November 11, 2020 | Issue #143

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Ray Dalio Sees Governments Banning Bitcoin Should It Become ‘Material’

In an interview with Yahoo Finance, Ray Dalio, the founder of the world’s largest hedge fund, said he sees three main problems with Bitcoin and other cryptocurrencies that will limit their future:
  1. A lack of venues that will accept cryptocurrencies for purchase. "I today can't take my Bitcoin yet and buy things easily with it."
  2. Bitcoin and other cryptoassets are too volatile to be considered an effective store of wealth or for use in transactions.
  3. If Bitcoin becomes "material," Dalio predicts governments will "outlaw" it. "They'll use whatever teeth they have to enforce that."

Meanwhile, billionaire investor Stanley Druckenmiller goes on CNBC and speaks highly of Bitcoin's increasing store of value.

"If the goldback works, the Bitcoinback will probably work better." Watch the full clip here.

Liquidity Crisis?

It appears Bitcoin is approaching a liquidity crunch.

Online payment provider Square (owner of the popular payments platform Cash App) sold $1.63 billion worth of Bitcoin in Q3 2020. The company says crypto activity from retail traders is on the rise from every angle.

More importantly, the amount of BTC sold through the app equates to about 110,000 BTC. This is significantly more than the amount of Bitcoin mined in the same time frame.

Think about that. Square is essentially selling double the amount of Bitcoin that is made. Not to mention, PayPal – that's nearly 3x the size of Square – is soon offering crypto, as reported last month.



Cred Files For Bankruptcy

Cred, a US-based cryptocurrency lending platform, filed for bankruptcy on Saturday, a week after it announced a freeze on customer funds amid concerns about fraudulent activity on its platform.

Founded in 2017, Cred provided interest on cryptocurrency deposits and loans backed by crypto collateral. It raised $26.4 million in a 2018 ICO of its LBA token.

By no means is the state of credit in the crypto industry perfect. But as Nic Carter explains... there's still hope.

Ethereum 2.0 Update

Ethereum 2.0 is (almost) here.

To catch everyone up:
  • Last week, the community finally got the news they were waiting for: a confirmed rollout date of December 1.
  • The first phase of development for Eth 2.0 is centered around the creation of a separate proof-of-stake blockchain network called the beacon chain. On this new network, ETH holders with a minimum of 32 ETH can earn rewards in the form of annualized interest on their wealth. (think bonds)
  • However, before Phase 0 can launch on December 1st, the mainnet staking address must have at least 524,288 Ether deposited by November 24. (Analysis shows a total number of 53,025 Ether staked at present. Or just over 10% of the required threshold amount.)
  • If and when it activates, the migration will move on to the second of four phases needed to complete the Eth 2.0 upgrade.

Separately, and in terribly-timed fashion, a bug caused issues on the Ethereum blockchain today for certain nodes that hadn’t upgraded—leading to a brief split. Here's everything that happened.

Bitcoin: An Unprecedented Experiment in Fair Distribution

In an article for Coinmetrics, Lucas Nuzzi explains why Bitcoin is fundamentally different than any other cryptoasset. He also describes (with charts) three reasons that will make it extremely difficult for any other cryptoasset to achieve Bitcoin's level of organic supply distribution:
  1. Bitcoin didn't have USD value in its inception
  2. Bitcoin's turbulent history led to high supply turnover
  3. Mining was designed to incentivize distribution and dis-incentivize hoarding


Joe Biden Transition Team Adds Former CFTC Chair and Crypto-Focused Academic Gary Gensler

Joe Biden is expected to tap Gary Gensler, a Wall Street veteran who has closely studied the budding cryptocurrency field, to advise on plans for Wall Street oversight in a prospective administration.

Other crypto-focused nominees include:
  • Chris Brummer, a law professor who testified before Congress regarding Facebook’s libra project
  • Mehrsa Baradaran, a law professor who testified as an expert witness at a Senate Banking Committee hearing on regulatory frameworks for blockchain and cryptocurrencies
  • Lev Menand, one of the original creators of the digital dollar concept

Former Microsoft Software Engineer Sentenced in Nation's First Bitcoin Case That Has a Tax Component to It

A former product tester for Microsoft has been sentenced to nine years in prison after being convicted of defrauding the tech giant and using Bitcoin as a means to hide the funds he obtained.

According to records, Volodymyr Kvashuk was involved in the testing of Microsoft's online retail sales platform and used that testing access to steal "currency stored value" (CSV) such as digital gift cards. Kvashuk then resold the CSVs for Bitcoin, using the proceeds to purchase a home and a Tesla.

Kvashuk attempted to mask his fraud by using a bitcoin "mixing" service in an attempt to hide the source of the funds ultimately passing into his bank account.

SEC Makes It Easier for Crypto Startups to Raise Funds

The SEC is raising crowdfunding limits from $1.07 million to $5 million, meaning crypto startups could start relying less on venture capital.


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