Crypto Around The World: Issue #2

Crypto At The Cinema in Thailand, ConsenSys Partners With China, And More…

Hello Abacus readers!

We’re back for round 2 of Crypto Around The World. This week we continued our focus on Bitcoin as a source of economic security in Venezuela and also take a quick look at Iran’s growing appetite for BTC. Besides that, there was tons of interesting news including a partnership between the Chinese government and ConsenSys as well as a Thai cinema operator beginning to accept cryptocurrency at over 500 locations in Thailand! Read away…

Venezuela Update: Donations, Miners and More…

Here’s a jaw dropping quote from the IMF:

“We are projecting a surge in inflation to 1,000,000 percent by end-2018 to signal that the situation in Venezuela is similar to that in Germany in 1923 or Zimbabwe in the late 2000’s.”

Inflation continues to increase at a rapid pace and as seen in the chart below Venezuelans continued their consistent purchase of Bitcoin.

In a moment that demonstrated the efficiency of distributing cryptoassets to at-risk populations, various Nano users sent $1.32 worth of Nano (almost equal to a one month salary) to a Venezuelan citizen who was able to purchase enough food for his entire family as well as others. He took to Reddit to give his thanks which in turn led to more awareness and another $77 of Nano being sent. In more concrete terms he was able purchase 102 kilos worth of food. You can get more details on the story here.

This story brought three things to mind:

1. We now have a verifiable example of crypto assets being efficiently distributed to at-risk populations without any formal NGO or other intermediary.

2. For the first time, virtual communities can bond to send substantial, no strings attached monetary aid to people in need.

3. This one is more abstract but… perhaps for the first time an uber wealthy individual could single handedly direct enough funds to change the economics of a country with the click of a button and a list of geographically relevant wallet addresses.

It’s not the most profitable idea but within the next couple years we’ll probably see the first charity focused DAO. The opportunity to distribute aid without any intermediaries both on the giver side and the receiver side may open up some of the most efficient and cost effective giving models we’ve ever witnessed.

Iran Is Taking A Page Out of The Venezuelan Playbook

If you haven’t been following the news, here’s a quick alert. The U.S. recently unleashed new sanctions on Iran. This has led to a “death spiral” for Iran’s local currency the Rial and now we have our second global example of two themes:.

Theme 1: Crippling U.S. sanctions leading to economic hardship on a local population who then turn to Bitcoin as a way to preserve value whilst their local currency sputters.

“On July 31, 2018 BTC was selling at approximately $19,000 in Iran while it was around $7,700 in the U.S.”

Here’s a quote from an Iranian who recently began purchasing bitcoin. Sound familiar?

“I started purchasing Bitcoin, and even Ethereum, thinking Iranian central bank will not be able to resolve the poor economic situation,” she told CCN. “I had read many reports about Chinese and Venezuelan people doing the same at the time of their economic crisis.”

Theme 2: A government that wants to evade U.S. sanctions declares it’s creating own digital currency.

That’s right, the government of Iran is creating its own cryptocurrency, just like Venezuela did with the Petro. The reason is to publicly circumvent U.S. sanctions. Fortune can give you the whole scoop here.

So who’s next? North Korea? Russia? We’re entering a new world and decentralization has a dark side that the crypto community should likely be more conscious of.

Payments Rails Aren’t As Straightforward As They Used To Be

Among a bevy of headlines from Coinbase over the last two weeks, there are two that should matter most to those who believe cryptoassets will be at the core of a new financial ecosystem.

1. Coinbase Now Offers Cryptocurrency Gift Cards in Europe And Australia (Bigger for the consumer).

2. Coinbase integrated with WooCommerce Plugin (Huge for Entrepreneurs).

With the giftcards, Coinbase is essentially telling its users “Hey, you see that BTC in your account? You can now convert that into an Amazon gift card and indirectly purchase your monthly Amazon expenditureswith Bitcoin. If you live in the U.S., where you can buy gift cards for just about anything at your local supermarket, this may seem small. But if you consider this as a global method for people to quickly translate crypto payments into tangible value, this is monumental.

Even more impactful is the integration of Coinbase Payments with WooCommerce. WooCommerce is an ecommerce platform that integrates with Wordpress and is responsible for 28% of e-commerce transactions. This means a global business owner can instantly set up a store without having to use any traditional banking services. Take this a couple steps further and the future could look something like this:

1. Raise 10K through a blockchain based p2p loan for your e-commerce business.

2. Purchase your inventory.

3. Set up your ecommerce instance with WooCommerce tied in.

4. Accept crypto through your store and pay back a smart contract enforced loan.

5. Exchange a portion of your crypto into an Amazon gift card and purchase an astonishingly sizable portion of all your needs because Amazon is taking over the world.

Enabling business that can be operationalized completely outside of the current financial system may come sooner rather than later. I wouldn’t be surprised if Coinbase started an ecosystem fund investing in projects that drive the use of cryptocurrency within e-commerce. One can dream…

And Now… A Way To Centralize Bitcoin Accounts That Could Also Usher In Adoption?

ICE (the company that owns the New York Stock Exchange) is releasing Bakkt. Put simply, Bakkt is an institutional and regulated attempt “to enable consumers and institutions to seamlessly buy, sell, store and spend digital assets.” For a deeper explanation,check out Michael Spencer’s post here.

So what is the most interesting piece here that not enough people are talking about?

“the platform will feature its own “omnibus ledger” that operates on top of the Bitcoin blockchain, similar to the Lightning Network (LN).”

The part that’s a bit out of the ordinary is that Omnibus appears to be a centralized ledger to keep account of transactions. This is actually the complete opposite of LN, but who’s keeping track? Here’s how I beleive bakkt will manifest itself.

• Banks live off of credit and lending.
• Without credit our current financial system wouldn’t exist.
• By creating a centralized layer on top of Bitcoin that also acts as a custodian and clearinghouse for user funds, ICE can effectively find a way to introduce traditional credit applications and fractional reserves into the bitcoin ecosystem.
• This also let’s them simply keep units of account without having to worry about transaction speeds. While this eliminates many of the benefits of Bitcoin it still leaves its integrity as a decentralized asset alone even though it opens the doors to centralization and unintended manipulation.
• In ICE’s brave new world, we still get a decentralized asset not run by governments, but we lose many of the benefits of anonymity and personal storage.
• I guess it all depends on what you’re willing to give up to pay for your Starbucks coffee with a Bitcoin “bakkt” credit card?

Flying under the radar in light of the Bakkt news was the fact that Germany’s second largest stock exchange is also creating cryptocurrency friendly market infrastructure. “In addition to BISON, there will be an ICO platform, a trading venue and custody for cryptocurrencies // services along the value chain are offered under one roof. Boerse Stuttgart Group is creating an end-to-end infrastructure for digital assets.” It’s going to take a while to see how this all plays out. Happy watching.

When Send Crypto To An Easily Readable Address?

Bakkt received the most attention these past two weeks but this initiative from MMX should turn heads for anyone pushing for better user experiences in crypto and wants a wallet address they can remember off the top of their head.

MMX is creating a system where users will register a .luxe (let’s u xchange) name of their choosing and tie it to a wallet address. This will make sending Ether or crypto kitties to your best friend as easy as typing in “username.luxe” and hitting send.

Crypto Companies Doing Real Things

Unfortunately, not too much to report on here these past two weeks. Either I did a poor job finding stories these past weeks (possibly) or companies that raised vast sums of money through an ICO and are doing real things are few and far between (likely).

First up, ConenSys project Civil, who will soon be conducting its ICO through Token Foundry as Foam just did, is creating a $1 million initiative targeting the Asian news market. Civil intends to create a network for decentralized journalism where citizens can fund the stories they would like to see most and journalists can form “newsrooms” to create the stories they want to write.

“In order to facilitate its ambitious plans in Asia, the company has teamed with Splice, a Singapore-based media startup, which will manage the new fund… Civil and Spice will be attempting to build up projects from scratch and get them off the ground.”

Decentraland also continued its push to become the ultimate decentralized virtual universe and launched a $5 million fund to encourage game developers to build atop the Decentraland platform. Some people may be tempted to laugh at Decentraland, but it is one of the most vibrant projects on Ethereum. It also lies right at the intersection of gaming, NFT’s, and VR, which is ripe for actual crypto use. Keep your eyes peeled on this one.

Blockstack didn’t do an ICO, but they did raise $50 million in December to create an ecosystem of blockchain applications. They just released Misthos, which could play a critical role in crypto wallet infrastructure for businesses. The team’s focus on a clean UX and general usability make it simple for business partners to sign off on transactions that require approval from all parties involved. Projects like these are tremendous for an ecosystem that needs to translate critical tech innovations like multisignature wallets into usable products. Thank you Mishtos!

If you haven’t checked out Misthos it’s worth a look.

A Movie, Some Popcorn And Some… Cryptocurrency

Lights, Camera, Action! Over 500 movie theaters will now be accepting cryptoassets at a theater near you if you live in… Thailand! The countries largest movie theater cinema operator (cinema always sounds better) will be accepting cryptocurrency thanks to a partnership with crypto POS provider Rapidz. Thailand is showing growing comfort with mobile payments and digital assets makes for a unique combination worth following.

Telegram. Small Steps Towards The First Digital Nation.

Telegram recently launched Telegram Passport “a unified authorization method for services that require personal identification.” You “can upload your documents once, then instantly share your data with services that require real-world ID (finance, ICOs, etc.). At least Telegram is putting some of their ICO funds to good use?

Ok enough making fun of Telegram. More seriously, is Telegram building a model for the world’s first digital nation? They already control a communication hub via their messaging app; they now are including identity, and next plan on introducing a currency called Ton which will facilitate global digital payments to an already bought-in user base: Telecommunications, identity, and currency all in one. Sounds like some of the core tenants of a functioning society. More and more it seems like this will be an existing corporation with easy access to a global user base rather than an existing nation operating an e-residency program.

“But how could that work?”, I hear you say. “Only nations have armies!”

Recent history has a couple examples of private companies hiring their own soldiers. Most notably, the East India Company had its own forces in India known as the Presidency Armies until the British took control of the military there. Nation states are already relying more and more on private firms for military operations. What’s stopping a company that controls its own currency from hiring its own army much like the East India Company did in the 1800’s? I don’t necessarily think it will be Telegram, but protocols or mining companies hiring armies isn’t too far away.

Here’s A Strange One. China Embracing Ethereum.

Apparently ConsenSys is partnering directly with the Chinese government. That would lead one to believe the Chinese government is potentially embracing a decentralized blockchain for various unknown initiatives. China has been “bullish on blockchain” and almost any other buzzworthy tech initiative. Over the last 12 months they have:

• Created an initiative in Nanjing to invest $1.5 billion in Blockchain public blockchain initiatives.
• Launched the Xiong’An Global Blockchain Innovation Fund to fund blockchain projects.
• Created more blockchain patents that any other country in the world.

That all being said, this one is a bit of a head scratcher being that ConsenSys seems to have a pretty strong stance on creating a truly decentralized financial ecosystem.

How does ConsenSys plan to work with a regime that has taken censorship and citizen monitoring to Orwellian levels? I’m eager to see where this somewhat oxymoronic partnership goes.

Phones On The Blockchain

Not a whole lot of news in terms of phones this week. Charlie Lee of Litecoin lore is officially partnered with HTC for the Exodus phone. As we move towards the November launch, there will hopefully be more promising developments here.

Because Without Government Regulations, We Would Be Lost! Well, Probably Not, But Overall This Is Positive.

Two biggest pieces of regulatory news are:

1. Japanese Association Seeks Authority to Enforce Self-Regulation on Crypto Exchanges

Every burgeoning industry needs elements of self regulation. During the automotive craze at the turn of the 20th century, screws and other facets of automobile construction had to be standardized so that market participants could work together and that everything wasn’t a pain in the ass for consumers. These self regulators knew what was best for the industry and created standards that would allow them to evolve as a business while delivering a great experience. The more self regulation that can be done in crypto, the better.

2. OCC Starts Accepting National Bank Charter Applications From Fintech Companies

Right now, companies like Coinbase need to apply to different states for different licenses. For all intents and purposes, exchanges like Coinbase can now apply to one regulator. This will make starting crypto businesses way simpler!

Did Someone Say Blockchain Land Registries?

The people behind Overstock’s tZERO security token exchange are now taking on… a blockchain land registry in Zambia? Yes, that’s correct. In fact, there are a number of governments already sponsoring similar initiatives as seen below:

So why is this exciting?

• Most land registries still involve paper and a host of middlemen which are susceptible to corruption, general fraud and unfortunately, literal loss of documents.
• An immutable blockchain could provide a record of account that anyone in the nation or, more importantly, anyone in the world could trust.
• Each parcel of land would essentially be a token that would be viewed as a land right.
• These tokenized land rights could than be used as collateral in a smart contract enforced loan.

The key impediment here is that people would need to agree on the token representing that right to land, whereas with Bitcoin or other NFT’s the object in question is purely digital.

If permissionless blockchains could be agreed upon as the record of account, the opportunities for property based collateralized loans via a blockchain become imminently more possible. Right now, a random farmer in Zambia can’t borrow from someone in the U.S. and put up his land as collateral. In a world where blockchain based land registries are common, we open up the the entire global economy world to open finance.

One project trying to tackle this today is Techstars backed BigBen. I find this project fascinating and will continue to follow along.

Some Articles Worth Checking Out:

Why Tokenization Is Still a Chimera: Expert Take

Here Andrea Bianconi does a great job of explaining why the hell we haven’t seen any meaningful token models yet. My favorite part below:

“On-chain tokenization is advisable when the asset can be freely transferred without the statutory need of a third-party, off-chain validation (such as with corporate debt — as in Case B above — or, for example, with unregistered real assets, such as objects of art, or plain digital assets, such as digital photos, music, etc.). Here, the blockchain fully performs its main functions, which are guaranteeing trust, transparency, immutability, non-corruption of data and non-duplication.”

Why Design Is The Killer App For Crypto

Coinbase Design director Connie Yang defines the three biggest design challenges in crypto. She’s pretty spot on. Here they are:

• Design Challenge 1: Considering a new form of “address”
• Design Challenge 2: There are no easy analogs for crypto — not even stocks
• Design Challenge 3: Creating meaning out of very long numbers

Ether as a Store of National Security

In my favorite read over the last two weeks, Cuy Sheffield puts forth a vision of Ether where it’s value is based upon its importance to economic national security. He argues that as Ethereum forms an increasingly important layer in the financial system, governments will purchase and stake Ether to ensure the blockchain remains secure and immutable. That’s a hell of a bold prediction, but who knows.

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If there are any stories you think we should cover or want to chat learn more about our work at Abacus send me an email at david@theabacus.io

I am not a professional investor and this article should by no means be considered investment advice. Cryptocurrencies are an extremely risky asset class. and I am not liable for any gains/losses that you may incur.