Litecoin (LTC) – No matter where you might be in the US, you can pretty much feel the tension emanating from Wall Street. The DOW Jones Industrial Average dropped almost a thousand points within a week after a perfect storm of bad news—the Fed raised their interest rates for the sixth time since the 2009 financial crisis; Facebook stocks plunged after a public relations debacle stemming from compromised information of millions of users; Trump issued tariffs on foreign steel and aluminum; and more, much more.
If it weren’t for the fact that the stock market closes at the end of the day, who knows where Friday’s free fall would have ended.
Analysts have been warning that the nine-year bull run that Wall Street has seen could be near an end. And it looks like those warnings are probably true. How much the stock market might continue to fall however doesn’t seem to be a concern for cryptocurrency enthusiasts. Because as stocks have been plummeting, the cryptocurrency’s version of the Dow Jones—the cci30—has shown cryptocurrencies leveling off after a tough eight weeks, but now showing strong recovery here at the end of March.
So in other words, the world of crypto is looking good. Wall Street, not so good.
As crypto proves its mettle to the financial world, it’s looking like a better and better option to soured Wall Street investors who on Friday dumped almost two percent of the entire market as stock values pretty much across the board took a nosedive.
Although the stabilizing of Bitcoin may be seen by the financial sector as the key indicator of the cryptocurrency sector’s health, one of the other major coins has shown the type of stability that Bitcoin has—and that’s Litecoin. The steady but sure Litecoin (LTC) has fluctuated this week less than any of the majors, maintaining its value in a highly consistent, stable trajectory.
WHERE IS THE JUICE?
Wall Street investors however in all honestly probably don’t have any interest in the cryptocurrency sector’s health. They want profits, and the big question on everyone’s mind is if there is a fourth gear to cryptocurrency. Although Bitcoin has been around in some form since 2009, it wasn’t traded until about 2011. But those early days of trading on Mt. Gox were a tiny srpig in the growth cycle of alt-coin. The years between 2014 and 2017—second gear—were the years that the alt-coin sector gained enough momentum to begin to be recognized by mainstream media. After The New York Times published the infamous “Bitcoin Scrapes $10,000 – an Investment Boom Like No Other” in November, 2017, the alt-coin sector zoomed into third gear and the sector went wild, with alt-coins pretty much across the board surging in value up to about 3,000 percent within three weeks of that publication.
Crypto analysts pretty much credit this massive surge in Wall Street investment, spurred by the NY Times piece, for December 2017’s alt-coin price spike, a phenomenon known as The Wall Street Rush. Analysts however also credit Wall Street dumping for the subsequent fall of cryptocurrency which started mid-January 2018 and has pretty much continued into the last couple of weeks, when alt-coin prices seem to have stabilized.
But truth be known, Wall Street investors generally didn’t know what they were dealing with in the alt-coin sector. To most of them, alt-coin speculation was exactly that, a chance to make quick profits, and those rush investors did that—they profited considerably, and then they dumped.
That Wall Streeters didn’t know what they were dealing with however is precisely why they’re wondering if there is any future to cryptocurrency.
But there is, there definitely, definitely is.
Now that cryptocurrency has entered into a new era—an era where coin value is tied to real-world use, such as XRP’s significant inroads into the financial sector, being used live by Cuallix, the international financial service, in testing phase by Western Union, MoneyGram, and numerous other financial services.
This use-case era for cryptocurrency represents the fourth gear for the alt-coin sector, a time when many cryptocurrencies will become valueless, while others—those alt-coins that play a real role for the inherent qualities of the coin’s design as well as their structured application and integration—will continue to surge.
FOURTH GEAR IS OFFICIALLY HERE
So far cryptocurrency has weathered Wall Street’s January dump like a champ. Although many criticize crypto for generally having lost half to two-thirds of its value (depending on the coin) in the last 10 weeks, what they aren’t pointing out is that over a year’s time, major coins like Litecoin (LTC) are still up more than 3,000 percent.
ADVISORY: I am not a financial advisor and I do not suggest speculating in alt-coin. The information in this op-ed is opinion and commentary only and it should not be construed as financial advice. Some information in this article comes from generally circulating content in news reports and industry web sites. I own some alt-coin, including XRP and LTC, but not much and I don’t day trade
Korean Crypto Exchanges Update Terms to Accept Liability for Hacks
A number of South Korean cryptocurrency exchanges have been forced to update their terms and conditions to accept liability for potential hacks and service issues.
According to a report by the Yonhap News Agency, South Korea’s antitrust watchdog, the Fair Trade Commission, said Monday that five exchanges in total had made the change after it issued a corrective recommendation.
Bithumb, an exchange that has been hacked twice in a year, is included in the five exchanges, the report says. Last June, the platform lost roughly $31 million in cryptocurrencies, and, in May 2019, a possible insider job saw around $20 million in the company’s holdings of XRP and EOS disappear.
Previously the exchanges’ T&Cs had stated that they would not compensate users if not found to be willfully or grossly negligent.
After it’s 2018 hack, Bithumb pledged to refund users that lost cryptos, despite its T&Cs.
In January, only a third of inspected cryptocurrency exchanges got a full pass in a government security audit.
At the time, several government agencies inspected a total of 21 crypto exchanges from September to December 2018, examining 85 different security aspects. However, only 7 – Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea – cleared all the tests.
Nouriel Roubini Says Facebook’s GlobalCoin Has ‘Nothing to Do With Crypto’
Noted economist and cryptocurrency skeptic Nouriel Roubini has said Facebook’s soon-to-be unveiled cryptocurrency, reportedly called GlobalCoin, is not really crypto.
In a conversation with CoinDesk, Roubini – also nicknamed “Dr. Doom” for his prediction of the financial crash in 2007 and 2008 – said:
“It has nothing to do with blockchain. Fully private, controlled, centralized, verified and authorized by a small number of permissioned nodes. So what is crypto or blockchain about it? None.”
Indeed, according to recent reports, the social media giant has signed up more than a dozen backers for its GlobalCoin cryptocurrency, a stablecoin apparently to be backed by a basket of fiat currencies. Each of the new backers – which reportedly include Visa, Mastercard, PayPal and Uber – will invest roughly $10 million in the project as part of a governing consortium for the cryptocurrency.
While he acknowledged that specifics of the project are not yet known (but are expected to be revealed in a white paper Tuesday), Roubini suggested that it is unlikely that GlobalCoin would use common blockchain technologies such as proof-of-work or proof-of-stake. “Why would they?” he said.
And while many in the crypto community have also criticized those calling Facebook’s token a cryptocurrency, the economist denied that he shared any common ground with the “crypto faithful.”
He told CoinDesk that he has gone on record as saying that “enterprise DLT [distributed ledger technology] is blockchain in name only … so some crypto faithful may agree on that.”
Roubini concluded by saying:
“But in my opinion, public decentralized trustless blockchain is a pipe dream … so we disagree on 99% of [the] substance.”
Click here to see our comprehensive guide to Facebook’s GlobalCoin.
Bitmain Lawsuit Seeks Millions from Staffers Who Founded Rival Mining Pool
- Bitmain is suing three former employees who started Poolin, a rival to the chip manufacturer’s BTC.com mining pool.
- The company is seeking $4 million in damages, alleging the Poolin co-founders violated their non-compete agreements; The former employees say Bitmain voided the non-compete by failing to pay them on time as agreed.
- The case offers a rare window on Bitmain’s inner-workings and employment practices.
Cryptocurrency mining giant Bitmain is locked in a legal battle with three former employees who started a rival mining pool.
Bitmain, the owner of BTC.com, the world’s top bitcoin mining pool by hash rate, is suing the co-founders of Poolin, the seventh-largest pool, for allegedly violating a non-compete agreement – and it’s demanding $4.3 million in damages from one of them.
For their part, the three Poolin co-founders say they were no longer bound by the non-compete, since it was Bitmain that invalidated their contracts for failing to pay compensation on time as agreed.
The case offers a rare window on the inner workings and employment practices of Bitmain, one of the blockchain industry’s largest and most powerful companies.
Bitmain makes most of its money from selling mining equipment, according to financials disclosedduring the firm’s abortive attempt to go public. But it also operates mining pools, essentially software products miners use to split rewards. This service accounted for $43.2 million of Bitmain’s revenues in the first half of 2018, the most recent period for which data is available, compared to $2.7 billion of hardware sales during the same period.
There are six lawsuits pending in the Beijing Haidian District court. The three Poolin co-founders – CEO Zhibiao Pan; COO Fa Zhu; and CTO Tianzhao Li – each sued Bitmain preemptively, seeking to be released from the non-compete.
Bitmain, in turn, countersued each of them, claiming they caused significant losses to the company after leaving by operating a directly competing pool. Aside from seeking damages, Bitmain asked the court to order the Poolin executives to resume honoring the non-compete agreement.
The dispute has largely escaped public notice, but video footage recently became available of an April 30 hearing where the two sides made their respective cases. The video only showed discussion of the case between Pan and Bitmain. As such, exact details regarding the other two former employees were not clear until now.
The birth of BTC.com
The main dispute in these cases boils down to the roles the three Poolin founders played in Bitmain’s flagship mining pool BTC.com, and the non-compete agreements they signed when they decided to leave Bitmain.
In a WeChat post written by Zhu and published by a Chinese crypto media outlet in January commemorating bitcoin’s 10-year anniversary, he briefly recounted the trio’s work at Bitmain.
Zhu wrote that back in 2015, the three – while still focusing on Bitmain’s original mining pool, Antpool – proposed to launch BTC.com as a parallel service within Bitmain.
The idea was not initially supported by Bitmain, Zhu wrote, and the three had to develop and roll it out on their own using Pan’s own capital at the beginning. In 2016, Pan open-sourced the code of BTC.com, which helped lower the threshold for anyone that’s interested in launching a mining pool business.
The three collaborators left Bitmain around mid-2017. Under the non-compete agreement, Bitmain would pay monthly compensation to Pan after his departure of about $2,780 for 24 months, and in return, prohibit him from specifically operating a bitcoin mining pool. The compensation for the other two under such agreements was not clear from the court video.
After their departure from Bitmain, Pan, Zhu and Li launched Poolin as mining pool for multiple cryptocurrency assets in November 2017. They didn’t launch a pool service for bitcoin until July 2018, when they mined Poolin’s first block of the largest cryptocurrency by market cap.
It has since grown into one of the largest bitcoin mining pools. Based on facts agreed on by both sides of the case and presented to the court, as of Feb. 14, Poolin was the third biggest operation by hash rate in the world, after BTC.com and AntPool. All told, miners connected to Poolin had mined 26,825 bitcoin, worth $220 million at today’s prices.
Notably, Poolin’s share of the hash rate has dropped since then to about 8.2 percent, and its rank has fallen to No. 7, based on the current distribution of bitcoin’s network computation.
Bitmain cries foul
Subsequently, Bitmain alleged that such conduct violated the non-compete agreement, and demanded that Pan return all the paid compensation, as well as a fine of $667,000 for reneging.
Further, Bitmain’s lawyers argued at the hearing that the revenues Poolin generated from mining the 26,825 bitcoin should be considered a profit made by violating the agreement, which should be paid back as a loss to Bitmain.
“Based on the agreement, if it’s difficult to calculate all the direct and indirect loss [for Bitmain due to Poolin’s violation], then the loss should be calculated based on the profits made by the violating party,” one of the lawyers said.
“As of Feb. 14, the total profits for Poolin would be 26,825 bitcoin times 4 percent, which was their handling fee, and times bitcoin’s price at the time, which was 24,518 yuan [$3,500],” the lawyer argued.
That, added to the alleged fine, would amount to more than 30 million yuan, or about $4.3 million.
Poolin pushes back
But lawyers representing the Poolin founders argued to the court that Pan was not obligated to honor the agreement and thus should not be ordered to pay damages.
Pan’s lawyers said in the hearing that Bitmain failed to pay Pan the agreed-upon compensation on time, citing lines from the agreement that if Party A (Bitmain) did not pay the compensation within a month since Party B (Pan)’s departure, it would mean Party A voided its obligation.
Further, Pan’s lawyers argued the transaction fee Poolin received doesn’t necessarily translate to profits of the company because until the date of the hearing, the firm had not turned a profit. In addition, the fact that Poolin successfully mined 26,825 bitcoin also does not necessarily mean it would be a loss for BTC.com, the lawyer said.
“There are a lot more bitcoin mining pools in this network. It’s not just Poolin v.s. BTC.com. Even if Poolin didn’t operate its bitcoin mining pool, it does not necessarily mean Bitmain will be able to mine those coins.” the lawyer argued.
So far, it’s not yet clear from the public record whether the court has made a judgment or when it will. The judge asked at the end of the hearing if there was a way for the two parties to settle the case. Lawyers from Bitmain declined to discuss that at the court and suggested waiting until after the hearing adjourned.
Bitmain declined to comment or provide further clarification on the status of the cases. Poolin executives did not respond to CoinDesk’s inquiries by press time.
This is not the first time Bitmain has had a legal dispute with former senior executives. In 2017, it suedZuoxing Yang, a former Bitmain chip design director who left to launch Bitewei, a rival mining equipment manufacturer, over patent rights infringement.
Bitmain initially demanded damages of 26 billion yuan, or $3.8 billion, but later reduced the claim to $380,000. In 2018, the court in Xinjiang that oversaw the case dismissed Bitmain’s complaint after Yang successfully revoked Bitmain’s patent over the technology in dispute.