This week in Crypto Watch, I spoke to Fred Schebesta, the Co-Founder of Finder and also the Co-Founder of HiveEx. For the past year he’s been engaged in cryptocurrencies. He launched HiveEx which is an exchange for buying and selling cryptocurrencies and recently has gone into a partnership with Ivy Coin to setup Ivy Pay which he’s talking about as an off-ramp and on-ramp for cryptocurrencies to convert them into fiat currencies.
He’s a very smart guy and he’s got some very interesting things to say about the future of the cryptocurrency world and what’s going on there and also pretty interesting things to say about advertising which he became an expert in through building Finder, a lot of which was done on TV advertising, which was unusual for digital businesses, but that’s what he did and it’s worked pretty well.
Market commentator Saeed Sidaoui also provides his report on the latest cryptocurrency news and market movements.
Crypto Watch is presented by The Constant Investor.com, I’m Alan Kohler and every day my writing and podcasts put the financial world into context with a focus on the issues that matter. Join us today, it’s only $1 dollar for the first month and now it’s time for this week’s Crypto Watch.
Alan Kohler here with this week’s Crypto Watch and I’m delighted to say it’s Fred Schebesta who’s the Co-Founder of Finder. For the past 18 months or so, a year perhaps, he’s been engaged in cryptocurrencies. He launched HiveEx which is an exchange for buying and selling cryptocurrencies and recently has gone into a partnership with ivyKoin to setup Ivy Pay, which he’s talking about as an off-ramp and on-ramp for cryptocurrencies to convert them into fiat currencies.
But look, he’s a very smart guy and he’s got some very interesting things to say about the future of the cryptocurrency world and what’s going on there, and also some pretty interesting things to say about advertising which he became an expert in through building Finder, a lot of which was done on TV advertising which is unusual for digital businesses but that’s what he did and it’s worked pretty well. Here’s Fred Schebesta, the Co-Founder of Finder and also the Co-Founder of HiveEx.
Fred, just before we get into the interview, I just wanted to acknowledge what a fantastic job you and your partner, Frank Restuccia, have done building this business over 12 years, going global, launching other things and retaining full ownership of it. I mean, most of the people I talk to in this sort of thing are having first round, second round, third rounds of investors but you guys have kept it to yourselves and funded it internally, I think it’s fantastic, so well done on that.
FS: Thank you. It’s not easy, but you get there.
I know it’s not easy and I just wonder, is that something that’s just happened simply because Finder.com.au threw off so much cash so early on or it’s something you and Frank decided you really wanted to do?
FS: We keep things simple and it works like this, Alan, is that I don’t like selling people things that I haven’t tried and done myself. If I was to get investment into Finder, I would want to ensure that I’ve proven the model. When we took the business to the US and the UK and we’ve regrown the model again and it’s playing out in a similar way, that’s when I knew I could stand there and say, ‘Yeah, if you were to give us money or invest in Finder, I know that it’s not a fluke, we didn’t do it once, we’ve done it twice, three times, and I back this.’ And I can stand by my word.
Are you thinking now of IPO’ing or not?
FS: I think maybe not today but maybe down the track. I think we should allow people in Australia to invest in hopefully what is a tech giant of Australia.
Because one of the interesting things you did was, it’s basically a new economy product but you marketed it largely via the old economy on TV, which was interesting and expensive.
FS: Yeah, it was not cheap at all. But I think a lot of people still watch TV – I don’t watch TV but a lot of people still do watch TV and you’ve just got to – I’m not the customer and you’ve just got to empathise with your customer and help them find your product.
Tell us about how you and why you moved into cryptocurrencies? What sparked your interest and how did you go about deciding what to do?
FS: Back in – I think it was July/August, I was in New York and we were building the US business and we were working really, really hard there…
July/August, when? This year?
FS: Last year. And I was sitting there and I was constantly hearing this talk about bitcoin, all the time I’m like, ‘What is this bitcoin thing?’ And I was like, ‘Let’s go and write some pages about bitcoin and Ethereum and all this stuff and let’s just do it write now.’ That’s what we do really well at Finder, we find something of interest that people want to get into and we get into it real quick and we start comparing it, right? So we banged up some pages and these pages started taking off and I’m like, ‘Wow, this is a thing!’
Fred, were these comparison pages or just content stuff?
FS: Yeah, where to buy Bitcoin, where to buy Ethereum – we compared all the different exchanges as to where you can buy the different coins, because you can’t buy all the coins from all the exchanges.
FS: So we were helping people basically in understanding, writing education about what is Bitcoin and how do you buy it and how do you store it and writing about the wallets and things like that. Then I invested in Bitcoin in November 2017 and I rode it all the way up and then I sold everything, then I bought back in and I sold everything, then I bought back in and I sold everything… I guess in the end I don’t know if I’ve probably come out probably a little bit down, not in a great situation because I just rode it all the way. I think everyone’s sort of not had the best experience over the last few months, but through that experience what I learnt was it was really hard to get big amounts of money in and big amounts of money out, so I decided to open up this OTC desk, HiveEx, where we made prices for people and people can buy and sell their whatever it is – we’ll make a price for them and trade it with them.
That idea and that concept for me, it just solved so many issues within cryptocurrency, getting money in, getting money out, which has always been an issue and I just wanted to get that done.
Is HiveEx a kind of market maker in cryptocurrencies?
FS: Yeah, we’ll make a price for you on Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Eos, whatever it may be and we just make it happen.
When you say you make a price, do you actually physically buy the currency or do you find a buyer to buy it?
FS: Yeah, we’ll also find a buyer as well. We might want to offload some risk or we might take some risk depending on how it goes. We’d tend to find other buyers at the time and that tends to be how we roll, but sometimes we don’t. Right now I’d say most of our orders are in Bitcoin and Ethereum. They’re really loading back up on Bitcoin right now.
And do you make a spread?
FS: Yes, it’s about 1%. Sometimes it’s less, sometimes a little more, depending on how volatile it is. Sometimes the markets are moving so wildly, it’s very hard to pin down the price, if that makes sense, so we just have to cover our risk.
You mentioned that people are loading up on Bitcoin again right now, tell us what’s going on in the market?
FS: Yeah, I think you look at last night, Ethereum took a big hit, Bitcoin went up and Ethereum went down and I think some of these things are playing out because you’ve got all these ICO’s that have raised all this Ethereum and a lot of those projects to me I don’t think – a lot of them have gone to near zero, a lot of people have lost 90-95%, so that’s all playing out. That music stopped, the whole ICO flipping thing. That Ethereum came from other people when they flipped on an ICO and they made, 10-20X. Then the next ICO came along and they just threw in another 50 or 20 Ethereum or whatever, 20 Ethereum from what they’ve already made in profits, they didn’t really care and so this whole cycle continued. But after a while the bad actors caught onto it and I think that whole show and that whole stage stopped. All these ICOs now are worried that the prices are going to go down even further and they won’t be able to build anything. There’s some real projects out there and they’re all dumping their Ethereum. That’s what’s causing the market, I think, to go down. But Bitcoin’s going up because people see it as a store of value, they see it as gold, and we’re seeing a lot of people really lean into that and it’s working well for them.
What do you think about the argument between Bitcoin and Bitcoin Cash in particular?
FS: Well, I never get too involved with this. I understand that they had to fork it in order to solve a problem in terms of throughput and things like that, but to me that’s not what Bitcoin was designed to do. I don’t think Bitcoin is a currency. Bitcoin to me is a store of value, it’s like gold. I think Bitcoin – they rolled out SegWit and I think SegWit’s doing a great job, that’s reduced transaction fees and it’s reduced transaction time dramatically. I think that was solving a short term problem personally, but I don’t think long term needed to be – it was going to be solved anyway and so I’m not sure whether Bitcoin cash to me now is more of a hedging tool that you can use against Bitcoin rather than anything else.
Obviously, Roger Ver says that Bitcoin Cash is going to be the future of payments. I’m not sure about Bitcoin as a store of value and gold, but do you think that the kind of contest to some extent is about which one of them becomes the mechanism for payments?
FS: I don’t think either of them are fast enough. Neither of them are fast enough to do payments. A currency tends to be a representation of a store of value, right? Our money these days was represented by gold. It was backed up by gold. All currencies start at zero and go to zero, all throughout history, that’s just a fact, because they’re not actually worth anything, they’re just a representation of something else. I don’t think the stable coin or the currency – it’s probably going to come to me out of one of the protocols. I don’t know whether its Ethereum, it might be Eos, it might be Hashgraph, it might be Algorand, it could be any of these. But I think a stable coin will potentially come out of that because they can handle the volume of transactions. It’s a huge number of transactions you’re going to need. Bitcoin and Bitcoin Cash to me, they don’t move as quickly enough from a development perspective and they’re not designed for me to be of a world currency, I don’t think it’s possible.
I note that you’ve chosen to do a deal with Ivy to create something called Ivy Pay. Ivy is on my list of cryptocurrencies, number 365 on the list, so it’s certainly not up there in terms of market cap, but is that because you think Ivy is fast enough?
FS: I think ivyKoin are trying to solve a real-world problem and that is that banks are still using their Swift system. For me, I’m not involved with the actual execution of the technology with ivyKoins, I’m just focused on Ivy Pay. Ivy Pay is really a smaller version where we’re trying to build an on and off-ramp of cryptocurrency into money and out of money and then eventually just replace the whole thing with the Ivy token. It’s a 3-step process basically to solving that problem of international payments. Ivy Pay is going to be an actual product. We are going to roll that out and we’re working very, very hard on it right now.
To me, some of the things, I guess ivyKoin’s had a tough ride in terms of market cap and things like that, but if you look at it carefully, all of their team are locked up in vesting. Most of their partners are locked up in vestings and they’ve voluntarily gone into vestings. I think it’s absolutely, they are committed to delivering that.
What does that mean, locked up into vestings?
FS: Their tokens are frozen, basically, they can’t sell them.
Could you explain what you mean by off-ramp and on-ramp, which is fundamental to what you’re doing with Ivy Pay?
FS: Yeah, so I guess the first step for us is we’re going to build an off-ramp so people can send cryptocurrency to Ivy Pay and then money will appear in their bank account.
What, actual dollars as opposed to cryptocurrency?
FS: Correct. Then the on-ramp is we’re going to do the opposite, we’re going to allow people to just basically have their bank account, we can credit their bank account and they can receive cryptocurrency into their wallet. If you tie those two things together, an on-ramp and an off-ramp, which is essentially what Swift is doing, where basically you’re sending money from one bank account to another, so you put those two systems together. Then what we thought the third iteration of that is you just remove that entire system and you just use the Ivy token to transfer money around the world between banks. That’s their ultimate goal, that’s what they’re trying to do with their white paper. They’re trying to basically, instead of using Swift and settling them with those interbank accounts, you can just use ivyKoin.
So this is not a consumer product, it’s for banks?
FS: That’s right. Initially it will be for consumers, just to be a proof of concept, so the Ivy Pay is really an execution of using ivyKoin. But long term, no, it is designed for banks to work with each other with ivyKoin.
Presumably it takes place at today’s exchange rate between money and ivyKoin, is that right?
FS: That’s right. We do the exchanging of cryptocurrency into fiat currency and each transaction that happens on Ivy Pay burns 5% of that transaction fee. In other words, it’s reducing the overall supply and we’ve bottled out the tokenomics on that and it will support the price of ivyKoin because as more transactions happen, more coins are burned.
But nevertheless, all cryptocurrencies are volatile in their price, how do you solve that problem?
FS: Well, these transactions in the moment, so I think if you’re going to zoom out a second, that’s something which is obviously apparent in all cryptocurrencies and even if you look recently, look at the Australian Dollar just dropped a cent against the US dollar yesterday and if you look at Turkey, those currencies are moving in a volatile manner as well, right?
We even had the same problem, we were trying to buy US Dollars the other day and we got caught out because the Australian Dollar dropped so fast, which is really, really annoying. That exists in all currencies, right, and the way you tend to deal with that is just through hedging. You can do that and that’s something which we’re trying to – I’m not sure if you’ve seen my release recently about building a crypto bank in Australia, is that we’re going to release an insurance product to insure the price of cryptocurrencies. Essentially, people can pay a certain amount of money and we’ll lock in the price of your cryptocurrency for you.
You mentioned building a crypto bank in Australia, I would like to move onto that now. You, as I understand it, made a personal investment into a business called Goldfields Money, which is an ASX listed company. I think since you went in there, there’s been a bit of a takeover contest. Kim Cannon came in and tried to buy it and then got rebuffed and somebody else is going in there as well. Are you a spectator to all this or are you getting involved?
FS: I’m a spectator. I didn’t seek to takeover, I’m not a takeover kind of person. I’m trying to build a digital bank. I’m a builder, Alan, I build things.
But why did you buy into Goldfields Money?
FS: Because I saw it as being a digital bank and I also saw them as being one of the smaller banks that could actually start to be positive about cryptocurrency, because the big banks are not really that positive about it, right? Even though Westpac owns part of Coinbase, which is kind of weird. The Goldfields Money, what we’ve been able to do is we’ve been able to open up IC Euro and cryptocurrency company bank accounts with them, so they are pro-crypto. There are several banks in the US that are similar to that like Future Bank, Silvergate and Bank of Silicon Valley. I see Goldfields as being the potential to be small enough and nimble enough to be able to take on this market and bank these companies.
Do you think it’s going to end up being taken over by someone?
FS: I think so. I think there’s pretty strong two competitors and they’ve got pretty deep pockets it seems to me. I work with both those companies, they’ve both got a similar vision so I’m on board with that, but I’m not there to takeover anything.
Right. What is a crypto bank, how does it work?
FS: I think it offers similar services to a real world – real world?
As opposed to the unreal world!
FS: Yeah, the imaginary world. Well, it’s imaginary money anyway, right? All banks have imaginary money in there, they don’t actually have the cash in their bank, you can’t go and get that money from – they don’t have it. You’d have to go unwind every single person’s mortgage and house and it’s just not there, just as imaginary as anything else.
Don’t tell me that, Fred! Dear oh dear.
FS: Sorry for bringing the reality, Alan, into the conversation. But we’re opening bank accounts so you can do fiat to crypto transfers, we’ll try and offer obviously exchange, we’re offering that. Insurance products so you can insure the price of your cryptocurrency, custodianship so you can store it, money transfers so you can transfer easily money from one currency to another and then easily into a different cryptocurrency, you can exchange it in. The reason for that is there are different prices with the different cryptocurrencies pairing with different – say, the Euro versus the US Dollar, they have different liquidity levels, they don’t actually have shared order books right now and so you get different prices and different amounts of liquidity.
Throw your mind 10 years forward, Fred, what does it look like?
FS: 10 years, whoa! That’s like going from the Jurassic to the Triassic period, Alan, in cryptocurrency.
[Laughs] I know, but I’m just trying to – when things settle down – obviously, there’s a lot of activity now, there’s a lot of people trying to solve the problems that you’re trying to solve, get on-ramps and off-ramps, you’ve got a particular way of dealing with it, lots of people are doing it, there’s tonnes of all these cryptocurrencies, there’s ICOs – you reckon that’s finished now and Ethereum’s on the nose. I mean, Bitcoin’s rising, all this stuff, where’s it going to end up? Is it ever going to end up anywhere?
FS: What’s going to happen in my mind is there’s a large amount of infrastructure that’s being constructed in cryptocurrency and in the blockchain space and these public ledgers. What’s needed now are real world applications that can take advantage of that infrastructure. If you cast your mind back to the internet, we’re kind of in ‘96/’97 when people stopped laying broadband cable because they thought, we’re never going to need that much. Now you’ve got a problem where the internet’s actually quite slow because people just didn’t lay enough cable back in the day, right?
In the same way, that’s because no one imagined the application of the internet could have been useful, right? I think the same thing will happen in this space. I was building websites back then, I remember thinking about all the ideas and I was like, well you can’t load a video, there’s no point building YouTube because we only have dial up modems. Waiting for a video was impossible. Some of these applications like games and all sorts of different things can’t be run on Ethereum because it’s just too slow, that’s just not a reality. But some of these new protocols and new blockchains will enable an actual Cambrian explosion of applications and real world things that we can use for the blockchain.
A lot of those things I think will come back to identity, some of them will come back to obviously money transfers is going to be a massive thing. I think banking is going to be affected and then the next thing I think that’s going to be affected is how people trade stocks. Security tokens are just going to be unbelievably massive in terms of how they are used. I think people are going to, instead of incorporating a company with shares, paper shares, you’ll just incorporate it with tokens. That way you can easily transfer those tokens and transfer ownership between people and then when you go to list it, you just put it on a cryptocurrency exchange which is a registered one and then you’re trading in it.
Then this whole idea of all this cost of IPOs and all this kind of stuff I think will decrease and the globalisation of equity I think will start to take place so you can buy a company no matter where you are in the world. It’s really hard for Australians to buy Google shares, you’ve got to do all this stuff to go and make it happen, right? Whereas, why is that the case? You should be able to buy whatever company you want and I think that’s what the future potential world will look like.
That’s very interesting, because at the moment, up to this point, the IPO and the ICO have been seen as quite different things and obviously the ICO has been seen as a bit of a cowboy area, and it kind of has been, but you’re saying the whole area will merge, are you? That tokens will become equity?
FS: Yeah, so security tokens will really start to come into effect soon. There already are a few security tokens and they aren’t allowed to be listed on certain exchanges, they’re only traded on some very smaller exchanges.
When you say security token, do you mean a token that represents equity?
FS: Correct, yes, or it pays dividends, it’s a financial instrument just like a normal share.
What are they? Name one.
FS: One is called Nexo, it’s a lending coin and it pays dividends, it pays a percentage of its interest that it earns from lending out money from staking with cryptocurrency. Basically, they make your margin your cryptocurrency and you get cash. Then the interest they charge, they pay part of that to the token holders. You can tokenise the entire company. I read the Corporations Act and I’ve written a white paper basically about – you can actually right now with the current Corporations Act, you could write a constitution which would mean that you would have tokens representing the security of the company and issue those tokens as the shares and hold them in a wallet, just like you would any other share. I think that’s a trend that will start to happen in the future.
You read the Corporations Act?
FS: Yeah, I just got it out and read it and I found the section about issuing shares and there’s a section essentially that describes, to create a corporation in Australia you’ve got to have securities to represent the value of the shares. If you make the security of that a token then you would essentially in effect create the exact same representation that you need to tokenise a company and list it on a cryptocurrency exchange and trade it just like the stock market.
How different would the trading of those tokens be? And the reason for doing that I presume is because it’s much easier to trade tokens than it is to trade shares, is that right?
FS: Much easier, yeah, and all the clearing and attribution and identity can be tied back to a smart contract attached to those tokens and if you go a step further, you can trade up to 8 decimal places or whatever it may be, of a token and you can own part of that company. And when a company needs to talk to its shareholders it can just send a message down through the tokens as opposed to the – it costs huge amounts of money to speak to shareholders and most companies have no idea who their shareholders are, zero idea, because it’s all collated in a different company. You have to go and speak to another company to speak to your shareholders, that’s just a reality. Whereas, you could just send a message through your token holders through a smart contract and speak to them.
That’s very interesting, I must say. You’re actually talking about a world in which cryptocurrencies, as we call them now, become everything really?
FS: Yeah, I think tokenising companies – there’s a coin called Ravencoin, you should have a look at that, it is all about tokenising companies and it’s being built, it’s going to rollout in October and people are going to build their companies using it. Then you’ve got security exchanges like tZERO coming out, Templum… These are going to be the places where you trade securities that represent value. That’s the problem with ICOs I saw in the beginning is, all these utility coins, it’s like you’re going and buying Timezone tokens to go and play the machines, that’s essentially what people were buying and speculating on.
Whereas, these security tokens will represent value and represent an interest in the company or a dividend. Or you might tokenise a fund or you might tokenise a whole pile of gold or copper or whatever it may be and then people can go and trade that.
It’s interesting, because all of the focus obviously has been on Bitcoin and it’s further interesting that for several months now it’s been stable more or less at around just about USD$6,000. How long do you think that’s going to persist for? What do you think will happen to Bitcoin itself?
FS: If you look at a logarithmic graph of what they call ‘The Halvening’ or where the difficulty of mining Bitcoin goes up. In other words, right now people get 12.5 Bitcoin for every block that they successfully mine. In about 2020, the next ‘Halvening’ will happen. I’m not exactly sure what the precise date is, and that’s when only 6.25 Bitcoin will come out. If you look classically at every single time that that difficulty has gone up, immediately Bitcoin will rise. The quantity supply of Bitcoin coming out will be decreased, there’ll be less Bitcoin for miners to sell and my forecast there would be that – and this is not financial advice, Alan – but would be the Bitcoin price will go up dramatically again, logarithmically.
And presumably at that point it will also start chewing up the entire world’s energy supplies?
FS: I’m fascinated by that and my view on that is actually, finally we’re talking about the energy production of computers. How many computers does Telstra, Optus, Amazon, Microsoft, Google, have just sitting there whirring away without any consideration about the energy production that they’re using? How much energy does BHP use spinning up servers in its office? AMP, Commonwealth Bank, all these companies doing sometimes absolutely nothing apart from being turned on in case something was to happen. What I love about Bitcoin is finally we’re talking about energy production. If you look at all the great miners, as to where it’s being mined, it’s being mined next to hydroelectric dams, next to volcanoes, next to solar farms…
Finally, we’re actually talking about how we produce energy. I think Bitcoin is actually going to start the revolution of cleaning up energy as opposed to destroying it and that’s what should have been done ages ago. What’s happening inside Commonwealth Bank right now with their servers, Alan, what’s going on?
I don’t know, are you asking me or are you going to tell me?
FS: I don’t know. No one’s asking any questions about how many computers they’re putting on to run and do activities that are maybe potentially inefficiently done and they could be done more efficiently. I think finally Bitcoin is going to clean up energy, that’s my view.
Just before we finish, I’d like to get your views on advertising because you, in building Finder, you I think did a lot of work in what works in advertising and you spent a fair bit of money on TV and I think you now understand how TV works versus modern digital kind of advertising. Do you think that TV has a future at all and also what about other traditional forms of advertising?
FS: I think that – and I’ve said this publicly before – unfortunately or fortunately, broadcast television is slowly, that audience is shrinking. People switch on their TV and they have it on in their house because humans don’t like to be lonely and they like that noise in the background, right? What we decided was our audience like to watch TV still, the majority of them, so we used that medium in that sense. Since then, I think we’ve really spoken to that audience and we’ve got high awareness with that, but I think going forward, the future channels, I don’t think television will be as strong, nowhere near as strong as it is, it is to me a shrinking medium.
I think you look at the newspapers these days, I remember when the newspapers used to be huge pieces of data and information and now you look at the AFR on a weekly basis or whatever it may be and it’s quite a thin newspaper. I think there’s only one or two ads in it now. Having said that, I think there are audiences that do market to that audience, that are still reading those mediums and they will be around for quite a long time. People still use fax machines, would you believe? But my view on it is that I think we saw that medium and we wanted to become a really strong player in that medium and now we look at every other medium and we’ll do the same thing, we’ll go through each one of them and find a way to communicate really well.
That’s why I made the jingle, I think jingles work with TV, people love jingles, they’ve always loved jingles throughout time and that’s why we made that. Maybe one day it will go down in the history of Australia, that jingle, but we’ll see.
It should. No doubt about it, it definitely should, it drives me crazy!
[Laughs] What do you think about the future of digital advertising, Facebook and Google and all that stuff? Does that actually work? Is it going to take over?
FS: I think people have now become very aware of their personal data and I left Facebook in 2012 because I didn’t want my data to get sold, that’s seven years ago. I just don’t want to be creeped on like that and I think people are becoming really, really hyper aware of that. There are a lot of people who don’t mind, they don’t care, they don’t mind if their data gets used for whatever purpose it might be and instead, they just want the service that they’re trading their data for and they’re fine with that. I think that Facebook is like a really popular bar and everyone went to it and now it’s becoming less and less popular and they’re going onto other bars, if you know what I mean, and that would be like Instagram and WhatsApp and WeChat and things like that.
I think e-commerce is going to move into these chat apps, I think people are going to really stay 100% into their app even more and they’re going to build more and more services and I think WeChat is literally light years ahead with that, I think payments are going to happen in there as well. Google’s always going to keep going because people have questions. There’s health questions, there’s finance questions, there’s all sorts of questions about life that Google tends to answer and I don’t think that’ll go away. People want to anonymously always browse on the internet, I don’t think that’s ever going to go away. Sometimes people don’t want to show other people what they’re searching, they don’t want to get into that. The reason for that – and that’s what the whole basis the internet was built on, is that anonymity in the beginning of the internet and I think that will continue on and that’s why Google will continue on. Whereas, I think Facebook’s sort of dipped its hands too many times in the privacy cookie jar and people have gotten a little too concerned and I think you’re going to see an exodus away from Facebook into other mediums of socialising without it.
That don’t invade your privacy, you mean?
We’ll have to leave it there, Fred, it’s been great talking to you, I’ve really enjoyed it, thank you.
FS: Thanks so much, Alan.
That was Fred Schebesta, the Co-Founder of Finder and the Co-Founder of HiveEx and Ivy Pay.
And now it’s time for this week’s Crypto Watch market wrap, with market commentator Saeed Sidaoui.
SS: The biggest news this week is the continued hype surrounding the impending IPO for the cryptocurrency mining giant, Bitmain, planning to raise as high as USD$18 billion via an IPO on the Hong Kong Stock Exchange. If successful, Bitmain’s IPO will be larger than Facebook’s original IPO of US$16 billion. An interesting development during the week however, has been a spike in rumours originating from a leaked balance sheet detailing Bitmain’s cryptocurrency holdings, currently in position of almost US$600 million or 5% of the entire Bitcoin Cash circulating supply, rumours suggesting some ulterior motives to the IPO are spreading like wildfire.
Continuing to dip their toes into blockchain this week, Microsoft has added two patent applications based on the blockchain, specifically within the use of what’s known as trusted execution environments or TEEs. TEEs can be used to assist with a number of factors including the verification of transactions. In addition, earlier this week, Microsoft’s cloud platform, Azure, introduced what’s known as proof of authority consensus algorithms on its Ethereum based product. This reportedly allows for a more efficient way of building decentralised applications for both private and consortium networks. Microsoft is continuing to make waves in the world of blockchain.
The US Securities and Exchange Commission has postponed its decision for a Bitcoin ETF until September 30 at the latest. The highly anticipated VanEck SolidX Bitcoin ETF delay was a heavy blow to the market, triggering an unprecedented sell-off continuing even into the new week.
Finally, some local news this week from the Commonwealth Bank of Australia, mandated by the World Bank to arrange a bond issue exclusively on the blockchain, quoted as the first bond globally to be created, allocated, transferred and managed utilising the blockchain technology. CommBank is said to be utilising a private adaptation of the Ethereum blockchain.
And now onto the market wrap up for the week, an absolutely devastating blow to the entire market this week with over US$60 billion or 25% pulled from the market, nothing was safe. This is what’s known as capitulation or the selling to just get out of the market, triggering heavy declines and massive selling volume all evident in the majority of projects, as Bitcoin dominance accelerated throughout the week, currently sitting at a comparatively massive 53.5%. It’s up almost 7% in this week alone. The last time Bitcoin dominance hit these levels was late 2017 which lead to that unprecedented month-long alt explosion. As usual, Bitcoin has set the tone for the rest of the market this week, failing to hold US$7,000 in the wake of the ETF delay blow.
Bitcoin has been trending in the low US$6,000s since and has become the short term key level defended by the bulls. Weekly performance for alts this week has been comparatively far worse than Bitcoin, as expected from the rise in Bitcoin dominance. Weekly drops of 15% to as high as 50% are common among much of the top 100. This week spells capitulation at its finest, folks. However, there’s been some convincing bounces across the majority of projects which has provided some relief to participants with strong buying volume across the board evident this morning and the majors, Ethereum, Ripple, Bitcoin Cash and Litecoin have as expected this week, taken a beating, down on average – wait for it – around 30%. That’s all for the weekly wrap up. I’m hoping for a better performance next week, guys. I’m Saeed Sidaoui and I’ll see you next time.
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