Cointelegraph By Shiraz Jagati
What happened to GameStop’s stock at the end of January will be remembered by investors for years to come, as it was probably the first time in the history of the “free market” that a group of self-described internet “degenerates” outsmarted a bunch of Wall Street pros at their own game.
As a recap, on Jan 27, when the Dow Jones Industrial Average fell sharply by over 2% — in large part due to the United States Federal Reserve announcing its move to maintain interest rates around the zero percent mark — shares of video game retailer GameStop (GME) and movie theater chain AMC Entertainment (AMC) proceeded to rise by 130% and 300%, respectively, taking their market capitalizations to $24 billion and $6.74 billion.
This unprecedented surge was facilitated by a group of independent small-time traders operating out of a Reddit subreddit called r/Wallstreetbets. They were able to recognize that executives over at New York-based hedge fund Melvin Capital were shorting GameStop shares in order to net handsome profits for themselves.
In a nutshell, “shorting” is a practice used in stock market trading wherein an individual borrows shares only to sell them off immediately in hopes of buying them back once they fall in price. The person can then return these shares to the lender, netting the difference between the price at the time of borrowing and returning of the stock.
Upon seeing this window of opportunity, a large number of Redditors started to pump GME and AMC, among many others, resulting in prices shooting up by over 2,000% in a matter of several days. This caused Melvin Capital to incur substantial losses estimated to be worth billions of dollars.
In the past, there have been countless similar scenarios that have played out exactly like this, wherein billionaires have gone up against each other upon realizing that large-scale shorting action was at play. However, this time around, because a group of unnamed individuals was able to pull off such a move, financial services providers such as Robinhood and TD Ameritrade rediscovered their financial ethics and decided to help Wall Street cut down on its losses.
GME situation may serve as a game changer for crypto
With traditional stocks now being faced with cryptoesque pump and dumps in addition to traditional gatekeepers like Robinhood playing Big Brother under the pretext of “protecting their customers,” Cointelegraph reached out to Nikita Ovchinnik, chief business development officer for decentralized exchange aggregator 1inch. In his view, it’s important for people to understand that there is a big difference between traditional pump-and-dump schemes and what happened with GME, adding:
“Robinhood and other companies that prevented them from trading have set an outrageous precedent, one which hopefully will not be tolerated by authorities. Users should have access and full control over their assets and decisions at all times and DeFi is the only battle-tested solution on the market that can transparently solve this issue.”
Jason Lau, chief operating officer of cryptocurrency exchange OKCoin, said that he is glad this event is finally opening everyone’s eyes to the market manipulation that is rampant in today’s so-called free financial markets. “Crypto is an entirely free market, there are zero barriers to entry,” he added.
Lau also believes that incidents such as these are a case in point as to why brokers are bad for the financial ecosystem while also highlighting the need for more decentralization. Similarly, Vitalis Elkins, chief operating officer of Tradelize — a cryptocurrency trading platform — told Cointelegraph:
“Since 2020, M1 money supply increased by almost $3T. This is similar to the amount of money created since the global financial crisis of 2008, and yet it’s 40% of total M1 supply in circulation. […] I believe that the GME phenomenon is not about 15-year-olds that are manipulating the market. It’s about a protest from the average investor and about the financial system that is exacerbating inequality and very close to exhausting the trust limit (of its users).”
Google and Apple come to rescue
As soon as Robinhood began to prevent amateur traders from taking a gamble on the pumping stocks, hundreds of thousands of disgruntled users decided to leave a one-star rating for the stock trading app on the Google Play store and Apple’s App Store. As a result, Robinhood’s rating proceeded to plummet to under one star almost overnight.
However, on Jan 29, it came to light that Google’s and Apple’s development teams had decided to step in to remove the negative reviews and complaints regarding Robinhood, with Google having previously stated that “Ratings and reviews meant to manipulate an app’s average rating or top reviews” violate its policies, thus effectively negating the opinions of its customers and sending the app’s rating back above the four-star range.
Following this, hoards of users once again decided to bombard Robinhood with one-star ratings, sending it to one star for the second time in just a few day’s time. However, it appears as though this time around, Google will not be coming to the app’s rescue. On Apple’s App Store, Robinhood currently has a four-star rating, but with the negative reviews flying in at a furious pace, that may soon change.
Is DeFi the way out of the confrontation?
One conclusion that the crypto community seems to agree on is that actions taken by service providers like Robinhood, Public and TD Ameritrade indicate that big money is reserved only for the elites and that the average person can’t or shouldn’t harbor hopes of amassing wealth, especially through the legacy financial system. Marie Tatibouet, chief marketing officer of cryptocurrency exchange Gate.io, told Cointelegraph that when it comes to decentralized finance:
“Everyone has the freedom to create financial instruments and create their own markets instead of being dependent on someone else managing it for them. Also, DeFi’s financial flexibility — no centralized limits to trades, liquidity, or influence on the market — presents an ideal platform for the financial world to grow without having to go through the usual potholes of manipulation and needless censorship.”
However, Charles Bovaird, vice president of content for advisory firm Quantum Economics, believes that while the recent developments involving GME and AMC have been very interesting to watch, they don’t put forth a strong enough argument for DeFi being the only way out of such situations in the future.
In his opinion, another solution — one that many in the crypto industry may not particularly like — could be the intervention of regulators. Bovaird pointed out that Treasury Secretary Janet Yellen recently summoned the heads of several government entities, including the Federal Reserve and the Securities and Exchange Commission, to look into matters like market fairness and asset volatility, activities that may help curb similar episodes in the future. He added:
“Yes, the stock market has suffered from manipulation at some points. So has the cryptocurrency market. While the legacy system may very well die at some point, making way for a system that values decentralization and transparency, we have no timeline for such a development.”
In a somewhat similar line of thinking, Elkins also opined that while DeFi is an attempt to “fix” the legacy financial system, it isn’t the only way out. He believes that as things stand, DeFi definitely cannot be considered a decent alternative to the traditional financial system that operates at the moment. However, he did concede that with the pace at which DeFi is evolving, there is hope that adoption use cases will appear in the future: “ETH 2.0 is coming and fee lowering can be a small step for mankind but a big step for DeFi.”
Gamestop debacle has helped put crypto in a good spot
While it still seems as though a large number of people have yet to entirely grasp the immensity of what crypto technology has to offer, a lot of causal investors are now beginning to ask questions about how Robinhood could even conceive of restricting its users in the first place.
This overarching theme of censorship and financial exclusion is a significant issue in traditional finance and will potentially serve for many as a gateway toward learning about crypto-enabled decentralized finance, according to Tatibouet:
“It’s not enough to have custody of your assets now. Everyone should have access to the same financial tools that the elites have. The future is where finance is not owned by any government, hedge fund, or billionaire. This is possible with DeFi.”
Similarly, Ovchinnik believes that the GME case ultimately stands to assist the crypto industry, especially because it will help investors realize that it’s simply impossible for anyone to stop trades from taking place on decentralized exchanges.
Related: r/Wallstreetbets vs. Wall Street: A prelude to DeFi bursting onto the scene?
That being said, he did state that from a purely user-experience standpoint, blockchain applications might still be too complex for many new users to get a grasp on immediately. “It would take at least a couple of years for the current protocols to evolve,” he added.
$97B retail firm uses IBM blockchain to track food supply
Cointelegraph By Greg Thomson
IBM’s food-tracking blockchain technology will be used by the Carrefour multinational retail firm to track food supply lines from the farm to the store. An agreement between Majid Al Futtaim — the firm that operates Carrefour in the Middle East — and IBM will see the retail giant use the IBM Food Trust initially to track two food categories: chicken and microgreens.
The IBM Food Trust is a blockchain-specific platform designed for the food industry, hosted on the IBM Cloud. Carrefour, which recorded $97 billion in revenue in 2019, will enable customers to scan QR codes on the products in question, and receive extensive information about their entire production process, according to a report by Gulf Business.
Relevant information will include product origin, date of production, transportation data, ingredients, health and halal certifications, nutrition stats, and temperature data.
Gulf Business references a recent IBM Institute for Business survey which revealed 73% of respondents sought better traceability methods for their products. Notably, 71% of respondents said they’d be willing to pay extra for services that provide it.
The CEO of Majid Al Futtaim Retail, Hani Weiss, said trust in global food supply chains was becoming an important issue — one spurred on by the outbreak of COVID-19:
“Trust in the food supply is becoming increasingly important worldwide, a trend accelerated by changing consumer demands and the subsequent health and wellbeing concerns arising from the Covid-19 pandemic.”
Weiss said the use of blockchain technology would improve operational efficiency, and build stronger customer trust and loyalty.
“It is therefore imperative for us to invest in ensuring quality throughout the value chain while simultaneously working to build robust customer trust and loyalty. In meeting the new market expectations, we are now offering enhanced food traceability for our valued Carrefour customers and improved operational efficiency for our business,” said Weiss.
IBM’s Food Trust was first used by Carrefour in November 2019, when it leveraged the blockchain technology to track the supply chain for infants’ milk formulas.
A 2020 report by Cointelegraph Consulting and VeChain suggested $300 billion worth of food would be tracked and traced on the blockchain by 2027. In an industry surprisingly rife with fraud, the use of blockchain tech would reportedly save $100 billion per year by ensuring the products that land in stores are legitimate.
Exchange listings and NFT boom back Enjin’s (ENJ) 52% rally to a new high
Cointelegraph By Jordan Finneseth
Non-fungible tokens (NFT) are rapidly becoming a focal point of the cryptocurrency market as evidenced by stories of millions of dollars being raised in minutes for one-of-a-kind tokenized art pieces and rare collectibles that traders rush to get their hands on.
One project that has been benefiting greatly from the resurgence of NFTs is Enjin Coin (ENJ), which broke out to a new all-time high of $0.67 on Feb. 25 following its listing on the Crypto.com exchange as well as the launch of spot and perpetual futures trading on FTX.
Data from Cointelegraph Markets and TradingView shows that ENJ rose 52% from a low of $0.438 on Feb. 24 to a new high of $0.67 before experiencing a pullback to its current price of $0.611.
A scroll through the project’s Twitter feed details numerous recent partnerships and integrations that have helped fuel Enjin’s price rise.
Minecraft is one of the most notable integrations for the Enjin ecosystem and users are able to earn special NFTs that unlock secret games inside the video game series.
The platform has also benefited from joining forces with the growing ecosystem of the Binance Smart Chain (BSC), which has launched an NFT educational campaign that Enjin will be part of.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ENJ on Feb. 24, several hours before today’s price rise.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of the historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen on the chart above, the VORTECS™ score for ENJ reached a high of 70 on Feb. 24, shortly before the price began to spike to a new all-time high on Feb. 25.
The growing popularity of the NFT space, along with numerous big-name partnerships has Enjin well-positioned as the current bull market cycle progresses into 2021.
Its recent integration with the BSC provides a way to escape high fees on the Ethereum (ETH) network and could bring a new wave of activity to the Enjin ecosystem.
Former MLB star sells $1M worth of NFTs in one minute
Cointelegraph By Brian Quarmby
Micah Johnson, a former MLB player-turned artist, sold a whopping $1 million worth of tokenized art in just one minute on the Winklevoss-owned NFT marketplace Nifty Gateway.
The auction, which launched on Feb. 21 and lasted for 28 hours, generated $2 million worth of sales in total. The auction sold NFTs representing a painted sculpture made from hand-casted resin dubbed AKU: The Moon God.
The physical AKU sculpture was also sold during the auction, fetching $305,000. The sculpture will be deposited into a vault and is subject to a two-year lockup.
The purchaser also receives exclusive access to view the sculpture — which is stored in a physical vault at the Art Angels gallery in Miami, and can resell the sculpture at any time by transferring their token.
Speaking to Cointelegraph, Johnson expressed his intention to demonstrate how non-fungible tokens can create unique experiences and utilities that go beyond the virtual world.
AKU depicts a young black child wearing an oversized space helmet and looking up to the sky. Johnson recounts finding inspiration for AKU from a heartbreaking question his sister was asked of her son, “Mom, can astronauts be black?”
In response, Johnson began painting his nephew as an astronaut, which eventually lead to the creation of AKU — a character that Johnson describes as having limitless potential:
“I wanted to give him life, bring that to light, and let the other kids or other people, adults, whoever felt like there was of their dreams to have a symbol to the whole world could relate to.”
Johnson described AKU as a great personal achievement, noting the tokenized artwork’s success as offering inspiration to people from all walks of life:
“To bring together such a diverse group of people. And let them see or be inspired by AKU, you never know how many people who collected that AKU, or sell that AKU, finally found the courage to go do something that they’ve thought about doing, dreamed about doing, and they’re going to go do it and maybe just change the world.”
The auction received widespread support from across the crypto community, including Erikan Obotetukudo, the founder of PaperTrail media:
— Erikan (@heyerikan) February 21, 2021
Within 36 hours of the auction’s completion, the tokens had generated nearly $500,000 worth of trade on secondary markets.
Blockchain2 days ago
ETH mining still highly profitable despite upcoming Eth2 upgrade
Blockchain1 day ago
Former MLB star sells $1M worth of NFTs in one minute
Cryptocurrency1 day ago
South Korean PC Gaming Rooms Rely on Crypto Mining to Profit During the Coronavirus Pandemic – Mining Bitcoin News
Bitcoin22 hours ago
Altcoins bounce to new highs as Bitcoin price trades sideways under $50K
DeFi1 day ago
Craig Wright Threatens to Sue and ‘Bankrupt’ Bitcoin Developers, Demands Access to Mt. Gox’s Stolen Coins
DeFi3 days ago
Skrill to Allow Withdrawals Direct to Crypto Wallets
Ethereum1 day ago
Ethereum exodus continues as Binance ‘helps,’ Feb 17–24.
Regulations3 days ago
DeFi will provide good regulatory test for SEC, says Commissioner Peirce