Category Archives: Cryptocurrency

The Chicago Board Options Exchange (CBOE) has partnered with Gemini, the bitcoin exchange backed by investors Cameron and Tyler Winklevoss, as part of a bid to launch cryptocurrency derivatives trading.

According to the Wall Street Journal, the agreement will find the CBOE leveraging Gemini's data for the launch of dedicated product listings in 2017. Opened to traders in 2015, Gemini is a New York-based exchange offering bitcoin and ether markets, as well as daily auctions of the cryptocurrencies.

The CBOE is still waiting for regulatory approval on the move, the report said, which would provide institutional investors with an avenue to hedge against volatility in the fast-growing cryptocurrency markets. Already, the total value of all cryptocurrencies from just over $10 billion at the start of the year, to a high of $115 billion in June.

Further, the announcement comes at a time when institutional investors are increasingly taking note of this price appreciation, and are seeking to determine opportunities for the technology that fit into their existing business models.

Most notably, it follows a decision by the Commodities Futures Trading Commission to grant a license to LedgerX last week that would allow it to clear and custody cryptocurrency derivatives for assets like bitcoin and ether.

Markets trading image via Shutterstock

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Options Exchange CBOE to Launch Cryptocurrency Derivatives in ... - CoinDesk

Cryptocurrency news has been hot of late, thanks in no small part to the skyrocketing prices of Bitcoin and Ethereum, the two largest cryptocurrencies right now. Litecoin and other cryptocurrencies are also up in value, and given the prices on graphics cards that are supposed to be useful for gaming, some of you will inevitably wonder: should I get into the mining business?

That's a big, open-ended question, and the answer depends on many factors. I'm not going to try and cover every aspect, because Google is your friend, but let's quickly go over the basics of what you would need to get started, and I'll include some rough estimates of how much money you can make at the end.

The core of mining is the idea of block rewards. For most coins, these are given to the person/group that finds a valid solution to the cryptographic hashing algorithm. This solution is a mathematical calculation that uses the results of previous block solutions, so there's no way to pre-calculate answers for a future block without knowing the solution to the previous block. This history of block solutions and transactions constitutes the blockchain, a sort of public ledger.

What is a block, though? A single block contains cryptographic signatures for the block and the transactions within the block. The transactions are collected from the network, typically with a small fee attached, which also becomes part of the block reward. There's a difficulty value attached to the solution for a block as well, which can scale up/down over time, the goal being to keep the rate of generation of new blocks relatively constant.

For Bitcoin, the target is to generate a block solution every 10 minutes on average. For Ethereum, block solutions should come every 16 seconds. That's obviously a huge difference in approach, and the shorter block time is one reason some people favor Ethereum (though there are others I won't get into). Simplistically, the number solution has to be less than some value, and with 256-bit numbers that gives a huge range of possibilities. The solution includes the wallet address for the solving system, which then receives all the transaction fees along with the block reward, and the block gets written to the blockchain of all participating systems.

Think of it as panning for gold in a streamyou might get lucky and find a huge gold nugget, you might end up with lots of flakes of dust, or you might find nothing. If the stream is in a good location, you make money more quickly. The difference is that with cryptocurrencies, the 'good location' aspect is replaced by 'good hardware.'

There are many options for cryptocurrency mining. Some algorithms can still be run more or less 'effectively' on CPUs (eg, Cryptonight), others work best on GPUs (Ethereum, Zcash, Vertcoin), and still others are the domain of custom ASICs (Bitcoin, Litecoin). But besides having the hardware, there are other steps to take to get started with mining.

In the early days of Bitcoin and some other cryptocurrencies, you could effectively solo-mine the algorithms. That meant downloading (or even compiling) the wallet for a particular coin and the correct mining software. Then configure the mining software to join the cryptocurrency network of your choosing, and dedicate your CPU/GPU/ASIC to the task of running calculations. The hope was to find a valid block solution before anyone else. Each time a block is found, the calculations restart, so having hardware that can search potential solutions more quickly is beneficial.

These days, a lot of people forego running the wallet software. It takes up disk space, network bandwidth, and isn't even required for mining. Just downloading the full Bitcoin blockchain currently requires over 45GB of disk space, and it can take a while to get synced up. There are websites that take care of that part of things, assuming you trust the host.

In theory, over time the law of averages comes into play. If you provide one percent of the total computational power for a coin, you should typically find one percent of all blocks. But as Bitcoin and its descendants increased in popularity, difficulty shot up, and eventually solo-mining became an impractical endeavor. When you're only able to provide 0.00001 percent of the mining power, and that value keeps decreasing over time, your chance of finding a valid block solution becomes effectively zero. Enter the mining pools.

If solo mining is like solo gaming in an MMO, block rewards have become the domain of large mining guilds, called mining pools. For blockchain security reasons, you don't want any single groupa mining pool or an individualto control more than 50 percent of the computational power (hashrate) for the coin network, but for mining purposes, being in a bigger pool is almost always better.

The reason is that, unlike block rewards where everything goes to the winning system, mining pools work together and distribute the rewards among all participants, usually based on a percentage of the mining pool hashrate. Your hardware gets smaller portions of work from the pool, and submits those as shares of work. Even if you only contribute 0.00001 percent of the hashrate, you still get that percentage of every block the pool solves.

To give a specific example, suppose a coin has a total network hashrate of 1Phash/s (peta-hash), but you only provide 0.1Ghash/s. Your chance of mining a block solo is about as good as your chance of winning the lottery. If you join a pool that does 25 percent of the network hashrate, the pool should find 25 percent of blocks, and you'll end up with 0.00004 percent of the block rewards. If a block is worth 50 coins, that's 0.0002 coins from each block the pool findsoften minus a small (1-3) percentage for the pool operators. That might sound like a pittance, but when coins are worth hundreds or even thousands of dollars, it can add up quickly.

There are many places that will provide calculators for cryptocurrencies, so you can see how much you could potentially earn from mining. But ultimately, you'll want to join a mining pool. As a side note, I'd recommend using a new email address for such purposes, and then I'd create a unique password for every pool you happen to joinbecause cryptocurrency thefts are far too common if you're lax with passwords. #experience

If you want to actually collect a coin, like Ethereum, you'll need to take the additional steps of downloading the Ethereum client, syncing up to the blockchain, and setting up the mining pool to pay out to your wallet. It's possible to have pools deposit directly to a wallet address at a cryptocurrency exchange, but again, there are risks there and long-term I wouldn't recommend storing things on someone else's servers/drives.

If all this sounds time consuming, it can beand the people who are really into cryptocurrency often do this as a full-time job. And the real money often ends up in the hands of the pool operators and exchanges, but I digress.

You've got your hardware, you've joined a mining pool, and you're ready to rock the cryptocurrency world. All that's needed now is to download the appropriate software, give it the correct settings for your hardware and the pool, and then away you go. Sort of.

Most pools will provide basic instructions on how to get set up for mining, including where to download the software. But all software isn't created equal, and even things like drivers, firmware revisions, and memory clockspeeds can affect your mining speed. So if you're serious about mining, get friendly with scouring places like Bitcointalk, Github, and other forums.

The easiest way to mine a coin is to just point all your mining rigs at the appropriate pool and load up the necessary software. The problem is that the 'best' coin for mining is often a fleeting, ethereal thingEthereum's real value came because other market forces pushed it from $5-$10 per ETH up to $200+ per ETH during the past several months. Prior to that, it was only one of many coins that were potentially profitable to mine. But switching between coins can take a lot of time, so there's other software that will help offload some of that complexity.

One popular solution is Nicehash, which will lease hashing power to others that will pay for it in Bitcoin. In effect, it transfers the job of figuring out which coin/algorithm to mine to others, though again there are fees involved and the going rates on Nicehash are lower than mining coins directly. The benefit is that you don't end up holding a bunch of some coin that has become worthless.

A more complex solution is to set up multi-algorithm mining software on your own. To do this, you would typically have accounts for all the coins you're interested in mining, and then create rules to determine which coin is best at any given time. Sites like WhatToMine can help figure out what the currently best paying option is, but naturally others would be seeing the same data.

The thing you need to know with cryptocurrency mining is that beyond the initial cost of the hardware, power and hardware longevity are ongoing concerns. The lower your power costs, the easier it is to make mining a profitable endeavor. Conversely, if you live in an area with relatively expensive power costs, mining can seem like a terrible idea.

When many people think about cryptocurrency mining, the first thought is to look at Bitcoin itself. Now the domain of custom ASICs (Application Specific Integrated Circuits), Bitcoin isn't worth mining using GPUs. Where a fast CPU can do perhaps 40MH/s and a good GPU might even hit 1GH/s or more, the fastest ASICs like the Antminer S9 can do 14TH/s. But the Antminer S9 costs $2,100 or more, and still uses around 1350W of power (so you need to add your own 1500W PSU)and you'll net about $8 per day.

Can you do better with mining using graphics cards? As you might have guessed given the current prices of RX 570/580 and GTX 1060/1070, the answer is yes, though not necessarily at the currently inflated GPU prices. But let's start with a basic system cost. You'll need a cheap CPU, motherboard with six PCIe slots, 4GB DDR4 RAM (maybe 8GB if you want), budget hard drive, six PCIe riser adapters, and 1350W 80 Plus Platinum PSU. For the case, you're usually best off building a mining rig using wire shelving and zip ties or something similar. Add all of that up and it will cost around $560 (with 4GB RAM).

The sticking point is the graphics cards. If you could buy RX 580 at the original MSRP of $230 for the 8GB card, $200 for the 4GB model, or $170 each for the RX 570 4GByeah, those are the actual launch prices!that would be $1,380, $1,200, or $1,020. With prices skyrocketing on the RX cards, GTX 1070 became the next logical target, with prices increasing from $350 per 1070 a few months ago to $450+ per card today.

I've got good news for gamers, as I've put together a table showing expected returns using various forms of mining, using current graphics card and ASIC prices. Some of these (like the Antminer L3+) are difficult to find or are still pre-order, but you can sometimes pay a significantly higher price to get one. Here's what things currently look like:

Is there still money to be made as a cryptocurrency miner? I think a lot of this goes back to what happened with Ethereum this past year, with the value going from under $10 per ETH to a peak of nearly $400 per ETH. Selling all the coins you mine can earn money, but if you had the foresight to mine and hold ETH and sold near the peak value, you literally just hit the jackpot. Or if you prefer mining slang, you hit the motherload.

Ethereum prices have since dropped down to $200 (give or take), but there's this hope that eventually another bubble will occur, driving prices up into the thousands of dollars per ETH. Sound like fantasy land? Tell that to all the Bitcoin miners and investors who got in for hundreds of dollars. But without a price spikeand with the potential for the price to drop instead of going upthe above table is something of an optimistic view of the cryptocurrency market.

Price volatility combined with increasing difficulty could radically change things over the span of months. Instead of 200-400 days to recover your hardware investment, it might take several years. Or it could go the other way and take 3-6 months. I wouldn't count on most GPUs surviving 24/7 mining for several years, however.

The bottom line is that at current GPU prices, which remain supply constrained, it's no longer a 'safe' investment to put tons of money into new mining rigs. So the bubble has burst and things should be settling down again.

Perhaps even better (for gamers), early estimates of mining performance using the Vega Frontier Edition suggest it won't be substantially faster than current AMD cards, and with higher power draw it won't be particularly attractive either. But be warned that software optimizations could shake things up. If someone figures out a way to get twice the performance out of a Vega card, it could become the new mining wunderkind.

Should you quit gaming and start mining, then? I wouldn't recommend itbecause if you haven't gotten started already, you're already behind the bubble and will may end up taking a loss. Besides, playing games is more fun, and doesn't serve to heat up your office. That unfortunately won't stop miners from continuing to buy graphics cards, so long as they see a potential profit in it.

Continued here:
What you need to know about cryptocurrency mining - PC Gamer

A South Korean lawmaker has proposed amending the country's Electronic Financial Transaction Act to more closely regulatecryptocurrencies.

According to several South Korean media outlets, including theFinancial NewsandSeoul Economic Daily, the proposal was put forth this week by Park Yong-Jin, a representative from theDemocratic Party who has been at the center of recent regulatory deliberations.

The amendments would seek todefine digital currency businesses and classify different partiesas digital currency traders, brokers, issuers and managers.

Itfurther mandates businesses hold deposits or provide insurance to hedge against potential cybercrime incidents, and aims toapply a 500 million South Korean won ($450,000) capital reserve threshold for any business that operates cryptocurrency trading service prior to seeking an approval from the authority.

Provisions for preventingmarket manipulation and money laundering usingdigital currencies are also included in the changes.

Parkis seeking a moreregulated environment amid recent surging prices of major cryptocurrencies like bitcoin and ethereum. Theproposalfollowsa recent panel hosted by the politicianat a public hearing to argue for regulations coveringdigital currency.

As for a next step, the bill is expected to be presented to the regular session of the National Assembly in September, at which point, it needs the approval of the country's Financial Services Commission.

As reported by CoinDesk, the financial regulator convened its first initiative last November to launcha regulatory policy on cryptocurrency. However, as of today, its policy plans still remain unclear.

Seoul, South Korea image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [emailprotected].

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South Korean Lawmaker Seeks to Tighten Cryptocurrency Rules - CoinDesk

When it comes to regulation, what exactly is a cryptocurrency?

Is it a currency? Is it a piece of software? Is it more like an equity? And if it is an equity, does that mean it should be regulated like any other security?

The U.S. Securities and Exchange Commission (SEC) recently weighed in

How regulators like the SEC define and treat cryptocurrencies is important because it affects both the value of cryptocurrencies, and how likely it is that blockchain technology will thrive in a particular jurisdiction.

For example, if a countrys regulatory body decides that cryptocurrencies should be banned, then this will drag down prices (depending on the size of the country) and blockchain technology companies will avoid setting up shop or investing there they wont feel welcome.

The SEC has been notably quiet on the subject of cryptocurrencies. Other regulatory bodies and governments, primarily in Asia, have been extremely proactive in outlining how they will treat and regulate bitcoin and cryptocurrencies as an asset class.

In May, I told you that the SEC would eventually step into this market. Especially as the financial stakes increase.

Now, it looks like the SEC is on the ball.

Earlier this week, the SEC issued the results of an investigative report into the details surrounding a cryptocurrency initial coin offering (ICO) called the DAO in the first half of 2016.

An ICO is when a new cryptocurrency token is offered for sale to the public, similar to an initial public offering (IPO) in the stock market.

The DAO intended to be a fully decentralised cryptocurrency venture capital fund. It would raise money (in the form of a cryptocurrency called ether), issuing DAO tokens in return. It would then allocate those raised ether funds to various business ventures by way of voting amongst the DAO token holders.

The DAO raised US$150 million worth of ether from some 11,000 investors. But then disaster struck. Despite assertions that the DAOs code had been analysed by one of the worlds leading security audit companies and that no stone was left unturned during those five whole days of security analysis, DAO was hacked. US$50 million of ether was stolen.

The SECs investigative report wasnt about trying to identify the culprit behind the attack. Instead, it was focused on whether or not DAO tokens constituted a security (that is, a stock) and should therefore be regulated under existing securities laws.

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The straightforward answer is maybe. The fact is, every cryptocurrency token has its own attributes.

As the SEC report put it;

U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular [cryptocurrency] offer or sale.

In other words, it just depends. But on what?

To answer that, we turn to the Howey Test, which was created by the Supreme Court as a means of determining whether certain transactions qualify as investment contracts.

[The test refers to a precedent from a case the SEC levied against Florida companies W. J. Howey Co. and Howey-in-the-Hills Service, Inc. that sought to determine whether or not a particular land-related deal constituted an investment contract under the Securities Act of 1933.]

If certain transactions meet the criteria, then they are deemed securities and subject to a raft of regulatory requirements.

Without going through all the checks, Ill just include some of the pertinent ones that the SEC included in its report.

So, investing money (cryptocurrencies included) in a token with an expectation of profit (dividend or simple value increase) derived from the managerial efforts of other people points to a cryptocurrency being a security, and that its required to be regulated as such.

The report was a warning. The SEC stated that charges would not be brought against anybody involved with the DAO. But that the report serves to caution the industry and market participants.

Given that there are no charges to be brought against the DAO, its likely that existing cryptocurrencies are safe from securities regulation for now, although that wont be the case for long. The primary focus of the SEC will be newcomers to the market, with the starting point being the Howey Test criteria, some of which are listed above.

There has been little to no impact on the broader cryptocurrency market from this report from the SEC. As someone whos personally been involved in the cryptocurrency token distribution process, the Howey Test is already a key component of any legal diligence on a cryptocurrency.

However, some cryptocurrencies are flying a little too close to the sun, especially those that specify dividend-style payouts for token holders. The SEC is very clear that just because something is virtual, it doesnt exempt it from being a security.

And when cryptocurrencies inevitably start falling under SEC jurisdiction, investors (particularly U.S. investors) will need to ensure that whatever they are buying is compliant with U.S. securities laws.

So you shouldnt invest in cyrptocurrencies on the assumption that they arent (or wont ever) be deemed securities. And when you evaluate different blockchain companies that issue their own cryptocurrencies, check the characteristics against those Howey Test criteria.

SEC regulation was always expected to occur sooner or later, and this SEC report didnt contain anything out of the ordinary it really just reiterated the criteria with which cyrptocurrencies will be measured with when it comes to regulation.

But I suspect we will start to see more global cryptocurrency offerings that specifically prohibit U.S. investors because nobody likes having to deal with U.S. regulations if they can avoid it.

Still, I dont envision this having any big impacts on general cryptocurrency prices in the immediate future.

Good investing,

Tama

P.S.We recently put together a free report on cryptocurrencies. Inside, youll learn why we still think you should buy bitcoin today and exactly how to buy it, move it and store it. You can download it at absolutely no chargeby clicking here.

Tama Churchouse spent nearly a decade creating and selling financial derivatives for a global investment bank in Hong Kong. As Lead Analyst he brings technical expertise across the entire asset class spectrum, from equities and index products, to interest rates and credit.

Originally posted here:
Is a cryptocurrency like a stock? This is what the SEC says ...

A little after 8AM ET today, Bitcoin was split into Bitcoin Cash, an alternative cryptocurrency, in a chain split that had been anticipated for months. The split, called a hard fork, comes out of a bitcoin groups desire to combat high transaction fees and a bitcoin size limit that made mining larger blocks invalid.

This has a nuanced implication for Bitcoin owners. If you own Bitcoin and control your private keys, the same private keys can be used to spend your newly minted Bitcoin Cash.

If you own Bitcoin but dont control the keys, then it depends on whether youve chosen to keep your bitcoins on a Bitcoin Cash-friendly platform or digital wallet. Each platform is treating the new Bitcoin Cash differently. To enjoy this extra currency, you should check with your platform and wallet to see what the company policy is.

the worlds most popular cryptocurrency exchange has rejected the new Bitcoin Cash

As a prelude to the split, Bitcoin trading platforms like CEX.io suspended Bitcoin withdrawals beforehand. CEX.io will allow both cryptocurrencies and split the coins for its customers. CEX.io chief marketing officer Eugene Kovalyk says, Whether we will list Bitcoin Cash as a new trading pair depends on the demand. If demand is big we should consider adding it definitely...No one should lose Bitcoin Cash on our platform.

Meanwhile, the worlds most popular cryptocurrency exchange, Coinbase, has rejected the new Bitcoin Cash to some customers chagrin. It argues that their systems cant support Bitcoin Cash without a major system rework that is currently not worth the unknown value of Bitcoin Cash. A spokeswoman for CoinBase says, If this decision were to change in the future and Coinbase was to access Bitcoin Cash, we would distribute Bitcoin Cash to customers associated with Bitcoin balances at the time of the fork. Coinbase would not keep the Bitcoin Cash associated with customer Bitcoin balances. The exchange allowed a brief window of time before August 1st for users who wished to access Bitcoin cash to withdraw their funds from Coinbase.

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Bitcoin has split in two, so you can have double the cryptocurrency - The Verge

Theres no shortage of bitcoin in Philadelphia.

In Northern Liberties, the red-hot digital currencycan be bought ata shipping services storefront. In West Philadelphia, customers can fill their virtual wallets after toppingoff theirtanks at a Citgo gas station. And in Cheltenham Township, a bitcoin ATM will convert your cash to cryptocurrency at a Dollar Plus variety store, conveniently sandwiched between an Aldi supermarket and a pawn shop.

About two dozen machines or shops in the region will take regular cash and credit private bitcoin accounts, according to the website CoinATMRadar.com, which locates and maps bitcoin ATMs.Those accounts can then be used to pay for goods online without a credit card, remit payments quickly to family overseas, or cover bets placed on online gambling sites.

Sam Wood

A bitcoin ATM at the Dollar Plus variety store on Ogontz Avenue in Cheltenham Township.

They can also be used to buyillicit drugs over the Internet, according to federal agents with Homeland Security Investigations.

And the number of those bitcoin outlets appears to be growing. That should come as no surprise becausethe value of bitcoin has skyrocketed. In January 2015, the value of a single coin was about $220. In mid-May it spiked to more than$3,000. On Monday evening, one bitcoinwas trading comfortably at about $2,860.

Hedge funds have swept in to gamble on the digital currency. Celebrities and athletes, from Bollywood movie stars to boxer Floyd Mayweather Jr., have promoted cryptocurrency, pumping up popular interest across the globe.

Theres a lot of excitement about it, said Kevin Werbach, a Wharton School professor whostudies bitcoin and its underlying technology, called blockchain. Its a commodity, and demand is exceeding supply.

The magnitude of the rise this year has been a speculative bubble which will in time deflate, Werbach said. but how fast and how far we dont know.

The worlds dominant digital currency (there are more than 700), bitcoin operates independently of any government or bank. Transactions are recorded and verified on the blockchain database that is instantly shared on a worldwide network of computers. Industry analysts say that the technology underlyingthose transactions makes bitcoin more secure than using a credit card.

At Liberty Parcel, on the 800 block of North Second Street, a bitcoin ATM has been sittinginside the shops entrance for more than a year, where it simply occupies space. Its like a gumball machine in front of a pizza shop, said a clerk who did not want to be identified by name.

An average machine might exchange between $25,000 and $30,000 a month, said Neil Conner, a spokesman for Lamassu, a New Hampshire-based producerof bitcoin machines. Typically, stores where they are placed collect about $100 a month in rent.

Legitimate businesses accept bitcoin, most famously Microsoft (though only for games, movies, and apps in the Windows and Xbox stores) along with merchants on Etsy (an online marketplace for crafts) and Overstock.com. Some political action committees will accept donations in bitcoin.

Most bitcoin is traded on exchanges such as Coinbase and Poloniex, online operations thatmatch buyers and sellers. The exchanges, which typically charge a 2 percent fee, arestrictly regulated by federal and state agencies and follow the same rules as banks. Their clients include high-end investors, financial institutions, and speculators and have caught the attention of the U.S. Securities & Exchange Commission, which last week announced it wants to regulate some transactions.

Bitcoin ATMs generally serve a less sophisticated clientele, according to industry experts. The machines charge steep fees up to 12 percent and rarely require more than a cellphone number to establish an identity. Bitcoin ATM companies have moved aggressively into areas that are underserved by banks.

Because they require so little identification, the ATMs frequently are used to buy bitcoin for nefarious reasons, according to federal agents. Most notoriously, bitcoin is the currency of choiceon the dark web, where its used to buy illicit narcotics. Its also used to extract payments from ransomware victims.

Because this is a private, decentralized currency, bitcoin itself has no way of telling if youre buying a bag of potato chips with it or a kilo of drugs, said Werbach, the Wharton professor.

Lamassus Conner said the bitcoin ATM machines allow new customers an easy way to experience the digital currency.

If youre looking to get your feet wet in cryptocurrency, bitcoin ATMsare the easiest on-ramp, Conner said. Whether its $5 or $100, its the least confusing way ofgetting involved.

Case to proceed against Montco man accused in $50M bitcoin heist Jul 27 - 8:07 PM

Feds: Jobless Montco man is no bit player in $50M bitcoin theft Jul 26 - 3:40 PM

Bucks burglary probe leads to a Montco hacker and possible $40M bitcoin theft Jul 24 - 8:32 AM

Published: August 1, 2017 3:01 AM EDT | Updated: August 1, 2017 5:31 AM EDT

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Bitcoin ATMs invade Philly, taking cryptocurrency to the masses - Philly.com

When it comes to regulation, what exactly is a cryptocurrency? Is it a currency? Is it a piece of software? Is it more like an equity? And if it is an equity, does that mean it should be regulated like any other security?

The U.S. Securities and Exchange Commission (SEC) recently weighed in. How regulators like the SEC define and treat cryptocurrencies is important because it affects both the value of cryptocurrencies, and how likely it is that blockchain technology will thrive in a particular jurisdiction. For example, if a countrys regulatory body decides that cryptocurrencies should be banned, then this will drag down prices (depending on the size of the country) and blockchain technology companies will avoid setting up shop or investing there they wont feel welcome.

The SEC has been notably quiet on the subject of cryptocurrencies. Other regulatory bodies and governments, primarily in Asia, have been extremely proactive in outlining how they will treat and regulate bitcoin and cryptocurrencies as an asset class. In May, I told you that the SEC would eventually step into this market, "especially as the financial stakes increase". Now, it looks like the SEC is on the ball.

Earlier this week, the SEC issued the results of an investigative report into the details surrounding a cryptocurrency initial coin offering ("ICO") called the DAO in the first half of 2016. An ICO is when a new cryptocurrency token is offered for sale to the public, similar to an initial public offering ("IPO") in the stock market.

The DAO intended to be a fully decentralized cryptocurrency venture capital fund. It would raise money (in the form of a cryptocurrency called ether), issuing DAO tokens in return. It would then allocate those raised ether funds to various business ventures by way of voting amongst the DAO token holders.

The DAO raised US$150 million worth of ether from some 11,000 investors. But then disaster struck. Despite assertions that the DAOs code had been analyzed by one of the worlds leading security audit companies and that no stone was left unturned during those five whole days of security analysis, DAO was hacked. US$50 million of ether was stolen.

The SECs investigative report wasnt about trying to identify the culprit behind the attack. Instead, it was focused on whether or not DAO tokens constituted a security (that is, a stock) and should therefore be regulated under existing securities laws.

The straightforward answer is maybe. The fact is, every cryptocurrency token has its own attributes. As the SEC report put it;

U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular [cryptocurrency] offer or sale.

In other words, it just depends. But on what?

To answer that, we turn to the Howey Test, which was created by the Supreme Court as a means of determining whether certain transactions qualify as investment contracts.

[The test refers to a precedent from a case the SEC levied against Florida companies W. J. Howey Co. and Howey-in-the-Hills Service, Inc. that sought to determine whether or not a particular land-related deal constituted an investment contract under the Securities Act of 1933.]

If certain transactions meet the criteria, then they are deemed securities and subject to a raft of regulatory requirements. Without going through all the checks, Ill just include some of the pertinent ones that the SEC included in its report.

So, investing money (cryptocurrencies included) in a token with an expectation of profit (dividend or simple value increase) derived from the managerial efforts of other people points to a cryptocurrency being a security, and that its required to be regulated as such.

The report was a warning. The SEC stated that charges would not be brought against anybody involved with the DAO. But that the report serves to caution the industry and market participants.

Given that there are no charges to be brought against the DAO, its likely that existing cryptocurrencies are safe from securities regulation for now, although that wont be the case for long. The primary focus of the SEC will be newcomers to the market, with the starting point being the Howey Test criteria, some of which are listed above.

There has been little to no impact on the broader cryptocurrency market from this report from the SEC. As someone whos personally been involved in the cryptocurrency token distribution process, the Howey Test is already a key component of any legal diligence on a cryptocurrency.

However, some cryptocurrencies are flying a little too close to the sun, especially those that specify dividend-style payouts for token holders. The SEC is very clear that just because something is virtual, it doesnt exempt it from being a security. And when cryptocurrencies inevitably start falling under SEC jurisdiction, investors (particularly U.S. investors) will need to ensure that whatever they are buying is compliant with U.S. securities laws.

So you shouldnt invest in cyrptocurrencies on the assumption that they arent (or wont ever) be deemed securities. And when you evaluate different blockchain companies that issue their own cryptocurrencies, check the characteristics against those Howey Test criteria. SEC regulation was always expected to occur sooner or later, and this SEC report didnt contain anything out of the ordinary it really just reiterated the criteria with which cyrptocurrencies will be measured with when it comes to regulation.

But I suspect we will start to see more global cryptocurrency offerings that specifically prohibit U.S. investors because nobody likes having to deal with U.S. regulations if they can avoid it. Still, I dont envision this having any big impacts on general cryptocurrency prices in the immediate future.

Disclosure: I am/we are long BITCOIN.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Read the rest here:
Is A Cryptocurrency Like A Stock? The SEC Weighs In - Seeking Alpha

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investFeed is a New York based community powered social trading network making the switch from US equities to cryptocurrency. Marketing itself as the worlds first social investment network for the cryptocurrency community, investFeed aims to develop cryptocurrency infrastructure for the industry. This is establishing a much-needed framework ready for the mainstream adoption of cryptocurrency.

Their pivot to digital currencies is described as a key move to cater to an exponentially growing industry, Weve been a social investment platform since 2014 and over the last few months weve had a huge demand from our user-base to integrate cryptocurrencies onto our platform We really see that [cryptocurrencies] are the future going forward, said Ron Chernesky, investFeed CEO on the live Post-Cable Network, Cheddar. Keeping the momentum and buzz around the token sale up, last week the investFeed team announced that they brought on ex-NFL football player, Jovan Haye, as an investor as well as emerging technologies and blockchain-focused VC entrepreneur, Steven Neryaoff, as an advisor.

On the point of corporate interest, one of Crypto Insiders recent pieces noted that there was huge increase in cryptocurrency attention from the Big Four accounting firms. Deloitte, EY, KPMG and PwC reps all stated that both existing and prospective clients are beginning to ask questions about initial coin offerings (ICOs), the process by which public blockchain technologies can be leveraged to create custom cryptocurrencies that are subsequently sold to fund projects. With investFeeds platform supporting cryptocurrency trading infrastructure, it has the potential to appeal to big enterprise looking to jump into the market.

CTO Drew Freeman was quoted on Finextra to have said, The switch from equities to cryptocurrencies will also target a millennial user base that has shown disinterest in traditional investments. So while the big movers of the corporate world are turning their focus to the crypto market and enterprise-facing players, investFeed has the potential to also capture the attention of the sizable youth demographic, empowering them through the decentralization featured in blockchain technology capitalizing on the best of both worlds in the process.

Having been involved in US equities trading since 2008, one thing that can be said for investFeed is that their team has a track record of operating as a cohesive unit which is in sharp contrast to the majority of token sale groups capitalizing on the ICO bandwagon. The platform will introduce old-school and traditional stock traders to the fast-paced world of cryptocurrency market investment in a familiar way through the investFeed skin and tools. Despite the ICO craze slowing down, investFeed has a high possibility of reaching its target they have a solid track record, a detailed whitepaper and a reasonable hard cap at 28,000 ETH. At the time of publishing, investfeed has raised 35% of its limit, and has until August 7th, 2017 when the sale closes out.

Featured image sourced from Wikimedia commons

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investFeed switch to cryptocurrency token sale brings mainstream demographics on board - Crypto Insider (press release) (blog)

A disappointed Pokmon GO Fest attendee has proposed class-action lawsuit againstNiantic

Elad Gil is running around the Color Genomics office when I come to meet him for a little sit-down. The place is full for a Friday afternoon. Theres a worker taking calls on the couch in the front and plenty of others pacing about in the background.

The office is tucked away in an unassuming industrial area of Burlingame, California, in a building that reminds me of some 60s-style government structure. Color is easy to spot: First suite on the first floor and the only one with, well, bright color.

Gil offers me a water and we sit down in a little conference room. Jokingly, he says maybe he can do something funny for the featured image for my article like pretend to hold up the color wheel logo. Katie would never let me do that, he says, referring to his chief marketing officer and ex-Twitter employee Katie Jacobs Stanton. Hes nerdy funny. I like that.

Gil came to Silicon Valley with impressive academic credentials, including a degree in mathematics, another in molecular biology and a PhD in biology from MIT. It was 2001, and he had hoped to make a dent in the universe. But the timing was off. The country was already headed toward an economic downturn, then 9-11 happened.

He was at a telecom company that quickly grew to 150 people and shortly after shrank to a tenth of the size in five rounds of layoffs. Gil was cut in the third round.

That was a turning point for him.

All these people helped, he said. Like big brand-name VCs were referring me to companies just to help. They were like, Everythings collapsing. Youre some random person who showed up with a PhD in biology. You have no job prospects.

He went on to hold prominent positions at Google and Twitter and now as a co-founder in Color Genomics. Hes also an investor in several well-known startups, including Airbnb, Square, Stripe and Pinterest, and is in a position, which hes known to readily use, to give back to Silicon Valley in much the same way.

But, a dark cloud has been hanging over the Valley lately. News of several incidents of sexual harassment and sex discrimination of female founders have toppled VCs once seen as demigods and caused some to lose hope in the dream.

SB: Ive heard people say Silicon Valley is over. Theyve kind of almost lost faith in their heroes, and then theres all these other little pop-up satellite Silicon Valley-esque cities starting to come up. Do you think Silicon Valley is over?

EG: Oh God, no. I think its best days are ahead of it Do you know the last time they said that Silicon Valley was over?

SB: When?

EG: Theres two times.One was in the early 90s where they were like Its over. Theres nothing left to be done.

SB: At the height of the semiconductors.

EG: Yeah, because all the semiconductor stuff was really sort of like 70s and 80s. And then in the early 90s 91, 92, 93 theres the internet. And I was talking to somebody who was really prominent in the internet wave, and he was like I moved out here in like 93 and everybody thought it was over.

Literally, that was the thing. They were like The best times are behind us. All the stuff that could be done has been done. Its over. And then a small group of people were like, Lets do stuff on the internet. Others were like Thats insanity. Like the internets a stupid toy thing that connects five universities. Who cares? Then of course, Netscape happened, and then theres a wave of innovations, and then in the bubble that I moved into with my perfect bad timing, the collapse I moved into. In that period, everybodys like Oh, theres nothing interesting on the internet, and we have to go back to hard tech. And Kleiner Perkins got into clean tech, and all these people were talking about nano tech, and it was like Silicon Valley is over, and theres nothing to do. We need to find new industries. Thats literally what happened.

Then all the social waves happened, and the mobile waves happened Just like theres a business cycle, theres a venture cycle, and innovation cycle. You end up with these gaps, and I think were just going through a period where theres less obvious things.

Interjection: We started talking about cryptocurrencies, ice cream, health tech and whats next in Silicon Valley. Ive cut a bunch of this short for brevity.

EG:I basically think the last six months have been cryptocurrencys Netscape moment, and I think were still trying to figure out whats Google, and whats PayPal, and Yahoo, and what to keep in with this first wave.

SB: [Cryptocurrency] scares people, especially when its very new.

EG:Totally. You remember the first internet. People were like Oh, nobodys going to buy anything on that. Theyre not going to put a credit into a website. Thats madness.Now weve got Instacart, Amazon

Can I say something, and then argue that I never said it when you have a tape? Can I do that purposefully?

SB: Okay. What do you want to argue?

EG: I never said I like chocolate ice cream. I like chocolate chip, or something like that.

SB: And Ill be like No, on the record. This is where he said it.

Okay, so kind of wrapping this up. Where do you see Color fitting in all of this?

EG: Yeah. I think Color was sort of part of a very early first wave of the visual data area So really our focus is on how do you unlock information thats sort of locked up for people, make it something they can actually use to help manage their own health.

SB: People might say it makes it a lot harder if you have to go through your physician first to get this information. I think thats kind of the allure of these at-home health tests a lot of the time.

EG: I think it depends on how much friction you can take out of the physician process, but also the flip side of it is, if physicians are telling people that they should consider it, thats actually a really powerful way, as well, for people to participate. So I think there are sort of two sides of the same coin.

As an Ashkenazi Jew, I remember going to my doctor and like Hey, should I be taking these genetic tests for cystic fibrosis and Tay-Sachs and all this other stuff as a carrier? And he was like, Oh yeah. Youre Jewish. Sure. You should do it.

SB: Sure. Gotta be proactive.

EG: But I had to bring it up, right? Its something thats often recommended for Ashkenazi Jews to do. So, were basically trying to create an online version of that, where youre still working with the physician but theres different ways for you to work with him.

SB:Where do you think people can innovate further in the health tech space right now? What would you like to see?

EG: Yeah. Um, thats a great question. I think ultimately, theres so much data available ambiently through peoples bodies This company Cardiogram that I mentioned. Im a small investor there, from a disclosure perspective. Thats a good example of where youre just ambiently recording and then telling people that they may have had a heart attack. I think that those are some themes that are really intriguing.

I think the top part in healthcare is that the people who are often benefiting the most from things arent necessarily the people making the buying decisions. There are some things at a low enough price-point, so that really changes the adoption rates of different tested products. Thats one obstacle, in terms of larger-scale adoptions.

SB: Okay. I think well end it on that.

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Elad Gil and Silicon Valley's bright future in cryptocurrency, genetics ... - TechCrunch

Investors are mesmerized with AMD's impressive second quarter as cryptocurrency mining demand drove the company's financial results above Wall Street's expectations.

The chipmaker reported better-than-expected second-quarter earnings and guidance Tuesday. Its shares surged more than 10 percent in after-hours trading following the report and were up more than 9 percent in early regular trading Wednesday.

"AMD turned in a solid beat to our and consensus estimates as the company's new Ryzen desktop CPU ramped into production and GPU demand outstripped supply," Stifel analyst Kevin Cassidy wrote in a note to clients Wednesday. "While management wasn't specific on how much, the GPU revenue upside was driven by cryptocurrency applications."

AMD shares have rallied 102 percent through Tuesday in the previous 12 months compared with the S&P 500's 14 percent return. That performance ranks No. 4 in the entire S&P 500, according to FactSet.

Cryptocurrency miners use graphics cards from AMD and Nvidia to "mine" new coins, which can then be sold or held for future appreciation. AMD traditionally has a better reputation for mining cryptocurrencies.

The ethereum cryptocurrency is up more than 2,400 percent year to date through Wednesday, while bitcoin is up about 160 percent this year, according to data from industry website CoinDesk.

In June, AMD shares jumped after the company told CNBC that the dramatic rise in digital currency prices has driven demand for its graphics cards. At the time, major computer hardware retailers had sold out of AMD's recently launched RX 570 and RX 580 models.

Digital currency mining was the key topic during AMD's earnings conference call with Wall Street on Tuesday evening. Analysts asked company management three times for clarification on the magnitude and sustainability of cryptocurrency mining demand.

One analyst noted the company is working to mitigate future downside risk and is not incorporating continued digital currency mining outperformance in its guidance.

"Crypto mining helped stimulate demand for AMD GPUs in Q2, which we think could translate to a risk should cryptocurrency values decline, AMD is working to manage the crypto risk by targeting supply to the core GPU gaming market, and working with some of its AIB [add in board] partners to offer specific feature sets to segment the market between gaming & mining," Jefferies analyst Mark Lipacis wrote Wednesday. "AMD is not including upside from mining in its outlook."

Lipacis reiterated his buy rating on the company and raised his price target to $19 from $16, representing 35 percent upside from Tuesday's close.

To be sure, some analysts are still skeptical about AMD after its big run.

"We were surprised at the aftermarket reaction for the stock," Morgan Stanley analyst Joseph Moore wrote Wednesday. "We continue to be somewhat cynical on the long-term intrinsic value of the stock, despite being excited about Zen and maintaining numbers that are above the Street. As street numbers start to catch up, absolute valuation levels are going to matter more."

Moore reiterated his equal weight rating and $11 price target for AMD shares.

CNBC's Michael Bloom contributed to this story.

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Wall Street stunned over AMD's blowout results due to cryptocurrency mining demand - CNBC