Hodler’s Digest, May 6–12: Top Stories, Price Movements, Quotes and FUD of the Week

Published at: May 12, 2019

Top Stories This Week

Hackers Withdraw 7,000 Bitcoins in Binance Crypto Exchange Security Breach

Binance, one of the largest cryptocurrency exchanges by daily trade volume, experienced a security breach this week, losing a little over 7,000 bitcoins (BTC). CEO Changpeng Zhao stated at the time that the bitcoins were withdrawn from its hot wallets, which contain only 2% of the exchange’s total bitcoin holdings. In the interim, proceeds from the hack have been moved to seven addresses. CZ devoted a live AMA on Twitter to address community concerns in the wake of the hack, also discussing the idea of a bitcoin chain reorganization. In response to criticism of using the term “reorg,” CZ later apologized, but noted that “it is my strong view that our constant and transparent communication is what sets us apart from the “old way of doing things.”

Bitfinex Confirms Initial Exchange Offering to Raise Up to $1 Billion in Tether

Embattled cryptocurrency exchange Bitfinex confirmed it would conduct a $1 billion so-called initial exchange offering (IEO) in a white paper issued on May 8, with a Bitfinex shareholder confirming that $1 billion in both hard and soft commitments have been sealed. The exchange is currently facing ongoing legal scrutiny from authorities who accuse it of losing $850 million. The white paper notes that there will be a sale of up to 1 billion LEO tokens, each worth 1 tether (USDT), lasting until May 11, which marks the cut-off point for sales to private investors. Zhao Dong has noted that the $1 billion already committed means there is little chance of a public sale.

Facebook May Announce FB Coin Stablecoin in Q3, Say Anonymous Sources

Social networking giant Facebook is hiring PayPal staff ahead of its alleged cryptocurrency launch, making up 20% of a 50-person team, according to an unnamed source familiar with the situation. According to the source, the social network company began hiring for a dedicated blockchain team last year, under the auspices of David Marcus, himself a former president of PayPal. The same source notes that the Facebook Coin could be launched as soon as the third quarter of 2019. The Committee on Banking, Housing, and Urban Affairs of the United States Senate is now seeking information on Facebook’s reported cryptocurrency project in response to the rumors over the project.

Bloomberg Report: Fidelity Will Start Institutional Bitcoin Trading Within Weeks

United States $7 trillion investment firm Fidelity will reportedly roll out bitcoin (BTC) trading for institutional clients in the coming weeks, an unnamed source told Bloomberg. According to this source, Fidelity’s cryptocurrency-focused spin-off, Fidelity Digital Assets, would be adding to the existing range of services, with trading to go live in as soon as in a few weeks. The source noted that the service will primarily target large-volume traders like other over-the-counter (OTC) offerings. Fidelity has not itself confirmed the time frame of the service offering, but did hint that its future direction would only involve more integration with the bitcoin space. Fidelity Digital Assets launched in October 2018 and has offered cryptocurrency custody from March this year ahead of planned OTC trading.

Starbucks Working With Microsoft for Blockchain-Based Coffee Tracking Platform

United States-based coffee chain Starbucks will begin using Microsoft’s Azure Blockchain Service to track the production of its coffee. The “bean to cup” initiative, first announced in 2018, involves farmers in Costa Rica, Colombia and Rwanda piloting a blockchain-based coffee-tracking system. The system, whose pilot program will be made open source by Starbucks, will allow customers to track the production of their coffee and will open up potential financial opportunities for coffee bean farmers on the back end. Microsoft’s Azure Blockchain Service is a blockchain-as-a-service (BaaS) platform that currently supports Quorum, the Ethereum-based platform of JPMorgan Chase.

“It doesn’t do anything. It just sits there. It’s like a seashell or something, and that is not an investment to me.”

– Warren Buffet, Berkshire Hathaway CEO

“Cryptocurrencies or bitcoins, or anything like that, are not really currencies — they are assets. A euro is a euro — today, tomorrow, in a month — it’s always a euro. And the ECB is behind the euro. Who is behind the cryptocurrencies? So they are very, very risky assets.”

– European Central Bank (ECB) President Mario Draghi

“The debate is over, bitcoin won. It is now seen by people all around the world as a legitimate place to [store] their value.”

– Michael Novogratz, CEO of crypto bank Galaxy Digital and former Goldman Sachs partner

“And I think the people who are professional traders that go into trading cryptocurrencies, it is just disgusting. It is like somebody else is trading turds and you decide, 'I can't be left out.’”

– Charlie Munger, billionaire investor and vice chairman of American holding conglomerate Berkshire Hathaway

Winners and Losers

At the end of this week, bitcoin is trading up, at around $7,154 as of 7:35 a.m. EST. Ether is at $190, XRP $0.31 and the total market cap is at about $213 billion.

The top three altcoin gainers of the week are kurrent, cryptosolartech and everus. The top three altcoin losers of the week are icocalendar.today, lendroid support token and commerce data connection.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

“Blockchain, Komgo, Forcefield, Vakt, one of these will have to work to change how trade is being done. It’s a matter of time. When, I can’t tell, but I think it has to go paperless.”

– Ng Chuey Peng, managing director and head of global commodities finance at Singapore’s Oversea-Chinese Banking Corp Ltd. (OCBC), speaking about the trade finance industry

“I actually think we should shut down the cryptocurrencies.”

– Joseph Stiglitz, American economist and Nobel Prize winner

“Ultimately we want to be able to tokenize existing securities — equities, fixed income, funds. Maybe the token will eventually replace the share one day.”

– Thomas Zeeb, head of securities and exchanges and director at SIX

“If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us.”

– Unnamed CFTC official speaking about ether futures

“I eventually want to have a fund where I take in bitcoin and I fund everybody in bitcoin and they pay their employees and suppliers in bitcoin and then I pay my investors in bitcoin.”

– Tim Draper

Prediction of the Week

Galaxy Digital CEO Michael Novogratz: Bitcoin Should Cross $20,000 Within 18 Months

Michael Novogratz, Galaxy Digital CEO, predicted this week that, in his opinion, bitcoin will beat its all-time high price within 18 months. During an interview, Novogratz added that $6,000 is a stall point, and the next one will be $10,000. The CEO also noted that altcoins were not likely to follow bitcoin’s rise, as they still have to prove their use cases. Illustrating his point with an allusion to the table of elements, Novogratz pointed out that, out of the 118 elements present on the periodic table, only “gold has store of value just because.”

FUD of the Week

U.S. Court Orders Craig Wright to Provide Bitcoin Ownership Records

The United States District Court of the Southern District of Florida issued an order this week that requires Craig Wright, the self-proclaimed Satoshi Nakamoto, to provide a list of his public bitcoin (BTC) addresses. The court’s order is part of a continuing case against Wright that has been filed by the estate of computer scientist David Kleiman over Wright’s purported thefts of hundreds of thousands of BTC. The plaintiffs had requested that the court make Wright turn over a list of the public addresses of bitcoin he owned as of Dec. 31, 2013, as well as identify all bitcoin allegedly transferred to a blind trust in 2011.

Chinese Social Media Giant WeChat Bans Crypto Transactions in Its Payment Policy

Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy this week. According to a tweet with an alleged screenshot of the policy changes, users who engage in cryptocurrency trading will have their accounts terminated. The updated rules — coming into force on May 31 — state that “merchants may not engage in illegal transactions such as virtual currency," the issuance of tokens, selling pornography or online gambling. WeChat is a popular messaging and payments service provider in China with the overall number of users allegedly reaching 1.098 billion by the end of last year.

“It’s like being on the internet; so people can spin out and they can start owning bitcoin, they can start owning ether. Some percentage of the user base is likely to do so, and again I think that’s gonna be a dramatic catalyst.”

– Spencer Bogart, partner at Blockchain Capital, speaking about Facebook Coin

“Blockchain...very interesting development.”

– Charles, Prince of Wales

“An awful lot of our international power stems from the fact that the dollar is the standard unit of international finance and transactions [...] it is the announced purpose of the supporters of cryptocurrencies to take that power away from us.”

– United States Congressman Brad Sherman

“We should not be trying to guide innovation, but we also should recognize that we cannot stop it and embrace the potential for positive change that innovation offers. Our silence is likely to simply push this innovation and any attendant economic growth into other jurisdictions that have done their work and provided clear guidelines for the market participants to follow.”

– United States regulator and so-called “crypto mom” Hester Peirce

“We have teams clearly working on blockchain and cryptocurrency as well, and we want to participate in that in whatever form it takes in the future. I just think it’s a little early on right now.”

– PayPal CFO John Rainey