Weekly Insights #36

June 21: The crypto market experienced a rapid surge this week. Bitcoin first broke $9k on Sunday and almost touched $10k today, with a healthy increase of 29% in “Real 10” market turnover. Even though the market performed well, the hot topic of the week was the reveal of Facebook’s Libra project, which we explore below. Additionally, Ethereum developers set a target launch date for the Ethereum 2.0 genesis block, IBM unveiled a new version of their enterprise blockchain, and Binance announced wrapped coins on Binance Chain.

 


NOTEWORTHY NEWS

Ethereum 2.0 Planned For Launch on January 3, 2020-June 15, Trustnodes

Phase 0 of Ethereum 2.0, the Beacon Chain, is targeted to launch on January 3, 2020, with the code to be finalized by June 30. Initially, a deposit contract will be launched ahead of the genesis block to allow validators to make deposits. This could take place in October at Devcon in Japan with a deposit contract ceremony so that there will be no confusion about the deposit address. The target balance in the deposit address will be at least 2m ether and at least two clients to reach production status. This means that the cross-client testnet must be running without suffering from major issues for a healthy amount of time. The full Eth2.0 Implementers Call #19 can be viewed  here.

 

IBM Unveils Upgraded 2.0 Version of Enterprise Blockchain-June 18, Coindesk

IBM has launched an upgraded version of its enterprise blockchain platform. The rearchitected IBM Blockchain Platform allows clients to deploy to public clouds like IBM Cloud, AWS, and Azure, or on company-hosted private clouds like LinuxOne. It also adds support for app management and deployment platform Kubernetes. In addition, the revamped IBM Blockchain Platform has a number of new and improved capabilities allowing firms to manage the entire lifecycle of a blockchain network.

 

Binance is Launching Crypto-Pegged Tokens on Binance Chain, Starting With Bitcoin—June 17, Binance Blog

Binance will issue a number of crypto-pegged tokens on Binance Chain in the coming days, starting with BTCB, a BEP2 token pegged to Bitcoin. Pegged tokens will be 100% backed by the native coin in reserve, and addresses will be published publicly. The ordinary Binance exchange will offer native-to-pegged trading pairs (BTCB/BTC). Binance will maintain large buy orders with a 0.1% price spread that will be used to convert back to the native coin. The benefit is that Binance’s DEX service will be able to operate various trading pairs that would otherwise be impossible.

 


 DIGITAL ASSETS ON THE MOVE

Facebook Finally Reveals Libra

What does this mean for crypto?
Facebook released the Libra whitepaper on June 18, announcing the digital asset Libra as a “simple global currency and financial infrastructure that empowers billions of people” and will provide financial access to the 1.7 billion unbanked adults who have a smartphone and internet access. 

The Libra Blockchain is open source and supported by a new programming language called Move. The core mechanism of the blockchain enables the creation of a unique governance mechanism that will initially be permissioned, similar to Proof-of-Authority-based networks, but that aims to eventually become permissionless. Libra will use pseudonymous accounts, just like traditional public blockchains, and will support smart contracts that can enable various activities. Initially, Libra will be governed by The Libra Association, a not-for-profit independent entity based in Geneva, Switzerland. The founding members of the association each run one of the validating nodes, for which they had to contribute $10m. The currently committed organizations come from various fields: Mastercard, Visa, PayPal, Ebay, Uber, Vodafone, Coinbase, Andreessen Horowitz, and others. It is notable that the current committed members do not include any other tech giants like Amazon, Google, or Apple, or any banks at all. 

The digital asset Libra will be backed by a collection of low-volatility assets, including bank deposits and government securities in currencies from stable and reputable central banks held in The Libra Reserve. Customers who buy Libra will transfer their interest earned from deposits and securities to the network operators, and this interest will be used to cover the costs of maintaining the network. Founding Members will be given an allocation of the Libra digital asset that will be given away in incentive programmes. Founding Members and others will be able to purchase Libra investment tokens in return for their capital pledges. This is a security that differs from the Libra digital asset and will entitle the holder to the cash flows derived from interest payments once the system is profitable. Calibra is a regulated subsidiary of Facebook created to “protect users from data-based conflict of interest” and will build and operate services on top of the network. The first product of Calibra will be a wallet for Libra that will be available as a standalone application but will also be integrated into Messenger and WhatsApp. Calibra is registered as a money services business in the US and will implement the necessary KYC measures for its customers.

There was instant political opposition from around the world soon after the project was revealed. The French Finance Minister opposed the idea of “Libra becoming a sovereign currency,” a US lawmaker called on Facebook to pause the project, Russia will not legalize the use of Libra, Australia’s central bank governor expressed concerns about regulatory issues, the Bank of England will not keep “an open door” to Libra, and Libra may not be welcomed in India.

The project is very interesting, as it presents a centralized but completely new governance system compared to existing solutions. The Libra digital asset is definitely not a cryptocurrency in the traditional meaning like bitcoin is. It is a new type of asset on a new type of infrastructure. It still depends on fiat currencies (and thus monetary policy from central banks) as they are included in the basket, but it could include other assets like bitcoin or ether in the future. The project is positive for the crypto space because it brings a lot of attention from regulators, companies, and consumers around the world. It has the potential to introduce billions of people to the concept of digital assets issued on distributed ledger technology. It does not compete with Bitcoin or Ethereum, but rather competes with commercial banks and even with central banks to some extent. Smaller and not globally important currencies are under direct threat, as citizens can now easily avoid the negative effects of domestic monetary policy, such as currency devaluation, by converting to Libra, which is less radical for an average consumer than converting all their savings into bitcoin, for example.


 MARKET OVERVIEW & METRICS

Weekly Market Overview, June 14 to June 21, 2019. Source: Coin360

Weekly Crypto Stats

  • Global network value is $303.04B, 15.51% weekly delta.
  • Global crypto market turnover is $67.66B, 36.26% from ATH.
  • Real 10 market turnover was $3.16B, 28.98% weekly delta.
  • Bitcoin dominance is 57.86%, with 4.06% weekly delta, and beta of 0.86.
  • Ethereum dominance is 10.17%, with -2.02% weekly delta, and beta of 1.25.
  • Bitcoin hashrate is 53.04B TH/s, with -5.28% weekly delta.
  • Ethereum hashrate is 162.96K GH/s, with 3.65% weekly delta.

CHART OF THE WEEK

BTCUSD Realized Cap compared to Network Value – Historically it is a good indication to buy when network value falls below the realized cap.

Source: Twitter @nic_carter

Information provided above is not to be considered as an investment advice.

ANNOUNCEMENT

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