Last week our theme was “Is this end of Bear market or Bull trap?“

Our theme for this week is “Are Apple, Amazon, Google and Facebook the future of banking?“

Banks started around 2000 BC in Assyria and Sumeria, were merchants, made grain loans to farmers and traders who carried goods between cities. Over time, banking evolved to the highly organized system we currently know. While, everyone thought that the banks of the financial crisis in 2008 were too big to fail, we still had a full-blown worldwide banking crisis, with repercussions still felt today.

Ten years later, everyone is talking about how finance and payments could be disrupted by blockchain and cryptocurrencies. Banks around the world have spent the past few years preparing for competition from small, nimble technology startups. Yet, the big four, Amazon, Google, Facebook and Apple have been working diligently and expanding into payments and other financial services to disrupt one of the last frontiers.

On Feb 28, the New York Times reported that Facebook is ready to launch its own cryptocurrency and is speaking with exchanges about listing the coin. Facebook will be launching a stable coin for WhatsApp. Its expected that the stable coin will become available to Facebook and Instagram users, in the future. Facebook’s stable coin will be pegged to the US dollar and will allow users to send money to other users anywhere, instantly. Between WhatsApp, Messenger and Instagram, Facebook has a combined user based of around 2.8 billion people.

With the new stable coin, Facebook will be going after a multi billion remittance market. Facebook’s move is clearly to counter the threat from rivals, Telegram and Signal. Facebook started its efforts in crypto last year, after Telegram raised with its ICO a record $1.7 billion. Eventually we may see Facebook try to take its coin mainstream, allowing users to spend the cryptocurrency with online stores or on FB pages, without the need to  type in credit card or PayPal account details.

Facebook, Google, Amazon and Apple have long tried to break into financial services, with products such as Pay by Messenger and Google Wallet. Amazon has already pushed into loans to small businesses operating on its Marketplace platform, announcing in June 2017 that it had originated a total of $3 billion since a low-key launch in 2011. In 2016, Facebook secured an electronic money license in Ireland.

Rakuten may be launching a cryptocurrency soon. An earning report from February 12 states there is a major update coming next month, mobile app platform Rakuten Pay may potentially start supporting cryptocurrency payments, including all payment solutions embedded into one platform.

The banks you know today might disappear altogether over time. When today’s customers evaluate financial institutions, they compare how easy, instant and seamless the experiences is. With data based services offering personalized solutions and voice-activated Alexa and Google purchasing, the entire experience is changing.

A survey carried out by strategy consultancy Bain found that nearly 60% of bank customers were willing to try a financial product from tech company they already use. Amazon and PayPal were the two brands consumers would most trust with their money, the survey found, ahead of Apple, Google, Microsoft, Facebook and Snapchat.

Big tech players can leverage the open banking opportunity. Open banking brings significant changes to banking. It’s an immense opportunity for fintech startups, and any technology company to make use of open APIs to access customers’ accounts. With open banking, a bank’s competitors have unprecedented access to a bank’s data. This means that when Amazon asks for access to your bank account in return for an extra month of Prime, there’s nothing the bank can do to stop them

As cryptocurrencies and altcoins become more mainstream, we will see big tech companies making them part of their strategy to disrupt the financial industry. Facebook, Google and Amazon might become the banks for the next generation, but it wont happen overnight. Alipay has 400 million users, WeChat’s WeBank is very successful. If done right, this could be great for consumers, as they will gain access to a much wider set of financial products at lower prices. It will also cause a real shock to the most banks’ revenue.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Last week our theme was “Can Regulation drive the next Bull Market?”

Our theme for this week is “Is this end of Bear market or Bull trap?“

All week long, Bitcoin’s price has been on the rise, giving hope to investors that the bear market could finally be over. In the last twelve months, Bitcoin’s price has been dropping, to as low as $3,000 per coin.

Breaking the $4000 price mark for the first time in months, has had a significant psychological impact on the crypto market. For most of 2019, the price of Bitcoin price has been hovering around the $3,600. On Saturday, Bitcoin climbed from $4,028 to over $4,100. Along with Bitcoin, just about every coin joined the rally. Ethereum jumped by 6.05%, Ripple (XRP) by 1.89%, EOS by 6.02%, Litecoin by 4.65%, Bitcoin Cash by 3.87% and Stellar by 3.92%.

This recent and sudden price jump, comes after some positive stories, floating in the news.

Earlier this week, Samsung confirmed that its flagship Galaxy S10 smartphone will feature an integrated secure cryptocurrency wallet. Currently, HTC’s Exodus 1 and Sirin Labs’ Finney also offer crypto storage features, but Samsung is the largest phone manufacturer to add crypto-storage options to its phones. Samsung’s new phone could give a boost to Bitcoin’s adoption.

Comments by tech heavyweights, Elon Musk, Jack Dorsey, and Chinese billionaire, Zhao Dong and recent news about J.P. Morgan’s new cryptocurrency, are also some of the reasons Bitcoin has shown signs of recovery.

CEO’s of Tesla and Twitter, recently suggested that cryptocurrency, especially Bitcoin, as the potential to change the world. Their comments gave hope to the market.

Bitcoin billionaire Zhao Dong, said the crypto spring will come in 2020: “In the bull market, I don’t persuade people to buy Bitcoin, because it seems easy to make quick money but in fact it is not. Now in the bear market, I start to talk people into buying Bitcoin.”

While, Jamie Dimon, J.P. Morgan’s CEO, has bashed Bitcoin in the past, the bank’s chief has consistently said regulated digital currencies hold promise. The “JPM Coin,” a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. Only a tiny fraction of payments will initially be transmitted using the cryptocurrency, but the trial represents the first real-world use of a digital coin by a major U.S. bank.

Earlier this month, Morgan Creek raised a $40 million cryptocurrency fund, backed by public pension funds. Eurex, a Germany-based derivatives exchange operated by Deutsche Boerse, is planning to launch futures contracts tied to digital assets such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP). The University of Michigan’s $12 billion endowment plans to bolster its investment in a “cryptonetwork technology fund”,  managed by American venture capital firm Andreessen Horowitz.

Digital behemoths that dominate the web are beginning to make moves in the crypto market. Facebook went from a complete ban on token related ads to developing its own stablecoin. While it has not been confirmed yet, the key focus of the token may be to enable remittance to and from developing nations with an integration into WhatsApp and FB Messenger. The Chinese government has partnered with Tencent on creating a blockchain security alliance along with 20 other public and private institutions to reduce occurrences of fraud, pyramid schemes and illicit financing in the blockchain space. AWS announced the launch of Quantum ledger services and managed blockchain implementations. The system currently offers one click solutions for launching private implementations of Ethereum and Hyperledger.

With all the positive developments, since the beginning of 2019, many are wondering if we’re seeing the beginning of the next Bitcoin bull run. For the first time after after 40 days, Bitcoin hit $4,010 on Tuesday. The trend is backed by an increase in transaction volumes, last seen nine months ago, in May 2018,. The increased volume, could mean that we will see continued gains for cryptocurrencies in the short-term.

This recent rally could be signaling the end of the bear market, that started in early 2018. We are still very early, with only 3% of the world owning cryptocurrencies. Imagine what’s going to happen when mass adaption comes along, and when everyone has a crypto wallet on their Apple and Samsung mobile phones.

Its difficult to imagine how a world with cryptocurrencies will actually develop, just like we couldn’t see how the Internet was going to change our lives, in the mid 90’s.

Whether the bear market is over or not is only a matter of time. In the future, you can expect prices to go much higher than their all-time high, in December 2017. The only thing you need is patience.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Last week our theme was “Security Tokens take center stage”

Our theme for this week is “Can Regulation drive the next Bull Market?“

Bitcoin has been in the longest bear market in its 10-year history. In 2013, the crypto market had 410-day bear market, when the Bitcoin price dropped from around $1,100 to nearly $200.

In 2017, cryptocurrencies experienced their greatest bull market ever. Bitcoin’s price surged from less than $1,000 to $20,000, while other major cryptocurrencies recorded 200x gains in the same 12-month period.

But in 2018 we saw a complete reversal, with bearish sentiment across the board and not just for Bitcoin. Investors in other cryptocurrencies, like Ethereum, and Ripple, also lost huge amounts. As a whole, the market lost 86% of its market cap, since its all-time high, causing many casualties and startups like ConsenSys, STEEM, Ethereum Classic, and NEM failing to achieve predicted returns.

The market was affected by regulatory news, mining and scaling difficulties. Investors that entered the market during the hype, recorded substantial losses in a short period of time.

While analysts and traders think the current bear market will continue throughout the first half of 2019, they expect the market to recover.

One piece of the news that makes me optimistic about the market’s recovery and for the future of Bitcoin and other cryptocurrencies is that Bitcoin is fully or partially legalized in 111 countries.

Recently, Coin Dance reported that Bitcoin was legal in 111 out of 251 countries and it was only illegal in the following ten countries: Afghanistan, Algeria, Bangladesh, Bolivia, Pakistan, Qatar, Republic of Macedonia, Saudi Arabia, Vanuatu, and Vietnam. Still, there aren’t many countries that have legitimized Bitcoin by declaring it legal tender and only one to do it, is Japan.

The United States has taken a positive stance toward Bitcoin, to prevent or reduce Bitcoin use for illegal transactions. Yet, there is also plenty of confusion and uncertainty, whether cryptocurrencies will regulated by the federal government, by states, or by an agency such as the SEC. Individual US states seem to be in competition for the title of the most crypto-friendly. While the Commodity Futures Trading Commission (CFTC) treats crypto as commodities, the Securities and Exchange Commission (SEC) insists they are securities, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) applies currency rules, and the Internal Revenue Service treats digital money as property.

While, the European Union (EU) has followed developments in cryptocurrency, it has not issued any official decision on legality, acceptance or regulation. In the absence of central guidance, individual EU countries have developed their own Bitcoin stances. A little over a month ago, two of the largest banking regulators within the European Union released reports calling for uniformity in the regulations of crypto assets and Initial Coin offerings (ICOs) across the continent. Germany is open to Bitcoin. While it’s considered legal, it is taxed differently, depending if you’re an exchange, miner, enterprise or user. The UK has a pro-Bitcoin stance and wants the regulatory environment to be supportive of the digital currency. In Cyprus, Bitcoin is not controlled or regulated and Malta has passed several laws crypto friendly laws.

In Japan, the Financial Services Agency, may have the best oversight on cryptocurrency exchanges, mandating increased security measures and suspending operations when necessary. The FSA has also created an industry study group for the cryptocurrency exchange industry.

South Korea is one of the largest crypto trading ecosystems in the world. In an effort to combat money laundering, in 2018 it banned anonymous trading and increased oversight on exchanges.

Australia considers Bitcoin a currency like any other and allows entities to trade, mine, or buy it and is not subject to double taxation. Currently they are debating a bill to apply AML to exchanges and prosecuting exchanges without a license.

China is perhaps the most famous example of a harsh cryptocurrency crackdown. Bitcoin is essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in Bitcoin. The nation’s authorities previously banned ICOs and cryptocurrency exchanges. In July 2018, state-run media in China reported that Bitcoin trading using the country’s national currency fell to less than 1% of the international total from a peak of more than 90 percent.

In Russia, Bitcoin is not regulated, and its use as payment for goods or services is illegal. The country’s financial regulator is working on cryptocurrency laws to protect individuals from cryptocurrency scams, while allowing businesses and individuals to work legally with cryptocurrencies.

Regulatory direction can give much needed certainty, help markets stabilize and drive wider participation, from investors that waiting on the sidelines because they fearful of the current levels of risk.

While we are seeing regulators around the world working on legal frameworks for crypto, the process is slow. The crypto market is down, because regulations are just beginning. Crypto’s greatest problem is also its greatest advantage: It’s brand new and everyone is trying to figure out how to regulate it. Once exchanges are standardized and offer more fiat on/off ramps, investors will be able to easily diversify their portfolios,  without worrying about losing everything at the sign of a bear.

For more about the Front Page Weekly CXO Briefing, please click here.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Last week our theme was “Lightning Network Gaining Traction”

Our theme for this week is “Security Tokens take center stage.“

Despite the collapse of cryptocurrencies prices in 2018, dropping by more than 80%, for Initial Coin Offerings (ICOs) was a good year. Indeed it was a very good year. We saw more money being raised by more projects.

According to a report published by ICOBench, in 2018, 2,517 ICOs raised $11.5 billion, a 13% increase, compared to 2017. The country leading the pack was Singapore with 228 ICOs, followed by the US with 195, the UK with 165, and Estonia with 112.

In 2017, we saw the rise of utility tokens. Utility tokens were meant to be used to access some kind of service or utility. When the ICO market took off, everyone was issuing some kind of utility token, sold during an ICO, that allowed users of a blockchain platform to pay with tokens for a decentralized service, or earn tokens for providing value to the ecosystem. Utility tokens are very similar to loyalty points, just like those given by credit cards.

Bloomberg’s Matt Levine compares utility tokens to the Starbucks card: “A Starbucks gift card is probably not a security, even though you pay money to a corporation for the card and expect to get back something in the future, because you are not investing the money in the expectation of profit: You’re investing it in the expectation of coffee.”

The fact is that backers of utility tokens are purchasers of a service, and not investors in it. There are many examples of utility tokens in the market. For example, BAT (Basic Attention Token) rewards users with tokens for using the BRAVE browser and viewing ads. Filecoin, which raised a record of $257 million with its ICO, provides a decentralized cloud storage service that takes advantage of unused computer hard drive space. Users that need storage, pay other users that provide storage with tokens.

But, we’ve been seeing the market shift, with “utility” being replaced by “security” and ICOs by STOs. The increase for tokenized securities has many saying that 2019 will be the the year of the STO.

Asset tokenization and security tokens are not a new idea. But with the ICO model crashing, STOs (Security Token Offerings) and security tokens have taken center stage. Security tokens have the potential to disrupt the way investors and securities issuers operate today.

Security tokens are digital, liquid assets, fractions of any real asset. Security tokens can be real estate, funds, equity in a company, derivatives, hotels, licensing, restaurant chains, anything with monetary value. A security token’s value is derived from a real, tradable asset. Security tokens can be used to grant ownership rights or shares of the company, to pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits for the token holders.

We’ve been reading more and more news about STOs in the past months, as more companies are leaning towards launching an STO.

According to an article on MarketWatch, tZERO announced a partnership with Dinosaur Financial Group to facilitate customer trading for the tZERO tokens. In August, tZERO, the security token exchange arm of e-commerce and retail company Overstock, raised $134 million with its STO. tZERO issued to investors tokens in October with a three-month lockup and now the first trades of their security token are already happening.

In July 2018, SPIN an electric scooter company launched an STO to raise $125 million for its start-up. In September, the Malta Stock Exchange signed an agreement with Binance to launch a security token trading platform.

Various platforms have emerged to assist start-ups with their STOs, like StartEngine, Harbor, Polymath, Dusk Network, TokenSoft, Republic, and Atomic Capital.

The ecosystem of security tokens is in its early stage and there is a certain lack of legal practices. As security tokens are investment contracts, in most places around the world they are covered by securities laws. There are people who argue that cryptocurrency tokens are an entirely new asset class which deserve their own laws outside of the existing ones, but this is not reality, at least not as of now. For now, strict regulations concerning securities could pose obstacles, but they could also be a blessing in disguise, legitimizing security token offerings and ensuring compliance from the start.

Security tokens have the potential to attract additional capital from new investors who previously haven’t been interested in this kind of investment. STOs are projected to have a market cap of $10 trillion by 2020. Also, STOs and security tokens could prove to be the answer be the answer to the government’s woes, protecting investors and ensuring operations within the law.

STOs provide a more intelligent and innovative approach to capital funding that frees access to both investment and capital ways, while providing transparency to all of the services in question. The security token ecosystem could lead to the emergence of a new equity ecosystem separate from the public stock exchange, as security tokens allow for compliance, automation, and interoperability all across the securities stack.

For more about the Front Page Weekly CXO Briefing, please click here.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Last week our theme was “New York regulators approved new Crypto ventures”

Our theme for this week is “Lightning Network Gaining Traction.“

Since it went live early last year, the Lightning Network has skyrocketed. With over 630 Bitcoin (BTC), more than 23,000 channels and a total network capacity of $2 million on the Bitcoin mainnet, according to data from 1ML, LN’s capacity for BTC has had crazy growth, going from 4 to over 600 BTC since last February.

In the last three months, LN’s growth has been even more steep. The release of Casa Lightning Node has been a huge factor driving this growth, making it very easy for non-technical users to run an LN node.

But, Casa is not the only reason. Campaigns carried out by the community, like Lightning Torch and the growing number of wallets that support LN, are some of the other reasons for this growth.

The first Lightning implementation by Lightning Labs was launched in beta in March 2018. The other two, by ACINQ and Blockstream, were launched in late March and late June.

Last week, Casa announced the launch of a new browser extension. The software will allow Bitcoin Lightning Network-enabled nodes, to be accessed directly from crypto websites. Casa Extension will make interactions seamless, allowing users to click on a button and make a payment on a website that accepts BTC.

The original Lightning Network white paper was released in February 2015, by blockchain researchers Joseph Poon and Tadge Dryja. Since LN’s introduction, we’ve seen different projects developing on the Lightning Network and others working protocols that use some of the same technology.

One of these projects is Arwen, that wants to be for trading, what LN is for payments. With $865 million lost to hacks on centralized cryptocurrency exchanges in 2018, and more than $1.5 billion in total up to now, Arwen is trying to solve a big problem. Arwen has developed a new protocol that allows traders to have control over their private keys, even when their coins are stored on an exchange. Users maintain self-custody of their coins in their own hardware or software wallet, without having to transfer their keys to a third-party. Last week, KuCoin announced a partnership with Arwen, to offer a non-custodial service to its customer base.

While the technology is still in testing, LN aims to make Bitcoin transactions faster and cheaper. The most remarkable growth metric for LN is the growing number of nodes, with active channels. On average, each node has nearly 8 channels and each channel has an average capacity of $110.

The Lightning Network has become one of the most promising approaches to making Bitcoin a fast, cheap and secure payment network. The technology is still in its infancy and for most people, LN is not relevant. But given the growth we’ve seen, it may very soon be. At this rate the LN’s capacity could exceed a billion, over the next year.

Whether LN is successful or not, in many ways depends on how successful Bitcoin is, in maintaining its lead over other cryptocurrencies. Currently the entire crypto market is valued at $113 billion, with BTC representing 53% and Ripple, the second in line, at 10%. But prices and market cap will not be the only factors, it will also depend on how quickly competition can scale and how seamless the experience becomes for users.

For more about the Front Page Weekly CXO Briefing, please click here.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.