Bitcoin Remains Stable as First Pension Funds Enter Crypto and JP Morgan Launches Stablecoin: BTCManager’s Week in Review February 18, 2019
The two biggest headlines of the week have been investment management firm Morgan Creek receiving pension fund money for its new digital asset fund and JP Morgan launching a blockchain-based stablecoin called JPM Coin.
The price of bitcoin remained effectively unchanged around the $3,600 mark versus last week’s close.
Morgan Creek’s pension fund backing highlights that institutional investors of all kinds are willing to invest in bitcoin and its digital asset peers. If even conservative institutional investors, such as pension funds, are willing to diversify into crypto, the space can expect mutual funds, private banks, and more hedge funds to enter this space sooner than later.
While JP Morgan’s new “cryptocurrency” has been dubbed as “the bitcoin killer” by less informed pundits and “experts,” it turns out that the bank’s stablecoin lacks several key features that would make it an actual cryptocurrency nor will it be publicly tradable in the crypto markets. Hence, there was little to no bitcoin price response to this news.
Even the price of XRP did not drop significantly after the JPM Coin announcement, despite being somewhat of a direct competitor to the new bank-issued stablecoins, which suggests that the market does not consider JPM Coin as anything more than a “blockchainification” of USD to reduce settlement costs.
As one would expect when bitcoin trades flat, altcoins have a mixed week. MakerDAO and Tezos were this week’s biggest gainers among the top tokens, rallying by over twelve percent, while Tron was the biggest loser, dropping eight percent week-on-week.
Morgan Creek Digital has attracted investments from two pension funds for their new venture capital fund, marking the first of its kind in the crypto industry, according to reports from February 12, 2019.
Pension funds are one of the most heavily pursued classes of investors. This is because a single pension fund usually has accounts of hundreds, if not thousands, of people and any investment they take on is exposed to a large number of people.
Now, the crypto community has attracted its first ever pension fund investment. This was done by Morgan Creek Digital who secured two pension fund investments as reported Bloomberg on February 12, 2019.
The firm secured these investments by launching a $40 million venture capital fund which saw backing from two pension funds in Fairfax County, Virginia, along with an insurance company, a university endowment, and a private foundation.
One of the biggest selling points of a crypto venture capital fund to mainstream investors is that it is based on blockchain technology, which is an emerging innovation with varied applications especially in the world of finance.
JP Morgan will be launching the JPM coin, a dollar-backed token to be used for international transfers, securities transactions, and to replace USD for large firms, CNBC reported on February 14, 2019.
JP Morgan has made history by announcing that they will be releasing their own digital token, making them the first major bank to do so. This is huge news as JP Morgan handles over $6 trillion each day across the globe and some of that will now be done via crypto.
For the next few months, the bank will begin testing the use of their JPM coin to settle transactions between their clients. This shows that the largest financial world is paying attention to blockchain and more importantly, its use as an alternative to traditional banking services.
One of these services is international transfers, which is mostly done through the SWIFT protocol. However, such transfers often take long periods of time and have a high transaction cost.
Blockchain firms such as Ripple have successfully counter-acted that, and are able to send huge sums of money in seconds and with little transaction cost.
Banks such as the Kuwait Finance House have partnered with Ripple to take advantage of this, lest they lose the customer base over time. Even SWIFT, which has been the international standard for global transfers, recently teamed up with R3. The management of JP Morgan has clearly seen this and wants to capitalize.
Cryptocurrencies like Bitcoin are experiencing a bearish experience, but that hasn’t dampened the experience of this phenomenon. Russian cybersecurity titan Kaspersky and Coinmap have conducted a study that proves critics wrong. The research shows that Bitcoin adoption has grown 700 percent in the last five years while one in every ten online buyers has paid for purchases using cryptocurrencies.
According to the report, the research, dubbed “The Kaspersky Lab Global IT Security Risks Survey,” was conducted in 2018 covering 12,448 respondents spread over 22 countries. The goal of the study was to try and determine changes in online shoppers’ behaviors and preferred online payment methods.
As per the study, 81 percent of the shoppers still prefer debit or credit cards, but alternative payment methods are slowly catching up. The novel cryptocurrencies sector has garnered a 13 percent market share while PayPal and Apple Pay stand at 53 percent and 31 percent respectively.
Kaspersky Lab’s head of verification growth center Vitaly Mzokov stated that the researchers were surprised that despite the ongoing crypto winter, cryptocurrencies are still soldiering on. This result, according to Mzokov, is proof beyond doubt that crypto assets are viable currencies with massive potential as far as the future of online payments is concerned.
There are currently over 2,070 cryptocurrencies listed on CoinMarketCap. The founder, and CEO of Digital Currency Group, however, has said he believes in Bitcoin and believes it could replace gold someday, saying he is bullish about BTC. Barry Silbert thinks a majority of those 2,070 crypto assets will fail before you hear about them.
The former Wall Street investor Barry Silbert, CEO and founder of DCG and Greyscale Investment, told CNBC on February 14, 2019, he was more bullish on Bitcoin than he had ever been. Silbert now joins other long-term disciples of Bitcoin such as Mike Novogratz, Tim Draper, and the Winklevoss twins who have doubled up their crypto dreams amidst the ongoing crypto winter and believe the Bitcoin is right where it is meant to be.
Silbert, a long-standing industry expert who left his position at SecondMarket to dip his feet into the crypto space, admitted that while Bitcoin may look quite ugly from the technical standpoint, it still retained a relevant underlying value. According to Silbert, most of the other cryptocurrencies will eventually disappear but “Bitcoin is still king.”
He explained during the phone interview:
“I’m not a believer in the vast majority of digital tokens and believe most will go to zero. Almost every ICO was just an attempt to raise money, but there was no use for the underlying token. The vast majority of what’s out there will be eliminated.”
Fresh Humiliation for QuadrigaCX: Over $400,000 in Bitcoin “Inadvertently Sent” to Dead CEO’s Wallet
The conspiracy theory surrounding QuadrigaCX began with the December 9, 2018, death of the exchange’s Chief Executive Officer. CEO Gerald Cotton reportedly took the only private keys to the grave, depriving users of $190 million in frozen funds.
Since then, an additional $468,675 in bitcoin was accidentally transferred to the crypto exchange’s inaccessible cold wallets early this month.
While releasing their first report on February 12, 2019, Ernst & Young, the court-appointed monitor for the embattled QuadrigaCX Cryptocurrency exchange, unveiled the shocking details. In the report, Ernst & Young reported that the exchange “inadvertently” transferred $468,675 in bitcoin to a cold wallet whose private keys were only known by the now deceased CEO Gerald Cotton.
The report of the monitor read:
“On February 6, 2019, QuadrigaCX inadvertently transferred 103 Bitcoins valued at approximately $468,675 to QuadrigaCX cold wallets which the Company is currently unable to access […] the Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”
Commercial blockchain services has a new player as Intel announced on February 12, 2019, the launch of their Intel Select solution for blockchain which allows businesses to build their own blockchain based on the Hyperledger fabric.
Businesses that wish to launch their own blockchains now have a faster and more reliable way to do so as Intel has launched a commercial package based on the Hyperledger ecosystem. The new product is called the “Intel Select Solution for Blockchain” and is designed for businesses that wish to launch their own blockchain with ease. According to the announcement, the use of blockchain will provide businesses with all the classic hallmarks, namely transparency, privacy, anti-tampering protections, and traceability to transactions,
This new product will incorporate the Hyperledger fabric for the launching of applications and will also make use of the Intel hardware. The end goal is to optimize price and performance while reducing infrastructure evaluation time. This is, according to the statement, because both the Hyperledger and Intel hardware need the other to work efficiently.
The announcement writes:
“While Hyperledger Fabric provides the building blocks for scalable blockchain for business use, it still requires high-performance, easy-to-deploy hardware to bring full benefits to businesses.”