Crypto-digest 05.16: CNET founder backs $50 million ICO for video streaming; Enterprise Ethereum Alliance unveils common blockchain standards; BitLicense refugees: Kraken, ShapeShift CEOs talk escape from New York; Circle becomes ‘Bitcoin Unicorn’ with Bitmain-backed mega-round; Bear revival? Bitcoin risks fall below $8K after 3.5-Week low; Wall Street vet Brian Kelly launches Blockchain ETF.
CNET founder backs $50 million ICO for video streaming
Streaming a TV show or a sports game directly to your laptop doesn’t make big TV networks much money today.
However, that might change if VideoCoin, a new decentralized project that’s taking aim at the price major broadcasters and media companies pay to stream content, succeeds on its vision. When a broadcaster sends out a broadcast over the airwaves, one signal can reach many devices, but when it broadcasts over the internet one signal goes to one device.
“It’s all cost and no revenue,” Halsey Minor, CEO of Live Planet, an immersive video startup, told CoinDesk in an interview at Consensus 2018. Live Planet is a strategic partner in VideoCoin, which announced Wednesday the completion of a $50 million initial coin offering (ICO) entirely through private investment.
Leading investors included Galaxy Investment Partners, Alphabit Fund, ethereum co-founder Anthony Di Iorio, Akamai Co-Founder Randall Kaplan and Science Blockchain. VideoCoin will not be doing a public sale, but a spokesperson for the project said that there will be details about an airdrop to supporters over its Telegram channel in the next two weeks.
“What we’re building is the next-generation infrastructure for how you do video processing and distributed services,” Minor, best known as the founder for the tech media website CNET, said. The plan is to create a platform that allows broadcasters to send their video streams out to unused computer infrastructure, such as server farms that have excess capacity, for processing.
Minor has a track record betting on early technology that faced serious doubts at first. As an early backer of Salesforce, he bet that companies would put their data into the cloud in order to better manage relationships with customers.
Since then, cloud businesses have become enormous and Amazon Web Services has become the dominant force in that space. “I think most people would believe that Amazon Web Services is the last step in computing,” Minor said.
However, by decentralizing computing tasks, Minor believes that there is still more margin that can be shaved off the cost of computing services. He said:
“I believe the blockchain could unleash a highly competitive market on computing in the same way I believed Salesforce could change enterprise software.”
“You don’t need specialized hardware to do video mining,” Minor explained. All computers, even cell phones, come with video encoders built in. That said, Minor doesn’t see as much opportunity in personal devices as he does in data centers.
“For the video part, we’re in very good stead,” he said, citing team members who worked on enterprise streaming solutions. “The hard part is building a very performant blockchain.”
With the completion of the token sale, the company announced it would update its product roadmap and new partnerships support adoption of the open source VideoCoin platform. Halsey said:
“The one use case the blockchain that’s going to work first is the commodification of hardware. It’s perfect for it.”
Enterprise Ethereum Alliance unveils common blockchain standards
The Enterprise Ethereum Alliance announced the release of a common technical specification on Wednesday, fulfilling a pledge the group made less than a month ago at an event in London.
Enterprise Ethereum Client Specification 1.0, unveiled during CoinDesk’s Consensus 2018 conference in New York, comes weeks after Jeremy Millar, a founding board member of the 500-plus-member group, spoke about the importance of common standards as a way to connect development efforts across the enterprise-focused, ethereum-based initiative.
It’s a significant moment for the group, which launched at the start of last year with backing from major corporates like British oil giant BP, Wall Street bank JPMorgan Chase and Microsoft, as well as stakeholders in the blockchain work such as ethereum startup studio ConsenSys, Nuco and BlockApps, among others. CoinDesk first reported on the group’s work in January 2017.
In statements, representatives from the initiative framed it as the result of a months-long collaborative effort between different stakeholders and one that widens access to the software.
Ron Resnick, executive director for the EEA, said of the release:
“The EEA’s Enterprise Ethereum Specification is the result of 18 months of intense collaboration between leading enterprise, technology and platform members within our technical committee. This EEA open-source, cross-platform framework will enable the mass adoption at a depth and breadth otherwise unachievable in individual corporate silos.”
Indeed, Resnick spoke about the work during a recent interview with CoinDesk, pointing to the process as one aimed at connecting the different software clients developed by group members.
“All the ethereum client companies see the need to agree on these building blocks and components and how they talk to each other, because if we don’t, then we don’t have a way to compete against the proprietary solutions,” he said at the time.
BitLicense refugees: Kraken, ShapeShift CEOs talk escape from New York
If you wanted to hear red-meat rhetoric about New York State’s regulatory approach, a fireside chat Tuesday between two of the cryptocurrency industry’s most outspoken leaders delivered.
For example, the audience at Consensus 2018 in New York City cheered when ShapeShift CEO Erik Voorhees invoked a local icon to make the case that the state’s BitLicense was a case of regulatory overreach.
“Here we are two miles from the Statue of Liberty and you cannot sell CryptoKitties in the state without that license. That’s the absurdity of what’s happened here,” he said.
And Jesse Powell, the CEO of Kraken, got some laughs at the expense of former New York Attorney General Eric Schneiderman.
When Scheniderman’s office sent a request for information to Kraken (along with several other exchanges) earlier this year – three years after his company stopped doing business in New York – it felt like “a slap in the face,” Powell said.
But then “it turns out this asshole actually slapped people in the face,” he quipped, referring to the allegations of physical abuse that forced Schneiderman to resign shortly afterward.
Yet between these zingers and applause lines about the BitLicense – which both executives blame for driving their companies out of state – there were subtler points made. The conversation highlighted the challenges facing both the industry and regulators worldwide as governments come to terms with the ramifications of cryptocurrency.
Powell, for example, pointed out the tension between anti-money-laundering regulations and customer privacy protections. In the case of the BitLicense, he said, Kraken would have had to “disclose all the information about our entire global client base to the state of New York.”
That was not only distasteful, Powell said, but “potentially illegal” under the privacy laws of other countries.
“To service New York today, what we’d have to do is create a special purpose entity just to service New York and completely firewall off” all the exchange’s other users to protect their privacy, he said.
Widening the lens, Powell contended that the U.S. “has really failed” by leaving it up to local regulators to figure out how to deal with cryptocurrencies.
“In others parts of the world, it’s an issue that’s being taken seriously by heads of state – presidents, prime ministers. It’s not something that’s relegated to individual regulators at a state level,” he said. “It should be treated as a national economic and national security issue, maybe even an international issue.”
Powell cited Japan’s Virtual Currency Act as an example of “reasonable” regulation. Although the law is “not perfect,” he said, “we’re already seeing an explosion of business in Japan” as a result of the clarity it brought.
Voorhees, however, held up a different U.S. state as an example of how to do things right: Wyoming, which recently passed a package of five blockchain-related laws.
The two most important ones, in his view, were a law that excludes tokens from being automatically categorized as securities, and another that excludes digital asset companies from being automatically classified as money transmitters.
“That’s the model people should be looking at, they’ve done it the best,” Voorhees said.
And despite using the phrase “statist oppression” early in the conversation to describe his feelings about New York when the BitLicense was created, Voorhees later clarified that he thinks regulators generally have good intentions.
But their aims can be met today by means other than imposing bureaucratic, bank-style regulations on businesses that want to be nothing like traditional financial institutions, he argued.
“The crypto industry and regulators can find common ground in realizing that this incredible new technology can achieve many of the noble goals of the regulators such as protecting consumers,” Voorhees said.
Ultimately, though, the two executives depicted cryptocurrency as a highly mobile activity that can easily relocate when any jurisdiction starts to appear heavy-handed.
Powell said Kraken’s main office is located in San Francisco only as a convenience because that’s where he lived when he started the company. Crypto businesses can basically pick up and move anywhere in the world they want to be, he said.
And users need not always move to another place, use a VPN to mask their IP address or even break the law to get around restrictions; Powell shared a tip for New York residents who feel deprived because of the way the BitLicense has limited their cryptocurrency trading options.
“If you’re here stuck in New York and you can’t trade how you want to trade, set up a Wyoming LLC and you can trade through that and have your business trade for you,” he said.
Further limiting regulators’ power, Powell said, the rise of decentralized exchanges will give users even more alternatives.
“If they can’t do what they want on Kraken they’re doing to do it on a decentralized exchange,” he said.
And Voorhees said “regulatory hopscotch” by exchanges and other businesses that move from one country to another is only a symptom of a broader phenomenon that won’t easily be resolved.
“Bitcoin basically broke down the borders of how value moves across humanity. There is no way that an invention like that doesn’t run straight into the jaws of regulations. And that conflict is going to be one of the great themes of my lifetime.”
Circle becomes ‘Bitcoin Unicorn’ with Bitmain-backed mega-round
The ‘bitcoin unicorn’ club now has another member.
Announced Tuesday, Circle has closed a $110 million Series E fundraising, a figure that effectively values the startup at nearly $3 billion, according to figures from the company. Led by China-based mining outfit Bitmain, the round includes support from Accel, Blockchain Capital, Breyer, Digital Currency Group, General Catalyst, IDG, Pantera and Tusk Ventures.
With the funding, the company is also revealing an ambitious plan to bolster its products and services by launching a “US dollar coin,” or a blockchain native asset that would be both regulated and backed by real government currency, through its affiliate CENTRE project.
In this way, Circle CEO Jeremy Allaire framed the round as one that helps it position itself as a true conglomerate of cryptocurrency services, as opposed to just an exchange or payment startup, both characterizations having been given to the company in the past.
Allaire told CoinDesk:
“A core part of vision is open-protocols that would enable the free movement of value. A real critical piece is there has to be open, interoperable standards for our how fiat money can move over blockchains. That’s where fiat stablecoins and payment protocols come into play.”
More than a technical novelty, Allaire positioned the stablecoin project as essential to Circle’s maturation and continued expansion, painting it as integral for its mobile payments application, its over-the-counter (OTC) trading business and its exchange service.
The launch also comes at a time when Silicon Valley investors have shown a preference for investments in such products, owing to the massive role stablecoins play in facilitating global cryptocurrency exchange and the perceived issues with today’s market leaders.
It’s this vision, Allaire said, that made Bitmain, the controversial cryptocurrency mining giant, a natural fit to lead the funding round.
As recently as March, Bitmain co-CEO Jihan Wu had made appearances at major U.S. conferences where he vowed to back high-tech alternatives to central banking.
“Jihan is a visionary and he is a visionary for changing the global financial order,” Allaire said. “They believe in the long-term potential of Circle.”
All told, the funding will also help boost staffing at Circle, which today employs more than 200 employees globally in locations including Boston, San Francisco, Dublin, London, Paris, Madrid, Hong Kong, Beijing and Shenzhen.
A new twist on stablecoins
But while Circle’s funding round and valuation are likely to grab a majority of headlines, it’s perhaps its launch of a US dollar cryptocurrency initiative with participation from Bitmain that may most impact the crypto market.
As noted by Allaire, the play is a strategic one that finds Circle taking aim at one of the most important elements of the crypto economy.
“It’s a big piece, as we acquired Poloniex and Poloniex was a crypto-only exchange,” Allaire explained. “The way people have handled fiat on an exchange like that has been through something like Tether, and we see a lot of weaknesses and challenges with Tether.”
Indeed, Allaire isn’t alone, as many commentators have sought to position Tether as a systemic weakness that, through its affiliation with the troubled exchange provider Bitfinex, a company that has struggled with regulatory issues, threatens the integrity of the market.
Yet, it’s important to note that Circle will be seeking to take an open approach to its USD-C token, framing it as an open-source project with a more robust governance model.
The vision is that regulated financial institutions, whether they’re a crypto exchange or a money transmitter, would be authorized by CENTRE to become issuers of stablecoins, and that many issuers could offer and manage different fiat-backed cryptocurrencies.
“Circle can be an issuer of US dollar coin, Square could be an issuer. If I got US dollar coins from Circle, I could transmit those to another digital wallet for an issuer,” he explained.
A foundation for payments
But if all the conversation about exchanges and crypto-plumbing lead to perceptions that Circle is straying from its more consumer-focused products, Allaire was quick to push back.
Rather, Allaire suggested that bolstering the exchange and fiat cryptocurrency ecosystems globally only strengthens products like its original mobile money application, enabling that product to work more effectively at scale in accordance with its original vision.
“To realize the vision for ubiquitous payments, we need there to be currencies that can be stored, settled and used,” Allaire continued.
With the funding, the company is also publishing a new white paper on its stablecoin work, as well as an FAQ that will seek to educate others on they can engage in this new market Circle hopes to steward.
Of note in these materials is that all USD-C tokens will be issued on ethereum, a notable detail given the platform’s issues in scaling to support its current diversity of users. (The company said more announcements on the project are expected this summer).
Still, the overall message was that this is an effort to bring an opaque offshore market back into the regulated cryptocurrency economy, as Allaire said CENTRE will require members to undergo compliance and balance sheet audits to ensure assets are properly backed.
In this way, Allaire summed up his message succinctly, dismissing existing market alternatives as nothing more than clever “regulatory hacks.”
“The CENTRE model is out in the open in a regulated context with real banking connectivity and that’s really based on an open standard.”
Bear revival? Bitcoin risks fall below $8K after 3.5-Week low
Bitcoin’s (BTC) bears have unraveled the minor rally in prices since Saturday and are now looking to pull the cryptocurrency below the $8,000 mark, the technical charts indicate.
The bears’ comeback comes after bitcoin saw minor gains after the May 12 low of $8,204, but the bulls repeatedly failed to cut through the key falling trendline hurdle. As a result, bitcoin fell to a 3.5-week low of $8,100 on Bitfinex earlier today.
As of writing, BTC is changing hands at $8,366 – down 4.7 percent in 24 hours.
The above chart shows that bitcoin has dipped below the 50-day moving average (MA), currently located at $8,290. As discussed yesterday, a close (as per UTC) below the 50-day MA would signal resumption of the sell-off from the recent high of $9,990 and could yield deeper sell-off to $7,800.
The rejection at the descending trendline hurdle and a drop to $8,100 has reinforced the bearish view put forward by the short-term moving averages (5-day and 10-day), which are sloping downwards in favor of the bears.
The retreat from $8,884 to $8,100 has also established a falling top (lower highs pattern) – a (you guessed it) bearish setup. While the 10-day MA has crossed the 100-day MA from above (bearish crossover), and the relative strength index (RSI) is also biased bearish (below 50.00 and falling).
As a result, there is a high probability that bitcoin will now go on to close today (as per UTC) below the 50-day MA and confirm a bear revival.
The bad news (for the bulls, at least) continues in the 4-hour chart. The downside break of the expanding channel (bearish breakdown) indicates the sell-off from the May 5 high of $9,990 has resumed and could yield a drop to $7,524 (target as per the measured height method).
Note, the major moving averages (50, 100 and 200) are sloping downwards (bearish).
BTC will likely close below $8,290 (50-day MA) today and confirm a bear revival.
The cryptocurrency looks set to test support at $7,787 (61.8 percent Fibonacci retracement of the rally from April 1 low to May 5 high) and could go as low as $7,524 (expanding channel breakdown target) in the next 24-48 hours.
An unexpected break above $8,884 would abort the bearish view.
Wall Street vet Brian Kelly launches Blockchain ETF
Investment manager Brian Kelly is launching a new blockchain startup-based exchange-traded-fund (ETF), he announced Wednesday.
Working in partnership with REX Shares founder Gregg King, Kelly will actively manage a portfolio of roughly 30 companies actively using blockchain technology and matching one of four general criteria, he told CoinDesk. The fund will support firms from the seed stage onward.
He told CoinDesk:
“When I look at the investment landscape, to me blockchain and cryptocurrencies are a once-in-a-lifetime investment opportunity … if I look at every other asset class, to me the most attractive investment is blockchain and cryptocurrency. The growth is explosive [and] the potential is enormous.”
The four criteria, or “pillars,” include enterprise blockchain, or companies using the technology to streamline existing business processes; “Wall Street disruptors,” that is, services changing how securities are traded (such as Overstock.com’s tZero exchange); mining focused entities; and exchange firms and startups creating a decentralized internet, he said.
Further, the fund will evolve over time, Kelly said, noting that “this is an active ETF [so] we’ll be able to add companies to the space.”
While right now the fund may be invested in some enterprise companies, he believes that “over time we might become 100 percent pure play,” or entirely invested in blockchain-specific startups.
That said, the ETF will not be invested in any cryptocurrencies directly, he added – rather, it would be invested in companies with regulated security offerings.
The fund will be open to anyone who has a U.S. brokerage account, he noted, including investors who reside outside the country. A person does not have to be an accredited investor to participate.
Kelly cited the progress companies have made in developing blockchain technology over the last year as the reason for the ETF, saying that firms were “finally getting some revenue from blockchain and cryptocurrency. Even a year ago you had a few who were doing it, but they didn’t have significant revenue streams.”
Now, with some companies even receiving bank financing, Kelly expressed confidence that he could “put together a diversified portfolio.”
Neither is Kelly worried about the volatility seen in cryptocurrency markets. Although his ETF will be invested in companies working with various crypto assets, he said:
“With all investments obviously there’s risk, and the volatility of bitcoin versus equities can change, historically bitcoin has been volatile. That being said we don’t know what the future holds – as more people and more investments come into cryptocurrencies those potentially could actually become less volatile.”