Crypto Prizes On The Rise, Magical Marketing Or Another Scam?

Crypto prizes are becoming popular for games and competition, but what is the gimmick? And what is the impression?

The art world, the gaming world, and even a few app developers are jumping onto the trend that is cryptocurrencies, seeing them as a perfect prize to tantilize and attract people to their work. But what is the end goal for these people and companies?

There is of course a lot of free marketing that comes up when ever cryptocurrencies are tied to something – the real estate sector has felt that – but, for an abstract artist like Andy Bauch, it adds another layer of intrigue and interest to his work.

Gaming companies have also found a technological link to the digital currency, setting it up as a prize for a global market. They too can benefit from the hype, but can also entice a bigger audience with a collectively attractive prize.

Why are these cropping up?

Prizes are nothing new, especially when it comes to games, or even sporting events. However, the allure of Bitcoin is starting to spread to the likes of puzzles and paintings too. What is the appeal of attaching a Bitcoin-based prize to a game that someone can beat, or a puzzle that someone can solve in a painting?

One of the biggest reasons for this has to be that generally, Bitcoin media comes with a lot of hype and free publicity. There have been many instances where pretty mundane occurrences, like selling a house, have suddenly garnered a lot of attention because of a Bitcoin price.

The real estate market was a prime example of this as a £17 mln mansion in Notting Hill, UK saw unprecedented interest since it went on sale in October last year.

Saurabh Saxena, founder of property firm Houzen has said of Bitcoin marketing in the real estate sector:

“I sincerely believe that Bitcoin as a currency or exchange medium is not sustainable. It’s purely a marketing gimmick.”

The same could be said about this latest trend of Bitcoin prizes for solving puzzles and games.

Everyone knows what it means to be a struggling artist, with little to no recognition of fame – see Vincent van Gogh – but, by incorporating a Bitcoin puzzle, suddenly the news is all over the internet and the name achieves a level of fame.

The Legend of Satoshi Nakamoto

Artist Marguerite deCourcelle has, on three occasions, hidden Bitcoin prizes in digital paintings for the public to unearth.

The Bitcoin puzzle series, “The Legend of Satoshi Nakamoto”, has been going on for a long time. It took nearly three years for the third puzzle in the series, “TORCHED H34R7S”, to be solved – recently by an anonymous winner.

When DeCourcelle and her team originally placed the key to the Bitcoin wallet into the digital painting, the wallet contained 4.87 Bitcoins – which was, at the time, worth about $1,400.

DeCourcelle explained Cointelegraph how she got into cryptocurrency and why she thought this would be a good idea to merge this with cryptic puzzles:

“In 2013, I was reading books such as Diamond Age, Snowcrash, Ready Player One, Daemon and Freedom which all share an underlying theme: a metaverse with currency that is valuable in both real world and virtual world. I was just learning about Bitcoin around this time, and Bitcoin immediately stood out to me as something that crosses these barriers. I realized that I could break down “money” into a string of information and encode it visually with patterns or layered strategy to encode the information in a more dynamic way – in other words, using game play to unlock a sequence that would otherwise be hidden.”

“Blockchain is a treasure trove of unexplored potential for how information transcends a virtual existence and can be simultaneously rooted in the real world. In the early days of Bitcoin, artists were asked to “show” the Blockchain through conceptual art. This was really hard to do. People also wanted to ‘see’ a Bitcoin – it was hard to accept that money wasn’t tangible. So a natural bridge to this for me was to ‘show’ people Bitcoin using art as the gateway.”

New money

Artist Andy Bauch’s new painting series “New Money” combines art and cryptocurrencies by hiding abstract codes in his Lego artwork. The paintings represent the private keys to wallets containing as much as $9,000 worth of cryptocurrencies each.

Again, Bauch has been given a free bout of publicity for combining the two worlds of art and cryptocurrency, leveraging the fact that cryptocurrencies being ferocious for any news that emanates from society.

However, it would appear that Bauch is not only doing this for the fame as his abstract pieces obviously have a narrative behind them, especially with the exhibition be labeled ‘New Money.’

A gaming gift

As well as artists, gaming companies are also hiding cryptocurrency in their games for those who reach the end first. Montecrypto: The Bitcoin Enigma is a game that will feature an digital world players navigate in the first person, solving 24 ‘enigmas’ in order to claim the ultimate prize of 1 full Bitcoin.

The developers have remained anonymous, with their wish to remain as such until the prize is claimed, but they have mentioned in the game’s FAQ’s that:

“We are not here to advertise Bitcoin. We think it can be fun to have a Bitcoin as a prize for our game.”

Neon District is another game that is launching soon that will have a crypto prize at the end, this time 15 Ethereum (ETH). This game comes from the same team that is behind the digital painting series; they clearly believe this is a good tool for marketing.

Is there a chance to be scammed?

DeCourcelle spoke to Cointelegraph about trust, and its importance, as she came to realise that in the cryptocurrency space, there is a lot of space for people to be trusted, and for that to be abused.

“I think people are absolutely wary of being scammed. I’ve found that my puzzles or my endorsement of a puzzle has given people confidence to pursue a contest. Similarly anyone in the space who is ‘trusted’ also brings legitimacy to projects. But it doesn’t take much to shake that trust, so we hold it close to our chest and do our best to not lead people astray.”

With the third puzzle being solved only last month in DeCourcelle’s series, she and her team have built up a decent reputation in regards to this tiny, but growing, facet of cryptocurrency. However, she admits that regardless of whether a company or person is offering Bitcoin prizes, or initial coin offerings (ICOs), trust and reputation is paramount.

“I think even in the ICO space, people are launching projects who have no business doing so as they’ve never had a proven product. Why would people throw time or money at anything that may never come to fruition? Trust and the ability to carry projects across a finish line means everything to a community who is backing a project,” she told Cointelegraph.

“We’re working on trustless systems that still rely heavily on trusting people based on social merit or reputation-based systems. Most ‘giveaways’ these days do not turn heads. In the old days, you could tweet – “1 Bitcoin for one lucky follower” and include a fancy gif. This doesn’t work anymore.”

“The current approach to marketing in crypto is becoming building trusted brands that people can feel confident to stand behind. People also want quality, delivering an educational experience where they are building relationships, making personal progress, and not wasting their time. It’s not really about the money, the money is a perk.”

Powered by WPeMatico

April Fool’s Day Rundown – Nerding Out On Cryptocurrency Pranks And Jokes

April Fool’s day began with a fake story about a full audit release for Tether and has continued with an unending number of fake crypto launches.

Every year on April 1 – April Fool’s Day – members of the crypto sphere try to outdo each other with nerdier and nerdier inside jokes and pranks, and this year has not proven to be any different.

Over the course of the day, we will be adding new April Fool’s stories that are still coming up. Do you want to share a find with us? Send it to us on Twitter.

Subreddit /r/bitcoin saw a fake post in 2015 about a return of all Bitcoin (BTC) stolen from now-defunct crypto exchange Mt. Gox by a former DEA agent seeking a plea deal. In 2017, Ethereum (ETH) co-founder Vitalik Buterin wrote a prank blog post claiming that ETH would change from its Proof of Work (PoW) algorithm to the Proof of Authority (PoA) in 2018.

This year, Buterin posted another April Fool’s blog post announcing the launch of an Ethereum “stablecoin” called the World Trade Franc (WTF). The WTF, which Buterin refers to as “combin[ing] all benefits of capitalism and socialism with none of the downsides of either,” is currently being marketed to “sketchy Pacific island nations national governments.” Below is a screenshot of WTF’s “people:”

Jesus Coin, described on Twitter as “THE currency of God’s Son,” tweeted today in another apparent Buterin-related prank about the new addition of Ethereum’s co-founder to their management team:

Coinmarketcap, a popular cryptocurrency market cap ranking resource, added a “Lambo” currency reference for its listed assets, showing how many “Lambos” each currency is roughly worth. As Bitcoin is currently trading for around $6,561, one Coinmarketcap’s “Lambo” is equal to exactly $200,000.

Reddit user drowssap5 has also gotten into the April Fool’s spirit, posting on subreddit /r/buttcoin that Tether had finally released their long-awaited full audit, with the following caveat:

“Just kidding. They wouldn’t do that.

Happy April Fools day!”

Bitrefill, a service for adding money to prepaid phones with Bitcoin, posted on both Twitter and their blog today that they are changing their name to “S**trefill,” even going as far as to change their official URL to mimic their “new name.”

“S**trefill’s” Medium blog post writes that due to a decrease in demand for spending Bitcoin, they are switching their focus over to “s**tcoins,” or coins that “are not perceived as having such a “high long-term value.” The launch of S**trefill’s new token, S**tCoinCash, will support a Lightning Network equivalent called the Crackening Network, according to the Medium post.

Financial news site Finance Magnates posted a legitimate looking “exclusive” on Facebook launching its own cryptocurrency with a “massive” Initial Coin Offering (ICO) that would rival both $850 mln ICOs of Telegram. The fake “Facebook Coin” would require “data such as name, address, phone number, mother’s maiden name and name of first pet,” and would advertise itself on the site, in spite of Facebook’s recent crypto-ad ban.

A slew of prank cryptocurrency launch announcements have also come out today, with blogging site Tumblr’s fake Tumblcoin, design site Houzz’s HouzzCoinzz, and grocery store chain Sam’s Club’s bulkcoin.

Meanwhile, crypto commenter @WhalePanda tweeted earlier today that the real April Fool’s joke is Bitcoin’s price:

In a similar fashion to Finance Magnates’ fake Facebook ICO story, Blockchain Center has jokingly reported on “Google ICO.” The search engine’s coin, called Googol (GG) according to the prank article, is not powered by Blockchain – instead, all transactions are to be recorded in a “brilliant” SQL database “distributed all over the world.”

Powered by WPeMatico

Crypto Wallet Is Consumer Xmas Favorite In Nevada, Research Shows

Recent survey shows that Ledger Nano crypto hardware wallet was Nevadans’ favorite online purchase over 2017 Xmas season.

Recent analysis shows that the Ledger Nano crypto hardware wallet was the most popular online purchase in Nevada over the 2017 holiday season, according to price protection app Earny’s research, published March 19.

Earny’s sample of 100 mln online purchases nationwide between Nov. 2017 and Feb. 2018 showed that Nevadans favored the Ledger Nano S, one of the industry leaders in hardware wallets for the crypto space, alongside Trezor and Keepkey.

Earny's state-by-state data

Hardware wallets securely store the private keys of users’ crypto assets offline, as opposed to online storage systems, thus protecting against cyber vulnerabilities.

Nevadans’ crypto savviness distinguished them from other states’ festive whims, such as Indian Healing Clay, which topped Connecticut, and an Electronic Duck Hunting Game in Kansas.

Earny’s published data did exclude smart home devices and detergents, consistently the most popular holiday items in every state.

Nevada’s tax- and crypto-friendly policies include a 2017 ban on local Blockchain taxes and recognition for smart contracts and digital signatures.

How far the wider US crypto user base is gaining traction has been subject to recent debate, as Cointelegraph reported March 28.

Meanwhile, impetus for regulation on a federal and state level gathers pace. Washington’s recent SEC and CFTC hearings were devoted to crypto-regulation, covering virtual currencies, ICOs and blockchain.

Powered by WPeMatico

South Korean Regulators To Release Crypto Tax Framework By June

South Korea’s taxation framework for cryptocurrencies will reportedly be released by the end of June of this year, according to the Ministry of Strategy and Finance.

South Korea’s Ministry of Strategy and Finance will reportedly release a taxation framework for cryptocurrencies by the end of June, local news outlet Fuji News Network (FNN) reported March 25.

A spokesperson for the Ministry of Strategy and Finance said that although they “do not have a specific time frame,” they are “thinking about announcing a virtual money tax in the first half of the year,” and FNN adds that any taxation would only start next year.

The announcement of the future tax plan came after the Finance Ministers’ meeting of the G20 that took place earlier this month from March 19-20.

In December of last year, South Korea’s Deputy Prime Minister and Minister of Strategy and Finance said that the country was looking into taxation methods for the local Bitcoin (BTC) market. More recently, in January, South Korea announced that cryptocurrency exchanges will be taxed in line with the existing tax policy, a 22 percent corporate tax and a 2.2 percent local income tax.

The South Korean government’s crypto tax task force has proposed a “transfer income tax that levies taxes on profits” made from crypto sales, FNN writes, adding that “If income from virtual currency transactions is considered temporary and irregular, other income taxes may be imposed.”

South Korea’s Ministry of Taxation has looked internationally for examples in crypto taxation, sending employees to the US, Japan, Germany, and the UK for surveys of their varying crypto tax frameworks. The surveys found that in most cases, taxation is applied “based on the principle that there is a tax on income,” as opposed to non-income taxes, according to FNN.

According to FNN, the Korean government will also be setting up “full-scale virtual currency regulation” after local elections on June 13. FNN adds that the Ministry of Finance and Economics will hold a virtual currency international conference held in Seoul on June 14 for G20 members, as well as the “second working session of the G20 international financial system” on June 15.

Powered by WPeMatico

China’s New Central Bank Head Is Pro-Market, Could It Impact Cryptocurrency Industry?

Given the government’s support towards native blockchain projects, and the election of pro-market economists like the new PBoC head Yi, it is likely that some pro-blockchain legislation will be released.

Yi Gang, an American-trained economist, has been elected by the Chinese government to take over the People’s Bank of China (PBoC), the country’s central bank, as its head. The election of a pro-market economist could have a positive impact on the cryptocurrency market.

Pro-market, favors freedom

Both Chinese President Xi Jinping and PBoC’s new leader Yi Gang are pro-market and pro-market reform. Prior to his election, Yi has consistently emphasized the importance of market liberalization, and has invited economists along with experienced financial experts who could support his long-term plan to increase the flexibility of the Chinese market.

Already, within weeks since the election of Yi, the Chinese government has, for the first time, allowed foreign companies to enter the country’s payment sector and compete against local giants like e-commerce conglomerate Alibaba’s AliPay and the country’s largest technology corporation Tencent’s Tencent Pay.

For context – Tencent’s gaming successes

For context, China’s Tencent, which has made a series of successful acquisitions over the past few years including Riot Games, the game development company behind one of the most popular online games – League of Legends (LOL), surpassed the market valuation of Facebook in November 2017. Tencent became the first Asian company to break the $500 bln mark, and outdistanced Facebook prior to its Cambridge Analytica Scandal, which led Facebook to decline by nearly $70 bln drop from $517 bln to $445 bln.

In 2016, it was revealed that more viewers watched LOL, the game developed by Riot Games under Tencent, than the NBA finals. LOL’s professional esports league finals were hosted in the Beijing National Stadium, also known as Bird’s Nest, which has a capacity of 91,000 people. The NBA finals were watched by 31 mln people worldwide, while the LOL finals were watched by 36 mln people internationally.

The success of Tencent and its dominance over the global esports industry as well as social media, messaging, and payment markets is important to acknowledge because for the first time in its history, the Chinese government has given the company competition in the finance sector.

Payment market for foreign companies

On March 21, Bloomberg reported that the Chinese government has officially opened the gates of its $27 trln payments market to foreign companies, and has allowed companies to apply for licenses. Iris Pang, a Hong Kong-based economist at ING Groep NV, told Bloomberg:

“The domestic market is quite saturated with very strong domestic players, and it is relatively hard for foreign companies to get a piece of the pie. But there is a chance for them to compete in the cross-border payment market.”

In other markets like social media, search engines, and messaging, the Chinese government has banned conglomerates like Facebook and Google from operating within the country for various reasons, but mainly to ensure that domestic platforms such as QQ and YouKu can take control over the entire market with 100 percent of the market share.

The move of the Chinese government and the PBoC to allow foreign companies into its payment sector was unprecedented, and such a positive movement towards market liberalization could inevitably lead to speculations around the cryptocurrency market and its stance towards it.

Xi’s narrative

In Sept. 2017, almost immediately after the PBoC and the Chinese government imposed a strict ban on cryptocurrency trading, analyst Jon Creasy explained that the PBoC has taken such path to support the political narrative of President Xi. Creasy said that the government will likely open its cryptocurrency market once President Xi establishes his government again:

“Historically speaking, President Xi Jinping has been one of the largest advocates of free markets China has seen in quite some time, and I expect this trend to continue. But for now, Mr. Xi must appeal to the people who keep him in power: the Communist Party. In my opinion, banning Bitcoin exchanges is nothing short of temporary glad-handing. Supposing this is true, what should we be doing about it?”

So far, the Chinese government and President Xi have demonstrated willingness to continue their plans to liberalize the Chinese market, starting with its payment sector that is largely dominated by domestic companies.

The next target market for the Chinese government could be the cryptocurrency market, given that the Chinese government has not led additional initiatives to shut down cryptocurrency activities and projects within China. Blockchain projects from China such as VeChain and NEO are still able to continue their developments, because the Chinese government had banned the trading of cryptocurrencies, but not storing or holding them.

Chinese cryptocurrencies

VeChain, NEO, and Qtum are all multi-billion dollar projects established and developed by teams located in China. In fact, the three cryptocurrencies are some of the largest cryptocurrencies in the global market, with NEO being the 9th biggest in the market with a $3.7 bln valuation.

Cryptweeter, a well-known cryptocurrency researcher, stated that state-owned media outlets including Yicai have offered extensive coverage of VeChain, a Blockchain project and cryptocurrency based in China:

“They have started to be picked up by mainstream media in China, most notably Yicai, who have been seen tweeting and retweeting a lot about VeChain recently. Yicai are state-owned and are one of the leading financial news and investment outlets in the country.”

Given the government’s support towards native Blockchain projects and initiatives, and the election of pro-market economists like the new PBoC head Yi, it could be likely that some pro-Blockchain legislation will be released in the mid to long-term.

Although the Chinese government has banned cryptocurrency trading, it is highly unlikely that this will continue to be the case, especially if PBoC head Yi continues his long-term initiative to liberalize the Chinese markets and its leading industries, like the payments and finance sectors.

Powered by WPeMatico

Kazakh National Bank Considers Ban Of Crypto Trading, Mining In The Country

Kazakh National Bank brings up crypto exchange and mining ban, citing lack of regulation and potential for money laundering.

Kazakhstan’s National Bank is considering banning exchanges of cryptocurrency for the national currency, the tenge, as well as crypto mining, local news outlet Sputnik reported March 30.

Daniyar Akishev, the chairman of the National Bank, said that they are “taking a very conservative approach toward the matter, and it welcomes nothing but extremely tough restrictions”, stating:

“Therefore, we want to ban the exchange of digital currencies for the national currency. We want to prohibit the stock exchange’s activities in this area, as well as every type of mining.”

According to Akishev, the problem with cryptocurrencies is their lack of regulation and characteristics as an “ideal instrument for money laundering and tax evasion:”

“We minimize the risks related to the national market. However, no central bank has all the instruments to control this market in the cross-border market. Therefore, at least, we must prevent this risk via the national currency.”

Akishev told Sputnik that the “majority” of Kazakhstan governmental organization endorse this strict attitude.

Last fall, Kazakhstan showed more support for the possibility of cryptocurrencies and crypto technologies, as government-supported Astana International Finance Center (AIFC) announced that they were working on creating their own cryptocurrency, the CryptoTenge. In November, Kazakhstan’s Blockchain and Cryptocurrency Association also applied with the government to be allowed to begin conducting official activities.

In early March, a study by search engine Yandex showed that Kazakhstanis were looking up cryptocurrency-related terms in more frequency this year than in 2017.

Powered by WPeMatico

Report: Stealth Crypto Mining Much More Prevalent In Higher Ed Than Other Industries

Both crypto mining and cryptojacking are more common on college campuses than in the five other industries studied, according to Vectra report

Both intentional cryptocurrency mining and cryptojacking is becoming more prevalent on college campuses than in any other industry, according to a blog post published March 29 by cyber attack monitoring firm Vectra.

Vectra analyzed five industries where crypto mining – which the blog post defines as “an opportunistic attack behavior that uses botnets to create a large pool of computing power”, incorrectly combining crypto mining and cryptojacking into one use case – has occurred from August 2017 to January 2018, finding that “higher education” sees more mining than the other four industries combined.

Top 5 Industries with Bitcoin

Universities are not able to monitor their networks as strictly as corporations, “at best advis[ing] students on how to protect themselves and the university by installing operating system patches and creating awareness of phishing emails, suspicious websites and web ads,” leaving college campuses more open to cryptojacking schemes. The blog post notes that given the “free source of power” provided by universities to their students (meaning free of charge to students, not free of charge in essence), “[l]arge student-populations are ideal pastures for cryptojackers.”

Students, rather than malicious cryptojackers, taking advantage of this “free power” are “simply being opportunistic as the value of cryptocurrencies surged over the past year,” Vectra’s blog post writes.

Joey Dilliha, a student at Western Kentucky University, told financial news site MarketWatch that he mines crypto with a Bitmain Antminer in his room with his school’s “free electricity”:

“I believe more people should be doing it. It’s a super fun, and cool cheap way to be introduced to the market of mining.”

Dilliha adds that because the mining rig is actually a banned item in his dorm – due to it being a fire hazard – he has to “turn it off and put a blanket over it” during “dorm room check days,” adding that his “RA loves to come in and talk about it with me.”

 In January of this year, Stanford University had posted a warning against crypto mining on campus, as school resources “must not be used for personal financial gain,” as well as citing the school’s chief information security officer:

“Cryptocurrency mining is most lucrative when computing costs are minimized, which unfortunately has led to compromised systems, misused university computing equipment, and personally owned mining devices using campus power.”

Vectra also notes the problems with cryptocurrency mining and crypto jacking as “creat[ing noise that can may [sic] hide serious security issues; […] impact[ing] the reputation of an organization’s IP address […] ; [allowing] cybercriminals [to] buy access to compromised computers to launch targeted attacks against universities.”

Vectra’s blog post, which has already several times confused crypto mining and cryptojacking, then goes into detail about the mechanics of cryptojacking, mentioning Coinhive and the CryptoNight algorithm-based Monero as common ways for cryptojacking to take place.

Cointelegraph recently reported on the ethics of cryptojacking, citing both cases where permission was asked before taking over a computer’s processing power to mine (like Salon.com) as well as malicious or unknown use cases (like Showtime and Telecom Egypt).

In conclusion to their blog post, Vectra writes that

“Cryptojacking and cryptocurrency mining are profitable, opportunistic endeavors that will likely increase as they replace ransomware and adware as the de facto method for individuals looking to make a fast buck.”

Powered by WPeMatico

Is Crypto Space Fated to Become Another Dotcom Bubble?

An expert view on crypto ‘bubble’ accusations.

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com.

The cryptocurrency craze over the past year saw the prices of crypto tokens rise to tens of thousands of times their original values. And Bitcoin wasn’t the only token to reach its all-time high. Even the prices of altcoins like Ethereum, Cardano, Ripple, Stellar, and NEO were all buoyed to new heights by the increased demand from investors seeking to take a piece of the action. The cryptocurrency market hit a peak of total capitalization of nearly $800 billion in January earlier this year.

Total

The market’s meteoric rise had many, especially those from traditional investing, calling the phenomenon a “bubble.” Since people try to make sense of new events using the past, the crypto space has been commonly viewed through the lens of the “dotcom crash” in the late 1990s- the early 2000s. Hundreds of companies met their ends in the aftermath of the so-called “dotcom bubble.”

So, is the crypto space headed down a similar path?

Still a Frontier

The crypto space can still be considered a frontier. Blockchain, as a technology, is only starting to see wider, gradual, adoption. There are still a few regulations to keep ventures and participants in check. The market trades heavily on speculation. Most projects behind crypto tokens have even yet to actually show or deliver definitive real-world value.

It seems to be difficult to pin down the basis of what’s driving the performance of cryptocurrencies. Support can shift easily from one project to another even if there isn’t much fundamental basis for a token’s sudden climb.

It’s also tough to anticipate how certain events would impact the market. For example, many would have expected for China-based blockchain projects to have a hard time considering the country’s ban on initial coin offerings (ICOs). This ban, however, appears to have been quite advantageous for ventures like NEO. Since the platform’s launch preceded the ban, it essentially avoided being used by scam projects that have emerged. Support for the project is growing, and NEO’s social hype and price movement even showed resilience when Bitcoin dipped.

Understandable Comparison

Economic bubbles are formed when assets are being traded at prices that are significantly more than their intrinsic values. The crypto market’s highly speculative nature has definitely contributed to the overvaluation of a number of cryptocurrencies. Joke currency Dogecoin, for instance, has a market capitalization of over $323 million at the time of writing. It even reached over a billion dollars at its peak – an astounding achievement for a project meant to be nothing more than a parody.

So, by traditional definitions, there are bases to call what’s happening to cryptocurrencies a bubble. As such, it’s only natural and considerably fair to compare it to the dotcom bubble since it’s the most recent one that involved disruptive technologies. Both have displayed similarities in the buildup of events.

Arrival of disruptive technologies. The emergence of accessible personal computing, commercial internet service providers, and better web browser technology created a consumer market for internet companies. Internet adoption in the 90s also experienced rapid growth. As for crypto, Blockchain has been around for longer prior to this cryptocurrency boom. Use of distributed ledger technology had been proposed from more than a decade back. It was only until recently with the buzz surrounding Bitcoin and the introduction of platforms like Ethereum that it found more applications. Traditional institutions legitimized the technology by embarking on Blockchain projects themselves.

Explosion of ventures. Both events featured the sudden explosion of projects and ventures looking to capitalize on the technology. Hundreds of companies were founded during the dotcom craze. In 1999, there 457 initial public offerings (IPOs) most of which were tech companies. In March 2000 during the market’s peak, there were 4,715 companies trading on Nasdaq. The crypto industry is experiencing something similar with ICOs. In 2017, CoinSchedule logged 210 ICOs, up from just 43 in 2016. These ICOs raised more than $6 billion in funding. This year, there have already been more than 70 token sales.

ICO

Sharp climb in stock/token prices. Internet company share prices skyrocket while the dotcom industry was developing. Of the IPOs in 1999, 117 companies doubled their share prices just on the first day of trading underscoring the exuberance of the market. Nasdaq peaked in March 2000 hitting an intraday high of 5,132. Crypto tokens display even more gains. It isn’t uncommon in the crypto market to see tokens rise to hundreds of times their ICO prices in just a matter of months.

NASDAQ

These are the patterns that lead many to believe that crypto’s trajectory is the same. The dotcom bubble burst sometime in 2002. Nasdaq bottomed out in September of 2002. Bad projects are expected to eventually get exposed revealing the overvaluation. The market eventually corrects in a massive way. Coins are expected to lose their value. Projects and ventures will go bankrupt. Investors will lose their bets. This is what

Recent events seem to tease something similar. February was met by a massive correction that saw Bitcoin’s price tumble down to the $6,000 mark. Other coins also took major hits. The total market capitalization dropped by more than 60% from the peak to around $265 billion. Many thought that this was the bubble bursting. Analysts even warned that Bitcoin would go below the $1,000 mark. Token prices have been pretty volatile throughout March and haven’t found a bottom for the time being.

Lessons to Be Learned

Noam Levenson, CEO and co-founder of Eden Block, shares,

“So, the real question is not: are we in a bubble? But rather, how big will the bubble get? If we respect the natural evolution of disruptive technology, then we must understand that with every massive speculative run-up, there is an equally massive crash. From the tulip bubble of the 1600s to the Internet bubble only 15 years ago, the crashes are inevitable. Thus, the question is, what can we learn from past bubbles, and how much can they guide our actions within the cryptocurrency market?”

The case of Pets.com, the poster child of what went wrong during the dotcom era, should contain plenty of lessons for crypto stakeholders. The arrival of the internet encouraged companies to pursue direct-to-consumer e-commerce efforts. Pets.com sought to sell pet accessories and supplies much like how Amazon sold books through an online channel. The company was also able to attract venture funding that bumped up its valuations.

However, it had a poor business model and had no independent market study to ensure its sustainability let alone its profitability. The company failed to make ends meet. Trying to absorb the high shipping costs of heavy pet supplies like pet food and cat litter was clearly more than an oversight.

The crypto space is already seeing similar poorly-planned me-too ventures emerge. It seems like companies are trying to tokenize everything using Blockchain not to be minding if the technology is mature enough to handle a particular use case or if these ventures’ targeted verticals have any real need for the decentralized technology.

However, Blockchain ventures can’t be taken in exact comparison. Here are some key differences in how they operate:

Zero to minimal logistics. A lot of dotcom companies were forced to balance running both online channels and physical fulfillment. Many found themselves overwhelmed by logistics like the case of Pets.com, eToys, and Webvan. Blockchain projects deal with mainly digital transactions and tokenized assets. Unless the venture seeks to omnichannel or brick-and-mortar presence, most services interaction layer, there are minimal logistics concerns.

Smaller workforce. Since many dotcom companies had to deal with physical fulfillment, they had to hire all sorts of manpower to deal with warehousing and logistics on top of their development, sales, and marketing staff. Most blockchain teams are lean and mean. Most can even easily operate remotely lessening the need to put up physical offices and infrastructure.

Comfort with technology. Market-wise, crypto ventures also have demographics on their side. Dotcom companies had to deal with technological migrants in the boomers and Gen Xers forcing them to allot resources for client education and after-sales support. Millennials are now the dominant demographics. Participants in the crypto market are now comfortable using digital channels for big-ticket transactions.

Innovation and Sustainability

While it is only prudent and smart for anyone entering the crypto space to proceed with caution especially when it comes to trading and investing in crypto assets, it would be unfair to be totally dismissive of what the Blockchain technology has brought about. The parallels with the dotcom bubble should serve as lessons to stakeholders.

One must remember that the aftermath of the dotcom bubble also affirmed that truly innovative organizations and technologies could weather the storm. Companies such as Amazon and eBay proved that pairing novel ideas with good business acumen can lead to success.

Surely, the situation today with crypto and the environment of dotcoms from nearly twenty years ago would have their differences. Ventures must be able to navigate these nuances in order to make the best possible decisions moving forward. Whether or not crypto ventures will share a similar fate to dotcoms remains to be seen. At least for now, crypto stakeholders have a chance to write a different story.

Powered by WPeMatico

Thai Finance Ministry Releases Final Version Of Cryptocurrency Tax Framework

The Thai Finance Minister has announced the final expected version of the crypto tax framework.

Thailand’s awaited tax framework for cryptocurrencies has been announced this week by the Thai Finance Minister, local news outlet Nikkei Asian Review reported Friday, March 30.

Apisak Tantivorawong reported during a March 27 cabinet meeting that crypto trades will be taxed with a 7 percent value added tax (VAT), and returns taxed with a 15 percent capital gains tax. The first draft of the digital asset regulations, released March 14, showed that the expected tax ceiling for the digital gains crypto tax in Thailand was 15 percent.

The previous uncertainty in Thailand surrounding crypto regulations, particularly in regards to Initial Coin Offerings (ICO), had caused the Thai Digital Asset Exchange (TDAX) to pause ICOs in February in order to wait for the Thailand’s Securities and Exchange Commission’s (Thai SEC) release of a regulatory framework.

Earlier in February, the governor of Thailand’s central bank had asked all banks to stay away from investing and trading in cryptocurrency, as well as participating in and creating exchanges and platforms for crypto trading. This central bank circular only applied to banks, not to exchanges or other crypto services.

The Nikkei Asian Review wrote Friday that the new regulations have been designed to “prevent the expanding [crypto] sector from being used for money laundering, tax evasion, and other criminal activities.” The former Finance Minister, now chairman of the Thai Fintech Association, Korn Chatikavanij, noted that the Thai government has to “be cautious not to allow their conservation instincts to result in draconian regulations.”

According to the Nikkei Asian Review, Thai crypto startups are looking to the more crypto-friendly Singapore as an alternative for locating their business, citing Thai and South Korean platform Six.network – which is registered in Singapore although it held its ICO in Bangkok – as an example. The Nikkei Asian Review notes that Six.network is working with the Thai SEC to “constantly clarify the operation to ensure transparency,” citing its co-founder, Natavudh Pungcharoenpong.

Thai company J Ventures did hold an ICO in Thailand in February, raising $21 mln by selling all of its 100 mln JFin tokens within 55 hours. Cointelegraph reported on March 21 that the “coin’s future has become unclear” as even already-issued ICOs will purportedly have to comply with any future regulations within a six month period.

Powered by WPeMatico

Major Russian Bank Looks To Pilot Crypto Transactions In Switzerland

Deputy Chairman of the Board at Gazprombank says bank to start pilot crypto transactions in Switzerland

Major Russian state-owned bank Gazprombank will be conducting pilot cryptocurrency transactions in Switzerland, local news outlet Vedomosti reported March 29.

According to Aleksandr Sobol, the Deputy Chairman of the Board at Gazprombank, Switzerland was chosen due to the more liberal crypto legislation in the country.

Sobol said that “some kind of pilots” will “of course” take place, according to Vedomosti:

“This will not be on a grand scale, but for ourselves. This is a demand from the sides of our large private clients for such amenities. Therefore we are now looking at how we can organize this service for them.”

As yet it has not been decided if future crypto services will be offered to customers or conducted for Gazprombank’s own investment; Sobol said the bank is “trying to follow the situation actively.”

In January of this year, Sberbank, Russia’s largest bank, had also announced that they had chosen Switzerland as the location to open their own crypto exchange, as Russian law does not allow crypto operations.

Crypto regulation in Russia is currently under review, as the Digital Assets Regulation Bill, presented on Jan. 25, will not be released in its final version until July 1.

Powered by WPeMatico