PewDiePie on the Blockchain, Is Bitcoin a Bubble? | Hodler’s Digest

The entire world saw Julian Assange half carried into the back of a police van this week as his seven year stint in the Ecuadorian embassy came to an abrupt halt following his arrest. Media outlets around the world posted about the spike in the surge of bitcoin donations to the WikiLeaks campaign, which had tweeted about accepting donations right away. However, spike is a bit of an overstatement as it seems that 24 hours after his arrest, about six bitcoins were donated, roughly 30 grand. Good luck Assange, truly. But don't expect your crypto followers to fund your attorney. I have a hunch it will cost a tad bit more than 6 bitcoin ladies and gentlemen, I'm Molly Jane and this is the Adventures of the Crypt Reader. Help Chinese miners and crypto enthusiasts all over the world to survive Chinese authorities are planning to ban crypto mining in the country. This also seems like a task for the cryptrader. The powerful Chinese National Development and Reform Commission added crypto mining to a list of 450 undesirable industries that should be eliminated. Reportedly, the reason for it is that mining does not comply with regulations, it is unsafe and it pollutes the environment. The public will be able to comment on the drafts until 7 May, when the ban is supposed to come into force. The move does not come as a surprise given China's ongoing crackdown on the crypto industry in general. Everyone remembers China's ban on ICOs in late 2017 and the following shutdown of crypto exchanges. Despite this crypto hostile environment, crypto mining has been thriving in China because of very low electricity prices and according to some estimates, half of the global mining network is presently located in China. As of today, China is the largest market for crypto mining equipment and the ban will potentially be a huge blow for companies such as Bitmain, among the largest producers of mining hardware. Many observers think China's ban could have a positive effect on bitcoin after all. In fact, many critics of the main cryptocurrency have been pointing at the excessive centralization of mining operations in China, which undermines the decentralized part of the foundation of crypto mining. Hardware producers Bitmain and Canaan declined to comment on the new regulation. We reached out to Jae Han Chu, co founder and managing partner at Hong Kong based investment firm Kinetic Capital, and asked him to give us his perspective on the imminent ban. So what impact is this ban going to have on the industry if it's implemented?

I think what we'll see is just a vast Type of flow of mining activity out of China and around to the other places. It's really like water finding its level. There's always going to be an economic incentive to conduct mining at a certain price, and it will just flow from currently where it seems to be the cheapest, to other areas, you know, of the world, similar to the way that a lot of kind of natural resources are kind of spent.

All right, interesting. The NDRC draft seems to be more of a policy guide than an actual law. What are the chances that the draft document will result in an actual ban of crypto mining?

Yeah, I think, you know, when it comes to China, when it comes to policy, nothing is ever so clear cut. And there's always a lot of different layers, both at the state level as well as at the kind of provincial level. And the implementation of something of a ban like this really boils down to the actual kind of provinces rather than the kind of federal government, in a sense. So I think that stating it and actually putting it into place is a very different thing. There have been a number of types of overall kind of bans, or not necessarily related to crypto, that have actually been much more difficult to put into place in practice because of local politics. And I think that's really just a feature of China. I'm cautious in terms of just calling it an outright ban. That's going to, you know, the way that people are thinking about it. So let's wait and see. And I think that's often how a lot of these kind of very sweeping changes kind of are in practice implemented.

Besides the reasons enumerated in this draft, do you think that there are some other, maybe less transparent reasons behind China's plan to crack down on crypto mining?

Right now, I find it hard to believe that they're looking at this from an environmental perspective because the overall type of footprint of mining, crypto mining, versus many of the other types of environmental concerns that take place in China, I think is pretty small in comparison. So I can only guess that the real motivations are potentially really in terms of order of finding control, ways to control the rapidly expanding kind of growth of crypto and interest in crypto. It's possible that a mining ban is a proxy to try and put some kind of cooler on public sentiment. Public sentiment, obviously, in China is very, very influenced by how the government sees particular industries. And if there's a mining ban on top of the exchange ban, perhaps they think that it will ideally scare people away from being too speculative in trading, which really was a problem and with the recent price run up, I can only imagine that there's a lot of people who are not finished speculating.

Okay, interesting. I see. In case the ban will come into force, how will it impact top mining hardware producers such as Bitmain?

Yeah, that is an issue at least for the corporate side of things because obviously the mining companies and especially Bitmain have been under a lot of pressure both from public as well as from their stock shareholders, as well as from, you know, the kind of the withdrawal of the IPO application in Hong Kong and Canaan as well. So I think that it will definitely put a lot more pressure on them to be able to find new customers in other countries. And so I think in the short term it will place additional financial pressure to basically, you know, kind of keep their keep their revenue flowing. On the other hand, again, I do think that people are not going to stop stop mining. It's just going to move from one place to another. I imagine there are many other developing countries out there who would potentially be interested to take on this tens I imagine it's multi billion dollar industry destroy.

Scam ICOs mission accepted. According to unconfirmed sources, Facebook is seeking to raise $1 billion in external funding to finance crypto related projects. The New York Times reporter Nathaniel Popper said in a tweet this week that the tech giant intends to use the funds raised among venture capitalists as collateral for its soon to be launched stablecoin. But why would one of the richest companies in the world rely on external fundraising? According to Pauper's sources, attracting external capital would give the impression that the crypto project is decentralized and less controlled by Facebook itself. The coin will be allegedly pegged to a basket of foreign currencies held in bank accounts. While Facebook has not exactly confirmed this latest information, last December, Pauperhead also reported on its intentions to release a stablecoin for money transfers via popular messaging WhatsApp. The coin is expected to be launched in the first half of 2019, and Facebook already has agreements with a number of exchanges. But this information is also unconfirmed. According to Barclays analyst Ross Sandler, the coin could bring Facebook up to $19 billion of additional revenue by 2021. Many in the industry are skeptical toward Facebook's initiative, pointing at the tech giant's stained reputation when it comes to issues of users privacy and data ownership, which should be at the foundation of every crypto project. Still others welcomed it as a huge step forward toward crypto mass adoption. Given the over 2 billion Facebook monthly users many of whom don't have access to traditional banking services. The founder of Kik Messenger, Ted Livingston, goes as far as stating that Facebook's new stablecoin could potentially replace the dollar as the global reserve currency. Crypto entrepreneur and hedge fund manager Jeremy Gardner is also sure the Facebook Coin is going to have a huge positive impact on the crypto industry.

Imagine if every Facebook user in the United States or the world all of a sudden has this cryptocurrency. Let's say everybody gets a few bucks and then they don't have an off ramp in their jurisdiction through Facebook or they don't have a bank account. They can now go and sell that at a cryptocurrency exchange exchange. I can only see it being a net positive in the short term, so I think the best way to go long on this would probably be to own a little bit more bitcoin.

This episode is sponsored by Sovereign Wallet. For most people, blockchain and crypto are still difficult. Sovereign Wallet changes this attitude by introducing a Messenger app style Decentralized cryptocurrency wallet. Sovereign Wallet places security at the heart of its wallet. In addition to end to end encryption and other banking grade security features, it uses machine learning algorithms to analyze the user's behavior and to identify true users. Sovereign Wallet allows you to store, send, receive, and soon will even allow you to trade. Cryptos trading will be available through the sovereign's own decentralized exchange called MDEX that will be launched soon. Sovereign Wallet users will trade directly with each other using atomic swap technology and will enjoy fixed rates. Check out SovereignWall and its MDEX features. The link is in the description below. Identify Satoshi Nakamoto and save his life earlier this week, Bloomberg referred to the crypto market as a bubble. Rand Neuner, perhaps in response, tweeted out that he can't respect any publication that uses this term. But what the hell is a bubble anyway and can it really pop twice? The first recorded economic bubble is of course the notorious tulip bubble of the 1600s. Tulips were the hot new thing and brought in large quantities by the masses. This caused tulip prices to shoot up. After hitting record highs, tulip prices crashed, leaving tulip holders bankrupt in some cases. A more recent bubble was the dot com bubble. This refers to the speculative investment bubble involving Internet companies. In 1995 to the year 2000, the value of Internet startups skyrocketed and a tech gold rush ensued. Investors threw money into anything that ended with a.com and over the past couple of years, some companies did the same. They put blockchain in their name. This excess capital back then encouraged Internet companies to form, often with very little planning, in order to get in on some of the easy money that was available at the time. Does that sound familiar? But can we really compare bitcoin to these historic bubbles? Is there a more nuanced view that we could take? How is it possible that Bitcoin burst in 2011, 2013 and 2017? To find out, we spoke to David Gerard, author of attack of the 50 foot blockchain. And can we even still compare bitcoin to a bubble at all?

I would say it's actually a fair call that in April 2019, we are not in the throes of a bitcoin bubble. So that's a reasonable point, but we're still sort of on the tail of it. It's a bubble that happened and still affects the perception of bitcoin and where it went and what it will go in the future with bitcoin is it's not a commodity with any use value like, say, gold or, I mean, even with Beanie Babies, you have a cute cuddly toy.

You know, what about institutional investment? Does that not indicate that bitcoin is not a bubble?

I'm not sure that institutional investment is a proxy for. This is good news for bitcoin. I think that the good news is yet to happen again. In terms of bubble economies, I do think it's quite possible bitcoin will bubble again and get mainstream interest again. People take comfort in the fact that Coinbase has a high valuation as a business and is getting investors. A lot of the phenomenon there is that there's a lot of venture capital sloshing around with nowhere to go because times are tough, economy's having trouble, poor people are getting absolutely wrecked. Rich people are discovering that they can't get a good return on sensible investments, which is why a lot of them looked into crypto during the bubble. Because, you know, this is a very volatile investment if you're looking at as an investment. But they were thinking, we can't get good returns on sane investments. Let's look at the crazy ones. Find, you know, pay your money, take a risk, maybe make get rich.

Will bitcoin ever trade to zero?

I mean, bitcoin is super hard to kill. You know, all you need is a copy of the software, a copy of the blockchain, and two or more enthusiasts. And how much it connects the real world of ordinary money in the real economy. That's a good question. Like there is no sort of circular flow of income in the crypto economy. There's no one actually does their books in bitcoins these days. Functionally, people are pretty much trading cryptos as a proxy for actual dollars or whatever. It's basically used by people who can't use real dollars for whatever reason. Like they're having trouble with capital controls or they're buying something their government doesn't want them to or something.

Help John McAfee get Bitcoin to 1 million by 2020, or make sure he follows through with his promise. PewDiePie, the most followed YouTuber on the planet, announced a partnership with decentralized streaming platform DLive. In one of his latest videos, the Swedish YouTuber better known as PewDiePie, announced he will be producing exclusive weekly live streams on the blockchainplace platform. DLIVE is a decentralized platform designed to be YouTube on the blockchain. The project, which raised $20 million in an ICO in February 2018, aims at empowering both viewers and content creators with a new reward system system. While platforms like YouTube charge fees as high as 50% to content creators, DLIVE claims it is not taking any earnings from users performing on it. At the moment, the platform counts around 3 million monthly users and 35,000 active streamers. PewDiePie's partnership with DLive comes amidst controversies around the YouTuber's alleged affiliation with white supremacism, which intensified after the Christchurch gunman invited people to subscribe to PewDiePie's channel before going on a killing spree leading to the death of 50 people. A petition asking YouTube to ban his channel has been signed by over 83,000 people, and the Supreme Court of India demanded that YouTube take down two of his videos that allegedly contained racist content. The Swedish streamer has dismissed these allegations, calling them defamatory and baseless. PewDiePie counts over 93 million subscribers and is among the top earning YouTubers with reportedly over $15 million in revenue in 2018. His decision to perform on DLive can potentially be a big step forward in bringing crypto to the mainstream. PewDiePie has also said that he will donate $50,000 to 100 Content Creators Active on DLive in order to support the project. Which cryptocurrency do you want me to kill for you? Let us know in the comments. And remember to like subscribe and Hodl Cointelegraph like subscribe and Hodl.