows traders to customize HFT strategies to include trades that would typically be unprofitable at higher-fee exchanges.

Simultaneously-Opposing Trades Allows for Advanced Risk Management

PrimeXBT provides the unique ability to hold opposing positions concurrently on any given trading pair.  Instead of being forced to enter naked positions with full risk if the trend moves against them, traders are now able to develop strategies that incorporate hedging by placing weighted trades in the counteracting direction.

While features such as leveraging are undoubtedly powerful, the true power lies in developing leveraged positions with calculated risk management utilizing hedging for safety.  This functionality reflects PrimeXBT’s goal to provide professional trading tools to beginners and experts equally.


Instant Access to PrimeXBT – the Time for Waitlists is Over

After months of anticipation, registrations and preparation.. PrimeXBT is now LIVE!

Tens of thousands of new users are logging into their new accounts following the lead up to today’s launch event.  But to get your first look at the platform’s features and user interface, there’s no need to join the back of a waitlist.

Be one of the first to experience the power of PrimeXBT at https://PrimeXBT.com, and for your chance to earn from the wave of new users signing up in the coming months, be a part of the highest-paying crypto platform referral program at https://PrimeXB.com/referral/.

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Cryptocurrency Platform Chimpion Announces Support for Binance

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Chimpion announced that its platform will support Binance Coin (BNB) as a payment currency and that it will be launching BNB Avenue, a BNB-exclusive online marketplace.

BNB Avenue will be built on the Chimpion e-commerce platform and will give consumers around the world access to products from top online marketplaces, similarly to BCD Bazaar, which was launched by Chimpion sponsors Shopping Cart Elite and the Bitcoin Diamond Foundation. Like BCD Bazaar, BNB Avenue not only gives merchants a chance to easily adopt cryptocurrency, it also empowers customers from all over the world to purchase or request a variety of products that may have not been available via fiat currency.

While most popular marketplaces operate in fiat currency, BNB Avenue exclusively supports Binance Coin (BNB), making it easy for shoppers all over the world to purchase coveted products. All Chimpion stores will now have the option to accept BNB payments, giving BNB holders even more options when they buy and sell online.

Binance was launched in 2017 by Changpeng “CZ” Zhao and experienced extremely rapid growth within its first six months. As of January 2018, Binance is the world’s largest cryptocurrency exchange with nearly $1.5 billion daily trade volume. After the successful launch of the Binance exchange, the company launched its token coin, Binance Coin (BNB), which has since reached a market capitalization of $1.3 billion.

With Binance Coin’s high profile in the crypto market and Chimpion’s robust e-commerce platform, BNB Avenue presents BNB holders with a practical way to use the currency.

About Chimpion

Chimpion is a cryptocurrency e-commerce platform that enables any merchant to begin accepting cryptocurrency payments online. By holding Chimpion’s Banana Token (BNANA), merchants can gain access to Chimpion’s robust crypto e-commerce platform for free, without needing to pay a monthly subscription fee. Chimpion was developed using technology from Shopping Cart Elite, Paytomat and Bitcoin Diamond (BCD) and combines comprehensive e-commerce features with convenient payment processing.

Chimpion’s primary goal is to drive the adoption of cryptocurrency as a payment solution by operating a rich e-commerce platform centered around digital assets. New startups and established merchants alike can become part of Chimpion’s vast network to take advantage of its fast and affordable transactions and user-friendly infrastructure.

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BitTorrent (BTT) Supported by CoinPayments’ Cryptocurrency Payment Gateway

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BitTorrent Inc., a leader in peer-to-peer protocols and products, announced that CoinPayments now supports BitTorrent (BTT), enabling millions of customers to use BitTorrent (BTT) to purchase goods and services from hundreds of online merchants.

BitTorrent, which already works closely with CoinPayments to accept TRON (TRX), Bitcoin (BTC), and Binance (BNB) for its premium products, today announced that customers can also pay in BitTorrent (BTT). One-year subscriptions for BitTorrent and µTorrent plans offer file conversion, streaming in HD quality and protection from virus and malware.

“Coming this summer, BitTorrent Speed will be implemented into our popular Windows-based µTorrent Classic client to create a healthier ecosystem and a foundation where content creators can distribute their work directly across the web,” said Justin Sun, founder of TRON and CEO of BitTorrent. “In advance of this highly anticipated release, we look forward to working with CoinPayments and other partners to make BitTorrent (BTT) liquid in the online marketplace before BTT is fully integrated into our desktop and mobile products.”

Users who are interested in receiving real-time updates about BitTorrent Speed, BTT, and upcoming product launches can follow the company’s official social media channels on FacebookTwitter, and Telegram.

About CoinPayments
Founded in 2013 CoinPayments now supports payments for bitcoin and over 1,000 altcoins for 2.3 million business and user accounts across 182 countries. Its platform offers prebuilt plugins and integrations for all the major ecommerce platforms, including Shopify, Woocommerce and Magento. With hosted wallets, conversion and fiat settlement functionality, CoinPayments leads the way in furthering the adoption of cryptocurrencies.

About TRON and BitTorrent, Inc.
Founded in 2004, BitTorrent, Inc. is the largest decentralized peer-to-peer network in the world, with over 100 million active users driving 22% of upstream and 3% of downstream traffic globally.

TRON is dedicated to creating a boundary-free internet that inspires innovation across industries. TRON, one of the largest blockchain protocols, offers high throughput, high scalability, and high availability for all Decentralized Applications (DApps).  The ecosystem is governed by Super Representatives and the community.

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