DDI Blockchain Weekly (October 8th – 14th)

3 min read

Most projects saw red during the last week as crypto markets shed around $20 million, and total market capitalization returned to $200 million. The drop was particularly pronounced on Thursday, when $6 billion was wiped out, and led by drops in Ripple and Ethereum. Although no single issue seems to have triggered the drop, markets are unlikely to have been buoyed by Nouriel “Dr.Doom” Roubini taking to the Senate floor to decry crypto as “the mother or father of all scams and bubbles.” Nonetheless, markets held firm until the end of the week.

Blockstream’s Liquid network for Bitcoin payments goes live


According to an announcement posted on Wednesday, Blockstream’s Liquid scaling solution has now been launched, after going live among its partners on September 27th. A Bitcoin ‘sidechain’ – that is, a mechanism that allows digital assets from one blockchain to be securely used in another blockchain, Liquid is described by its creators  as “an inter-exchange settlement network,” and one that will facilitate “faster bitcoin transactions between businesses and individuals, while enabling extended functionality.” 

Liquid is seen as a complementary scaling solution to the Lightning Network. But while Lightning focuses on micropayments, “Liquid is designed to facilitate fast and reliable high-value transfers,” according to Blockstream CSO Samson Mow. “Liquid allows parties to send funds to any destination, without the need to establish channels ahead of time. Funds in Lightning are ‘hot’ (private keys are online), whereas you can store Liquid Bitcoin in both hot or cold wallets. Liquid also has the ability to have Lightning added as a second layer as well, so we view these two technologies as complementary and both important for the ecosystem.”

20% of hedge fund launches in 2018 are crypto funds

According to data compiled by Crypto Fund Research, cryptocurrency-focused funds make up 20% of the total hedge fund launches in 2018. Despite the ongoing bear market this year, it has seemingly not deterred new crypto funds from entering the space. The industry witnessed 90 cryptocurrency fund launches by the end of the third quarter of this year, and the number could go as high as 120 by the end of Q4. That is 1.69 percent more than in 2017 and 471 percent higher than in 2016.

Fund Research

But while such numbers are certainly encouraging for crypto, the total number of crypto funds in operation stands at 303, which is just 3% of the more than 9,000 hedge funds worldwide. At less than $4 billion under management, moreover, Crypto hedge fund assets also represent a small proportion of the hedge fund universe.

Bitcoin developer says EOS is a scam

In an interview with Crypto Insider on Friday, renowned Bitcoin developer and blockchain educator Jimmy Song spoke frankly about several crypto projects and issues. Among his most notable assertions was that blockchain platform EOS is a “scam,” and that it “will die in a horrible dumpster fire in the next five years.” Although he did not provide reasons for holding this view, he also reserved criticism for both Bitcoin Cash and Ethereum. 

For the former: “BCH has no reason to exist, I wrote an article called “Bitcoin Cash is fiat money,” please go read that if you want to see my arguments about why I think Bitcoin Cash is worthless or it doesn’t really have any value to anybody.” And for the latter: ““Ethereum, I think it’s a platform for these scams, and that’s more or less their killer feature. I don’t think it’s technologically very interesting, most of the features that they have done are done in a very amateurish way. Like adding Turing completeness … that’s not used by anybody; it’s stupid.”

Distributed ledger technology has “huge potential”, according to World Bank chief

World Bank President Jim Yong Kim believes blockchain technology has “huge potential” to transform the banking system. Speaking at the IMF and World Bank Annual Meeting on Thursday, Kim talked about advancements in technology that can help traditional finance “leapfrog generations of bad practice, generations that would take forever in terms of reducing corruption.” And he also highlighted the use of blockchain as a tool to fight poverty and boost prosperity.

“…we think distributed ledger has huge potential and we issued the first blockchain bond in August, where we created, allocated, transferred and managed the entire bond through blockchain technology.” The World Bank and The Commonwealth Bank of Australia combined to create an Ethereum-based Australian dollar blockchain bond earlier this year. Kim additionally observed that the World Bank’s goal of providing universal access to financial services by 2020 will almost certainly require the bank to embrace new technologies such as blockchain and AI.

Coinbase active customers drops 80%

According to data from fintech-focused venture firm Tribe Capital, the number of monthly US customers buying and selling crypto on the Coinbase platform in September declined about 80 percent from December 2017 to September 2018. The numbers also support the findings from research firm Diar, which recently confirmed that Coinbase’s U.S. dollar volumes had fallen by 80% between the fourth quarter of 2017 to the third quarter of 2018.

active customers drops

Tribe compiled the data by analyzing credit card and bank transfer activity across the period. And although the numbers only cover US-based transactions, Tribe states that they still capture overall trends. Other retail-focused exchanges are also expected to have experienced similar declines.

Dr Justin Chan Dr Chan founded DataDrivenInvestor.com (DDI) and is the CEO for JCube Capital Partners. Specialized in strategy development, alternative data analytics and behavioral finance, Dr Chan also has extensive experience in investment management and financial services industries. Prior to forming JCube and DDI, Dr Chan served in the capacity of strategy development in multiple hedge funds, fintech companies, and also served as a senior quantitative strategist at GMO. A published author at professional journals in finance, Dr. Chan holds a Ph.D. degree in finance from UCLA.

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