Security Cryptocurrencies Investment Strategy Weekly Report (01/11/2019) | Grasping the Digital Future

11 Jan, 2019 03:02
source: 香港奇点财经Singularity Financial

Preface:

Since the beginning of 2019, the total market value of cryptocurrency has risen steadily, Bitcoin fluctuated between US$3,600 and US$4,000, and the market is warming up gradually. Bitcoin hashrate ushered in a strong rebound after experiencing a sharp decline. The mining difficulty doubled, and the number of active addresses hit a new low in recent days.

Bakkt successfully raised 182 million US dollars. Li Ka-shing, Microsoft, Boston Consulting Group and other well-known institutions all participated in this field. A large sum of capital continues to bet on the cryptocurrency, which has significantly enhanced market confidence.

Ethereum will carry out the “Constantinople” hard fork on January 16 and will officially turn to the Proof of Stakes consensus mechanism. Binance, Huobi, and OKEX announced their support. After the news, ETH exceeds XRP and becomes the second largest cryptocurrency on the market.

51% attack continues to threaten the safety and stability of cryptocurrency. Recently, the 18th largest cryptocurrency Ethereum Classic (“ETC”) suffered several 51% attacks. Singularity Financial Limited (“SFL”) gave out a warning two days ago, suggesting ETC investors not to make any transfer transactions and to pay attention to the latest attack development. SFL also put together a list of cryptocurrencies that are in potential dangers of 51% attacks.

The STO ecosystem continues to evolve and innovation continues to emerge. DX EXCHANGE has tokenized the stocks of top Nasdaq-listed companies, such as Google and Facebook, making it possible for investors to conduct the stock trading all day long. However, a “trial” made by an anonymous online trader revealed that DX Exchange site has concerning security issues that jeopardize its users’ sensitive data, even their funds. As of this moment, our research report is released, the security concerns are not 100% removed, SFL team strongly recommends investors to stay away from this platform until all issues are clear.

SNC Limited, a Hong Kong-based decentralized ecosystem for Security Token Offering (“STO”), obtained strategic investment from Fundamental Labs, a world-renowned blockchain investment institution. The strategic alliance between SNC and its investor, Fundamental Labs, is not only an affirmation of SNC’s current accomplishment and STO business outlook but also a long-term commitment and determination of two companies to lay the groundwork together in the Asia-Pacific region.

News Highlights

Bakkt raised $182 million; large capital continues to bet on cryptocurrency

Recently, Bakkt CEO Kelly Loeffler announced on Medium that Bakkt completed raising USD182.5 million in Series A investment. The investment institutions and partners involved in the Series A investment include Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures (Li Ka-shing’s investment group), Intercontinental Exchange, Microsoft Ventures, M12, Pantera Capital, PayU, Fintech division of Naspers (Tencent’s largest shareholder), and Protocol Ventures.

This financing round reflects the continuous optimism of large capital towards the cryptocurrency industry. Zhao Changpeng, CEO of Binance pointed out, “Institutions are not stupid.” and the smart money never left. Bakkt originally planned to launch it in November 2018, but it has been repeatedly postponed and may eventually be launched in the first half of this year.

Ethereum will conduct “hard fork” upgrade on January 16th, and its market value returned to second place

Ethereum is about to undergo a massive “Constantinople” upgrade, which is expected to be carried out on January 16th. At present, Binance, Huobi, and OKEX have issued a statement to support this upgrade. Through this upgrade, the Ethereum blockchain will be gradually transformed from the Proof of Work to the Proof of Stakes consensus mechanism. Affected by the upgrade, after 2019, the price of Ethereum rose sharply, and now it has surpassed XRP and become the second largest cryptocurrency on the market.

In addition, at the Ethereum Core Developer Conference on January 4th, 2019, developers agreed to introduce the “ProgPow” algorithm, which is an anti-ASIC algorithm that will maintain the GPU mining and maintain the decentralization of Ethereum. The specific introduction time will be discussed at the meeting on January 18th. And the upgrade is expected to be completed within 2-4 months.

US government shut down affects the Bakkt, Bitcoin ETF review

By January 9th, the regional shut down of the US government has continued for the 18th day. At present, there is still no hope of reopening. President Trump and the Democratic Party continue to confront each other over the USD$5 billion border wall budget. The two sides refuse to give way to each other.

The government shut down has also had a huge impact on the cryptocurrency industry. The physical delivery of Bitcoin futures issued by Bakkt is extremely important to the cryptocurrency market. Backed by the Intercontinental Exchange (ICE), the parent firm of the New York Stock Exchange, Bakkt has been a topic of interest for months as release dates are increasingly delayed further, pending approval from the United States Commodity Futures Trading Commission (CFTC).

Recently, it has been announced that Bakkt will delay the release of its futures product even further. Previously, the release date had been moved to Jan. 24, but now, the release date is uncertain.

The US SEC has also been affected. The highly anticipated Bitcoin ETF Vaneck SolidX Bitcoin Trust has a final deadline of February 28th. If there is any doubt whether it can be approved in time, the SEC is likely to take the opportunity to postpone it again. Hester Pierce, a commissioner at the SEC, said that it could get approved today, but it could also take 20 years. Jake Chervinsky, a lawyer at the Kobre and Kim law firm, suggested that it will not be approved. Chervinsky stated that the exchange-traded product as a concept is currently ”in trouble.” More specifically, he expanded on the issue, arguing that the cryptocurrency market might not be ready for an ETF as of yet. The SEC chairman Jay Clayton agreed that the chances for approval are slim. Clayton noted that there must be better surveillance in cryptocurrencies before an ETF can be approved.

ETC suffers from the 51% attack, Dash and Mona are also in great danger, and the hashrate rental market became a fuse

The Gate.io Institute recently released a report, stating that it has confirmed that the Ethereum Classic (ETC) network suffered the 51% attack and the attacker’s ETC address has been identified. In this attack, Gate.io detected a total of 7 rollback transactions. Four of them, 54,200 ETCs in total, were from the ingeniously planned attacker. The attack lasted for a total of 4 hours. Gate.io said that the essential reason for the 51% attack on the ETC network is that the market value of ETC and the hashrate of the network were declining. It is easy for an attacker to carry out a hashrate attack on ETC by leasing the ETH hashrate.

Nicehash claims to be the leading platform for hashrate leasing. The various leased hashrate on the platform are already large in size. Crypto51.app has long tracked the cost of the 51% attack against each cryptocurrency and listed the hashrate percentage that Nicehash can provide in the total hashrate required to launch an attack. Singularity Financial found from the results that the following tokens are also in great danger.

SFL believes that on days like these when hashrate leasing is already advanced enough, the threshold for attacking the variety with the same algorithm is actually very low, especially for the divergent coin, and if you continue to use the same algorithm as before, the probability of being attacked is very high. As the blockchain is going forward, only a few blockchains may just need to adopt the POW mechanism, and most of them will adopt POS or the more advanced consensus algorithms.

STO Market

SNC, an STO ecosystem platform in Hong Kong receives strategic investment from Fundamental Labs

SNC Limited (“SNC”), a decentralized ecosystem for Security Token Offering (STO) was founded by C Block Capital Group, a private international investment group based in Hong Kong. The key members of the SNC team previously came from distinguished hedge funds, investment banks, big-four auditors, and Fortunate 500 high-tech companies. As a distributed platform for the STO ecosystem, SNC covers four major business lines: asset Management, exchange, advisory and media. Blockchain investment platform Fundamental Labs is an investment fund and incubator that focuses on technology and business fundamental innovation to reform traditional industries. The fund has accumulated an outstanding portfolio of close to 50 blockchain and technology companies globally. Among its more prominent portfolio companies are Coinbase, VeChain, Canaans, PlatOn, and Conflux.

The strategic alliance between SNC and its investor, Fundamental Labs, is not only an affirmation of SNC’s current accomplishment and STO business outlook, but also a long-term commitment and determination of two companies to lay the groundwork together in the Asia-Pacific region.

DX EXCHANGE began trading, anonymous trader revealed DX Exchange site security issues

DX Exchange began trading on January 7th. and it allows users to trade crypto and digitized versions of many major companies’ shares, like Apple, Tesla and Amazon. In addition to the French currency, it also supports digital currency deposits. DX Exchange has offices in Estonia and Israel and plans to expand to the New York Stock Exchange and the stock exchanges in Tokyo and Hong Kong.

However, a “trial” made by an anonymous online trader revealed that DX.Exchange site has concerning security issues that jeopardize its users’ sensitive data, even their funds. Besides leaking sensitive data and allowing unauthorized access to users’ accounts, the leak also put the whole system in danger as some of the leaked tokens belonged to the company’s employees. The trader contacted Ars Technica.

DX Exchange responded to Ars Technica’s report by confirming the bug fixing within 24 hours. But Ars Technica’s team said that there are other several red flags on DX Exchange’s security, including a sloppy token system. He regretted the fact that the exchange doesn’t provide contact information of the security team and doesn’t have a bug bounty program. As of today, the security concerns are not 100% removed, Singularity Financial team strongly recommend investors to stay away from this platform until all issues are clear.

Secondary Market Quick Overview

Since the start of 2019, the total market value of cryptocurrency has risen steadily. The market value of bitcoin has fluctuated between US$3,600 and US$4,000. The transaction volume, on the other hand, has declined slightly.

Data Source:CoinMarketCap

Mainstream currency? Among them, ETH, TRX, and LTC have shone, and XRP, XLM, and ETC performed poorly.

Data Source:Coin360

Since November 2018, bitcoin mining has experienced three sharp declines, but as the currency price rebounded to a high of US$4,000, e hash rate continued to grow. The difficulty of mining increased by 10% on January 1st, and could likely rise another 8% in a few days.

Data Source:Btc.com

The number of active Bitcoin addresses have continued to fall recently to below 400,000 in early January, a record low since the adjustment.

Data Source:Bitinfocharts

Opinions

New Class of Security Token Is Arriving, How to Operate STO in 2019

Securities tokens are intended as investments because they provide more basic structure, rights, corporate governance, processes, code of conduct, etc. Recently completed STOs include tZERO – a pretty straightforward security token for an investment-based project in an alternative trading system that pays 10 percent of the company’s profit to token holders.

In 2019, we are looking forward to seeing a new class of security tokens that will allow new blockchain businesses to access capital from global investors while also protecting investors from fraudulent and worthless projects. This would have to result from the creation of information platforms, new protocols, and new regulations. As more brainstorm is coming in, we will be able to create a more concrete vision of this new class of security token.

The current security token market lacks advanced financial instruments. At the moment, we have only seen security tokens that represent equity in a business. This has been an easy way to start, but won’t be enough to lead to the mass adoption of security tokens. As the next generation of security token protocols emerges, tokens will be able to handle bonds and other derivatives.

Currently, there is a lack of debt protocols in the security token market, but we anticipate many to pop up in 2019. Debt protocols can decrease the systematic risk associated with most security tokens and provide investors with immediate cash flow. Additionally, debt holders have first priority in the case of a failing business.

Another important thing to point out, security tokens offer the investor the ability to invest in a company through equity, profit sharing, dividends, voting rights, and numerous other benefits that surpass those of ICO’s. Even though the current talent in the security token space is highly skilled and intelligent, but the experts from traditional industries could help shape a stronger and more transparent industry.

As the security token market gains more traction in 2019, signs that bigger financial players will step into crypto in 2019 have been increasingly forthcoming in recent months. Nasdaq would begin allowing Bitcoin futures trading in Q1 2019. Meanwhile, the Liechtenstein-based Union Bank AG and the Japanese First Bank of Toyama have also announced their own security tokens and/or stablecoins for 2019.  SEFToken Inc., started 2019 new year by announcing a new form of a tokenized instrument – a “covered warrant” – similar to an option, that gives the holder the right to buy or sell the underlying security at a certain price, up until a predetermined date.

The future widespread adoption of the STO model seems predetermined, but there may still be a number of obstacles along the way. Much will depend on the actions of regulators and their approval of a new scheme of fund-raising. It may be too early to say whether new tokens will be able to revolutionize the fund-raising area. STO can be an attractive tool for medium-sized businesses that are not able to bear the costs associated with the traditional private placement of securities. If this happens, it will be possible to state with confidence: STO is serious and lasting.

We think it will take at least another year to create some kind of STO market standard. The massive introduction of a new instrument will require concerted efforts on the part of regulators and institutional investors, with the recent fall in the cryptocurrency market slowing this process down. STO is truly the future of the blockchain industry. The only question is whether it will come in 2019 or only in 2020, but failing to prepare is preparing to fail.


About Us

SNC Limited (“SNC”) is a Hong Kong-based decentralized ecosystem for STO with business lines spanning across asset management, regulated digital asset exchange, STO advisory services, and media. SNC’s vision is to become the leading digital asset manager and exchange in Asia bridging the traditional and digital asset worlds; as well as becoming the capital markets bridge between China and the world.

Singularity Financial Ltd (“SFL“) is one of Hong Kong’s leading financial technology media platform providing independent and objective coverage on future technology and FinTech solutions. SFL is positioned to play an important part within the SNC ecosystem by providing professional support for investment projects in terms of media coverage, investment grade research reports, public relations, and more.

For more information, please contact media@sfgroup.hk.