Daily Bit: July 19, 2018

Tweet of the Day

There’s no upside in hating on someone’s idea. You come off as non-believer or ruin their confidence. Instead, just ask the questions that make you hesitate & let them come to their own conclusion. If you’re right, you helped them think it through. If you’re wrong, you’ll learn.

– @Suhail

Top Cryptos By Market Cap

BITCOIN (BTC) |  -0.40% | $7,396.77
ETHEREUM (ETH) |  -5.06% | $468.81
RIPPLE (XRP) |  -5.97% | $0.48052
BITCOIN CASH (BCH) |  -5.22% | $820.34
EOS (EOS) |  -5.32% | $8.37
*STELLAR* (XLM) |  -3.31% | $0.2899

*As of 12:15PM EST


After sweeping in like a rising tide, the markets pulled back, now settled closer to $285B.

Word On The Street

Embracing Debate: Digital Money
United States lawmakers congregated on Capitol Hill yesterday for another discussion on the role that digital currencies could play in the future of money. These meetings are going to take place like clockwork through the broader adoption of digital assets and well after to ensure that the industry remains up to par.

With that in mind, there is work to be done. Jake Chervinsky, a lawyer specializing in defense & securities litigation, had several valuable takeawaysfrom the meeting that consider the current vantage point of lawmakers and how that presents a unique opportunity as these conversations continue:

(1) Education is in the gutter. Many politicians are still in the dark, though to be fair… when was the last time you walked into a room full of adults that all understood blockchain? Regardless, a team of industry lobbyists should be at the ready – but we’re not there yet.

(2) Because of that, there’s a wide swing in understanding among politicians. Concerns about money laundering and non-government backing were dismissed months ago, yet they’re still brought up by lawmakers. Everyone needs to get on the same page.

(3) For once, politicians are non-partisan. When’s the last time that a group of Republicans and Democrats were put in a room and couldn’t decide what side of the line to stand? We’ll call it a breath of fresh air, they’ll call it information overload.

(4) Riding on #3, there’s a golden opportunity for change. Nail down the big issues before the system nails down politicians.

That is vital – especially considering the fact that crypto is adamantly opposedby Rep. Brad Sherman, whose top contributor for 2017 was a payment processor that was found guilty of facilitating illegal gambling.

Where’s Blockchain?

Greetings, from the patent stork
The US Patent and Trademark Office did a flyover on corporate America Tuesday, revealing three patents recently submitted by financial services companies:

  • Bank of America is eyeing a system that provides “a more accurate indication of a user’s financial standing by allowing external validation of data in a process data network.”
  • Wells Fargo is looking to enhance user privacy using a system that tokenizes sensitive data, allowing it to be cryptographically secure while remaining stored in a public ledger.
  • Mastercard’s submission discusses a system that manages fractional reserves of digital assets. The system involves independent accounts containing fiat and crypto and the use of traditional payment channels.

Good for corporations, not great for open source
The two simply don’t mix – they’re like oil and water. As more companies produce patents to obtain rights over select use cases of blockchain technology, the innovative capabilities of open source technology will dwindle.

And don’t sleep on patent wars. Patent assertion entities, aka “trolls”, scoop up patents in the hopes of making a quick buck in court aren’t doing the industry any favors.

The most infamous? Attorney Marc Kaufman thinks the title goes to ETIC, or Enchain, the holding company for Craig Wright. And by all definitions, it’s accurate – ETIC has no products despite 41 deceased and 35 standing patents.

What Else You Should Read Today

Adoption

  • Prism, a portfolio market platform built by ShapeShift, added 27 digital currencies to their investment repertoire.
  • The ranks of R3’s blockchain consortium were swelled by the Canadian Large Credit Union Coalition (LCUC), a group of 16 companies with $125 billion in assets under management.

General

  • This Medium post is a doozy (34 min read), but a goody – Vitalik Buterin on crypto economics and markets in everything. And if that’s too daunting, here’s the podcast version.
  • Yesterday Ari Paul unsheathed an article that he wrote in 2011 which he thinks could benefit crypto junkies – check it out here.

Markets

  • A horde of venture capitalists that includes Polychain and Sequoia threw $28 million at Nervos Network, a Chinese blockchain startup with a focus on interoperability solutions for large-scale enterprises.
  • The CEO of McDonald’s Thailand, Mr. Hester Chew, gave OmiseGO (OMG) a McDouble thumbs up during a recent discussion about the partnership, stating that “we are glad we made the move.”

Regulation

  • Japan’s Inspection Bureau was swapped out for a new organization that will craft a financial policy that ropes in cryptos, fintech, and money laundering.

Problematic

  • Brazilian authorities busted an international drug ring that used digital currencies to complicate the tracking of their funds.

Bulls and Bears

While BlackRock’s Larry Fink claims that company clients have 0% interest in crypto, Grayscale’s Barry Silbert offers a stark contrast: interest is on the rise.

In fact, Grayscale just released their results for the first half of 2018, and the firm is receiving nearly $10 million per week in investments.

As for the $10M question, “Where’s that money coming from?”, Grayscale released the following information:

  • Institutional Investors: 56% ($848K avg)
  • Accredited Individuals: 20% ($289K avg)
  • Retirement Accounts: 16% ($335K avg)
  • Family Offices: 8% ($553K avg)

In total, Grayscale’s funds loaded up nearly $250 million during the recent bear market – a company record. Critics may write it off as greater fool investing, though there’s no denying the growth seen in the industry over the past 6 months.

What to watch: How Grayscale investment products perform over the long run. Currently, they aren’t doing too hot – 6 of 8 investment vehicles are underwater in terms of total returns – though that can change if they’re correct about where the market is headed: up.

When most folks think of digital currency, the phrases ‘programmable money’ and ‘smart contracts’ are not far behind. However, a recent paper from Penn Law professor Dave Hoffman and his peers reveal that code was nonexistent in some degree in the 50 top ICOs of 2017.

No code = no (absolute) trust tree
Or, in 
Dave’s words, “The ICO market celebrates self-regulation, disintermediation, and “trustless” transactions. But our findings suggest investors don’t react to the absence of coded governance rules. So there’s actually a lot of “trust” in this market.”

Promises that were left uncoded:

  • Vesting: 37 promised, 80% uncoded
  • Supply restrictions: 32 promised, 25% uncoded
  • Burning: 17 promised, 35% uncoded

The big picture: A lack of code doesn’t mean that guidelines don’t exist elsewhere. Ordinary contracts, traditional corporate governance, and secondary smart contracts can be followed.

But at the same time, we wonder if those promises impacted the bottom line for ICO raises. Maybe some projects would’ve raised less if investors knew that code wouldn’t have de facto control at the end of the day.

Education

ERC
ERC 
stands for Ethereum Request for Comment. Like other open-source systems, Ethereum needs a way to organize token proposals and develop the pitches most popular in the community. Those submissions are known as EIPs, or Ethereum Improvement Proposals.

Once a framework is built, smart contracts can be created to do their bidding. And, like the inventory at a craft beer store… there are multiple flavors. Figuring out which one is best for your pallet depends on the parameters that you want to exist for your smart contracts.

The most common: ERC20 tokens. The standard has 6 mandatory rules and three optional ones, making for a total of 9 considerations to the design of their smart contracts.

Because ERC20 tokens are the most popular, they’re everywhere:

  • EOS (EOS)
  • Binance Coin (BNB)
  • OmiseGO (OMG)
  • 0x (ZRX)
  • ICON (ICX)
  • … and at least 490 others.

The tradeoff: ERC20 tokens are simple… which has led to bugs. As a result, new ERC’s were created to squash those problems – more on that in a future post.


THAT’S ALL FOR TODAY!

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