eBay, Stripe, Visa And MasterCard all abandon Facebook's Libra project. View in browser

“When somebody asks me ‘What is Bitcoin?’ I say ‘Do you like freedom? Do you like independence? Then Bitcoin is for you.’” ~ Russell Okung, American football player

Market State

During the last week the total cryptocurrency market enjoyed a little rally and increased from $220 billion to $231. Then the market pulled back gradually and stabilized around $226 billion. Last monday Bitcoin dropped below $8000 reaching $7800. It quickly corrected itself, touching $8600 before falling back. Currently Bitcoin is trading around $8330. Ether has been officially recognized as a commodity by the Commodity Futures Trading Commission (CFTC). It is up by 4.5% to $184. Also last week Ethereum community held its fifth annual conference Devcon 5 in Osaka, Japan. Ripple didn’t seemed to be correlating with the overall crypto market. Over the week XRP has increased by 5% to $0.29. Ripple has restructured their website so their clients have easy access to all of their software products. 

According to a chart shared by Glassnode the number of Bitcoin addresses holding more than 1000 Bitcoin has increased drastically despite the bear market. There will only ever be 21 million Bitcoins. Thousand Bitcoin is just 0.004% of the total supply, which might seem insignificant but at current price this amounts to $8 million. The whale addresses started to grow as soon as Bitcoin hit its bottom in late 2018 and early 2019, when the price of Bitcoin was around $3200. Addresses containing more than 1000 Bitcoins have grown from around 1500 addresses to over 2000 in 2019. The data suggests that whale addresses rise significantly during any major price drop. About hundred whale addresses have joined the list during the recent drop from around $9600 down one thousand. Another data shows that nearly $10 billion worth of Bitcoin is held in the wallets of major exchanges. That is about 7% of all Bitcoin in circulation. The whale addresses could be exchanges or institutional investors accumulating Bitcoin for the lowest price possible.

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Quiz of the week

What is Solidity?

  1. Programming language used for developing Ethereum smart contracts
  2. The hashing algorithm that is used in Litecoin
  3. A tool used in mining to generate the next transaction

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

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Top stories of the week
UNICEF Launches Cryptocurrency Fund

The United Nations’ children welfare agency UNICEF announced the launch of its cryptocurrency fund that will accept and manage Bitcoin and Ether donations. The donation will be invested in blockchain projects that benefits children and young people around the world. The first donation came in the form of 1 BTC and 10000 ETH from the Ethereum Foundation. The benefits of crypto fund is that it completely transparent as it can be tracked on the blockchain. This system of decentralisation offers non-profit organisations the advantage of bypassing expensive fees and middlemen traditionally required to move large amounts of cash overseas quickly. 

Christopher Fabian, principal adviser at Unicef Innovation, said the initiative would prepare the organisation for the future while also maintaining safeguards built into existing donor systems. “We see this as a piece of learning that we need to go through to prepare for the next decade,” he said. Fabian said to reduce risks caused by the currencies’ volatility, most of the initial projects funded in this way would be short-term. UNICEF joins a number of aid agencies that have started accepting donations in virtual coins, including the American Red Cross and the UN World Food Programme.

Australia's Gold Mint Launches Ethereum Based Crypto Token

Australia‘s 120-year-old, state-owned gold refinery Perth Mint has teamed up with an Australian fintech firm InfiniGold and launched the world’s first government guaranteed gold-backed Ethereum token. PMGT stablecoin is backed 1:1 by GoldPass certificates issued by The Perth Mint. GoldPass was launched in 2018 via a mobile app and allows investors to buy, sell and transfer physical gold via digital certificates. All GoldPass digital certificates are 100% backed by physical gold stored in central bank grade vaults of Perth Mint. PMGT digitized gold now brings GoldPass digital certificates and the physical gold to Ethereum blockchain. Richard Hayes, CEO of the Perth Mint said “The digitisation of gold via a public ledger is a natural progression for the global commodity markets. It will promote gold as a mainstream asset, enhance its accessibility, and offer greater liquidity.”

CFTC Chair Says Ether Is a Commodity

The Commodity Futures Trading Commission (CFTC) chairman Heath Tarbert has publicly announced that Ethereum is a commodity, at Yahoo Finance's All Markets Summit and therefore it will be regulated under the jurisdiction of the CFTC. He also anticipates Ether derivatives to trade on the US market in the near future. According to Tarbert, forked assets will most likely be classified and treated the same way as the original asset unless the fork itself raises some securities law issues under that classic Howey Test. Previously the US Securities and Exchange Commission director, Bill Hinman explained that newly created tokens are likely securities as they are promoted with the promise to grow in value and to be sold later at a profit, while Bitcoin and Ether are sufficiently decentralized and not controlled by a third party, thus they are not considered as securities.

German Finance Minister Wants To Introduce A Digital Euro

Germany’s minister of finance, Olaf Scholz, is in favor of digital version of euro but is against private currency projects like Facebook’s Libra. In local financial news magazine WirtschaftsWoche, Scholz said A payment system like that would be good for Europe as a financial center and its integration into the world financial system.”  He added “We should not leave the field to China, Russia, the US or any private providers.” Just last month Germany released its official blockchain strategy in which Germany made it clear that it couldn’t accept any parallel currencies to be issued in the country. Scholz said: “A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies.”

eBay, Stripe, Visa And MasterCard All Abandon Facebook's Libra Project

Stripe, eBay, Visa, MasterCard and Mercado Pago, a Latin-American e-commerce giant have joined PayPal and officially departed from the Facebook’s Libra project. The US lawmakers have been pressuring the members of Libra Association. In a letter to Visa, Mastercard, and Stripe two US senators have asked the companies to reconsider their involvement with Facebook’s Libra project or expect high level of scrutiny. Many have expressed that they are sad to see Facebook’s Libra project fail before its launch due to political pressure and forced not to experiment or innovate to avoid regulatory concerns. Facebook CEO Mark Zuckerberg will testify before the House Financial Services Committee on the 23rd of October to discuss concerns over Libra digital currency. Meanwhile Facebook and Calibra, the wallet for Libra have been sued for trademark infringement by a mobile banking app Current.  

US Tax Agency Issues New Crypto Tax Guidance

The U.S. Internal Revenue Service (IRS) has issued its first official ruling on cryptocurrency taxes since its 2014 guidance. The IRS is counting hard forks as income which will be taxed. According to the guidance “When you receive cryptocurrency from an airdrop following a hard fork, you will have ordinary income. However, a hard fork is not always followed by an airdrop.” Crypto enthusiasts have flooded social media with feedbacks and more unanswered questions. Many said that hard fork and airdrop terminology is used incorrectly and the IRS doesn’t describe these events correctly. Also the most widely used US tax form has added a new question which for the first time will ask US tax payers “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” followed by a yes or no option. 

The US SEC Halts Telegram's $1.7 Billion Token Sale

The Securities and Exchange Commission (SEC) has filed an emergency action and halted $1.7 billion unregistered token sale conducted by Telegram Group Inc and TON Issuer Inc. The two entities have failed to register their GRAM token sale and sold 2.9 billion tokens at discounted prices to 171 initial purchasers worldwide, including more than 1 billion GRAMs to 39 US purchasers. Telegram has announced its own blockchain project called Telegram Open Network (TON) last year with a mainnet expected to launch on the 31st of October, 2019. Telegram’s court hearing is scheduled on the 24th of October.  Telegram explained to its investors that the company has been trying to obtain feedback from the SEC regarding the TON blockchain for the past 18 months and disagree with the SEC's legal action. The company added that it is continuing to determine the best way to tackle the situation.

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Quiz answer

What is Solidity?

The correct answer is “A”.

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