Are PayPal and Venmo coming to crypto? View in browser

Unlike banking and payment services in the traditional financial system, Bitcoin is global and borderless. Users don’t need an account, don’t need to provide any identification to use the service, and their transactions can’t be censored or frozen by authorities. Bitcoin can be a lifeline for human rights defenders, especially if its privacy and usability can be improved.~ The Human Rights Foundation

Market State

The cryptocurrency market gained $10 billion this week, however, the gain didn’t last long. The whole market is just above $261 billion at the time of writing. Bitcoin started the week with bullish sentiment and surged past $9600, however, the surge in price of Bitcoin was short-lived and it is currently trading around $9200. Top cryptocurrencies by market capitalization have recorded similar price action. Meanwhile decentralized finance (DeFi) space exploded in value last week. The biggest news from the DeFi world has been the launch of decentralized lending protocol Compound’s COMP governance token, which can only be earned by using the protocol. The launch of COMP token was so successful that the price of the token rose five fold on its first trading day and became the most valuable DeFi token, in less than a week COMP token has risen to over $2.43 billion in market capitalization. Currently it is trading at around $251. Since the DeFi interest rates have been higher than the average interest rates offered by banks, DeFi lending protocols are attracting many investors. 

According to the latest survey by Fidelity Digital Assets, one of the largest asset management firms in the world, 36% of institutional investors across the US and Europe own crypto assets. Fidelity surveyed nearly 800 investors including financial advisors, family offices, pensions, crypto and traditional hedge funds, high net worth investors, and endowments and foundations. More than 25% of surveyed firms said they hold Bitcoin making it the most popular crypto asset among institutional investors, while 11% hold Ether. Tom Jessop, president of Fidelity Digital Assets “these results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class.”

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Quiz of the week

What is the maximum supply of Ether?

  1. The maximum supply of Ether is 180 million Ethers
  2. The supply of Ether is pre-defined at 360 million Ethers
  3. There is no limit to the supply of Ether

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

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Top stories of the week
Are PayPal and Venmo Coming to Crypto?

According to three anonymous sources with insider information, PayPal and its mobile payment service Venmo are planning to add support for direct sales of cryptocurrency and launch cryptocurrency wallet to its 325 million users. One of the sources claimed “They are going to allow buys and sells of crypto and have some sort of a built-in wallet functionality so you can store it there.” Another source confirmed that “PayPal is looking to offer buying and selling of cryptocurrency within the next three months or even sooner.”

PayPal hasn’t confirmed the news and declined to comment on the plans thus details remain scant, however, the sources state that the company will collaborate with multiple exchanges including Bitstamp and Coinbase to access liquidity. It’s worth noting that PayPal has a longstanding relationship with Coinbase, going back as early as 2016. Coinbase made instant fiat withdrawals to PayPal available for its US customers. Last year, European Coinbase users could withdraw to their PayPal accounts, followed by users in Canada.

PayPal has over 300 million registered users, while Venmo has more than 50 million active users. In 2019, PayPal's annual payment volume amounted to more than $712 billion, representing a 23% growth from 2018. Venmo was acquired by PayPal in 2013 and its annual payment volume reached $100 billion by the end of 2019 which was an 73% increase compared to 2018. Many crypto advocates believe that if the rumour about PayPal entering to the cryptospace is true, it could lead to a bull market.

The Human Rights Foundation Funds Privacy-Focused Bitcoin Projects

On June 10, 2020, the Human Rights Foundation (HRF) launched a Bitcoin Developer Fund to support software developers “who are making the Bitcoin network more private, decentralized, and resilient.” The HRF said it started the fund "so that Bitcoin can better serve as a financial tool for human rights activists, civil society organizations and journalists around the world." The foundation has awarded the first grant of $50,000 to Chris Belcher, a UK-based developer working on a project called CoinSwap, which is a mixing tool that makes it harder to monitor Bitcoin transactions. 

Alex Gladstein, the HRF’s chief strategy officer said “Human rights defenders and reporters around the world face increasing financial repression in the form of frozen bank accounts, restrictions on foreign funding, payment surveillance, and general difficulty in earning income or receiving donations. Bitcoin can be a powerful tool for them to use moving forward alongside encrypted messaging apps like Signal and projects like Tor Browser and Securedrop.” 

According to HRF’s announcement the “The fund’s next gift, already earmarked for another developer working on strengthening Bitcoin pseudonymity at the network level, will be announced in the near future.” Furthermore, the foundation is seeking more support via a crowdfunding campaign. People can donate Bitcoin or US dollar to the new HRF Bitcoin Development Fund. 95% of donations will go directly to the selected developers while 5% will support HRF’s human rights advocacy in general. Any Bitcoin developer is open to submit a proposal to HRF for the fund.

Bitcoin As a Peaceful Protest Against Economic Injustice

On May 25, 2020, George Floyd, a 46-year-old afro-american man, died handcuffed and prone in Minneapolis, while a white police officer knelt on his neck for almost nine minutes. Weeks after George Floyd’s death, protestors are still continuing their call for racial justice and the protests are now happening all around the world. According to some opinions economic inequality is what separates Black Americans from the rest of the nation. (In Minneapolis, for example, the median income for Black households is $38,200, less than half of their white counterparts.) During the protests, Isaiah Jackson’s book titled “Bitcoin & Black America” is gaining popularity and traction. The books’ title has already appeared on signs at protests in North Carolina, New Jersey, and even London.

Jackson is the founder of KRBE Digital Assets group, which is a collaboration between two Bitcoin enthusiasts who aim to provide newcomers, investors and business owners the tools they need to navigate the cryptocurrency ecosystem. According to a Coindesk interview with Jackson, he thinks that “Bitcoin can play a crucial role in addressing economic disparity in Black communities.” Jackson said though “the protests were sparked by police violence, the underlying causes of them is economic injustice.” 

According to Jackson wealth gap between black Americans and white Americans was created by a long history of racist practices including redlining and discrimination at banks. (Redlining: denial of certain services such as loans to groups with specific racial characteristics. In the 1930s a policy was introduced in the USA that put services out of reach for residents of areas densely populated by African-Americans, which resulted in residential segregation. The policy was banned in the 1970s, however, it still has its effect on African- American community. ) 

He’s supportive of protesters on the streets worldwide, but Jackson also sees buying Bitcoin (BTC) as an alternative, peaceful solution. “I usually say that that the most peaceful protest you can do is simply buying Bitcoin on a regular basis, because you're just moving your money out of this system into what I believe is a better money system that can be used in the future.”

Is Goldman Sachs Wrong About Bitcoin?

On the 27th of May, the Wealth Management Division of Goldman Sachs, a multinational investment bank held an investor conference call to discuss current policies for inflation and how it could impact gold and Bitcoin. The call was titled “US Economic Outlook & Implications of Current Policies for Inflation, Gold, and Bitcoin”. The conference news generated positive expectations in the cryptocurrency community. However, the bank has a critical stance on cryptocurrencies. The bank said that Bitcoin is neither an asset class nor a suitable investment. The investor presentation from the call listed several reasons why Bitcoin is not an asset class: because it doesn’t generate cash flow like bonds nor earnings through exposure to global economic growth, it doesn’t provide consistent diversification benefits given their unstable correlations, it has not proved itself to be a reliable hedge against inflation, it doesn’t dampen volatility. The presentation also mentioned that cryptocurrencies have been used to facilitate money laundering and purchases on the dark web. The bank also believes that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, but not with a “viable investment rationale.”

Goldman Sachs’ view on cryptocurrencies has been criticized by many Bitcoin proponents. A Swiss Bank responded to Goldman Sachs’ dismissal of Bitcoin as an asset class. The Head of Digital Assets at Swissquote, Chris Thomas, said “The world is witnessing an emerging asset class being formed. Goldman Sachs is ignoring the strong foundations of this emerging asset class based on cryptographic principles.” Regarding Bitcoin’s volatility Thomas pointed out that volatility is not unique to cryptocurrencies and recalled the recent oil price crash “Bitcoin did fall 37% on March 12, 2020. And just one month later, oil markets plunged 333% in the space of 24 hours, nearly 10x a greater drop.” Thomas denied the narrative of Bitcoin as a criminal tool by referring to Chainalysis’ report in January, 2020 which says that only 0.08% of crypto transactions originate from the darknet markets and that criminal activity represented just 1.1% of total activity.

Bloomberg, a global media and financial data and analytics conglomerate is on the opposite side of what Goldman Sachs noted about Bitcoin. According to Bloomberg’s June Crypto Outlook report, “something has to really go wrong for bitcoin not to appreciate in value, due to quantitative easing and maturity”. Analysts at Bloomberg predicted the price of Bitcoin to reach its record high of $20,000 later this year, based on an analysis of historical trading patterns. Bloomberg believes that Bitcoin is benefiting from the coronavirus pandemic. Firstly, central banks are printing money on an unprecedented scale pushing up inflation, leading to an increased demand for “independent stores-of-value such as gold and Bitcoin”. Secondly, the virus is accelerating the shift away from paper currency toward digital money.

European bank uses stablecoin instead of SWIFT for cross-border transfers

Bank Frick, the Liechtenstein-based crypto-friendly bank, is now processing payments made in the stablecoin USDC. Stefan Rauti, head of blockchain banking at Bank Frick noted that “With the addition of USDC, we enable our customers to process USD payments quickly. Compared to the classic SWIFT procedure, the processing time is significantly reduced.” USDC integration allows Bank Frick users to send and settle payments at a faster rate than the SWIFT interbank settlement service, used by a majority of banks. SWIFT transfers typically take between 24 and 48 hours to settle, while stablecoin transfers are often settled within minutes.

Bank Frick, was founded in 1998 and offers crypto trading and custody for institutional clients miners and mining firms and supports a total of ten crypto assets. The USDC stablecoin was launched in late 2018 by the CENTRE consortium, co-founded by crypto exchange Coinbase and the fintech firm Circle financed by Goldman Sachs. Like most stablecoins, USDC is pegged 1:1 to the US dollar and audited by Grant Thornton, the world's sixth largest accounting firm. According to Circle co-founder, Jemery Allaire, Bank Frick's addition of USDC is part of a growing trend among financial institutions. He expects more regulated banks to add support for stablecoins, “which are becoming a significant alternative rail to value transfer for banks."

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Quiz answer

What is the maximum supply of Ether?

The correct answer is “C”.

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MrCoin Team

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