The European Central Bank to set objectives for its own stablecoin by mid-2020. View in browser

“As the decade ends, the biggest unicorn of the 2010s wasn’t Uber, Airbnb, or Snap. It was Bitcoin.” ~ Balaji Srinivasan, CTO of Coinbase

Market State

The cryptocurrency market 10% of its previous week value. The market capitalization dropped from around $197 billion to $178 billion. Bitcoin was still trading in the low $7000s until yesterday when it dipped below $7000. Last week, one year ago Bitcoin reached its bottom of $3200. Since then Bitcoin has been up by 107%. The total number of Bitcoin users is increasing. One indicator of it is the increasing number of Bitcoin addresses that hold any amount of Bitcoin. According to Coinmetrics the total number of Bitcoin addresses with any amount has hit an all time high at 28.39 million addresses. Most Bitcoin users have several Bitcoin addresses. Thus the number of Bitcoin addresses may overcount the total number Bitcoin users. However many Bitcoin users also keep their Bitcoins on exchanges, which may use single or a few addresses to hold all customer funds. Thus one exchange address might represent many Bitcoin users. This is why it’s almost impossible to determine the exact number of Bitcoin users however the growing number of Bitcoin addresses with balance can be viewed as an indicator of growing bitcoin adoption.

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Quiz of the week

What sentence did Satoshi Nakamoto embed into the Bitcoin Genesis Block?

  1. For greater privacy, it's best to use bitcoin addresses only once.
  2. When designing Bitcoin, even aliens need to be accounted for.
  3. The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

Scroll down to see the answer at the end of the newsletter.

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Top stories of the week
The European Central Bank to Set Objectives for Its Own Stablecoin by mid-2020

The former Managing Director of the IMF, Christine Lagarde held her first press conference as the new president of the European Central Bank (ECB) last week in Frankfurt, Germany. During the conference Lagarde talked about ECB’s digital currency plans and admitted that there is high demand for stablecoins. When asked questions regarding the digital currency of the European System of Central Bank, she said: “My personal conviction on the issue of stable coins is that we better be ahead of the curve. There is clearly demand out there that we have to respond to.” Lagarde also revealed that the ECB has set up a digital currency task force which will accelerate the development of its digital coin efforts. According to Lagarde the ECB would determine the purpose of a Digital Euro by mid-2020. Earlier this month, the European Council and the European Commission jointly issued a statement on stablecoins which said that “no global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”

Dutch Bank ING Working On Crypto Custody Solution

Amsterdam based bank ING, is one of the largest banks in the world with $1.1 trillion of assets and 38 million clients is working on a custodial platform that will allow their clients to safely store cryptocurrencies. The bank told Reuters news agency, that it “sees increasing opportunities with regard to digital assets on both asset backed and native security tokens.” ING is aiming to provide its users a compliant way to access the emerging sector. Reuters reported that “many large financial firms are attempting to turn traditional assets such as bonds or stocks into tokenized assets using blockchain.” The custody project is part of one of the bank’s several blockchain-related initiatives. ING has already been involved in a number of blockchain initiatives and has a dedicated blockchain team. In April, 2019 ING had announced that it has been testing its newest cryptographic blockchain development: Bulletproofs, which is a technique that allows for information to be shared without revealing contextual details. In cryptocurrency Bulletproofs are used to hide the amount of a transaction.

Bitcoin Was Named the Best Asset of the Decade by Bank of America Merrill Lynch

Despite the bear market cryptocurrencies have been one of the best performing assets of the decade according to several recent reports. One of them was from Ryan Alfred, president and co-founder of Digital Assets Data, a cryptocurrency software and data company, revealed that the yearly performance of cryptocurrencies have risen well above annual returns of the US equities, commodities and bond markets in 2019. Alfred said, “Looking back at the performance of the top ten large-caps (Bitwise 10 index, which tracks the return of 10 largest crypto assets) in comparison to other major asset classes, we can see their special signature.” The top 10 cryptocurrencies by market capitalization has outperformed other major asset classes including equities, gold and oil. However this wasn’t the case at the beginning of 2019. In February 2019, the performance of top 10 cryptocurrencies has been well below other traditional asset classes. The success of cryptocurrency is mostly due to its most defining characteristics such as high volatility and liquidity, that allows investors to quickly convert between digital and fiat currencies. Carl Quintanilla, anchor of CNBC business news site, also pointed out the excellent performance of cryptocurrencies. Carl tweeted that Bank of American Merrill Lynch (BAML) considers Bitcoin as the best performing asset of the decade. Analysts have estimated that if you had invested $1 in Bitcoin back in 2010, it would be worth more than $90000 today. While the same amount put into US equities in 2010, would be worth $3.46 today. Even after a long bear market Bitcoin has had a successful decade.

Basel Committee Seeking Global Crypto Standard

A global banking regulator, the Basel Committee on Banking Supervision (BCBS), international committee formed to develop standards for banking regulation has published a discussion paper called “Designing a prudential treatment for cryptoassets”. The Committee expects comments from all stakeholders including academics, banks, central banks, finance ministries, market participants, supervisory authorities, technology companies and the general public by the 13th of March, 2020. The BCBS admitted that though the size of the cryptocurrency market remains small relative to the size of the global financial system, its absolute size is meaningful to be monitored by central banks. The rapid growth of the cryptocurrency market might lead to increased risks for central banks around the world. The discussion paper didn’t touch upon central bank-issued digital currencies. The BCBS proposes a list of recommendations for banks that are directly or indirectly exposed to cryptoassets. The paper concludes with a list of feedback questions including “What benefits do crypto-assets provide for the banking system, and the provision of financial services more generally?”

Largest Russian Darknet Marketplace Planning to Raise $146 Million Via ICO

Hydra, Russia’s largest Darknet marketplace, has announced that is seeking to raise $146 million through a token sale to expand the marketplace internationally. The ICO (Initial Coin Offering) is scheduled to start on the 16th of December. According to the Coindesk columnist Anna Baydakova, Hydra’s investment memorandum, can only be accessed through a specialized anonymous browser, like Tor. There will be 147000 tokens issued by Hydra and 49% of the tokens will be sold to the general public. Each token will be priced at $100 worth of Bitcoin. Investors who purchase 100 tokens will get a 0.00333333% share of Hydra’s profits and will receive $500 monthly dividends in Bitcoin. The Hydra marketplace has been around since 2015 and has 2.5 million active users with 100 000 daily transactions. It’s a marketplace for illegal goods and services such as drugs, fake passports, hacking services. Buyers and sellers never meet in person, instead illicit goods are concealed and dropped off at public places where clients can pick them up. Many claim that the token sale is likely to be an exit scam and investors should stay clear of the project.

Tweet of the week

Rewritten lyrics of Wham band’s Last Christmas song

Meme of the week
Quiz answer

What sentence did Satoshi Nakamoto embed into the Bitcoin Genesis Block?

The correct answer is “C”.

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