Today is a record moment in US history. The total national debt has surpassed $22 trillion for the first time ever.
The runaway mountain of debt is a terrifying reminder of how fragile the fiat monetary system is. If you want to watch it pile up in real time, visit the US debt clock. It’s a sobering vision of a system out of control.
This is why bitcoin matters. Bitcoin, with its fixed supply and anti-inflationary policy, is an antidote in waiting.
US Debt Climbs by $1 Trillion in a Year
The national debt jumped $30 billion in the last month alone. In total, the US racked up more than $1 trillion worth of debt in the last year.
The debt has spiraled since Donald Trump introduced his $1.5 billion tax cut plan last year. However, we should point out that Obama was a much worse offender. The national debt doubled under his presidency.
The national debt doubled under Obama’s presidency. Source: debtconsolidation.com
This isn’t the fault of any one president. It’s the fault of an economic system that is slowly failing us.
Although many will maintain the economy is booming, this is a car crash coming in slow-motion. As Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities explained to CNBC:
“Even if you think that public debt just doesn’t matter to economic outcomes, the thing you have to admit is that when we hit a downturn, governments are less likely to take significant steps if the debt is as high as ours is now.”
This is Why Bitcoin Matters
When the next recession comes (and it will), the US will find it much more difficult to pay back the debt. And they’re unlikely to support struggling institutions like they did in the wake of the 2008 crisis.
Instead, they’ll be forced to turn to the Federal Reserve to print more dollars.
In effect, this increases inflation and pushes down the purchasing power of your money. In the worst cases, it can lead to hyperinflation as we’ve seen in Venezuela.
Bitcoin is the alternative monetary system. It’s the antithesis of fiat money like the dollar.
Unlike fiat, it has a fixed supply so central banks can’t endlessly print more. And its monetary policy is not controlled or manipulated by any one entity.
When the debt bubble finally pops, people will flock to an alternative. ShapeShift CEO Erik Vorhees has predicted that the growing national debt will inevitably lead to a crypto boom.
For now, the national debt continues to build. As Judd Gregg and Edward Rendell of Campaign to Fix the Debt conclude:
“[This] is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation.”
Featured Image from Shutterstock
Source: US National Debt Hits Terrifying $22 Trillion. This is Why Bitcoin Matters.
The company announced Monday that it has partnered with New Zealand-based blockchain data and research firm Brave New Coin to offer information on the two new indices starting Feb. 25.
The Bitcoin Liquid Index (BLX) and the Ethereum Liquid Index (ELX) will offer “real-time” information on the Nasdaq Global Index Data ServiceSM (GIDS), its consolidated data feed, Nasdaq said.
Specifically, the BLX and ELX indices will offer a “real-time spot or reference rate” for the price of 1 bitcoin (BTC) and 1 ethereum (ETH) respectively, quoted in USD, and “based on the most liquid ends of their markets.” The data will be refreshed at a frequency of thirty seconds.
Nasdaq said both the indices are calculated using a methodology that has been “independently audited” against the International Organisation of Securities Commissions (IOSCO) principles.
“The BLX is one of the most widely-referenced BTC indices among crypto traders and has been calculated back to 2010. Likewise, the ELX has been calculated back to 2014,” the exchange operator added.
Nasdaq has been very active in the crypto and blockchain space, including investors in industry startups. Last month, the firm led a $20 million Series-B funding round of enterprise blockchain startup Symbiont.
Back in November, it was revealed that Nasdaq has partnered with investment management firm VanEck to “bring a regulated crypto 2.0 futures-type contract” to the market in 2019, though no additional details have been revealed since then.
Nasdaq image via Shutterstock
Source: Nasdaq to Add Bitcoin and Ethereum Indices to Global Data Service
Amidst the worst bear market in the 10-year history of the crypto market, Bitcoin traders have pivoted from long-term strategies to derivatives and options.
According to a Bloomberg report, individual Bitcoin traders, as well as many initial coin offering (ICO) projects and investment firms, are engaging in over-the-counter (OTC) derivatives trading.
Hundreds of Millions of Dollars in Bitcoin Derivatives
Outside of the crypto exchange market, investment firms like QCP have actively been trading derivatives with other entities within the digital asset sector.
The report revealed that QCP has initiated several multi-month call options with counterparties such as ICOs and miners.
Derivatives deal in the OTC market would work like this: if an investment firm projects the Bitcoin price to go up in the near-term, it strikes a deal with an entity holding a certain amount of Bitcoin.
If the price of Bitcoin hits the target of the investment firm, it will be able to purchase the amount of Bitcoin listed in the options contract based on the market price of when the deal was established.
However, if the price of Bitcoin falls, the counterparty gets to take a premium plus the original amount of BTC that was initially offered.
Last month, Bloomberg reported that QCP established a deal with an ICO project involving 250 BTC worth $900,000 when the price of BTC was $3,625.
Chart via TradingView
QCP and the counterparty agreed on a strike price of $4,200 and if BTC increases above the $4,200 mark in the upcoming months, the investment firm will be able to purchase 250 BTC at $3,625. But, if BTC falls, it will have to pay the ICO project $66,250.
ICO firms, mining companies, and individual investors in the cryptocurrency market are actively engaging in such deals due to the lack of volatility of cryptocurrencies and the massive 80 percent decline the asset class has suffered since January 2018.
Alameda Research CEO Sam Bankman-Fried said that investors are trying to acquire as much cash as possible during the bear market to acquire digital assets as they fall in value.
“Anyone sitting on a stockpile of tokens saw in the bear market of 2018 that their business is at the mercy of crypto prices. It can be crucial for those players’ survival to have some cash if digital asset prices go down,” Bankman-Fried said.
As of February, around $500 million is estimated to be involved in the OTC Bitcoin derivatives market.
Ultimate Sign of Crypto Winter
Investors have become desperate to acquire more cash in the bear market, foreseeing a further drop from the current price range.
Optimistic deals such as Morgan Creek’s recent $40 million raise from two public pension funds, an insurance company, a university endowment, and a hospital have improved the sentiment of the market.
But, investors are still uncertain about the near-term of the cryptocurrency market and generally do not expect an accumulation to occur prior to the latter half of 2019.
“I’ve been too optimistic about the pace of institutional adoption in the past. It’s coming, but I can’t estimate which quarter (Whether that’s this year or 2022) that we’ll see a big spike. As a humble guess, something like Q3 2019,” Paul said earlier this month.
The third and fourth quarter of 2019 posses a variety of catalysts and fundamental factors that could lead the cryptocurrency market to increase substantially in valuation.
Historically, BTC has tended to increase in price a year before a block halvening. The next block halvening of BTC is estimated to occur in June 2020. Hence, traders expect BTC to begin recovering by around May of this year.
Major financial institutions like Fidelity, Nasdaq, and ICE are expected to introduce cryptocurrency investment vehicles around the same time frame.
However, until that point, the sentiment of investors in the cryptocurrency market will likely remain gloomy, which could fuel the activity in the OTC derivatives market.
Click here for a real-time bitcoin price chart.
Featured Image from Shutterstock. Price Charts from TradingView.
Source: Bitcoin Traders Turn to Derivatives in Droves: The Ultimate Sign of Crypto Winter?
Source: Looking beyond the hype of blockchain: A business guide – The Block
Blockchain has long been a buzzword that has been drifting throughout the technology space with little understanding for those not in the know. However, in 2018 a lot more is understood about the technology and the mainstream has finally started to recognise its potential. With countless successful business cases due to the implementation of the blockchain, the technology has built quite the reputation for itself. Examples of integration have become apparent in the not-so-obvious industries rather than the usual updates from the fintech companies. Revolutionary developments in the marketing and advertising industry, as an example, has left many business leaders with the craving to integrate the technology as part of their own endeavours.
However, blockchain is a very complex technology and it’s important decision makers understand what it is, how it works and how it could affect a business before jumping on the ‘bandwagon’ and implementing it without research.
Blockchain was originally introduced in 1991 to prevent tampering of digital documents. However, due to a limited uptake it wasn’t till 2009 when bitcoin came into the picture and launched blockchain to where it is today. What makes blockchain so revolutionary is its ability to encrypt and secure data once it has been recorded; making it very difficult to tamper with. This singular aspect makes the technology particularly attractive for many industries who value security as a priority.
Despite the praise blockchain has received over the past few years, a large number of projects still fail, who have set out to reach their objectives using the blockchain. It is not a case of the blockchain not being ready, the technology is very effective and works. The problem therefore lies with those in charge of the implementation, and this usually comes down to a lack of understanding of their business needs as well as the technology itself.
Improving collaboration with blockchain
Firstly, a business should look to analyse its own situation to pinpoint which parts are in need of attention or reinvention. Collaboration within a business is usually an area of interest to refresh as businesses continue to look for ways to innovate and increase employee productivity. In this case, blockchain technology has the potential to provide the perfect solution to achieve enhanced collaboration.
The blockchain doesn’t disrupt databases, but it disrupts how databases get synchronised between each other. A single ledger of transaction entries means that both parties involved have access to the document in question simply. The coordination and validation efforts therefore become straightforward because there is always a single version of records. By improving the collaboration between records, without compromising security in the slightest improves workflow and productivity. After all, employee productivity is paramount to a successful business, without it organisations lose creative innovation which impairs their ability to stay relevant, competitive and profitable.
Stay secure with blockchain
The next thing to consider would be the most threatening aspect to your business – data security. However, if the most threatening aspect is a cyber data breach which has the power to expose sensitive customer information then blockchain would seem an ideal solution. Blockchain technology provides a business with complete control over how, when, what and who can access company data.
The blockchain technology in this case, will allow a business to collaborate effectively and efficiently, securely sharing trusted data with full auditability and accountability without a second thought. Company confidence when handling its customers data will also prove profitable in terms of competing with rival business who perhaps don’t have the same level of security in place.
Payment processes with blockchain
Blockchain technology first gained notoriety because of the use of cryptocurrencies in 2009 when Bitcoin integrated the technology to completely revolutionised the way currency is handled online. It is also a pivotal point where blockchain established itself as a major player in the industry and since been well renowned for its integration. The third and final guidepoint therefore refers to the transaction of secure payments.
Once the payment process in a business is perfected, this can open up new sources of liquidity for the business. A blockchain-run payment processor would provide companies with nearly instant, diverse ways to use their cryptocurrency assets, allowing for improved liquidity and decreased liability. Afterall, streamlined payments improve internal efficiency and automation. And as more companies adopt crypto and blockchain technology as part of their payment processes, exchanging between other businesses is also going to become more effective and streamlined.
Just like any innovation, little was understood about blockchain when it was first introduced but has since been recognised for its ability to disrupt other areas in ways it was far from intended for.
2018 seemed to be the year of this widespread implementation and ‘hype’, and it’s important, as a business, to look beyond the craze and understand what the technology could really enhance your daily operations. Increasing internal collaboration, the protection of sensitive customer data and the process of secure payments are just some of the ways in which businesses can evaluate their own situation and decide whether the implementation of blockchain will be the technology to revolutionise your process.
Interested in hearing leading global brands discuss subjects like this in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America.
image source: istockphoto.com
Source: The Daily: Bittrex Opens OTC Desk, Bakkt Acquires Futures Team The Daily
In today’s edition of The Daily, we cover a number of stories that show how the cryptocurrency ecosystem is evolving to become more inviting to institutional investors. Bittrex exchange opens an OTC trading desk, Bakkt “acquihires” a futures compliance team, and Swiss investment bank Vontobel launches a custody solution.
Also Read: Bitwise Asset Management Files With SEC for New Bitcoin ETF
Bittrex Opens OTC Desk
U.S.-based digital asset exchange Bittrex has announced that it has opened an over-the-counter (OTC) desk, which includes trading on nearly all 200 tokens available on the platform. It will offer approved customers with reduced price risk, rapid trade execution and guaranteed pricing for large trades, which are typically $250,000 or greater. The new OTC desk will also accept both cryptocurrency and USD wire transfers for deposits.
“We’re excited to offer this new, game-changing trading option for our customers,” said Bittrex CEO Bill Shihara. “With one of the most extensive selections of digital assets of any OTC desk available, this offering will be another way for Bittrex to further advance adoption of blockchain technology worldwide, while also providing our customers with price certainty and a fast and easy way to trade large blocks of digital assets.”
Bakkt Acquires Futures Team
Bakkt, the digital asset subsidiary of Intercontinental Exchange (NYSE: ICE) which recently raised $182.5 million, has completed its first acquisition. The company announced it entered into an agreement to acquire certain valuable assets of Rosenthal Collins Group (RCG), an independent futures commission merchant.
The goal of the deal is to purchase capabilities needed for developing the bitcoin futures platform. The transaction is expect to close in February and will include the members of the RCG team joining Bakkt. It is said to enhance the company’s risk management and treasury operations with both systems and expertise, as well as to contribute to its regulatory, AML/KYC and customer service operations.
“This acquisition underlines the fact we’re not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets,” stated Bakkt CEO Kelly Loeffle. “Our mission requires significant investment in technology to establish an innovative platform, as well as financial market expertise to deliver the most trusted fintech ecosystem for digital assets.”
Vontobel Launches Crypto Vault
Investment bank Vontobel, the third-largest provider of B2B custody and execution services in Switzerland, has launched a ‘Digital Asset Vault’. The service allows Vontobel’s clients, which include over 100 banks and wealth managers, to issue instructions for the purchase, custody and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. Financial intermediaries could also use the service to offer their own clients a solution for digital assets.
“Digital Asset Vault represents the logical next step in the development of our range of services for digital assets. With our innovative strength and experience, we have thus closed the gap between existing and digital assets. By incorporating digital assets into our own banking infrastructure, we have also become the first provider to already meet the high standards required by financial intermediaries and their regulators,” stated Roger Studer, head of Vontobel Investment Banking.
What do you think about today’s news tidbits? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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