Ethereum Creator Loses Over $400 Million As Crypto Market Collapses

TechCrunch Disrupt London 2015 - Day 2

Vitalik Buterin, co-creator of the world’s second most-valuable blockchain Ethereum, has taken a major hit to his net worth after the price of ether (ETH) dipped below $2,000 earlier on Monday.

As of 3:15 p.m. ET, ETH is trading at $1,938 according to Messari, down by more than 50 percent just five weeks after reaching its all-time-high of $4,338 on May 12. The decline of the second-largest cryptocurrency falls in line with the rest of the market, as crypto prices have fallen across the board since news broke of a renewed clampdown on bitcoin miners in China.

Buterin’s two main ether addresses currently hold 325,001 and 1,366 ETH worth a collective $632,499,246 as of 3:15 p.m. ET. The current value of his holdings is $457,500,754 less than the $1.09 billion it was worth on May 3 at 1:30 p.m. ET, according to Messari, when Buterin became the world’s youngest crypto billionaire at age 27. When ETH’s value first surpassed the $3,000 price level Buterin held 333,520 ETH worth $1.09 billion. Forbes is unable to account for the 7,153 ETH difference between his holdings now versus on May 3.

Ether’s current market capitalization is $223,752,321,616, second only to the original cryptocurrency, Bitcoin with a market capitalization of $606,843,934,844. Ethereum has gained notoriety this year as the birthplace of decentralized finance (DeFi) applications aiming to create decentralized alternatives to traditional financial services. At the time of writing there is $51 billion locked in the DeFi market, according to data aggregator DeFi Pulse.

Emily Mason

 

By:

 

Source: Ethereum Creator Loses Over $400 Million As Crypto Market Collapses

.

Well, it’s not necessarily Ethereum that is a risky investment, it’s cryptocurrencies: They are highly speculative. Even though some experts and crypto supporters believe they could replace fiat currency one day, the answer is much more complicated.

Despite their bustling activity growth, efficiency, and impressive blockchain technology render, many countries are still anxious about cryptos replacing fiat currency. But even though peer-to-peer currency might be the bane of central banking systems around the world, the simple answer would be: no, cryptos won’t replace fiat. Why?

Because their usage is on the rise, their speculative popularity is why they won’t be adopted as mainstream legal tender: they are driven for value storage and speculative trading – rather than for transactional value.

For instance, very few mainstream businesses accept cryptos as legal tender – only 2’300 businesses accept it in the United States, which mostly only accept Bitcoins. When you consider that there are over 30 million businesses in the US, a thin fraction accepts Bitcoins, which puts Ethereum at a disadvantage.

As the past few weeks have proven, their volatility can be a double-edged sword: Between May 12 and May 24, Ethereum has lost nearly 50% of its value. While it has somewhat recovered since it is gut-wrenching to see.

What’s The Deal With Bitcoin ATM and How Does A Bitcoin ATM Work?

What is a Bitcoin ATM, and does it actually function as an ATM? The short answer is yes.

Technically, these aren’t traditional ATM’s (Automatic Teller Machines) as they do not allow physical withdrawals of BTC from an account you own. Instead, these machines will enable you to purchase Bitcoin, depending on the specific machine. There are a number of machine types around from various companies, the top 3 being: General Bytes, Genesis Coin, and Lamassu.

  1. You verify your identity through an one-time-password sent to your mobile or email. Again, this varies from machine to machine.
  2. You decide if you want to buy or sell BTC (if you have the option).
  3. To buy, you must choose the amount you want to in terms of BTC or your target fiat currency.
  4. You then deposit the fiat currency into the machine.
  5. Several things may happen depending on the machine:
  • A QR code may appear on the screen for you to scan
  • A QR code may be printed off corresponding to your new BTC wallet.
  • The machine will ask and scan the QR code of your pre-existing wallet.
  • You input your email address to have a QR code sent to you.

To sell, you must send the appropriate amount of BTC to the address displayed on the screen. Once the transaction is confirmed, you will receive the agreed fiat sum. How long this takes depends on the machine.

Bitcoin ATM’s v.s Crypto Exchanges

Bitcoin ATM’s are connected to exchanges. When using one, you are essentially buying or selling your chosen coin on an exchange. However, you’re interacting with a physical machine in a specific location rather than online. The price difference between using an online exchange and an ATM is generally around 5-10%. This means that ATMs cost 5-10% more to buy, and selling means you receive 5-10%.

Despite the premium that must be paid, many are attracted by these machines’ convenience and ease. They allow for a more visual and straightforward financial transaction that most are already familiar with. In addition, machines do not require any confusing registration processes or the need to learn about online trading interfaces.

When selling through an online exchange like Phemex, the platform’s spot markets offer more control over the price you are transacting with. You can also take advantage of limit orders and stop orders if you are not happy with current market prices.

Bitcoin ATM Map

There are many services and locations apart from bitcoin ATMs which provide exchange of bitcoins for cash and vice versa.You can send cash-to-cash payments to your relatives or friends in other countries by using two bitcoin ATMs. Find where to buy or sell bitcoins and other cryptocurrencies through ATMs for cash here…

By:

Source: Bitcoin ATM’s: How Does A Bitcoin ATM Work? – Phemex Blog

.

References

“FINTRAC Advisory regarding Money Services Businesses dealing in virtual currency”. Fintrac-canafe.gc.ca. Retrieved 2016-11-22.

Phemex Is Empowering Everyone To Trade Simply and Manage Risk Efficiently

Led by 8 former Morgan Stanley Executives, Phemex’s goal is to build the worlds most trustworthy cryptocurrency derivatives trading platform. Its leverage a “User-Oriented” approach to develop far more powerful features than any existing exchange.

Above all, they place customers first. All of the features and tools are designed with this philosophy in mind. This is why their development team is directly available and constantly gathering feedback, comments, and requests from our community on social media.

Back in 2017, as experienced professional Wall Street traders and investors, Jack Tao and other founding members of Phemex identified a lack of professionalism, trustworthiness, and customer support within the crypto industry. In the following two years, the number of users engaging in cryptocurrency trading increased significantly.

Nevertheless, existing exchanges showed little to no improvement. Realizing the seriousness of the problem, the team left Wall Street and founded Phemex in the summer of 2019. They then dedicated themselves to building a simple, efficient, but most importantly, a trusted cryptocurrency trading platform. Then, on November 25th, 2019, the Phemex platform officially went live.

Pheme (Fama) is the personification of fame and of the public’s voice in Greek mythology. While MEX stands for mercantile exchange. This name was chosen to highlight our vision and their dedication to stand as the most trustworthy trading platform.

From day one, their mission was and will always continue to be the empowerment of individuals. They want everyone in this world to have access to the right set of tools that will allow them to manage risk efficiently and trade simply. They sincerely believe this to be a fundamental right that all traders should enjoy.

For its crypto derivatives products, Phemex allows you to trade with leverage. This means that you can receive a higher exposure towards a certain crypto’s price increase or decrease, without actually holding the necessary amount of assets. You do this by “leveraging” your trade. In simple terms, this means that you borrow from the exchange to bet more. You can get as much as 100x leverage on this platform.

Leveraged trades are risky though. For instance, let’s say that you have 100 USD in your trading account and you bet this amount on BTC going long (i.e., going up in value). If BTC then increases in value with 10%, you would have earned 10 USD. If you had used 100x leverage, your initial 100 USD position becomes a 10,000 USD position so you instead earn an extra 1,000 USD (990 USD more than if you had not leveraged your deal).

As we mentioned above, in terms of Spot Trading, Phemex has adopted a zero trading fee model. Instead they just charge for monthly Premium Memberships (prices are $9.99 for 30 Days, $19.99 for 90 Days and $69.99 USDT for 365 Days). Becoming a premium member will also allow you to set conditional spot orders, you will enjoy hourly withdrawals with no limits, and will be able to gift trial premium memberships to friends.

With respect to contract trading, Phemex separates between “takers” and “makers”. Let’s describe these terms real quick. Every trade occurs between two parties: the maker, whose order exists on the order book prior to the trade, and the taker, who places the order that matches (or “takes”) the maker’s order. We call makers for “makers” as their orders make the liquidity in a market. Takers are the ones who “take” this liquidity by matching makers’ orders with their own..

Phemex previously didn’t accept any other deposit method than cryptos, so new investors were restricted from trading here. Starting 18 June 2020, however, they partnered with a company called Banxa which is a payment gateway that accepts credit and debit card purchases of crypto.

Since then, Phemex has also partnered with Koinal, Coinify, MoonPay, and Mercuryo. You have a variety of payment options (ranging from bank transfers to Apple Pay) and rates to fit your needs.

To our understanding, Phemex does not charge any fees of their own when you withdraw crypto from your account at the platform. Accordingly, the only fee you have to think about when withdrawing are the network fees. The network fees are fees paid to the miners of the relevant crypto/blockchain, and not fees paid to the exchange itself. Network fees vary from day to day depending on the network pressure.

Generally speaking, to only have to pay the network fees should be considered as below global industry average when it comes to fee levels for crypto withdrawals.

Source: https://phemex.com

BlockFi Mistakenly Deposits Outsized Bitcoin Payments

In this photo illustration the cryptocurrency exchange...

BlockFi, the crypto lending and trading business, mistakenly deposited large amounts of crypto to user accounts. The payments were associated with a promotion they were running, in which users would receive bonuses in USD stablecoins.

The promotion was intended to be “paid out in one lump sum in GUSD” according to their website. Instead, some accounts were paid the amount denominated in Bitcoin, with some receiving over 700 BTC (worth >$28,000,000 at current prices).

A screenshot from one affected user who withdrew the funds shows threat of possible legal action should they not be returned, and a pay-out of $500 should they return them by a set time.

BlockFi clearly has their hands full dealing with the mistakenly deposited bonus payments, and users have reported experiencing additional issues with the company’s services. The BlockFi subreddit is full of posts with individuals receiving the mistaken funds, having difficulty withdrawing, and being unable to trade. One user claims to have been falsely accused of withdrawing mistaken funds after withdrawing USDC which he or she had been deposited a month earlier.

A statement by BlockFi, noted that “fewer than 100 clients were incorrectly credited,” and “BlockFi has contacted these clients and is working with them to rectify the issue.”

There are risks with using centralized services like lending platforms and exchanges—these are especially well known by early Bitcoiner’s who have witnesses a great number of hacks, exit-scams, and insolvencies wipe out customer funds held by large custodians.

BlockFi claims that “client funds are not impacted and are safeguarded.” After raising a recent $350 million funding round, the company likely has large pools of capital to pull from should they be unable to recoup any of the mis-credited funds from users who withdrew to personal wallets.

BlockFi’s previous promotion was, indeed, a friend referral promotion which offered (albeit small) BTC rewards.

I am the Director of Research and Development at Inca Digital, a data and intelligence provider in the digital asset space. I use Inca’s proprietary data system, NTerminal, to aggregate and analyze structured and unstructured data.

Before Inca, I helped start up a pharmacogenetics laboratory and worked in neurodegenerative research. My scientific background influences the way that I think about complex systems such as blockchain networks, and the models used to understand them.

Source: BlockFi Mistakenly Deposits Outsized Bitcoin Payments

.

Reversing the excess bitcoin rewards

One user who reached out to CoinDesk said they received a large sum of BTC in their account which they thought was a reward for referring their friends – so they sent it to their cold storage wallet. BlockFi’s previous promotion was, indeed, a friend referral promotion which offered (albeit small) BTC rewards.

The user said after looking at the transaction in more detail, they realized it was an error, so they requested a cancellation of the withdrawal. The cancelation request was confirmed via email and their account shows the BTC transaction was reversed, with a note specifying they had reversed the bonus transaction. Nevertheless, the user said the bitcoin reward ended up in their cold storage wallet. They shared these documents with CoinDesk, and the blockchain shows that the funds were indeed transferred to their wallet address.

The next day, they received a phone call and an email (which CoinDesk has reviewed) from BlockFi threatening legal action if they didn’t return the funds, but also offering $1,000 worth of the stablecoin GUSD for any trouble this may have caused.

Other users on Reddit posted images of BlockFi’s “generous” giveaway, with one deposit amounting to over 700 BTC. That transaction, according to the user, was reversed. Another said their friend received 5 BTC and was, in fact, able to move it off the platform.

Yet another user said they received both BTC and GUSD, only to have the BTC reversed. The GUSD remained, but a couple of days later when they tried to withdraw some USDC (+0.09%), a different stablecoin they had deposited a month earlier, BlockFi sent an email accusing them of withdrawing funds that weren’t theirs.

Crypto’s Terrible, Horrible, No Good, Very Bad Week

It started even before Elon Musk took the stage on Saturday Night Live. The May 8-14 issue of The Economist arrived in the mailbox, delivering a quiet, existential blow to cryptocurrency as we’ve known it for the last decade or so. The publication’s cover package offered a vision of “govcoins,” digital currencies backed by central banks:

Government e-currencies would score highly, since they are state-guaranteed and use a cheap, central payments hub. As a result, govcoins could cut the operating expenses of the global financial industry, which amount to over $350 a year for every person on Earth.

Although the motivation for these “govcoins” is not to push existing cryptocurrencies to the margins, that would be the likely effect. Then, as Musk appeared on SNL, the price of Dogecoin plummeted. Although news stories attributed Dogecoin’s tumble to a Weekend Update skit that labeled the joke-coin a “hustle,” the selloff started at least half an hour before that. It felt more like a classic “buy the rumor, sell the news” dynamic.

But Musk reserved his true market-moving power for midweek, when he tweeted that Tesla will stop accepting Bitcoin as payment for cars. The reason, Musk said, was “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.” In a later tweet, Musk called the amount of electricity used to produce Bitcoin recently “insane.” Critics pointed out that Musk and Tesla could easily have known about Bitcoin’s energy suck when they embraced the currency months ago; nonetheless, the price of Bitcoin sank by as much as 15% that day.

Musk’s pronouncements put the spotlight on cryptocurrencies that claim to require less electricity to produce. All of a sudden, everyone is touting cryptocurrencies that operate on a more efficient standard than Bitcoin’s “proof of work” standard. The flurry recalls the hype around sustainable aviation fuel or ‘70s-oil-crisis car advertising, in which the sole marketing criterion was which vehicle got the most miles per gallon.

The recently launched Chia Network, for example, plays up its “proof of space and time” standard as more energy efficient. Other cryptocurrencies, like Nano and Cardano, took to Twitter to boast about their supposed energy efficiency. On The Defiant podcast, crypto coder Preston Van Loon insisted that Ethereum—a versatile cryptocurrency that’s still valued about 400% higher than on January 1—is “about six months from proof-of-stake.”

Of course, the dramatic dropoff in Bitcoin and Dogecoin prices is both predictable and relative; the idea that Dogecoin is still trading at over 50 cents a coin is ludicrously mind-blowing. Nonetheless, the Musk-Tesla decision around Bitcoin feels like a watershed moment. Cryptocurrency mining’s energy use has gone from a fringe concern to front and center in a matter of weeks. As FIN noted last week, some state legislatures are beginning to discuss limits on crypto mining. It’s going to get harder for crypto enthusiasts to avoid this issue.

Don’t Miss Out on Future FIN

This edition of FIN is going out to our full list of e-mail sign-ups, which we provide about once a month. For the full FIN experience, be sure to subscribe: you’ll gain access to FIN’s exclusive industry interviews, timely charts, and groundbreaking analysis.

Fintech Meets Healthcare

One of the most powerful fintech applications imaginable is in American healthcare space. The United States spends trillions of dollars a year on health care, and yet the outcomes are consistently below those of other developed countries. There are dozens of reasons for that, but one that seems ripe for solving is how payments work.

The system of private health insurance is tremendously inefficient, to the point where it actively interferes with patient care. Americans almost never know what a given procedure is going to cost, how much their insurance will or won’t cover, or even when they will be billed. Surveys indicate that more Americans stress out over medical bills more than over their actual care. This chart shows why half of all Americans have been late to pay a medical bill:

For their part, doctors and other medical providers feel swamped with paperwork and antiquated billing systems. One company that’s trying to fix this broken mess is Waystar, a Chicago-based healthcare technologies that offers a cloud-based billing system to help rationalize payments. Waystar claims to currently handle about one out of every four healthcare transactions in the US.

In an interview with FIN, Waystar CEO Matthew Hawkins acknowledged that while the American health care system has for decades been slow to digitize, recent legislative changes—such as 2009’s “meaningful use” law—have spurred positive changes. Moreover, the shift to telehealth services brought on by the COVID pandemic should make the system more efficient. Hawkins said his company’s ultimate goal is “paving the way toward price transparency.”

He laments that “we’ve all gotten comfortable behaviorally with going to a provider, receiving health services, and then not really knowing the cost of those services.” Imagine an app that would tell you in advance what a surgical procedure was going to cost you, and even gave you the option to set up a payment program before you see the doctor!

Robinhood’s Customer Service Glitches Explained

Sheelah Kolhatkar is one of the most talented business writers in the world. And given the connection that former officials of S.A.C. have to the Robinhood story (Kolhatkar wrote the book on S.A.C.), she’s by far the best person to write about Robinhood for The New Yorker. Unfortunately for her and the publication, Robinhood has been so heavily covered since January that a lot of her current piece feel overly familiar.

But the one thing she really nails is Robinhood’s terrible customer service. According to her story, Robinhood outsourced its customer service in 2016 to a company called Voxpro, located in Ireland. Voxpro’s poorly paid employees didn’t have the licensing or certification to deal with investors’ problems. In 2017, Robinhood made the conscious decision to eliminate the option for its users to call and speak to anyone. The company later restored an option for an investor to get a callback, but these years of customer-service neglect explain a lot.

FINvestments

🦈Number of the Week: In the April 11 issue, FIN predicted that Better.com would go public this year. Sure enough, that is happening, via SPAC. The company, which made its fortune selling mortgages but clearly plans to expand into a broader range of financial services, will be valued at $7.7 billion.

🦈PayPal’s march to become an overall e-commerce hub continues; this week it bought Happy Returns, a Santa Monica-based company that makes it easy for people to return in person items that they’ve bought online.

By: James Ledbetter

Source: Crypto’s Terrible, Horrible, No Good, Very Bad Week – James Ledbetter’s FIN

.

Related Links:

Bitcoin alternatives: The ‘green cryptocurrencies’ that want to solve Elon Musk’s crypto climate concerns

Bitcoin crashes as Elon Musk announces Tesla cars can no longer be bought with cryptocurrency

Former BlackRock executive says Wall Street’s green investing is ‘PR spin’

UK ‘halfway to net zero’ due to dip in emissions, analysis reveals

Is the government doing enough to incentivise households to go green

The environmental costs of fast fashion

Booking.com discount code: 10% with Level 1 Genius membership

 

%d bloggers like this: