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More thoughts on custody; Bitcoin dominance peaking

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Satoshi&Co Daily Crypto Newsletter

May 9 · Issue #173 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website www.satoshiand.co

(Listen to our latest podcast here. It is with Dhruv Bansal of Unchained Capital, and it is proving to be a sleeper hit! In case you just want to read the summary notes, you can find them here).
Yesterday’s post on custody kicked off a debate; A couple of readers pointed out the irony of something as centralized as custody being critical to the growth of the decentralization revolution.
To be honest, that argument captures only part of the picture. Those crying out for custody are basically traditional institutions that are using legacy frameworks to evaluate crypto primarily as an asset class. Even If you are a fund manager that completely believes in crypto and decentralization and are comfortable with Metamask and DEXs and various type of wallet solutions and all that, if you ever want to raise capital from a large institution (pension fund, endowment etc), you are bound by the strict rules that govern these LPs. And one such iron-clad rule is third-party custody with one of the big custodians of Wall Street. Come to think of it, just like the ratings business, custody is another that owes its existence solely to regulations and policies and laws.
Cryptocustody is an exciting, evolving field, and in addition to exchanges, also overlaps with the DeFi stack. Fully decentralized custody is still some distance away, but efforts like Anchorage are hugely promising.
Binance hack? Water of the BTC duck’s back. Possibly aided by the fiasco of Tether being undercollateralized and the subsequent flipping of Tether into BTC, the price of Bitcoin has surged upwards by more than 20% in the past few weeks. Normally, you would expect altcoins to mirror Bitcoin’s price movement very closely, as has been the case for most of 2019. However, the recent price rally has taken Bitcoin dominance close to the high levels last seen during the great bull run of 2017. The high levels of Bitcoin dominance could perhaps point towards a bullish market for altcoins, which have underperformed Bitcoin by around 30% in recent weeks. Another reason for bitcoin peaking could be the spate of bullish news coming out from institutions and existing technology giants ( Facebook, IBM, JPMorgan) etc  as we head in to one of the busiest weeks of the year in crypto - Blockchain Week NYC and Consensus Week. Will BTC price move up sharply after that?
Source: coinmarketcap
Source: coinmarketcap
Meanwhile in Crypto Wonderland....
“Facebook’s U-turn On Crypto Ads”
Facebook had implemented the ban on cryptocurrency ads and promotional campaigns related to blockchains and ICOs back in January 2018. It was believed that the ban was to tackle concerns that users may get misled by fraudulent investments and spend their capital on initial coin offerings offered by unreliable cryptocurrency start-ups. However, the announcement itself did not list the reason behind Facebook’s u-turn on such ads. Many speculate that the current development is in keeping with the release of their own virtual asset, motivating them to change their stance on ads regarding cryptocurrency and blockchain on social media.
“Crypto Money-laundering Ring in Spain Nabbed”
Crypto money-laundering ring that was offering its services to other criminal enterprises has been dismantled in Spain. The Crime as a Service operation is believed to have laundered approximately $10.08 million (€9 million) using bitcoin and other cryptocurrencies. Guardia Civil (Spanish Civil Guard) arrested eight people in connection with the crime while charging eight more for involvement. Wallets containing 9 million euros were also frozen. This included 20 hot wallets and four cold wallets.
“New Version of Desktop Mining App for MacOS Users”
HoneyMiner, a desktop-based crypto mining application, has released a new version for MacOS users. HoneyMiner, which launched in July 2018, accesses your CPU or GPU and uses it to mine various cryptos. A central server points the connected machines at a certain target like ethereum, ethereum classic, zcash, monero and other GPU-friendly currencies. The HoneyMiner app takes 2.5% of the proceeds for multi-GPU machines and 8% from single GPU users.
“Mass Exodus on Bitfinex”
An ongoing investigation into iFinex Inc. seems to have caused an exodus of traders out of Bitfinex. An increasing number of users report issues with withdrawing funds from the platform. Moreover, approximately $430 million worth of Bitcoin and Ethereum have exited the exchange’s cold wallets. A sum of approximately 1,094,172 ether valued at $183 million, and 42,645 bitcoin worth $247 million, were withdrawn from the platform following the investigation.
Crypto Twitter Pick
Mohamed Fouda
The year is 2030, the BTC block reward is ~ 1.56 BTC, a custody provider got hacked and 5000 BTC were stolen.

It decides to cut losses and publishes a double spend tx (to itself) with 2500 BTC as mining fee to reorg the chain.

Calculate the reorg probability.
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
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This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.
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