In brief

• Venture capital funding for the crypto and blockchain industries has all but flatlined in the wake of the coronavirus pandemic.
• Some VCs believe that blockchain is poised to benefit from the aftermath of the pandemic; others caution against a post-COVID "gold rush."
• Investors are taking an interest in "digital transformation" and companies in the "virtual world".

The coronavirus pandemic has changed the world. From the way we work to the way we socialize, nothing will ever be quite the same again. For the blockchain and cryptocurrency industry, the pandemic caused an even wilder ride than usual—and that’s in an industry famed for its volatility.

The cryptocurrency market tumbled alongside global ones in the middle of March, but it made a stunning recovery by the time Bitcoin underwent its third “halving” in early May. 

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But the question remains: what happens next? The battering taken by the global economy could mean that less money is directed into the crypto and blockchain industry. Less money flowing to new products could deflate the expansionary bubble of, say, decentralized finance (DeFi). So, where is venture capital money going, post-coronavirus? 

Crunching the numbers on VC funding

In April, at the height of the pandemic, disclosed VC funding for crypto projects dropped by more than 50%. Since then, overall funding in the blockchain industry has stagnated, according to Crunchbase.

For two groups on the site, one with 1,306 top blockchain companies and another with 5,878, there hasn’t been much in the way of new funding this year. The former records a $10 million increase in funding, from $7.1 billion in Q1 to $7.2 billion in Q3 (with no increase in Q2).

The latter, larger group also reports an increase of $10 million, from $21.1 billion to $21.2 billion, (also with no increase in Q2.)Crunchbase, of course, doesn’t tell the whole story—many funding rounds are still crowdfunded through ICOs. Just a month ago, the Celsius Network reported a $10 million investment led by Tether, while DeFi Money Market reported a $6 million token sale. 


 Coronavirus

COVID-19 sets crypto startup funding back a year

However, most venture capitalists Decrypt spoke to corroborated the funding squeeze during the lockdown. Some said that funding has since recovered as countries start to reopen.Wayne Lin, founder of Axia8 Ventures and a former senior partner of Shanghai-based BN capital, estimates (as a “snap judgment”) a 40% decline in crypto funding since the start of the year.

Of that, he attributed 20% to the coronavirus, which crashed the global economy, seized up funding and niche crypto industries, like the Bitcoin mining industry. The other 20% he put down to dwindling interest in an industry that for years had over-promised and under-delivered. 

“We're roughly back to where we were a year ago.”Jamie BurkeJamie Burke, CEO of London-based Outlier Ventures, said that global venture capital funding dropped by about 20% since December, to lows of $50 million—although this picked up to $93 million in May.

“Whilst there was a significant drop throughout corona, it's actually picking up significantly,” he said. “We're roughly back to where we were a year ago,” he said. Burke said that around a third of new funding is going to decentralized finance companies.


 Coronavirus

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Ran Neuner, CEO of OnChain Capital and host of CNBC Africa’s Crypto Trader, said much the same. “Many of the VC funds paused all investments, sometimes even those with signed term sheets and the like,” he said. 

Neuner operated a “Runway Fund” to keep crypto companies afloat during the pandemic (in exchange for equity). But as markets recover, “they continue to invest and in fact they are chasing deals like they did in the raging bull market.”

Could the coronavirus be a boon for blockchain?

Neuner thinks that COVID-19 even increased interest in Bitcoin. “This pandemic and the related flow into Bitcoin have certainly cemented BTC as a bona fide asset class that is here to stay,” he said (something elite investment bank Goldman Sachs vehemently disputes).

“There are many solid deals out there today and a whole lot of capital to fund them,” Neuner added. “Crypto is now a much more mature asset class and even the more traditional investors are deploying in the space.”

“Crypto is now a much more mature asset class."Ran NeunerKailin O’Donnell, Co-Founder and General Partner at NEM Ventures, is equally full of gusto.

“The blockchain industry seems to have for the most part dodged the worst impacts of the virus, and in many respects has benefited from the vast shift towards digital,” he said. “Large swathes of the industry were entirely digital and remote-based, allowing many blockchain companies to continue operating as normal.” 


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 Lin, however, is hesitant to look forward to a gold rush once the coronavirus subsides. “There has not, in my eyes, been a super, world-changing development or progress on blockchain tech,” he said. Which suggests there’s no reason to expect more funding.So, where will the attention of VCs focus, now that the world is starting to emerge from lockdown?

The post-lockdown crypto "opportunity"

O’Donnell, of NEM Ventures, said that funding will (obviously) toward ending the pandemic and also streamline remote working.Simon Kim, Managing Partner and CEO at Korean-based VC fund, Hashed, said that investors are “taking greater interest in companies in the virtual world.

” Kim’s firm has observed “an increasing demand from investors for investment opportunities in digital transformation—from contactless to automatization technologies—without sacrificing trust and integrity,” he said. 

“For crypto, COVID-19 is an opportunity.”Simon KimBoth Kim and O’Donnell think that this could be blockchain’s time to shine. The pandemic “opens up more investment opportunities for blockchain-based projects,” said Kim. VCs “understand the need for Web 3 technologies,” he said. “For crypto, COVID-19 is an opportunity,” he said. 

Nevertheless, he's treading lightly: “We still want to be cautious (conservative) considering the macroeconomic trend,” Kim said. The global economy has collapsed and excessive money printing could cause the depreciation of fiat currencies, like the dollar or the yuan. Kim is looking for “companies that can survive for a long time with a low budget.

” Still, where possible, he’s interested in investing. Blockchain is “able to enhance the trustworthiness of user privacy and data of participants” and its infrastructure “can reduce the cost of cross-border transactions and transaction fees online,” he said. 

 Coronavirus

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That’s why Hashed has invested in Voithru, a platform that crowdsources translations for 90% of Korean Youtubers’ foreign language subtitles and pays out in stablecoins.

Foreign interest in Korean content has increased after Parasite won the Oscar, he said, watched by quarantined Americans with more time on their hands.However VCs invest, it is clear that, at least among those that still believe in the capability of Web3, the funding will keep coming. 

“Blockchain and crypto are clearly here to stay,” said Alexander S. Blum, co-founder and COO of crypto asset management firm Two Prime.

DISCLAIMER

THE VIEWS AND OPINIONS EXPRESSED BY THE AUTHOR ARE FOR INFORMATIONAL PURPOSES ONLY AND DO NOT CONSTITUTE FINANCIAL, INVESTMENT, OR OTHER ADVICE.

The sharing economy is fast transforming how we interact as people and work. Valued at around $15 billion five years ago, the sharing economy is predicted to be worth over $335 billion by 2025.

The potential for the industry is massive.

Based on peer to peer (P2P) activity where individuals acquire, provide, or share access to goods and services through a platform, some skeptics believe that the blockchain’s role is minimal in this industry. But, contrary to this belief, blockchain has a more significant role to play.

The Problem With The Sharing Economy 

According to the Blockchain Council, a group of experts dedicated to research and development of the technology, the sharing economy suffers from a poor model where the revenue generated isn’t fairly shared with all the members involved.

Also, there is an issue with how platforms like Uber and Airbnb act as intermediaries in what are supposedly peer-to-peer transactions leaving participants with no option but to follow the terms and conditions on offer.Direct connections are highly discouraged.

Even though these platforms may offer decent user interfaces, individuals cannot communicate with each other outside the platforms without violating the terms of service.

These companies have the power to dictate prices, and they also take a considerable chunk of the earnings in a supposedly “peer-to-peer” system. Additionally, there have been cases of safety and crime.

Even though incidents occur rarely, there have been reports of sexual assaults with Uber cataloging 2,936 cases in 2017 and 3,045 cases in 2018 in the US alone. Other ride-sharing companies such as Grab in Malaysia and Ola in India have seen similar cases reported.

Astonishingly you can even find entire websites dedicated to horror stories about Airbnb from both the guests and hosts. From shootings during Halloween, theft, prostitution, and even voyeuristic hosts using spy cameras to watch guests.

Even though a platform like Airbnb does undergo background checks to improve security, the verification process can be improved. Blockchain can help with verification of identity and background checking, thus making the process more efficient. It can even go a step further to incentivize good behavior and punish bad actors.

The decentralized nature of the technology ensures databases are safer, limiting the vulnerabilities of centralized servers.

Rise Of Blockchain-Based Sharing Economy Platforms

With the many benefits the sharing economy stands to gain from the blockchain technology apparent, we are witnessing the emergence of blockchain-based platforms in the sector. 

Blockchain’s role in the sharing economy is being facilitated by protocols like TimeCoinPrototol that offers a platform where new projects can build a sharing economy service.

The project also believes it can solve some of the issues within the gig economy. Having launched last year, the project uses “time tickets,” allowing users to tokenize their business hours.

These tickets can be bought in exchange for various services, including consulting, photography, and relationship counseling. Other potential use case includes offering financial advice, fortune-telling, programming, and coaching.

According to Cointelegraph, “TimeTicket has already succeeded in raising $3.2 million in equity, and now, an initial exchange offering is being planned in Hong Kong to get the TimeCoinProtocol up and running. A total of 100 million TimeCoins (known as TMCN for short) are going to be issued, 58% of which will be allocated to the token sale.”

TimeCoinProtocol is just one platform that is utilizing the blockchain to offer benefits to the sharing economy, there are others like Origin based on the Ethereum blockchain, and a few others that can be seen on Defiprime.com, a platform that lists top DeFi projects.

The sharing economy is expected to grow much faster than traditional operating companies. One study by PWC found out that between 2013 and 2025, the revenue of sharing economy will grow by a mind-boggling 2233%. In contrast, companies with traditional operating models will increase their income by just 39.6%.

The study conducted in 2015 also found out that around 44% of Americans were familiar with the sharing economy business model, and 19% had already tried it. Fast forward to 2020, and this number has increased tremendously.Statista predicted that over 86 million Americans would be taking part in the sharing economy by 2021.

This number is almost double the 44.8 million Americans exposed to the sharing economy by 2016.

According to Credit Suisse, 17% of people were open to the idea of sharing their sofa. This goes to show how the sharing economy is gaining popularity with more people willing to share items they don’t frequently need.

According to China Daily, over 700 million Chinese citizens took part in the sharing economy back in 2017. That more than half the entire population. The industry was estimated to be worth more than $760 billion at the time.

According to Airbnb, hotels worldwide are losing over $450 billion annually due to the platform. More people prefer using the platform since its cheaper, and while you are at it, you can even rent one of the 1,400 islands available, or choose a castle from the 3,000 available.

Ultimately, the blockchain will help platforms in the sharing economy sector reduce their reliance on corporations. By eliminating managers, intermediaries, and employees, fees will be reduced significantly.

Security is guaranteed using an in-app rating system that is censorship resistant since it's based on the blockchain. Additionally, fairness is also ensured through a financial incentive as users administer the platforms collectively.

Dislosure: I don't have any vested interests in any mentioned projects.

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Disruptors for GOOD explores social entrepreneurs around the world who have dedicated their lives to ethical fashion, impact investing, sustainable travel, and businesses that impact the world in a positive way. The founder of Causeartist, Grant Trahant, does one-on-one interviews with some of the most creative and impactful startups and brands around the world.

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Over the past few years, cryptocurrency, and the technology that powers it, blockchain, has burst into the mainstream on many levels. Much the same can be said for social entrepreneurship and impact investing. The social impact economy is real and it is absolutely coming.

According to the World Economic Forum the social impact economy could reach a market size of between US $400 billion and US $1 trillion by 2020. This is an amazing and inspiring number.The question then becomes, what will power this potential trillion dollar economy? 

The simple answer is blockchain and cryptocurrencies, but as of now only 0.5 percent of the world’s population is using blockchain, while more than 50 percent of the population has access to the Internet.

The low usage of crypto and blockchain is a normal trend for a distributive technology, but when disruption truly occurs it will happen quickly and on a mass scale.

Currently there is an estimated 24 million active Bitcoin wallets around the world. In comparison there is an estimated 3.2 billion people active on the internet.

In December of 1995 the internet was starting to spread, but still it only had 16 million users(0.4% of the population).

In December of 2005, ten years later, the internet had over one billion users!Can blockchain have this robust growth over the next decade?

As blockchain matures more and more; companies, investors, and organizations will begin to implement new and creative ways to use it. This is already happening, but as we saw the robust growth of the internet over just a ten year span, we could be on the cusp of seeing that with blockchain and digital currencies around the world.

The developing world in most respects are way ahead of the developed world when it comes to implementing blockchain and cryptocurrencies. There is an estimated 2 billion working-age adults globally (38%) that do not use or have access to formal financial services.

Blockchain is creating a flexible and robust financial system for the developing world, skipping the large financial institution banking model all together.

For more on this particular subject please read this great post from CoinCentral: How Blockchain Can Eradicate Poverty in Third-World Countries

Below are already some amazing ventures looking at blockchain as a true path to connecting the world through social impact and being transparent in doing so. As the world becomes more and more integrated into the internets eco-system, more and more will soon be integrated into the blockchain and create a more efficient world.

Blockchain for Social Impact Coalition

Blockchain for Social Impact Coalition (BSIC) incubates, develops, and implements confederated blockchain products and solutions that can address social and environmental challenges across the United Nation’s Sustainable Development Goals.

The coalition aims to inspire, federate, and create bridges between NGO’s, and government agencies, foundations, impact investors, philanthropists and technologists. The Blockchain for Social Impact Coalition is an initiative of ConsenSys.

Vera

Vera is a simple way for businesses to offset their plastic footprint. By becoming Vera-Certified, you’ll help create new jobs for people who collect ocean-bound plastic.

You’ll not only alleviate poverty, but also ensure that plastic never ends up in our oceans! The best part about Vera, is that everything is transacted through the blockchain, which creates a traceable, auditable supply chain that guarantees our promise. Join Vera’s collective who already offset more than 40,000 plastic bottles every month!

Impak Coin(MPK)

Impak Finance created an Impak Coin, the first stable cryptocurrency designed to support the growth of the impact economy. By design, Impak Coin will build loyalty, reward collaboration and encourage its holders to buy from impak.eco accredited members.

Impak Finance is building an ecosystem to bring citizens, businesses, and investors together, both digitally (impak.eco) and face-face, to grow an economy built on social values. By using Impak Coin you will create meaningful purchasing habits and support impak.eco businesses.

For each Impak Coin transaction you get an MPK reward and the business doesn’t have to pay transaction fees.

GiveTrack/BitGive

GiveTrack is a platform nonprofits use for taking donations and sharing with donors exactly how their contributions are used while tying donations directly to a project result. GiveTrack is a project of BitGive. 

GiveTrack is built on a public ledger that provides financial transaction information in real time. Donations made in bitcoin are displayed on the Bitcoin blockchain, a public ledger that is immutable and transparent.

Project results are tied into GiveTrack through a reporting mechanism that provides notification of project milestones and written updates from the charity’s representatives in the field.

Akcoin

AKoin is a new cryptocurrency from visionary changemaker Akon and is the foundation of the AKoin Ecosystem– a unique global project that offers an abundance of digital and in-real-life platforms and experiences that create opportunity and inclusion for youth entrepreneurs by allowing consumers to buy, hold, and spend cryptocurrency right from their smartphone through a suite of blockchain-powered apps.

Created by Grammy-nominated, multi-platinum selling artist, producer, entrepreneur, and philanthropist Akon, who successfully founded and grew Akon Lighting Africa to provide scaled solar power solutions throughout 18 countries to date in Africa, the AKoin Ecosystem’s exclusive suite of sustainability and growth-building crypto-based apps offer immediate and ongoing new revenue generating opportunities to stimulate micro-exchanges and financial stability.

Plastic Bank

Using blockchain technology, the Plastic Bank offers a secure and transparent way to monetize ocean-bound plastic with a dual mission of protecting the environment, and banking the unbanked in some of the world’s poorest regions. 

The Plastic Bank helps build recycling infrastructure in the world’s poorest countries, such as Haiti, and addresses the inefficiencies of existing informal systems in highly urbanized areas such as Sao Paulo in Brazil or Manila in the Philippines.

Collection centers are built in close consultation with local communities, and are run by local entrepreneurs to ensure that the operations are self-sufficient and sustainable on the long run – people living below the poverty line are offered a stable source of employment, often earning twice their regular income as a result.

The Roots Token

ROOTS tokens create an economic logic that aligns the interests of those who possess capital and those who are trying to escape poverty. RootProject creates a virtuous circle by creating an ongoing demand mechanism for ROOTS tokens via on the ground, crowd-funded projects that produce a public good.

Ownership of ROOTS is encouraged by providing economic opportunities to token purchasers as well as low skilled workers. When the currency appreciates, it creates value for everyone in the system because ROOTS tokens are held in a pension-like fund for those who complete RootProject activities while those who have purchased tokens see their value grow due to reduced supply and continued demand.

ixo Foundation

ixo is optimizing the way the world creates impact. Using blockchain and next generation web standards, the ixo protocol combines data with trust. The world is starting to realize how important it is to really count what matters, for people and the planet. With ixo, all measurable changes that have an impact can now be transformed into Verified Impact Data with crypto-economic Proof of Impact, which enables anyone to value what counts for sustainable social, environmental and economic development.

Trusted Impact data grows investments into impacts and optimizes the results, assisted by machine learning and intelligent oracles. The ixo protocol generates Impact Tokens that are traded through decentralized impact exchanges. These digital assets will create new marketplaces for the Impact Economy.

Watercoin

The watercoin WTR will allow O’Claire, a subsidiary of SUNWATERLIFE,  to have sufficient means to distribute its O’Claire drinking water on 3 continents. The funds raised will be used in particular to acquire and set up drinking water production units, set up production, distribution and sales and marketing teams, and make the necessary communications investments to deploy the brand.

A portion of the proceeds raised will be locked-in to meet sufficient financial guarantees. The WATERCOIN WTR, a cryptocurrency with a strong societal impact!

Everex

Everex is the first fully transparent microfinance platform. Built on Ethereum blockchain technology and accessible from mobile devices, the Everex network allows anyone to request microcredit and send fiat payments from anywhere in the world.

We offer technology and services within an ecosystem involving software applications to facilitate cross-border lending, remittances, merchant payments, and currency exchange. Our solution assists 2 billion underbanked individuals to build and improve their credit history on the basis of mobile phone data, granting them access with EVX to the global financial system for the first time.

Cherr.io

Cherr.io harnesses the power of charitable blockchain solutions to supplement the ones in need. Cherr.io’s main focus is to bring the product with full support of smart contracts and attract new charity organizations with live campaigns.

Cherr.io is partaking in the future of charity by offering blockchain solutions for charitable donations. They aggregate these resources towards the Global Goals in a cohesive and systematic way.

Cherr.io’s goal is to make this technology available to all charitable organizations by creating an universal platform that will improve and expand the existing fundraising processes, increase transparency and reinforce the trust that the people have in charitable organizations.

Blue Whale Foundation

Blue Whale will empower the world’s freelance community by creating the largest worker-centric decentralized ecosystem where independent workers can pursue their passions and get the value they deserve from the gig economy. 

With freelancing demands on the rise, middlemen tech giants like Uber and AirBnb have been profiting from the gig economy from exorbitant commission and marketing fees, while freelancers are left with little to no security for performing these jobs for their customers.

Blue Whale plans to answer the gig economy’s problems by providing a decentralized ecosystem that takes these middle men out and establish a direct connection between the freelancer and customer.

Alice

Alice is a social funding and impact management platform built on the Ethereum blockchain. The platform incentivizes organizations (charities, NGOs, social enterprises) to run projects transparently, by making sure they get paid more when they achieve their goals.

The performance of each project is publicly available, making it easier for funders (philanthropic organizations, impact investors, small donors) to identify and help scale social projects that actually work. Shared impact data also helps reduce due diligence and reporting costs, and helps social organizations collaborate more effectively.

Clean Water Coin

The Clean Water Coin Initiative is the first ever coin designed and developed to be a nonprofit organization.

The organization created a Crypto Charity and coin that lets a community actively participate in helping provide clean water. The organization has teamed up with CharityWater.org so that we can create campaigns and raise funds for clean water projects.

Everledger – Diamond Time Lapse

The Diamond Time-Lapse Protocol is a traceability initiative built on a blockchain-based platform for the diamond and jewelry industry. The aim is to engage all industry participants including manufacturers, retailers and consumers to know a diamond’s story from the origin to the end customer.

This has been developed from understanding that consumers have a keen interest in the lifetime journey of their diamonds and jewelry, as well as the industry desire to demonstrate authenticity, transparency, and provenance.

Amply

Amply is a digital identity protocol that builds trust. Amply provides every child with their own self-sovereign digital identity based on the blockchain. This will enable children to receive benefits and services that they might have previously been excluded from. In their pilot project, Amply is being used to replace an existing paper-based system to register children for a government funded pre-school subsidy in South Africa.

Service providers use a mobile app to verify children’s attendance at classes and to capture other useful information.This will increase trust in the funding mechanism and make funding available to more children who need it. It will save administration time and costs. And it will provide really useful information about how and where services are being delivered.

Amply is unique in that it places each individual child at the centre of their relationships with Early Childhood Development services in a way that is ‘self-sovereign’ and directly beneficial to them.

This means that a child’s digital identity and personal data are privately owned and controlled by the individual (with some help from their guardians).

Header Photo by David Shares on Unsplash

The Global blockchain Association (GBA) has entered a 5-year partnership with Africa Blockchain Institute currently operating in Rwanda. The deal aims to roll up ground for the emerging technology behind the Bitcoin network.

GBA is a global community helping governments and organisations around the world to understand, implement, and benefit from blockchain technology. Ghana-based, Africa Blockchain Institute in January opened in Rwanda, becoming the first institution to offer professional courses on blockchain in the country. Its Executive Director, Kayode Babarinde said the partnership will scale up blockchain infrastructure across Africa, starting from Rwanda. “The infrastructure is already being set-up, with experts working around governance and understanding of Blockchain.

Now the deal is to extend activities to Africa, being the major benefactor of Blockchain Technology, with focus on governance systems and operations,” Babarinde said.

Described as an open, distributed ledger, blockchain is a record-keeping technology which ensures more transparency and decentralization for transaction of value.

Striving to spearhead the penetration of digital technology on the African continent, Rwanda becomes the partnership’s centerpiece because it knows some corners of the house, said the blockchain expert.Currently, a handful of projects are known to run through this technology in the country.

 They include mineral tracing and Spenn, a money transaction mobile app. This paper has learned that other projects are running in the pipeline under the ICT ministry, including a blockchain-based gorilla trekking mobile game.

Despite moderate developments, however, some countries have been criticized for being slow in unlocking the opportunities that blockchain has to offer.

Jean Bosco Ahorukomeye, a Rwandan lecturer at Zigurat Innovation and Technology Business School, University of Barcelona, Spain, points out the latency results from insufficient skill set among policy makers and implementers.

“You cannot leverage opportunities blockchain offers if you don’t know what it is capable of doing,” Ahorukomeye said in a phone interview.Ahorukomeye further said the technology is so disruptive that it can erase all unnecessary costs one faces, for instance, while making money transactions between countries - exorbitant currency exchange rates, transaction fees, transport among others.

Meanwhile, Lilian Uwimana of Kipya Big2Big Ltd, a Uganda-based fintech company involved in trading of cryptocurrencies, says many people are excited about blockchain, but are blocked by a negative attitude towards the technology due to the little knowledge about it.Yet, blockchain is peer-to-peer.

It removes all the above middlemen - banks, forex bureaus, and central banks. As a blockchain expert, Ahorukomeye argues that governments are afraid to surrender the control.

On a bright side regarding money, he finds a take-or-leave alternative: central bank digital currencies.

Like China, governments can digitize national currencies which will be stable, regulated and controlled by central banks, yet carrying blockchain pillars of transparency (open to everyone) and immutability (inability to be tampered with).

Besides the above cases, blockchain technology can be used to register anything of value, medical records and digital identities, which cut out many sorts of document forgery and related cyber frauds.

Very few countries in the world have established their stance on this technology. Tech analysts believe that a country that will lay out a regulatory framework before Libra, Facebook’s hyper-disruptive crypto, hits the road, will attract a pool of investments.

“Looking at the ICT map [of Rwanda], Blockchain is the 6th core technology needed in the country, however slow the government is, they can't escape Blockchain. It is our job to get them on the know,” Babarinde observed.

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The Cryptoverse is in an uproar, arguing over money, hypocrisy, and morality.

This comes after The US Small Business Administration (SBA) published the Paycheck Protection Program (PPP) data, per which dozens of blockchain and crypto-related companies have taken millions from the government in payroll loans.

Per SBA's website, PPP is a loan meant to provide a direct incentive for small businesses to keep their workers on the payroll.

Among the companies from the crypto and blockchain industries who've received the loans are ConsenSys, crypto exchanges Bittrex, ShapeShift, bitFlyer USA, company behind Cardano (ADA) IOHK, Polychain Capital, Circle, Celsius Network, Messari, The Block, and others.

Though specific amounts are not available, some received several hundred thousands, while others collected several millions, with ConsenSys being in the highest range (USD 5m - USD 10m).

Unsurprisingly, the news has caused a major discussion in the Cryptoverse about the industry's very nature, what is / should be legal, and even if legal - what is moral?

Wealth advisor Kevin Prendergast claimed that he talked to small business owners "in the "real economy"," and these don't hesitate to apply for PPP.

He asked why a prudent business owner would "turn down low/no cost source of capital in this challenging environment.

"Former Goldman Sachs trader and the founder of liquidity provider B2C2, Max Boonen, argued that even if a company's survival doesn't depend on a grant, it's still a matter of competitiveness to pursue it. "One can argue that it's "noble" to decline but does that make it "vile" not to?

"This has brought another matter into light, which Boonen noticed himself - possible hypocrisy within the industry.

"Contemptible if your public persona is built around banging the “all tax is theft” and “who needs government when you have Bitcoin” drums," said Senior Research Analyst a Decentral Part, adding: "Fair game otherwise."

And while some wondered if the companies that earn money by selling tokens (like TRON) or those that provide grants (like IOHK) should even be eligible for a program like this, others said it might be better for them to collect that money than distribute fewer grants.

IOHK CEO, Charles Hoskinson, came to the defense of the company's decision to take the government money, saying it "is a small business that employees Americans" and also invests in universities, helping create jobs there.

Meanwhile, according to economist Michael Stepner, as quoted by CBS, "the program spent vastly more money than the number of jobs it saved.

" A paper Stepner co-authored found that c. 90% of "workers whose paychecks were paid out of the fund were not at risk of being laid off in the first place."

Also, back in May, TRON and its CEO Justin Sun found themselves in hot water following the reports that the company received more than USD 2 million from the US COVID-19 small business relief fund.

Bitfinex, a state-of-the-art digital asset trading platform, has launched paper trading, a demo account service that enables users to practice strategies without putting funds at risk in a live account.

Paper trading, which will be available on newly-created sub accounts, will enable users to trade Bitcoin in a simulated market environment without the need to deposit real funds.

As an exchange built to serve professional trading strategies, the addition of paper trading will enable users to explore the rich features of the platform without putting funds at risk.  

Trading pairs available for paper trading include: TESTBTC:TESTUSD, TESTBTC:TESTUSDT, TESTAAA:TESTBBB.

In addition, paper trading is available for margin trading, funding, derivatives and over-the-counter (OTC) trading.“Paper trading will enable our users to hone their trading skills in a fun and safe environment,” says Paolo Ardoino, CTO at Bitfinex.

“Trading – especially at leverage – is not a game. Paper trading lets users perform a test run of strategies before risking capital in a live account. As an exchange that serves professional traders and those executing more sophisticated strategies, the launch of paper trading forms part of our commitment to ensuring our users are well educated and informed.

” To enable a paper trading account, users should take the following steps: log in to your account, navigate to the Sub-Account section and create a new sub-account that you wish to set up for paper trading.

For additional information on the paper trading feature, please visit our knowledge base: Paper Trading - test, learn and simulate trading strategies.

Bitfinex is leveraging its position as a one-stop-shop for crypto trading, offering a variety of services, including margin trading with up to 5x leverage. 

It’s been an interesting few days for digital payments, blockchain finance and cryptocurrencies in Switzerland, with several companies and projects announcing developments.

At the tail end of last month, budding crypto bank Mt Pelerin said was applying for a Swiss fintech license, aiming to join the only recipient of that category so far – Yapeal. But more interesting still, was that Mt Pelerin held its first shareholder meeting on the blockchain.

Mt Pelerin is one of the most interesting blockchain start-ups that I’ve been tracking for some time. In 2018, it claimed to be the first company in Switzerland to issue shares in the form of digital tokens that are recognizable under Swiss law.

On June 26, shareholders were, for the first time, able to wield those tokens to good effect by voting on agenda items.

The company said the AGM went without hitch with shareholders able to follow the event on their smartphones via their Bridge Wallets – a technology that Mt Pelerin plans to develop into an industry standard for token creation, distribution and management.

The main drawback for tokenized securities at present is their lack of liquidity. Holders can trade them over the counter, but a secondary market of stock exchanges that can handle the likes of digital shares are still works in progress.

Mt Pelerin says ownership of its shares are recognised by Swiss law. But as I’ve pointed out in previous newsletters, the law is currently being updated to adapt to the new world of digital asset trading. Until that process is complete, by the start of 2021 at the earliest, there remains scope for doubting whether blockchain shares have the same legal footing as normal company stocks.

On the digital payments front, fintech firm Neon has announced a deal with British financial services company Transferwise to allow Neon account holders to transfer their funds abroad at a lower cost.

Bridging the two fintech companies is Hypotherkarbank Lenzburg that will handle the transactions over its Finstar open banking platform.

Credit Suisse has announced it will onboard Google Pay for its Swiss credit card clients from mid-August while Switzerland this week switched to QR payments for household bills, concluding a process by SIX Group that has taken a few years to bring online.

It may be a bit premature to predict the death of cash payments in Switzerland but the coronavirus pandemic appears also to have given digital payment systems a boost.

“Over the last 12 months, the proportion of contactless card payments in Switzerland has more than doubled, while cash withdrawals from ATMs have declined.

This proportion of contactless card payments is likely to continue rising sharply compared to cash payments, not least because of the pandemic,” said Credit Suisse.

Finally, the transaction bank InCore said this week that it is now offering banking services for clients of the giant cryptocurrency exchange Kraken.

InCore will act as a bridge for investors who want to get into crypto or expand their portfolio.InCore had previously announced a partnership with Maerki Baumann bank, which is no surprise given that InCore is a spin-off from the Zurich private bank, which itself is making a play in the digital assets sector.

The gap between the traditional financial world and crypto is narrowing all the time.

I’m told there were efforts to get some major crypto exchanges up and running in Switzerland a couple of years ago, but these efforts were stymied by the financial regulator.

Partnerships like InCore/Kraken may prove a useful workaround.

Zimbabwe is an underdeveloped country that is suffering from the last few years due to the destructive condition of its economy. If we take a brief review of the last few years of the Zimbabwean economy then it can be seen that the main source of income of the country is its agricultural output which is also has decreased by 51%.

GDP per capita dropped by 40% also industrial production has encountered a downfall of 47%. The depriving state of the country's economy suggests introducing a better technology that can revive the economy.

Economic analysts and futurists recommend some basic changes in the economic sector in terms of blockchain technology. Blockchain technology is a distributed general ledger that allows two parties who are willing to perform financial transactions securely without any involvement of a third trusted party like any bank.

The transactions which can be performed by blockchain technology involve the transfer of money, assets, and information. The blockchain technology includes digital money systems out of which bitcoin is the first-ever application to be used worldwide. Blockchain is successful in Africa.

The bitcoin era in South Africa has a success score of 96%. After observing the success score of blockchain technology in the rest of Africa, Zimbabwe also looks forward to its economy to shift to blockchain technology.

Shifting to blockchain technology will have several benefits for the economy of Zimbabwe which can be briefly explained as follows:

As it is already known that by using blockchain technology the users can securely transfer their finances anywhere in the world without even involving any kind of intermediary party i.e. banks.

When the users of blockchain technology are not involving any banks, it means that they are not using any banking services which makes the transactions even more fast and efficient.

By using blockchain technology one can decrease the costs on their transactions. Even making transactions worldwide is almost free of cost. When there is a free of cost option which is even fast and efficient then definitely the general public is going to shift from old banking ways of making financial transactions to blockchain technology.

It's not only finances which can be transferred by the blockchain technology but different crypto assets can be transferred by this technology. Even the energy can be traded by blockchain technologies allowing its users to sell excessive energy, to the people living close to them.

Usage of this advanced technology helps the residents of Zimbabwe by removing the controls from utility companies.Blockchain technology not only allows its users to perform transaction free of costs but also it is secured.

Blockchain technology is a distributed general ledger which means all the transactions done by this technology are recorded in a ledger which can be verified and accessed by the people involved in the transactions at any point in time.

As it is mentioned earlier that blockchain technologies are also used to transfer confidential information which contributes not only to research fields of the country but also to the medical and health care department of Zimbabwe. In the healthcare sector, all the valuable and confidential reports of patients can send them by using this platform.

Different application developers are making efforts to develop some really easy to use and user-friendly applications based on the idea of blockchain technology.

The availability of these kinds of applications makes it easy for users to make financial transactions. Because of this easy to use feature of this technology the general public is more likely to invest in cryptocurrencies which will help to thrive in the Zimbabwean economy.

Blockchain technology promotes decentralization in the country which means transferring more control to the general public which promotes new entrepreneurs to start new businesses which eventually helps in reviving the Zimbabwean economy.

By the passage of time the blockchain technology will evolve tremendously and the fact that how the central banks are also taking part in exploring the new technologies show the chances of incorporation of blockchain technologies into the financial system of the country as a whole.

Blockchain technology promises to resolve the basic problems of the online system. It's a secure, efficient, fast, and cheap way of performing transactions that convince the residents of Zimbabwe to come and invest in cryptocurrencies by using blockchain technology which will evolve Zimbabwean economy.

Read the original article on Zimbabwe Standard.

Global, Ireland July 1 2020

This article looks at some of the ways in which blockchain technologies are being used by international organisations, state authorities and health institutions to tackle some of the challenges associated with the Covid-19 pandemic.

We also highlight some of the legal issues arising from the use of blockchain technology.

The unique features of blockchain – its use of cryptography, peer-to-peer networking and a distributed public ledger – make it ideal for tracking the spread of the virus, facilitating the sharing of essential Covid-19 related data, and securing medical supply chains.

Data SharingA key issue in managing the pandemic is the need for reliable, up to date data concerning the outbreak and spread of the virus. One of the advantages of blockchain is that it can provide verifiable data using distributed ledger technology and peer-to-peer networking.

A blockchain is a public database, or "ledger", which is stored in multiple locations across a decentralised network. Data is added to the ledger in "blocks".

Each time a new block is added it must first be verified by all participants in the network.

This way, multiple parties can collaborate over the validity of rapidly updating data, thereby ensuring the data recorded on the ledger is accurate and up to date.A number of platforms have recently been launched which use this technology to facilitate the sharing of Covid-19 related data.

In March 2020, the World Health Organisation (WHO) in partnership with several major tech companies launched MiPasa, a blockchain-based platform which purports to facilitate “fully private information sharing between individuals, state authorities and health institutions.

”MiPasa synthesizes location data and health information from various sources such as the WHO, the U.S. Centre for Disease Control and other similar agencies, and attempts to reconcile them by allowing the public to report data discrepancies, thus creating a single source of verified and up-to-date information.

The platform also facilitates privacy-enabled self-reporting by allowing public health officials and individuals to upload data about the time and exact location of different infections.

This data source is stripped of personally identifying information, allowing a person to see if they have been in the vicinity of someone who has been infected before.

In Honduras, the Toronto-based technology firm Emerge has launched Civitas, a mobile phone app which associates users' government-issued ID numbers with unique records managed on a blockchain-based network.

This helps government agencies with determining whether an individual should be approved for a permit to leave their residence to receive medical treatment.

 If a user reports that they are experiencing Covid-19 symptoms, then the Civitas app can assist with determining when would be the best and safest time for them to leave their home to get essential items such as food and medicine.

The app can also assist physicians and other healthcare providers by allowing them to track Covid-19 symptoms and include any notes related to the patient’s care. Such data is made available exclusively to the user and healthcare provider, and is cryptographically secured, thus alleviating any privacy concerns.

Medical Supply Chain ManagementIn addition to facilitating the sharing of data, blockchain solutions can also help manage and optimise supply chains in medical equipment and other essential supplies needed for treating and containing the virus.

In the Netherlands, the distributed ledger technology firm Tymlez has provided its blockchain platform to the Dutch government as the underlying technology for mapping and analysing the country's medical supply chain.

The use of this blockchain platform ensures that supply and demand are matched and creates transparency across the supply chain, reducing the risk of price gouging and hoarding in relation to critical supplies such as PPE and ventilators.

A similar network has been launched in the United States and Canada, by IBM in collaboration with the blockchain firm Chainyard.

The network, called Rapid Supplier Connect (RSC), is a blockchain-based network designed to help government agencies and healthcare organisations identify new, non-traditional suppliers who have pivoted to address the shortage of essential equipment, devices and supplies needed for Covid-19 relief efforts.

RSC aims to alleviate the strain on medical supply chains by accelerating the process for verifying and onboarding non-traditional suppliers and providing real-time inventories of life-saving equipment.

Contact Tracing AppsGovernments around the world are taking steps towards introducing contact tracing apps – smart phone apps which use phone tracking technology to enable users to determine whether they have come into physical proximity with infected persons.

One of the main challenges associated with the adoption of these apps is the need to ensure data protection and privacy for users. Blockchain could potentially provide a solution to these privacy issues.

As a complementary tool to the tracking technology, a blockchain ledger could be used as the basis for recording data relating to users' movements and sharing this data with other participants on the ledger.

The use of a blockchain platform would ensure that users' identity is protected through encryption and anonymous identifiers. Instead of usernames and passwords, each user would be provided with a unique, encrypted digital identity which could be used to manage and share personal data.

The use of private key technology would give users ultimate control over the data they wish to share. Furthermore, because the blockchain ledger is immutable, this means that any shared information will remain safe and secure and cannot be tampered with.

Blockchain: Legal IssuesThere are a number of legal issues associated with the use of blockchain and other distributed ledger technologies.Smart ContractsOne of the emerging uses of blockchain is as a platform for "smart contracts".

These are automated self-executing contracts, consisting wholly or in part of computer code, which are deployed on a distributed ledger and which can be used to execute transactions between participants on the ledger.

In principle, the ordinary rules of contract law apply to smart contracts and these types of contracts may give rise to legally enforceable obligations if the traditional formalities for the conclusion of a contract are complied with (ie offer, acceptance, intention to create legal relations and consideration).

In Ireland, the use of electronic signatures to execute contracts is valid under the Electronic Commerce Act 2000 (the 2000 Act). It is likely that private keys used on blockchain platforms, which are intended to authenticate documents or transactions, would fall within the definition of "electronic signature" contained in the 2000 Act.

Data PrivacyTo the extent that data stored on a blockchain ledger could constitute "personal data", there may potentially be a conflict between blockchain technologies and data protection law, specifically as regards compliance with the General Data Protection Regulation (EU Regulation 679/2016) (GDPR).

Ultimately, this would depend on the particular use case in question and each case would need to be analysed based on its own particular facts.

Blockchain startup Block.one opened its blockchain-powered social network Voice over the weekend to limited public access with a promise to reward users for quality content.

Announced in 2019, Voice is pitched as a blockchain-based social media application designed with users of the platform in mind. Offering a “more transparent social media platform for the world,” users of the service are rewarded for their content through the Voice Token cryptocurrency.

Users verified on the service obtain tokens based on their participation that they will eventually be able to convert to money.

The service has evolved in testing from being Twitterlike earlier in the year to being somewhat closer to a mix of Facebook and Medium. Posts made on Voice can either be short-form or long-form with a preference for long-form as part of the push by Voice for quality content.

Voice is built on Block.one’s EOSIO protocol best known for the EOS token. EOSIO launched in 2018 with a promise of offering an operating system that allows scalable decentralized autonomous communities with the support of asynchronous smart contract communication.

Arguably EOSIO’s and Block.one’s biggest claim to fame is holding the record for the largest initial coin offering in history after raising $4.2 billion from investors.

The ICO gained the attention of the U.S. Securities and Exchange Commission which claimed that the tokens in the ICO were offered as an unregistered security.

Block.one settled with SEC for $24 million in September.Voice was originally scheduled to go public later in the year. The current access is partial in that though content on Voice can be read by all, signups require a request for early access. The ability to invite others to Voice will be available starting Aug. 15.

“We were prepping for a big reveal in the fall — but things changed. The world changed,” Voice Chief Executive Officer Salah Michael Zalatimo wrote in a Voice post Saturday. “So, we’ve decided to open up our platform now and invite the community to be a part of the building process.

”Zalatimo added that the current environment has “fully exposed the corrupt social spaces created by Big Tech. It’s time to break away and put humans first. We need your help. It’s time for social as it should be.

”Exactly what Zalatimo means by that isn’t exactly clear.

When it was announced in 2019, Block.one described Voice as “a more transparent social media platform for the world, where the value of good content gets circulated right back into sustaining the community, not corporate bottom lines.

”Rewarding creators for participation is certainly not a bad thing, but it’s an idea that has already been tried with little success.

Minds.com and Steemit are two examples and although both have a carved out a niche audience, neither has grown to the point where it has entered the mainstream.

Voice has the advantage of being backed by Block.one and its ICO funds, but it needs to differentiate itself if it has any chance of mainstream success. So far, aside from not being evil and rewarding users, there’s nothing that stands out, but that could change with time as the service continues to be developed.

In Sunday’s City AM it was reported that Chancellor Rishi Sunak is considering plans to hand £500 to every adult and £250 to every child to spend with businesses that are most affected by COVID-19 lockdown.

The initial proposals include making these payments available via vouchers, travel cards or mobile phone credits.How could the government deploy these vouchers?

How would it be possible to validate merchants who were accepting the vouchers? Would all of the transactions be in fiat?

And how would merchants reconcile all of these vouchers back into fiat currency?Recovery vouchers present a fantastic opportunity for the blockchain community to come together and provide a solution.

Numerous areas make deploying this voucher system challenging. There are issues of potential fraud, personal data, misuse of the credits and redeeming the vouchers back into fiat currency. 

Starting at the top of the process, merchants would need a simple way to register themselves and their businesses. Any system would need to check existing business registries and make an instant decision if their business was eligible to receive vouchers. Once registered, merchants can be approved. Redeeming vouchers is limited to approved merchants.

The general public would need to have a means of securely receiving the vouchers and ensuring that there were no double claims.

The general public would need to have a means of securely receiving the vouchers and ensuring that there were no double claims. Ideally, the system will grant vouchers without the need to share excessive personal data. Public blockchains are well established in providing pseudonymous access. 

If provided on a public blockchain, the entire system would be accessible by anyone wishing to check the efficiency of distribution of the funds. The ledger could also contain data related to the redemption of the vouchers.

Using blockchain for this solution has all of the core functionality of maintaining balances, preventing double-spend and full audit capability built-in. 

Once redeemed by the public, merchants would have instant access to funds which they could submit back to the government to be converted back into currency and deposited into their accounts if they wanted to.

Although I’m sure the Chancellor might initially object, the funds collected from vouchers could even be used immediately to return to employees.

Or the funds could be used to pay other merchants in their supply chains. Every transaction would be recorded on the blockchain so there would be no opportunity for tax evasion. It would substantially accelerate the liquidity in the market and get help to the businesses who needed it in a low friction way.

It would be possible to use an existing public blockchain (like Ethereum), or it could be that an entirely new public blockchain was created just for this purpose. Who would run that blockchain, and why? In a public blockchain, there are incentives to the people who maintain the ledger.

The same could apply here. Thousands of blockchain enthusiasts would sign up to be part of a project like this and would, in turn, earn a small amount from every transaction for their efforts. The merchants would bear the costs, but they would far less than the fees they pay to the current credit card network.

The idea of using blockchain to support this system isn’t without its challenges.

The idea of using blockchain to support this system isn’t without its challenges. An estimated 5% of the British public does not own a mobile phone.

There would need to be a method of giving these people access to the vouchers safely and securely.

Fortunately, the idea of a paper wallet already exists and could be easily adapted for this program. Using blockchain would also address the estimated 4.7% of the British public who are unbanked.

A significant obstacle to the adoption of bitcoin has been the user experience. There are issues of managing private keys, lack of customer support and more. None of these issues goes away in this system – and some of them become more exaggerated. However, with mass adoption comes real opportunities to learn and of course, to innovate.

As the blockchain would be public, there would be opportunities for anyone to check their voucher balance on a public blockchain explorer. These could be accessible via web, mobile phone app or even through some form of a kiosk. It would also be possible to integrate into existing payment systems like PayPoint or Payzone. 

Renewals of the voucher program on a blockchain system simplify future disbursements. Extending the idea beyond vouchers to spend in the hospitality industry, new amounts could be distributed on a separate set of smart contracts to cover everything from housing benefit to winter fuel allowances. 

Promotion and marketing of this system are one of the most critical aspects. For that reason, the words blockchain and cryptocurrency should never be mentioned.

The focus must be on the value the system brings to the public, merchants, the government and the economy – not on the blockchain.As I have said before, blockchain is best when it is invisible.




Get in touch with us [email protected] / Twitter @igetblockchainTroy Norcross, Co-Founder Blockchain Rookies

Kevin Chou, CEO and co-founder at blockchain ecosystem Rally, believes that blockchain technology could lead the charge toward a virtual economy in the web 3.0 era.

Speaking at Unitize on July 6, Chou, who is also involved with the firms Kabam, Forte and Gen G, said that content platforms should move away from the old business model of web 2.0 that consists of the platforms taking a large portion of the revenue.

Instead, companies should create a new and decentralized business model that favors influencers, creators, and “give away the governance to the community," said Chou.

He added, “The web 2.0 era of business models was very much about how I build a very large platform and give away the service for free but collect a bunch of that data. […] I’m surprised, and there are many great value services that have been created, but we’re also seeing the drawbacks to that today with the lack of privacy, lack of control of your own data, and lack of control over the economics because it’s primarily advertising-based.

”“I think a lot of the new blockchain projects and web 3.0 projects are all about how we create something that will eventually be decentralized. I think the space started with everything that needs to be decentralized from the beginning,” Chou concluded.

Bitcoin pioneering the concept of decentralization

Chou believes that Bitcoin (BTC) “did a great job of pioneering” the discussion about decentralization by making people and businesses aware that decentralization is feasible, adding, “But we also see now that there’s a path established by projects like Compound and Maker, and a lot of other DeFi projects."

The latest venture from Salesforce co-founder and CNET founder Halsey Minor looks a lot like an attempt to recreate the legacy monetary system on a blockchain.

• Launched commercially last week, Public Mint says its "fiat native" blockchain makes transactions efficient and accessible.

• The platform is described as a programmable blockchain with fiat funds held in insured banks, enabling users to create their own "digital money systems."

• Users would transact in regular U.S. dollars using their smartphones, while the funds are held centrally by custodians.

• Companies using the platform can accept dollars via credit card, wire transfers and more whether or not they have a bank account.

• Support for other fiat currencies is expected to be added in the future.

• Public Mint is a fiat layer that is claimed to be supported by more than 200 banks – although they aren't named in a press release.

• The platform could be a solution for cryptocurrency firms that have had trouble accessing the traditional banking system, the firm says.

• Reportedly taking two years to build, it was founded by Halsey Minor, who was also behind CNET, Salesforce and crypto trading platform Uphold (formerly called Bitreserve).

• VideoCoin, another Minor venture, became one of Public Mint's first corporate users in late May.

Cryptocurrency funds are a new type of investment vehicle that parallels traditional portfolio investments, like hedge funds, but are composed entirely out of digital assets. Because of this, they play by slightly different rules than their legacy counterparts.

Knowing how they differ and where to get involved is key for those who want to jump into this intriguing new world, so we’ve outlined the main points in this helpful guide.

What are cryptocurrency funds?

The term “cryptocurrency fund” refers to a portfolio containing a variety of different digital assets and is usually managed by one or a few individuals. Investors are then able to buy into these funds so that they can share in the profits as the value of the fund grows.

According to data from Crypto Fund Research, a little over half of these act as venture capital funds, while the rest are predominantly hedge funds. Venture capital funds involve a variety of investors pooling their money in order to buy into smaller businesses with high growth potential. Of course, in cryptocurrency funds these businesses are new projects and altcoins.

Once the asset or assets have grown by a sufficient amount, they are usually sold off and investors take a cut of the profits. Hedge funds act as portfolios that are actively managed and work to minimize risk in the market, hence the name “hedge.

” These can be made up of any assets, but different assets are typically used in both long and short strategies, diversifying the portfolio in order to make the fund resistant to, or even profitable during, high volatility.

Again, these funds are usually managed by small teams and are often only available to high-end investors, with minimum investments ranging in the tens to hundreds of thousands of dollars. 

Traditional hedge funds also usually have minimum time constraints attached to them, so investors would be committed to keeping their money in the fund for at least one year, for example.

They also tend to have fairly high fees, around 20% of profit, as incentive for the managers to provide solid performance. On that note, this entails putting trust into the team managing the strategies, and there is no guarantee that the fund will ultimately see a return. If poorly managed, the market volatility that these funds are supposed to protect against can also quickly wipe them out.


 This was seen in March with the sharp drop that came amid the coronavirus market panic. Some cryptocurrency funds weren’t prepared for such a sudden drop, and collapsed as a result.

Common strategies used by cryptocurrency fund managers

At this point, we should explore the strategies that fund managers use to grow their investments. One common tactic often invoked is called “long/short equity.

” In this scenario, fund managers look at the assets they believe are undervalued and overvalued, and then place long and short positions accordingly. If their analysis is correct, then their portfolio should see gains whether the market is rising or falling. 

A similar strategy is known as “market neutral.” Here, the goal is for the long and short positions to balance out, so that the market exposure nets to zero.

Therefore, a manager may take a 50% long and 50% short in the same industry or asset in the hopes of reducing risk from volatility. It should be noted that reduction of risk generally means lower returns as well, which is an acceptable trade-off for some.

Another common strategy used is arbitrage. There are many types of arbitrage, but the general idea is to buy assets on one exchange and then sell them on another that is offering a better price. This is common in traditional hedge funds, but the cryptocurrency market often offers more lucrative opportunities due to its young and volatile nature.

It is common for different platforms to offer slightly different prices on various assets, and if the move can be made fast enough, then making a profit can be relatively easy. That being said, speed is key, making this strategy a common favorite among high-frequency traders.

There are other strategies as well, such as “global macro,” which looks to take positions based upon larger trends within a market, and “short only,” which basically focuses on explicitly shorting assets that the managers feel are overvalued.

Lastly, there is “quantitative,” which focuses solely on models, data and research to craft the portfolio. Realistically, it is not uncommon for multiple different strategies to be used, but it is essential that the fund managers understand what they are doing in implementing whichever one and are transparent about it with investors.

A variety of different ways to invest

This is generally the largest risk involved with investing in a cryptocurrency fund: clients need to put their trust into those behind it, which is why it is important to do research.

The more information the managers are willing to share about who they are, how they are managing and what their track record is can help determine if they are right for an investor.

That’s why, for many, partnering with a reputable firm is an essential part of the trust that they will see a return on their investment. Some of the biggest names in cryptocurrency funds include the Digital Currency Group, Galaxy Digital and Pantera Capital, among many others.

All focus specifically on cryptocurrencies and other digital assets.Of course, these will still generally require large, upfront investments from qualified individuals.

However, retail investors who want to be in on this type of action might want to look at projects like Tokenbox. In addition to acting as a general wallet and exchange, Tokenbox allows users to “tokenize” their portfolios as well as invest in the tokens attached to the portfolios of others.

This acts as a streamlined way to either begin a new cryptocurrency fund or get involved in an existing one. The tokens that are tied to winning portfolios can themselves be bought and sold, and their value is tied explicitly to the performance of their fund.

Managers can then showcase their success to try and attract more backers. All of this is possible without the need for a massive initial investment, but rather acts more like purchasing any single cryptocurrency on an exchange.

What can this market look forward to?

The cryptocurrency fund outlook is fairly bright these days. According to a report by PricewaterhouseCoopers and Elwood Asset Management Services Ltd., the overall value of Assets Under Management in these funds grew from $1 billion in 2018 to an impressive $2 billion in 2019 — doubling the market’s size in a single year.

On top of that, the median return on these investments in 2019 was 30%, down a little from 2018 but still far above most traditional hedge funds. This is, of course, due to the room for upside that is available in the market.

Though a wide variety of cryptocurrencies can be found in various offerings, the study found that 97% offered Bitcoin (BTC), followed by Ether at 67% (ETH) and others such as XRP (XRP), Bitcoin Cash (BCH) and Litecoin (LTC), all being offered by about a third of the funds available. This all points to a market that is really only beginning to be explored.

As cryptocurrency grows into mass adoption, it is only logical to assume that the number and value of these investment vehicles will continue to rise. Risks will always be present, which is why investors must always do their homework, but the untapped potential of digital assets looks promising.

If more retail investors can be brought into this realm as well, then the story of cryptocurrency funds may be just beginning.

Millions of Britons now hold cryptocurrency: LEE BOYCE delves into official figures to see what a typical bitcoin speculator looks like

• The FCA has released an annual detailed report focusing on cryptocurrencies 
• It lifts the lid on why people have bought in and why 
• Consumer Trends asks: Will the number of coin owners keep growing? 

By LEE BOYCE FOR THISISMONEY.CO.UK PUBLISHED: 09:25 BST, 4 July 2020 | UPDATED: 09:34 BST, 4 July 2020

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Not so long ago, sandwiched somewhere in between the EU referendum and the coronavirus pandemic, bitcoin and cryptocurrencies briefly became the hottest global topic.

With prices soaring, many blindly took a punt, worried they would miss out on a chance for a quick and large profit – the only way was up and all that Yazz. You heard overheard conversations about buying bitcoin, ripple, ethereum and more everywhere. 

It seemed everyone was piling in, young and old, with the hopes of turning hundreds or thousands of pounds into something more substantial.

Many subsequently had their fingers burnt – bitcoin prices fell from a peak of nearly $20,000 in December 2017 to $3,000 a year later, others saw their currency vanish, exchanges disappear, or were scammed.



Bitcoin boom?

The FCA has provided a snapshot of crypto BritainA lucky few, likely to have been involved when the price was low and the industry unknown, may have turned a handsome profit.

Fast forward to today and while cryptocurrencies remain niche, there is still plenty of interest around bitcoin and the like, with ways to buy it far easier than a few years ago. And for those who managed to buy in at $3,000 a coin in that dip a year after the boom and held on, they would have witnessed the price triple.  

We see comments dominated by two extreme camps: those who say bitcoin will race to $100,000, or even a $1million a coin in the next few years, and others saying it is a scam or casino-style gambling, with those getting involved having no idea what it is all about.

The Financial Conduct Authority has taken a keen interest in recent years and this week marked its annual report on the cryptocurrency, to reveal whether the interest in bitcoin has died down or continues to boom.Consumer Trends dives into the statistics to see whether the fad is over, or if people are more interested than ever…

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Who is a typical crypto holder?

Around 1.9million Britons own cryptocurrencies, according to the new data from the FCA – or nearly 4 per cent of the adult population. These are people who actually 'own' a coin in a wallet, not have their money tracking the price.

A further 700,000 people have also held crypto at some point, or 5.35 per cent of Britons – up 2.35 percentage points on a year earlier.

That means more than one in 20 Britons have been tempted into dabbling in crypto at some point.

What about the price?

The price of bitcoin soared from $1,000 a coin in early 2017 to $20,000 by the end of the year.

A year later, it had fallen to $3,000. Last summer, it managed a spell back over $10,000 a coin, it fell back to $6,000 in March and currently sits at around $9,000.According to the study, 78 per cent of all people had heard of bitcoin.

The next most familiar? Libra, which hasn't launched, followed by bitcoin cash, ether, bitcoin SV and litecoin - these were the only ones with a 10 per cent or more familiarity with the British public.  

The data, which was gathered in December 2019, also showed that people were far more likely to have heard of cryptocurrency: nearly three quarters are now aware of it, compared to just 42 per cent a year before.

What is the make-up of a typical punter and how much have they gambled of their own cash?Well, 79 per cent are male, 69 per cent over the age of 35 and the majority – 73 per cent - are classed as being in the highest ABC1 social grades.

Furthermore, nearly half of cryptocurrency holders earn £20,000 to £50,000, with exactly half of all owners holding under £260 worth and 75 per cent under £1,000.

This suggests that most have dipped their toes in the market in the hope of a crypto like bitcoin rising to $100,000 a coin.If you bought £260 worth today, and it did - for whatever reason - rise to $100,000 a coin, it would see the value rise to around £3,000 from that initial investment. It is small enough for most to write it off if needed, but big enough to have more than a passing interest. 

The most popular reason for consumers buying cryptocurrencies was as 'as a gamble that could make or lose money', acknowledging that prices are volatile.

There has also been a shifting generational change – just 7 per cent of all crypto holders were 55-plus in 2018. Despite seeing largely as a millennial or generation Z purchsae, this figure has increased to 22 per cent in the new study.

Meanwhile, the number of 18-24 year-olds involved dropped from 18 per cent to 10 per cent. The most likely age range to hold crypto now is 35 to 44 year-olds at 27 per cent.The year previous, 25-34 year-olds were most likely, at 39 per cent. The survey is of a nationally representative online panel of 3,085 respondents.

Money, money, money: Half of those with cryptocurrency have less than £260 worth

Some have borrowed money to get involved

In the survey, the FCA used the term cryptocurrency, but notes: 'This term is more widely used in public domain than the broader "cryptoasset" term we tend to prefer'.

This highlights that the city watchdog would prefer it not to be described as a form of currency.

The survey indicated that 8 per cent of people borrowed the money from financial firms, friends and family, other sources or using a credit card or existing credit facility.

While this seems a low percentage, the FCA says this is still 215,000 people. For a speculative investment, that is a worrying figure.It does point out, however, that those who did borrow money purchased small amounts – half bought less than £120 worth.

Another titbit from the survey is that fact that 27 per cent of people who bought crypto are in the C2DE social grade.

These are described as skilled manual workers, semi-skilled and unskilled manual workers, state pensioners, casual and lowest grade workers and unemployed with state benefits only.

The FCA concluded that those displaying a lack of basic knowledge and are unaware of the absence of regulatory protections are more likely to be in this social grade than the typical cryptocurrency owner.

Consumer Trends

This is Money assistant editor and consumer journalist, Lee Boyce, writes his Consumer Trends column every Saturday.It ranges from food and drink and retail, to financial services and travel. Have an idea or suggestion? 

Get in touch:[email protected] 

On that note, most consumers seem to understand the risks associated with the lack of protections, the high volatility of the product and have some understanding of the underlying technology, the study says.

Nevertheless, the lack of such knowledge among some presents potential consumer harm - 11 per cent of current and previous cryptocurrency owners thought their money was protected. Again, while the minority, it still amounts to approximately 300,000 adults.

Nearly half of people said they bought crypto as a gamble that could make or lose money. Just 15 per cent expected to make money quickly.

A quarter have bought in as a part of a wider investment portfolio, while a similar number said they did as they feared missing the boat.Meanwhile, 17 per cent said they have got involved as they don't trust the financial system and the same amount did as part of a long-term savings plan, such as a pension.


+4

Earnings: It appears basic-rate taxpayers are the most likely to hold crypto

Never been used and use non-UK exchanges

According to the study, 47 per cent of people have never used cryptocurrency for anything. This suggests that many are buying it and holding it in the hope of the value growing, not for any practical use.


Last month saw the announcement that PayPal will begin supporting bitcoin transactions - which may change all that. The majority bought their crypto through an online exchange. Of those that used an online exchange, 83 per cent used non-UK based exchanges.

While there are plenty of reputable exchanges, as we've pointed out before, it can be the Wild West, with people potentially transferring their money overseas.   Coinbase is by far the most popular exchange to use - 63 per cent of those who have bought crypto used the San Francisco based firm. 

The next four that most people use are Binance, based in Malta, Kraken, also in San Francisco, Bittrex in Seattle and Bitfinex, Hong Kong - the only other firms to score above 10 per cent.  



Keen interest: A year ago, the majority never looked at their crypto value - now, most keep a keen eye on it

Are they holding it for the long-term?

In general, cryptocurrency holders expect to hold onto it for long periods of time - again, highlighting that most are now buying and leaving it, in the hope for long-term growth.

In the previous study, 35 per cent said they never monitored the value of their crypto holding - however, this has dropped to 12 per cent.    

Most current owners who have a plan for how long they intend to hold crypto expect to keep them for three years or more. At the same time, almost 40 per cent said they don't know for how long they will hold onto it.

Google trends data showing searches for bitcoin, with the big spike during the boom

Have more people got involved during lockdown?

It is highly likely that the number of people involved in cryptocurrencies has surged during lockdown, thanks to stock market volatility, savings rates collapsing and having extra cash.

There have been plenty of reports suggesting that some households have managed to save extra cash - much of which has poured into savings accounts or National Savings and Investment products.

Some of this would have been diverted into bitcoin. On 11 May, in the midst of lockdown, we also saw bitcoin half - an event that happens every four years.It means the reward for digitally mining Bitcoin has halved from 12.5 coins per block to 6.25, constricting the supply.

The event saw some exchanges report an influx of investors, hoping to see prices surge after the event.    According to Google Trends, worldwide searches for bitcoin reached their highest amount since the halcyon days of late 2017 and early 2018, when crypto chat became all the rage. 

This suggests that more Britons are likely to have piled in since the data in this report was gathered - but as the study suggests, the majority are wisely not expecting quick gains or sticking too much of their cash in crypto.  

If you do buy into bitcoin 

Find out how bitcoin and the blockchain works, so that you have some understanding of the system, the ledger, the major players and the public and private key elements.

Remember bitcoin yields nothing and its main source of value is scarcity. 

Most bitcoin activity is trading not investing. Research coin wallets, the digital vaults where cryptocurrency is held, and consider security carefully. Bitcoins have been stolen before, understand how this happened.

Be prepared for extreme volatility. The price can move by 20 per cent in one day and you could easily lose half of your cash in a far quicker time that investing in the stock market.

Consider how you would cash in any gains. 

There are reports that this has proved hard for some people. A time of market stress could lead to people being locked in and unable to trade.

Read our guide to How to be a successful investor, which looks at the far less high octane world of long-term investing and how to make it a success. What is bitcoin?

The digital currency that most will be familiar with is free from government interference and can be shared instantly online. It doesn't rely on trusting one central monetary authority.

The underlying technology is blockchain, a financial ledger maintained by a network of computers that can track the movement of any asset without the need for a central regulator. 

David Nage, Principal and Head of Strategic Relations at Arca joins the show. In this episode we discuss:

• David’s experience in the family office channel and his path to the crypto industry
• His upcoming FO256 family office virtual conference on June 24th
• Podcasting and content creation as a complement to investing in the blockchain industry

To learn more about David check out his Base Layer podcast and follow him @DavidJNage