Investment Specialist: “The Market will Take Time to Digest the 2018 Meltdown”

Andres Chavez
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Investment Specialist: “The Market will Take Time to Digest the 2018 Meltdown”

The crypto markets have been showing a bearish behavior for quite some time now: the last big surge started in December 2017, and everything from January 2018 to this point has been either decline or a notorious inability to swiftly recover. Bitcoin, for example, went from being worth more than $19,000 a year ago to the $3,500-$3,600 range today.

In order to re-establish its value, several things need to happen. Awareness needs to keep growing for cryptocurrencies and blockchain to reach a truly worldwide status, and institutions need to invest heavily for the market to have a chance at a long-awaited revival.

Patrick Springer, a former Morgan Stanley managing director and current advisor for Polybird Exchange, explains that Wall Street companies will only adopt aspects of blockchain if they see specific conditions fulfilled. Among them are enough demands from their clients, cost savings, and market share chances.

Suffering the Consequences of the Collapse

“The demand for bitcoin futures and ETFs by core institutional investors has still not been determined yet,” Springer told a recognized crypto news site. “The damage from the crypto meltdown in 2018 plus the numerous regulatory issues will take time for the market to digest.”

He also states that “incumbents in trading, settlement, and payments already have such large market shares and current systems are reasonably efficient for existing uses that there is not a lot of incentive to be an aggressive first-mover.”

One needs to wonder why would a person or an entity enter the blockchain universe amid the current chaos when it comes to the primary crypto assets’ price. Springer, however, defends these investment opportunities and he says that blockchain-based securities are for real. “There is increasing confidence in stablecoins, and there will be new types of blockchain securities for investors to look at. Tokenized assets, meaning digital tokens of real assets will begin, creating opportunities in many different types of asset markets,” he observes.

The Tokenization of Assets

With decades of experience working with institutional investors, Springer is an authorized source. He expresses full confidence in a change for the best, and identifies the tokenization of assets as a primary reason behind that. “Institutional and accredited investors will be attracted to an emerging asset class of tokens that provide ownership interests more easily or provide streams of income in a secure manner. Over time, bulge bracket players will look to provide investment solutions for their clients. Fidelity’s commitment and movement in the space is something to keep an eye on.”

Springer spots digitization of equities as the real game-changer for the current financial landscape. “There is an enormous opportunity to make different types of real estate investments available to more investors — and at the same time to make more financing channels available to real estate developers of all sizes.”

He emphasizes that the process of digitally encrypting every element that a smart contract should exercise governance will be of great help in decreasing market frictions. “Listing titles, licenses, and others on a global marketplace where more investors can evaluate, value, and transact more seamlessly will lead to better capital allocation and a more efficient economy.”

Other experts and authorized voices around the community have provided their opinion on the market. For example, Anthony Pompliano, from Morgan Creek, has said that “every asset in the world will be tokenized,” and has listed equity in public and private companies, real estate (personal and investment,) debt funds, venture funds, high value collectibles, and public infrastructure projects as some of those elements.

By Andres Chavez

Harvard and Levis Strauss Formed an Alliance to Create a Security System Based on Blockchain

Maria Rodríguez
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Harvard and Levis Strauss Formed an Alliance to Create a Security System Based on Blockchain

The US Department of State financed the development of the blockchain system that the clothing company will use

Harvard University and the renowned American clothing company Levis Strauss & CO, announced on Thursday, January 24th, through a press release, that they made an important alliance in order to develop a system to improve health and the safety of the human personnel who works in the factories.

The proposal was designed jointly, in addition, with a group of experts from Think Tank New America, to carry out the development of the system and the platform on which the blockchain system will be sustained.

The system that these companies seek to implement since this year aims to replace, consequently, the antiquated system of health and safety audits which operates in the companies, this in order to improve the working conditions of the personnel and increase the effectiveness and productivity of the companies. In practical terms, the system will assemble a report structure which evaluates, step by step, the controls that are conducted in a common audit.

Dr. Eileen McNeely, Director of the Health and Sustainability initiative T.H. Chan of Harvard University, recently told the media that these processes were previously done manually and with margins of error that can be improved. “Over the last 25 years, work in supply chains has been monitored mainly by audits. A distributed query system on the blockchain that goes directly to the source offers a new solution”, she said.

According to the press release, it was learned that the alliance and the launch of this system will be used for the first time in three clothing factories of the company Levis Strauss & CO, currently operating in Mexico.

The first pilot of this new audit process based on blockchain technology will be implemented at the beginning of the second quarter of this year 2019, and will continue the process of testing and use for next year. These factories located in Mexico will be the first ones to use the system, which will place an annual survey prepared by more than 5,000 employees of the company in a system supported by blockchain.

About the survey that will be installed in the system, it was discovered that it was built and designed by the School of Public Health T.H. Chan from Harvard University. This survey will use indicators that were carefully studied. In addition, Allison Prince, Executive Director of New America’s Blockchain Trust Accelerator, added that system security is a strong advantage when commenting that the results of the blockchain survey “will never be manipulated”.

According to the local media report, the blockchain that will be used in the system will be provided by ConsenSys, a blockchain company mainly founded by Joseph Lubin, one of the people in charge of Ethereum (ETH).

The company is going through difficulties that have affected its operations and its intellectual and technical personnel, which has led the company to make layoffs of up to 10%. It is hoped that these initiatives will reverse the situation and achieve positive changes.

By María Rodríguez

The Polkadot Project Aims To Raise another $60 Million through an ICO

Andres Chavez
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The Polkadot Project Aims To Raise another $60 Million through an ICO

Despite renewed efforts to regulate them worldwide and a decline in popularity since their “boom” in 2017, Initial Coin Offerings remain a highly efficient way to raise funds for a blockchain project if certain conditions are met. And if the team has a solid plan, exciting objectives, and a clear path to reach them, investors can become interested in a hurry.

Polkadot, a famous blockchain-based project that has already hosted a fairly successful Initial Coin Offering, is planning to raise more money through another ICO. The reported goal this time would be $60 million, according to a report from a recognized publication of The Wall Street Journal.

The Wall Street Journal cites “people familiar with the matter” in its piece, published on Thursday, January 24th. Through the scheduled funding project, Polkadot is planning to increase the value of its associated tokens to approximately $1.2 billion, including those that are not in circulation.

A Blockchain Interoperability Protocol

The Polkadot blockchain project is a very well-known proposition in the industry because it managed to rise over $145 million in a successful token sale performed in October 2017. However, some issues halted the progress soon after: Ether tokens worth around $98 million were frozen because of a bug in Parity wallets. The team stated back then that “our ability to build Polkadot as planned and to the original timetable has not been affected.”

Polkadot’s initial proof of concept (PoC) went live in May 2018, a solid eight months ago. Gavin Wood, a famous name in the crypto community because of his role in the foundation of Ethereum, is the project’s developer, while Parity Technologies and Web3 Foundation own the initiative, known for being a blockchain interoperability protocol.

Through the development of the Polkadot platform, Wood is reportedly eager to make blockchains “talk to each other.”

An Exciting, Empowering Governance Model

The Polkadot platform has the task of allowing blockchains to communicate and interact with each other and enable upgrades automatically without hard forks involved. Token holders are the entities in charge of making decisions within the ecosystem, according to its governance model.

The Polkadot project has, like all crypto-related projects, a native, associated token. In this case, it goes by the name of DOT, and it allows its holders to have a vote on prospective changes in the code, which would mean automatic upgrades throughout the network in the case that a consensus is achieved.

Aiming for the Q3 of 2019

The official launch of the blockchain-powered Polkadot network is currently scheduled, tentatively, for 2019’s Q3 (third quarter,) according to the owning companies Parity Technologies and Web3. The crypto community is patiently waiting.

Parity is known for its involvement in a wide array of blockchain related projects and tools. For example, it had a vital role in the launch of the Substrate platform, a venture that not only is integrated with the Polkadot protocol, but can also help users create customized blockchains for dApps, or decentralized applications.

By Andres Chavez

Italian Senate Presents Amendment to Legalize Smart Contracts

Maria Rodríguez
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Italian Senate Presents Amendment to Legalize Smart Contracts

The objective is that smart contracts have the same legal validity as physical contracts. The technical regulations will be established in no more than 90 days

Through an amendment approved this Wednesday, January 23rd, the Italian Senate incorporated the concepts of “technologies based on distributed records” and “smart contracts” into its legal framework. The amendment to regulate the blockchain industry is called “Decreto semplificazioni” and represents the first regulatory attempt of this type in that European country.

According to the official information, the Constitutional Affairs and Public Works commissions of the Italian Senate approved the modification of the Simplification Law Decree to incorporate these concepts in it. This would be the first step that Italy takes to grant legal value to digital registers based on distributed accounting or ledger technology and smart contracts themselves.

The amendment also provides basic terms for the industry, such as Distributed Ledger Technology (DLT), as well as definitions of what smart contracts are, according to the document published on the Senate’s website.

The document states that any digital record based on blockchain technology may be legally validated at the time of registration, because these protocols produce the legal effects of other means contemplated in Italian law, such as physical contracts or electronic validation.

The Procedure

After the decree receives approval from the first committees of the Italian Senate, it must now be approved by the Italian Parliament and get the support of the Chamber of Deputies and the Senate of the Republic.

Once the decree is approved, it will become law, although, for the time being, the Agency for Digital Italy, which is the technical agency of the President of the Council of Ministers, must define the technical part of the legislation, within a period not exceeding 90 days.

Fulvio Sarzana, an expert blockchain spokesman for the group created by the Minister of Economic Development, commented on the initiative that Italy could try to legalize all transactions using distributed accounting technology to eliminate intermediaries in centralized institutions.

“The objective is to have the possibility of giving a legal value to a transaction which uses a distributed and computerized electronic record, without going through notaries or central certification bodies”, said the lawyer, adding that this new rule “grants a contract automatically executed by an IT program (Information Technology) the legal value of a normal contract, written and signed”.

An Advance in Europe

In December 2018, Italy became one of the seven countries of the European Union which urged the promotion of blockchain technology and its applications in the region.

Also, Italy became the 27th country to sign a declaration to create a European Blockchain Alliance and, in this way, to cooperate with the development of this technology in its jurisdiction.

These changes come from September 2018, when the Italian government joined the European Blockchain Association, after having maintained a cold stance about cryptoactive technology. According to the Minister of Economic Development, Luigi Di Maio, Italy joined the association in order to exchange experiences in the technical and regulatory field of this technology.

Since January of this year, a group of experts in cryptoactive technology, promoted by the Italian Ministry of Economic Development, some government strategies in this area, which will be sent to the European Commission to build a normative frame of reference for the entire region.

By María Rodríguez

$60-million Blockchain Project Cuts off 60 Percent of Its Staff Due to the Market Collapse

Andres Chavez
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$60-million Blockchain Project Cuts off 60 Percent of Its Staff Due to the Market Collapse

The market has not been kind or pretty for Bitcoin and altcoins for the last year. For the former, going from $20,000 to all the way down to less than $4,000 has affected every sector of the cryptocurrency industry, including blockchain projects based on a digital asset. And as the market still shows a volatile behavior, it is not clear what the future may hold.

The present is harsh, to say the least, to the company managing the Nebulas blockchain project. Although the crypto market collapse is not the only reason explaining the latest developments, it is among the primary ones: the firm just cut its team from 80 people to only 30, according to a specialized crypto news site.

50 People Lost their Jobs

It is a 50-people cut, which represents a 60% of the staff. Nebulas made headlines in August 2018 because it chose to delay its token distribution decisions and announced that it would hold onto founders’ coins for a decade.

Sadly, Nebulas has suffered the harsh reality of the crypto markets these days and has been forced to implement some changes, mainly layoffs of peripheral, non-vital elements to its roadmap, until its NAS token shows signs of life, which is far from a sure thing given the current state of the industry.

According to Becky Lu, which is the spokesperson for the company, “one of the reasons was the market price kept going down.” The statement was offered to the same crypto news site that reported the cut in staff members.

NAS’ current market cap is around $25.7 million at the moment of writing this article. The protocol behind NAS is supposed to measure and score other blockchains. The NAS token opened at $2, but is now exchanging hands at a fraction of that price: a little over a quarter of that. It is no longer a top 100 cryptocurrency.

According to Lu, the dismissals began last year, mostly in Beijing, which is where the vast majority of the team provides its professional services. The bear market has forced Nebulas to tighten its strategy.

“Another reason we decided to cut off the unimportant projects like third-party wallets [was that they are] not core to the main tech visions mentioned in the [Nebulas] white paper. So the dev team of that project was first impacted,” she stated.

A Global Phenomenon

The Nebulas case is just the latest sign that the current bear market is severely affecting not only cryptocurrencies, but other blockchain-based industries as well. Similar scenarios have presented themselves in companies such as ConsenSys, Bitmain, ShapeShift, and BlockEx. However, Nebulas’ 60 percent staff cut is among the most extreme reported in recent times.

The most noteworthy aspect of the mass dismissal is that just seven months ago, the team managed to raise more than $60 million on its token sale. Nebulas has even launched incentive programs for members of the community and developers alike, showing steady progress. It has published a tool to measure the quality of data on blockchains, named NOVA testnet.

According to Lu, there is still enough “runaway” for a couple of years. “Now that the team has accomplished most of the tech development, the main job for this year is to build up the community government and consensus to achieve full decentralization,” she concluded.

By Andres Chavez

Dutch Financial Authorities Plan Licenses for Exchanges

Maria Rodríguez
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Dutch Financial Authorities Plan Licenses for Exchanges

Regulators ask for international cryptographic rules to be implemented. In the Netherlands there are less than 30 cryptographic service providers

Pete Hoekstra, Minister of Finance of the Netherlands, received official advice for the introduction of a licensing system for cryptocurrency-related services, including exchange offices. This was announced through press releases and official information in that country.

This new system that the Dutch authorities wish to raise will require companies to provide information about their customers to the authorities in the country. In addition, cryptographic exchanges and wallet providers should monitor their clients’ transactions and inform the authorities about suspicious activities.

The purpose of the license plan is to prevent money laundering and terrorist financing since it happens on several occasions, affecting to customers and different countries in Europe are working against money laundering.

De Nederlandsche Bank (DNB), which is the nation’s central bank, and the Netherlands Authority for the Financial Markets (AFM) published a report, in which they suggest that providers of custody and exchange solutions fiat to cryptoactive currencies must have a license, “due to the risks of financial crimes”.

The statement explains that “these risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures provided by the Fifth European Anti-Money Laundering Directive (AMLD 5)”.

The two authorities said they are recommending the licensing regime instead of a registration system because it allows for “premarket entry assessment” to know if the parties involved can comply with AMLD 5 rules.

According to these institutions, doing only a registration regime, on the other hand, would be “less effective” since it only allows a “limited substantive evaluation” of these parts. For this reason they ask for other ideas.

Road to the Crypto-Adoption

In August, an executive of the Dutch central bank declared that cryptocurrencies are not recognized as “real money”, but that the bank has no plans to ban them. However, the Dutch authorities currently recommend revising Europe’s regulatory framework for corporate financing, in order to allow blockchain technology as a tool to contribute to the development of small and medium-sized enterprises (SMEs) and to allow the use of cryptographic assets as actions or bonuses.

Among other forms of corporate financing that may be beneficial are the Initial Cryptocurrency Offers (ICO) and the Security Token Offers (STO). In view of this, the regulators ask to implement international cryptographic rules, because the cryptographic providers complain about that in the Netherlands are less than 30 providers and the transactions volumes are “insignificant” compared with other international providers.

“The evolution of cryptos is mainly oriented on an international level given its inherent cross-border nature, and this cannot be limited to the Dutch market alone”, the report explained forcefully.

Earlier this month, the European Banking Authority (EBA) and the European Securities and Markets Authority, each one by its side, requested rules related to ICOs to be taken into account at the European Union level. In the coming weeks the results of these requests would be seen.

By María Rodríguez

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