BitDigest May 18 · Issue #660

May 18, 2020
  • Bitcoin holding below $10,000 resistance levels
  • Fed’s Powell says Fed can issue digital money (but not cryptocurrencies)
  • Bitcoin’s hashrate has fallen 36% over the past 7 days
BitDigest May 18 · Issue #660

Harry Potter and Bitcoin

I assume that most of BitDigest’s readers have been asked “what is bitcoin,” but the seemingly simple tweet “I don’t understand bitcoin. Please explain it to me,” by Harry Potter author JK Rowling took the cryptoverse by storm over the weekend with everyone from Ethereum co-founder Vitalik Buterin to Tesla’s Elon Musk trying to answer this question.

Rowling had a difficult time understanding the explanations tweeting, “People are now explaining Bitcoin to me, and honestly, it’s blah blah blah collectibles (My Little Pony?) blah blah blah computers (got one of those) blah blah blah crypto (sounds creepy) blah blah blah understand the risk (I don’t, though.),” but she did share her appreciation with all of her followings by adding, “God bless every single one of you now earnestly explaining bitcoin to me as though I’ll grasp it if you break it down properly. Things like this are white noise to me. I cannot and will not ever understand Bitcoin, but I love you for thinking that I can or will.”

a16z’s Crypto Price Innovation Cycle

In the first video of Andreessen Horowitz’s (a16z) Crypto School, Chris Dixon discusses their idea of their crypto cycle in which price acts as a leading indicator to drive interest followed by new ideas and then projects. While price is typically a lagging indicator, he suggests that the appreciation of digital assets has been the primary driver bringing people into the market. In my words: it’s the sweet smelling candy that tempted all of us and inspired our initial interest before falling down the proverbial rabbit hole.

Supporting this thesis, he discusses an analysis of the three cycles a16z uses to view the market: 2009 – 12, 2012 – 16, and 2016 – 19 comparing each of these by price, social media activity, developer activity and start-up activity.  While this report is explained in greater detail in The Potential of Crypto video, a16z released a summary of this discussion in a new blogged titled the Crypto Price-Innovation Cycle.

Crypto Stories Continue on Billions

Billions ran its third episode of the new season last night and for the third week, crypto has played a major role in the story line. In Week 3’s episode, written by the Bitcoin Billionaires author Ben Mezrich, Axe’s son Gordie gets in trouble for shutting down the electrical grid at his boarding school while trying to mine digital currencies. Mezich also throws in a reference to the Winklevoss twins when their last name is used an adjective to represent a child who sets their sights on success at a young age.

The Headlines

BitDigest May 18 · Issue #660

Powell Confuses Market Saying Fed Can Create Digital Money

www.cbsnews.com
Federal Reserve Chairman Jerome Powell says the Fed has “the ability to create money digitally” but he explained “we do [this] by buying Treasury Bills or bonds for other government guaranteed securities” – he did not say the Fed has the ability to make a central bank digital currency like China’s DCEP.
BitDigest May 18 · Issue #660

JCB Developing Blockchain-based Transaction System

www.ledgerinsights.com
Japanese credit card company, JCB is developing a blockchain-based payments system to track transactions.
BitDigest May 18 · Issue #660

Investors Accuse Nvidia of Misleading Importance of Crypto Mining

www.courtlistener.com
Investors have amended a class action lawsuit suggesting Nvidia Corp (NASDAQ: NVDA) mislead investors by downplaying the role crypto mining chips played in 2017 and 18 revenues.
BitDigest May 18 · Issue #660

BitMEX Accused of Racketeering and Extensive Illicit Activities

www.cointelegraph.com
A new lawsuit was filed in the United States District Court for the Northern District of California accusing the parent company and key executive of crypto exchange BitMEX of engaging in or abetting racketeering, money laundering, wire fraud and operating an unlicensed money transmitting business.

Market Data

BitDigest May 18 · Issue #660

Bitcoin Hashrate Fell 36% Last Week

www.bitinfocharts.com
Bitcoin’s (BTC) hashrate is continuing to fall sliding 12.7% to 87.3 Ehash/s over the past 24-hours; BTC’s hashrate has fallen 36% over the past week.
BitDigest May 18 · Issue #660

Fortnite Fans Winning Race to Get Community Tokens

www.cointelegraph.com
Fortnite fans and not crypto followers are driving interest in Community Points on Reddit with 80% of all accounts signing up for the social news aggregators new Community Points platform coming from the (r/fortniteBR) subreddit version versus the crypto sub-reddit (r/cryptocurrency).
BitDigest May 18 · Issue #660

Central Banking Releases CBDC Survey Results

www.centralbanking.com
Central Banking magazine released its inaugural Central Bank Digital Currency (CBDC) Survey finding that an important number of central banks will issue a CBDC within the next 5 years, but only one-third of respondents suggested they would consider using a blockchain to support this effort.
BitDigest May 18 · Issue #660

Derivatives and Custody Drive Institutional Infrastructure Investments in Crypto

www.theblockcrypto.com
The Block released a research report on Institutional Digital Asset Infrastructure suggesting that derivative and custody investments have driven over 80% (46% and 36% respectively) in total investments in the space since 2014.

Exchange, Custody and Product News

BitDigest May 18 · Issue #660

Bitwala Adds Interest Paying Accounts

www.bitwala.com
German crypto banking platform Bitwala has introduced a new passive income account that will pay holders up to 4.3% APY on bitcoin.

Thoughts on the Ecosystem

BitDigest May 18 · Issue #660

Government Needs to Design Crypto Infrastructure

www.nytimes.com
Former Citigroup CEO Vikram Pandit believes the US should have a digital currency but “to function seamlessly and serve everyone, the government must be responsible for the design and building of a foundation that includes the entire stack: digital identity, data and information linkages, wallets, digital access and inclusion.”

Reports you may have missed

Crypto markets are declining following news that most of the SEC’s lawsuit against Coinbase will proceed (more below). BTC (-1.27%) reached intraday highs of $71.8k before declining to $69k after the news. Rumors have circulated that Morgan Stanley and PNC will soon approve access to Bitcoin ETFs on their wealth management platforms. Together, Morgan Stanley and PNC hold over $1.5 trillion in client assets and likely will provide a tailwind...

Following the worst week of ETF flows since inception, BTC (+3.89%) is rebounding, rising to $69.6k, and ETH (+4.09%) has reclaimed the $3,500 mark. Last week’s outflows totaled $888 million, representing about a fifth of the inflows seen in the previous two weeks. ONDO, an institutional RWA protocol, is one of the top performers today, rising 7.61% as investors remain optimistic about the future of tokenized assets and their ability...

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