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Blockchain Bites: Data Unions. Hard Forks. And One Citi Analyst’s Case for $300K BTC.

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A Citibank managing director thinks bitcoin could hit $318,000. MIT researchers resoundingly reject blockchain-based voting. And Bitcoin Cash’s latest fork looks set to fail.

Top shelf

Technical comparison?
A Citibank executive published a report predicting that bitcoin could reach $318,000 by December 2021. Using technical analysis, and a comparison to gold markets in the 1970s, Citibank Managing Director Thomas Fitzpatrick said quantitative easing could lead to a breakout price movement for the largest cryptocurrency by market capitalization. ClassicMacro, a pseudonymous Twitter account that surfaced the report, bucked the prediction by saying, “There is no edge in guessing targets so far in time with TA. All we know is that price is likely to continue going up.”

Six criticisms
Fidelity Director of Research Ria Bhutoria rebutted six common criticisms of bitcoin in a recent viral blog post. Published Thursday, the corporate blog examined supposed fallacies that bitcoin’s volatility means it cannot be a store of value, that bitcoin hoovers up energy and that bitcoin fails as a payments mechanism for all but criminals. She highlighted the crypto’s settlement assurance, supply inelasticity and decentralization. Bitcoin is growing because people recognize it offers “perfect scarcity … transaction irreversibility, and seizure and censorship resistance.”

Expanding Galaxy
Crypto merchant bank Galaxy Digital acquired two firms as it positions itself as the “go to” crypto platform for institutional buyers. Announced Friday, DrawBridge Lending, a “white glove” crypto service, and Blue Fire Capital, a futures market maker, are now under the Galaxy umbrella. Notably, DrawBridge brings over $150 million in third-party assets to the firm. The news came hours after Galaxy announced net income of $44.3 million for Q3 2020 – well up from a loss of $68.2 million in the same quarter last year.

Downvoted
A new report from MIT roundly rejects blockchain-based e-voting as a tool for any political elections. Following up on an earlier report detailing blockchain voting cybersecurity vulnerabilities, the latest study suggests that many cryptographic proposals – like zero-knowledge proof and permissioned blockchains – add complexity and are insufficient to meet the needs of a voting public. Putting aside these digital solutions “higher tolerances for failure,” blockchains cannot stop voter coercion, while also introducing the persistent issue of key management. “I haven’t yet seen a blockchain system that I would trust with a county-fair jellybean count, much less a presidential election,” one of the authors wrote.

Flash attack
Value DeFi joined the ranks of exploited decentralized finance (DeFi) protocols this weekend, with a malicious trader (or traders) making off with approximately $6 million worth of crypto. In what appears to be a flash loan attack, the attacker borrowed 80,000 ether from the DeFi lending platform Aave and used it to arbitrage two stablecoins in Value’s MultiStables vault. (Flash loans allow users to borrow funds without collateralization because the lender expects the funds would be returned instantly.) The attacker has since returned $95,000 in DAI stablecoins. Separately, researchers with Israel-based startup B.Protocol found a novel way to trim debt positions on MakerDAO.

Quick bites

  • If data is the labor form driving capital creation in the modern economy, then its producers ought to unionize, James Felton Keith argues. (CoinDesk – op-ed)
  • China’s crypto miners struggle to pay power bills as regulators clamp down on crypto to fiat trading. (CoinDesk)
  • Grayscale bought another 15,114 bitcoin ($241 million) in its largest raise to date. (Decrypt)
  • SEC Chairman Jay Clayton is stepping down, months ahead of his scheduled departure. (CoinDesk)
  • Binance will discontinue its U.K. pound stablecoin, an “experiment” that obviously wasn’t a success. (CoinDesk)

Market intel

Bonds and BTC
The growing value of negative-yielding bonds may catalyze further institutional bitcoin purchases, CoinDesk markets report Omkar Godbole reports. Bloomberg and Barclays’ Global Negative-Yielding Debt Index is now worth $17.05 trillion, a lifetime high, a metric that measures the amount of bonds that will pay out less at maturity than their purchase price. Several analysts, including John Ng Pangilinan, a managing partner at Singapore-based Signum Capital, said this trend could incentivize investors and corporations to follow firms like MicroStrategy and Square by piling into bitcoin or other inflation-resistant assets. “On our end, we are seeing an uptick in the number of investors looking at earning yield from lending out bitcoin,” Pangilinan said.

At stake

The fork that wasn’t
Bitcoin Cash’s latest divide looks like a dud. In the latest “hard fork” of the network, two of the blockchain’s major clients, Bitcoin Cash ABC (BCHA) and Bitcoin Cash Node (BCHN), are hashing it out over control of the sixth largest cryptocurrency by market cap.

A dispute between the parties arose after BCHA developer Amaury Séchet proposed an 8% “tax” on miner profits to fund his groups development of the network. This so-called Infrastructure Funding Plan (IFP faced strong opposition from the Bitcoin Cash community, including its most prominent advocate, Roger Ver, leading up to the hard fork.

Ver said the proposal would lead to greater centralization of the network, and said there were alternative ways to fund Bitcoin Cash’s development rather than a tax.

Now, one day after the contentious split, it appears that Séchet’s proposal will fail. According to coin.dance data, the BCHN chain is currently 129 blocks ahead of the upstart chain, with no miners supporting BCHA. If BCH ABC does not attract enough hash power to produce a viable blockchain, the ABC blockchain would in theory “disappear,” CoinDesk’s Muyao Shen reported this weekend.

Until the situation is resolved, a number of major exchanges and crypto service providers have paused BCH functionality. “We’ll re-enable sends/receives once we’ve determined the upgrade is stable,” Coinbase, for one, said. Additionally, Decrypt reported that the majority of exchanges will support whatever blockchain has the most hash power behind it. 

Bitcoin Cash is no stranger to disputes. The network came into existence in 2017, after a contentious dispute among Bitcoin developers over block size. At the time, Roger Ver led a group of stakeholders that believed Bitcoin was failing as a payment system, and proposed a marginal increase of the number of transactions that could be confirmed in a single block.

Following BCH’s hard fork from Bitcoin, a group led by Australian cryptographer Craig Wright wanted to further bump up the block size, resulting in Bitcoin SV (short for Satoshi’s Vision, as Wright has claimed he is Bitcoin’s pseudonymous founder).

Many have criticized Bitcoin Cash’s “fork first” governance, which often introduces uncertainty into the market.

As Cointelegraph reports, Grayscale Investments’ Bitcoin Cash Trust fell $1.6 million following the announcement that the crypto asset would be forking on Nov. 15. Grayscale, like CoinDesk, is a unit of Digital Currency Group.

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AvePoint to Go Public via $2 Billion Merger with Apex Technology

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AvePoint’s business has gained from a spike in adoption of Microsoft Cloud with more users moving to work virtually during the COVID-19 pandemic.

AvePoint Inc, a cloud data management firm that is backed by Sixth Street investment firm, is scheduled to go public. The move by AvePoint will involve a merger with blank-check firm Apex Technology Acquisition Corporation in a deal that is estimated to be worth $2 billion.

On the back of that announcement, Apex shares gained over 2% on November 23. AvePoint is recognized as the biggest data management solutions provider for the Microsoft cloud. When the deal goes through, the company is set to receive $140 million in proceeds from several institutional investors. It will then get listed on the Nasdaq using the ticker symbol “AVPT”.

Currently, AvePoint has almost seven million users and it operates from its headquarter in Jersey City, New Jersey. Official reports confirm that the company anticipates generating around $148 million in revenue this year, representing a 26% surge from one year ago.

Interestingly, AvePoint’s business has gained from a spike in adoption of Microsoft Cloud with more users moving to work virtually during the COVID-19 pandemic. The firm targets more small and medium-sized business companies to offer vertical solutions for enterprise content management on the cloud.

The co-CEO of Apex who is a former Oracle finance boss, Jeff Epstein, said that the Microsoft Cloud has created a tidal wave that is sweeping through the enterprise world.

Brad Koenig, an ex-Goldman Sachs head of technology investment banking, teamed up with Epstein to launch Blank-check firm Apex. It raised around $305 million in September 2019.

How This AvePoint and Apex Merger Works

By description, a special purpose acquisition company (SPAC) is a type of shell firm that uses initial public offering (IPO) proceeds to acquire another firm. The process takes at most two years to complete, which then takes the acquired company public. The investors do not know beforehand which company the SPAC plans to buy.

SPACs are becoming a popular IPO alternative for firms in 2020. The founder and CEO of AvePoint, Tianyi Jiang, mentioned that the firm had thought about a traditional IPO. However, he is convinced that the operational expertise from Apex may enable his 19-year-old firm to scale and expand faster into new market bases.

Koenig will join the AvePoint board as an observer while Epstein comes in as a director. Sixth Street spearheaded a $200 million growth equity AvePoint investment in 2019. It will continue as a shareholder in the combined firm. On their part, Goldman Sachs and Evercore Group will continue acting as AvePoint’s financial advisers. On the other hand, William Blair & Co is the current financial adviser to Apex.

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Wanguba Muriuki is a content crafter passionate about putting everything into writing. He is passionate about Blockchain and Traveling. He is also an experienced creative and technical writer. Everything and everyone has a story to tell. What better way to capture the real story than in words.



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Coinbase Will Suspend All Margin Trading Tomorrow

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Crypto exchange Coinbase plans to end all margin trading effective Nov. 25, 2020, due to recent regulations by the Commodity Futures Trading Commission (CFTC).

The San Francisco-based trading platform announced Tuesday that it would prevent customers from placing new margin trades beginning at 2 p.m. PT (22:00 UTC) on Wednesday, while simultaneously canceling any open limit orders. 

Coinbase will end the margin trading feature entirely next month, once existing positions expire. When customers trade on margin, they’re effectively borrowing funds from the exchange or broker to cover the cost of an investment in an asset such as a security or a cryptocurrency. This allows traders to leverage their positions, thus amplifying profits – or losses.   

The exchange pointed to “recent guidance” from the CFTC, referring to the Commission’s March guidance around “actual delivery” of digital assets as the reason for this decision, but didn’t specify which aspect of the guidance led to the move.

That guidance, which has its roots in a 2016 enforcement action against Bitfinex, sought to provide rules around when a customer can be said to have legally taken control of a cryptocurrency, including when the customer acquires the crypto through a margin or leveraged product.

Assets purchased through leverage or a margin contract cannot be liquidated, according to the guidance.

‘Actual delivery’

Coinbase appears to be saying that it is difficult, if not impossible, for it to comply with a CFTC requirement that neither it nor any affiliated entity can have any sort of control over a cryptocurrency once it’s been delivered in accordance with the terms of a margin contract.

Under the terms of the CFTC’s guidance, “actual delivery” has occurred when a customer controls the cryptocurrency purchased, including if it was acquired via a margin or leveraged product, and the seller has no control over the cryptocurrency in question.

Coinbase has taken issue with this point in the past. In a comment letter to the CFTC discussing the then-proposed guidance, it wrote that affiliates of the seller should be able to hold the cryptocurrencies. 

“Requiring unfettered ability to transfer digital assets would effectively mean that U.S. entities and regulated entities, or entities using cold storage or other asset protection methods, could not hold digital assets acquired through margined transactions,” then-Chief Legal and Risk Officer Mike Lempres wrote in 2018. 

The final guidance approved in 2020 said that the offeror, seller or affiliated entities cannot have any interest, legal right or control over the commodity.

Essentially, Coinbase would have to register with the CFTC as a commodities exchange if it wants to continue offering leveraged products.

Other exchanges in the U.S., like Kraken, also offer margin trading. A spokesperson did not immediately respond to a request for comment on whether Kraken was also looking at the actual delivery guidance.

“We believe clear, common-sense regulations for margin lending products are needed to protect and provide peace of mind to U.S. customers,” Coinbase’s blog post said. “We look forward to working closely with regulators to achieve this goal.”

UPDATE (Nov. 24, 2020, 22:50 UTC): This article has been updated with additional information.



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Tesla CEO Elon Musk Becomes World’s Second-Richest Person as Company Approaches $500B Market Value

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According to the Bloomberg Billionaires Index, Elon Musk’s net worth has gained over $100 billion since the beginning of the year.

The CEO of Tesla Inc (NASDAQ: TSLA) Elon Musk has surpassed Bill Gates to become the world’s second-richest person. According to a Bloomberg report, Musk’s net worth reached a new milestone on the 23rd of November, jumping by $7.24 billion to $128 billion. 

As Tesla stock has continuously increased since the beginning of the year, the net worth of the company’s CEO has also been rising. As noted in the Bloomberg report, the increase in Musk’s net worth can be tied to the steady surge in Tesla stock. Tesla has been recording gains over the past year. Approaching a $500 billion market value, the Electric Vehicle (EV) company is currently up 4.18% to $544.41 at premarket trading. This shows an increase over its previous close of $521.85. 

Tesla Elon Musk Becomes The World’s Second-Richest Person

According to the Bloomberg Billionaires Index, Elon Musk’s net worth has gained over $100 billion since the beginning of the year. Back in January, Bloomberg ranked Musk the 35th richest person in the world. Notably, Tesla shares make up about three-quarters of Musk’s net worth. 

TSLA has gained 675.78% in the last twelve months and 523.73% in its year-to-date record. Over the past three months, the company surged 29.54%. In addition to recent gains, the EV company added over 24% over the past month. Also, Tesla stock has jumped 27.88% over the past five days. 

Since the debut of the Bloomberg Billionaires Index daily ranking in 2012, this is the second time Bill Gates has been ranked lower than the world’s second-richest. Gates, the co-founder of Microsoft Corporation (NASDAQ: MSFT), was ranked number one on the billionaire index for years before Jeff Bezos surpassed him in 2017. 

Bloomberg Billionaires Index noted that Amazon.com Inc (NASDAQ: AMZN) CEO Jeff Bezos is the world’s richest person with a total net worth of $182 billion. Since the beginning of 2020, Bezos has added $67 billion to his net worth. 

The Gates Foundation

The Bloomberg report further said that Gates’ net worth would have been higher if he has not been donating to several charities over the years. In 2000, Bill Gates and his wife Melinda Gates founded the Bill & Melinda Gates Foundation. Since then, the billionaires and philanthropists have donated billions of dollars to charities. 

Bill Gates private foundation has been committing funds in support of the creation and distribution of an effective coronavirus vaccine. Similarly, several individuals, organizations, and the government have been making significant efforts to fight the global health crisis. 

Coinspeaker earlier reported that the Gates Foundation committed an additional $70 million for the COVID-19 vaccine. As of the 13th of November, the private foundation has pledged a total of $156 million to counter the unprecedented pandemic. 

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Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.



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