Bitcoin Closes the Week Softer on Back of Little Newsflow: BTCManager’s Week in Review November 5, 2018
The price of bitcoin closed the week around two percent lower – reaching the $6,350 level – on light volumes and a lack of major market-moving headlines.
The main headline of the week was the publication of a research paper that suggested that bitcoin mining may accelerate global warming due to its high energy usage. This claim, however, was quickly refuted by members of the cryptocurrency community who pointed out the errors in the paper’s methodology and assumptions.
Moreover, Morgan Stanley published a report that states that the pioneer cryptocurrency has now become an accepted institutional investment asset class and, has thereby, told observers what many have already known since the start of the year.
Additionally, Goldman Sachs has reportedly started to offer bitcoin derivatives to a subset of clients. The investment bank has begun onboarding clients for its Bitcoin non-deliverable forward contracts offering, which marks another milestone in institutional investors’ adoption of bitcoin as an asset class.
The biggest movers among leading altcoins were bitcoin cash (BCH), which rose by 25 percent week-on-week as investors moved into the digital currency to benefit from the upcoming hard fork, and Basic Attention Token (BAT), which jumped15 percent thanks to its listing on the popular cryptocurrency exchange Coinbase.
Bitcoin mining could spell the doom for the environment by emitting enough CO2 to raise the average global temperature more than two degree Celsius in as little as 15 years, predicts a group of researchers. Expectedly, their take on the cryptocurrency’s environmental footprint stirred a hot debate in the crypto space with some alleging the study to be half-baked and misleading.
According to Camilo Mora, an associate professor at the University of Hawaii, Bitcoin could potentially accelerate the rapid deterioration of Earth’s climate if it were to emerge as a global transactional currency.
The study is loosely based on the CO2 footprint of all Bitcoin mining operations in 2017. Mora and his fellow researchers noted that relevant miners were responsible for nearly 70 million metric tons of CO2 in 2017 while accounting for no more than 0.033 percent of cashless transactions worldwide.
Some industry users were quick to point out that calling Mora’s work a “research paper” would be a mistake as Nature Climate Change published it under the comment section, and not as an independent featured study.
On top of that, the critics allege, the study is based on several assumptions of questionable nature. For example, they pointed out that the study doesn’t take into account that the fuel and technology used to generate electrical energy could undergo massive changes in the near future.
Goldman Sachs, the global investment banking behemoth, will soon start rolling out a Bitcoin (BTC) derivatives trading facility, and has been working with a small number of selected clients to trade the product actively, The Block reported on October 30, 2018.
Goldman Sachs, the white-shoe New York investment bank, has been one of the first major financial institutions to announce plans or a trading desk created specifically for cryptocurrencies.
Dubbed the darling of the cryptocurrency world, the bank had many observers and investors waiting for it to make a big splash into the market. However, it seems that the company is not in any rush to roll out new tradable products tied to the market.
According to reports, Goldman Sachs has been working with a small number of clients to trade the product actively and is currently researching ways to implement custody of the cryptocurrency for its customers.
The news about a digital asset derivatives trading had been stirring since October 2017 when The Wall Street Journal first reported the investment banking giant might have intentions of launching a bitcoin trading operation.
A new report from Edelman called “Millennials With Money” published in October 2018, discussed some of the tendencies of the generation which included, among other things, there relatively open stance on cryptocurrencies and blockchain technology.
Millennials are the largest generation in the United States, constituting for over 25 percent of the United States population. They are the first “digital natives,” being born in a digital age, and have experienced both economic prosperity and uncertainty.
Because of these two factors alone, corporations within the financial industry (as well as crypto startups) should pay particular attention in attempts to capture one of the largest demographics predisposed to the sector.
Millennials, who both embrace disruption and have a healthy appetite for risk, are a perfect audience willing to try out new and innovative companies even within the crypto space.
Microsoft recently partnered with Nasdaq to integrate the Microsoft Azure Blockchain into Nasdaq’s Financial Framework, a technology software that provides end-to-end infrastructure for financial providers. According to Microsoft Azure’s blog post published on October 30, 2018, the blockchain system will make it easier for traders, exchanges, and clearing houses on Nasdaq’s Financial Framework to interact and work together.
According to Microsoft Azure’s blog, the Azure blockchain will help ensure that Nasdaq’s different technologies within their monolithic infrastructure can work together to improve the overall customer experience. For example, blockchain technology can help create an interoperable communication system between the core Nasdaq Financial Framework Infrastructure, the middleware and customer technologies.
“With multiple blockchains in use by various industry participants, we believe that the combination of Nasdaq’s Financial Framework and Microsoft’s blockchain technology can remove some of the project complexities that exist in this realm,” said Tom Fay, the Senior Vice President of Enterprise Architecture at Nasdaq.
Coinbase Inc., one of the biggest cryptocurrency exchange platform in the U.S., is reportedly projecting revenue for the year of nearly $1.3 billion, according to a Bloomberg report from October 30, 2018.
Although the cumulative value of all significant cryptocurrencies has tumbled by more than 70 percent during 2018, the most significant digital asset exchange in the U.S. is having its best year yet.
In October 2018, Coinbase raised money at a valuation of $8 billion, a number that places it among the ranks of the world’s most valuable startups, which is more than five times higher than it was at the beginning of 2017.
According to Bloomberg, 2016 saw Coinbase incur a net loss of $16 million with a revenue of only $17 million. In 2017, however, the company managed to record a $380 million profit. If the trend continues, the exchange will be looking at roughly a whopping $456 million for this year.
“The companies interested in investing in us know that this is the next wave of tech innovation,” said Asiff Hirji, Coinbase’s chief operating officer.
“This was an opportunistic round. We didn’t have to go out and raise capital.”
Ethereum co-founder Vitalik Buterin announced that the blockchain platform’s next upgrade would improve its transaction capacity by a factor of one thousand. Speaking at the Devcon4 keynote in Prague, Czech Republic, Buterin reminded the audience that this long-awaited “Ethereum 2.0” update would henceforth be called “Serenity” instead. The update is set to signify Ethereum’s fourth major development milestone after Frontier, Homestead, and Metropolis from the years prior.
At the keynote, Buterin said that “Serenity is the world computer as it is meant to be. Not a smartphone from 1999 that can process 15 transactions per second and maybe, potentially, play Snake.”
Buterin said that the combination of PoS and Sharding would allow Ethereum to effectively achieve “a thousand times higher scalability.” The network will also process transactions much faster, with economic finality for each block expected in as little as ten to twenty minutes.
The Cryptoassets Taskforce consisting of the HM Treasury, Financial Conduct Authority (FCA), and the Bank of England recently released a Cryptoassets Final Report on October 29, 2018. According to the U.K. Government, the report provides a high-level overview of the U.K.’s regulatory approach to cryptocurrencies and distributed ledger technology (DLT) in the financial services industry.
It begins by defining and differentiating between the types of cryptoassets such as exchange, security, and utility tokens. They also look at the differences between permissioned to permissionless distributed ledger technologies.
The report then dives into the U.K. crypto asset market, looking at digital assets as a means of exchange, a form of investment, and a way to raise capital. While the cryptocurrency and DLT industry fall into the financial sector, the paper also analyzes the number of actors involved in the market that range from crypto asset developers and issuers to financial intermediaries.
Regarding DLT, the FCA and PRA decided to take a technologically neutral approach and position towards regulation. The FCA and Bank of England will, however, continually explore the need to regulate, as well as investigate the potential unintended consequences of controlling new technologies. The FCA concluded that changes to existing regulations are not necessary.