Binance Coin Skyrockets, Starbucks Coffee for Bitcoin | Hodler’s Digest

How much bitcoin do you buy a week? Well, probably not as much as Twitter CEO Jack Dorsey, who went on Tales of the Crypt podcast to talk all things bitcoin. During the course of the interview, he hinted that he buys up to $10,000 worth of Bitcoin a week, slowly seeming to be converting his over $5 billion into crypto. Brad Garlinghouse was in a more fighting mood this week. He slammed the JPM coin following speculation that the major bank's project could render Ripple obsolete. Garlinghouse said that the JPM coin lacks interoperability. Just use the dollar, guys. He did, however, have one conciliatory remark. The Ripple's CEO said that the very fact that a major bank was leaning into blockchain and crypto is a good sign. Nouriel Roubini, aka Dr. Doom, might never change his mind on crypto, but some previous fudmeisters have repented. Niall Ferguson, historian and author of the Ascent of Money, has recently joined a stablecoin project and said that crypto won't turn out to be a complete delusion after all. Roubini only saw betrayal Also this week, the Neutrino scandal continues. College campuses mined crypto, a backed Starbucks equity deal and Time to get bullish about Binance Coin Ladies and gentlemen, I'm Molly Jayne and this is your weekly Hodler's Digest. Let's take a look at the markets this week. The Coinbase Neutrino scandal might be reaching a conclusion. This week it was announced that former members of spyware firm Hacking Team will transition out of Neutrino. However, their departure date has not been confirmed. Details of the acquisition were leaked on Wednesday, legal documents reportedly revealing that Coinbase bought the firm for $13.5 million. The cost of the acquisition at this point goes beyond money. Brian Armstrong and his team are clearly backpedaling furiously after some pretty severe blowback from the crypto community. The hashtag DeleteCoinBase emerged in response to Coinbase working with former members of Hacking Team, which had reportedly helped repressive regimes monitor journalists and political activists. Armstrong issued an official statement expressing regret and a lack of due diligence. However, he maintained that Neutrino was of critical importance to Coinbase, and yet there are still questions that have been left unanswered. This prompted crypto Twitter Persona WhalePanda to post a link with a list of 10. Caught up in the malee was blockchain analytics firm Elliptic, who provides tech to Coinbase. A Coinbase executive had defended the Neutrino acquisition by saying that Existing external tech providers were selling Coinbase's user data to third parties, a claim which Elliptic denies. Chainalysis, another blockchain analytics firm, took preemptive measures. They published an official statement assuring their clients and the public that they do not partake in such activities. Worried about student debt? Concerned you will leave college penniless and destitute? Well, have no more fear. The answer is simple. It's mine. Crypto According to a new study, students across the US are doing just that. In fact, college campuses are the second largest crypto miners across industry verticals. The research was carried out by Umbrella, a security product for tech conglomerate Cisco. They monitor their clients network connections to screen malicious activity, which includes potentially nefarious crypto mining. University campuses are ranked second at 22%. The energy and utilities sector is at number one at 34%. A Cisco threat researcher explained the trend and why it's so cost effective for students. Mining difficulty for a lot of coins is very high right now, which means it costs more for electricity and Internet than the profit you can produce for mining those coins. If you don't have to pay for those costs, then you are in a really good spot for making money. On the university's dime. Cyber attack monitoring firm Vectra discovered a similar trend. Intentional crypto mining and cryptojacking were more prevalent on college campuses than in any other industry. So far, universities have not really commented on the trend and there have been no major crackdowns. However, with the need for more and more powerful hardware to turn a profit, it is hard to imagine many students are making a serious dent in their student loans, which is around $40,000 on average. The dream of buying coffee with Bitcoin has never been so close to materialization. According to unconfirmed reports, the previously announced Bakkt digital assets platform, which includes Starbucks as one of its associated enterprises, actually completed an equity deal with the coffee giant. The anonymous source further notes that Starbucks will install Bakkt software in its stores, thus allowing customers to potentially pay with Bitcoin. Pay but not really. The crypto will be instantly converted into fiat, meaning that Starbucks is not truly accepting your Bitcoin for a frat. When the partnership with Bakkt was announced last summer, Starbucks had toned down Hodler's enthusiasm, clarifying it will not accept Bitcoin directly, but that they will continue to talk with both customers and regulators as the crypto space evolves. Set to be launched by the operator of the New York Stock Exchange at some point or later this year, pending regulatory approval. Of course In a process that has already been elongated by the lengthy US Government shut down, Bakkt plans to initially offer physically delivered bitcoin futures. Commenting on the partnership with Bakkt, vice president of partnerships and payments at Starbucks, Maria Smith said Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US Dollars for use at Starbucks. Binance Coin has been among the best performing tokens of 2019 while most cryptocurrencies tend to follow the pattern of Bitcoin, the crypto exchange Binance's native token has developed a pattern of its own, surging by over 140% since the beginning of the year against the backdrop of the bear market. The contrast was particularly evident at the beginning of the week, when Bitcoin and other major cryptocurrencies lost around $5 billion while Binance Coin surged by 16%. According to many observers, Binance Coin has been behaving like a stablecoin, which pumps when the rest of the coins dump. This week, Binance Coin became the seventh top cryptocurrency by market capitalization, leaving behind Tron, Stellar and Tether. Many in the industry are congratulating Binance CEO CZ for the coin's outstanding performance. CEO of Tron, Justin sun went as far as defining Binance Coin as a new Bitcoin, while eToro's Matti Greenspan said Binance Coin has been able to buck the crypto correlations principally because people buy it as a way of speculating on industry growth. If the market's moving, these people are trading and Binance has a big share of those volumes. We reached out to Ivan on Tech asking him to comment on Binance Coin's outstanding performance.

So number one, Binance is a corporation and they are pushing their currency very, very successfully and they are doing everything they can to increase the value of the Binance coin. And the latest development is of course their Dex that they're building and they have been very open with the fact that it's not really that decentralized but it's all about the fact that user has control over the keys and now that we have the Binance chain and everything else coming out they want to push adoption and want to push user base to grow and make it even bigger. So I think they have made a lot of efforts and it is harder to do when you have a project such as Bitcoin or Ethereum where the community is more decentralized and there are many different interests and the decision process is slow while Binance can really take decision quickly. They can push their coin with new innovations, new technologies. And I think it is one of the biggest reasons why we see Binance Coin performing so well today. And everything, everyone is aware in the industry that Binance Coin is backed by Binance. It depends on Binance. And Binance really needs to be successful for Binance Coin to be successful. So until now they have been that. And until now the performance of the coin reflects their successes. So when it comes to short and middle term, who knows? I mean, we're in crypto, volumes are so low compared to traditional markets. Anything can happen in the short term. It can dump, it can pump. Who cares about short term or middle term? It's all about the long term. Can Binance sustain itself long term? And this is the question I think we need to be asking. Looking at their technology right now, I think they have a very good chance. And as I told in the previous question, they're not that focused on decentralization per se. They just want adoption, they want users. At the same time they see decentralized exchanges getting more and more popular and getting more and more advanced and developed. So therefore they're creating their own Dex where users control their own key and also launching their own blockchain. Think long term, they have all of the possibilities and all of the chances to really be successful. And when Binance is successful, Binance Coin is also successful because they have been really trying to get so many use cases for Binance Coin as possible. And this is different from many other ICOs and many other projects. Many other ICOs had some kind of token, they offered something, but then you realize they don't even use it themselves, they're not even pushing it themselves. They start accepting other payments method, they start doing a lot of other things that basically make their coin useless. While Binance have really been pushing their coin and I think it is a good thing for their investors now, long term, I think it's looking bright right now. I think when you look at the cryptocurrency market as a whole, there is a clear pattern to the entire market. I mean, we are in the bear market and so most cryptocurrencies go down, including Bitcoin if you look at the longer term. But then of course some coins have short term gains, such as Binance right now. But all in all, long term, I think Bitcoin and Binance are just so different. So while they will probably share the sentiment of the market as a whole, that when everyone is negative on crypto, everyone is leaving the crypto space as we saw this year and last year, when we have a bear market, well, probably they will both lose value. But at the same time I also see that they're so different. You cannot compare Bitcoin and Binance Coin. Binance is all about the Binance as a company. So maybe we should value Binance Coin more as a share in Binance Company. It is not a security, it's not classified as a security. But the value in my view depends so much on Binance. And so for me it is rational that in the future they will not be as similar as they are today when it comes to markets moving because they are so different. And the value of Binance Coin really, really depends on the Binance company. And they have been doing very well up until now and we're going to follow it into the future.

Crypto lending startup BlockFi is launching a deposit account for Bitcoin and Ethereum. The BlockFi interest account will offer customers a 6% annual interest rate issued monthly, which will be compounded, thus resulting in a 6.2% annual yield. This is a much higher percentage than what the majority of traditional banks offer to their clients. The interest paid to crypto holders come from the interest the company receives by offering loans to institutions. Director of marketing at BlockFi, Brad Michaelson reportedly said that the new product will help crypto investors grow their wealth with one of the most powerful tools in finance, compound interest. According to the announcement, account holding will be custody to Gemini Trust Co. Which is regulated by the New York Department of Financial services. Last year, BlockFi attracted investments from big crypto players like Mike Novogratz's Galaxy Digital and Anthony Pompliano's Morgan Creek Capital. Pompliano did not hold back in his enthusiasm in praising the new deposit fund. However, BlockFi's announcement sparked a fair amount of criticism on social media, with many concerned of possible risks behind lending money to BlockFi. Some pointed out the lucrative interest rates offered by BlockFi are directly correlated with the risk of entrusting funds to the company. Also, if the account will be issuing interest in crypto investors, money will still be affected by the market's high volatility. Reacting to the wave of criticism, Pompliano invited investors not to trust him and rather to do their own research about BlockFi.

The concern is absolutely valid. Basically, BlockFi needs to do an effective job of managing that risk, and the first thing that you need to understand when you think about managing that risk is who the counterparties are. We're under Pretty strict non disclosure agreements in terms of saying specifically who we work with. But if you look at our last round of investment, its firms like those, Fidelity, Susquehanna, Acuna Capital, CMT Digital, Galaxy Digital, Morgan Creek, etc. As a general rule there's a little bit of variance on this, but as a general rule our margin call level is 110%. So if the Bitcoin price goes up by around 15% then we hit the margin call price. Our system sends an instant notification to our borrowers and they have a certain period of time, usually hours, actually usually just one hour to respond to that. If they don't respond to that, we will take some of the dollars that they provided as collateral and use them to buy Bitcoin. One of the things that we're constantly monitoring and modeling is level of volatility over time. And if you're looking at those models, Bitcoin volatility has come down dramatically and it's trended downwards for a while now. So it's actually these days very rare to see a north of 15% move up in Bitcoin. In a gap 3%, 5%, 8% maybe, but 15, it hasn't happened in a while. We will never use funds that are in the interest account like equity capital. So. So one of two things is going to happen. Either BlockFi goes bankrupt and returns everybody's money or we're very successful and this thing keeps working and it keeps scaling. So Gemini is that they're basically the security platform for private keys. They also provide liquidity in terms of their exchange when we need it. For that risk management function I was talking about, the client sends their funds. BlockFi never touches the private keys, Gemini manages the security. And then when we lend them to one of those counterparties, we move the crypto off of Gemini and send it via the blockchain to the counterparty who is posting the collateral back to BlockFi.

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Sam.