A NEW AGE FOR DIGITAL ADVERTISING WITH BLOCKCHAIN?

mintdice.com

Advertising has become an essential part of promoting any type of business available and even plays a role in driving the data market further. The world of advertising is worth billions of dollars and is on course to hit $120 billion by 2021 in the US.

Every company, no matter what they offer, cannot function without reaching their target audience-- this is where advertising comes into the picture. Brands like Google live off consumer data which can be used to send targeted ads to the right audience. Unfortunately, there are several issues that make the process of reaching the right audience inefficient.

Currently, almost half of all ad traffic is generated by bots. This means that even though so many brands pay a lot of money to reach their potential customers, it does not guarantee that they will actually make any sales to real, paying customers. While the reach and even engagement generated by paid ads can translate to heavy figures, the useful leads are relatively low.

This situation can be fixed by creating platforms that will allow companies to target their potential customers individually and in a direct manner. This will ensure that bots can be filtered out and sales can be maximized.Blockchain and smart contracts are great technologies to base such a system on.

A blockchain is an immutable digital ledger that stores all the transactions carried out on the network it supports. It has already been described as an emerging technology that will disrupt the way several industries function. It is now clear that digital marketing may be one of those industries.

In the past few years, since the emergence of bitcoin, the buzz surrounding blockchain which underpins most cryptocurrencies has increased considerably. There are already more than 2000 cryptocurrencies, all with their own unique use cases and projects. The appeal of blockchain lies in the number of useful applications it has. In advertising, a blockchain platform would be able to target the users on its network without allowing bot activity to thrive. It could also change current the world of advertising by making the process more transparent and private.

HOW CAN THE NEW BLOCKCHAIN PROCESS BE USED BY ADVERTISERS?

Mostly, blockchain can be used to improve the process of running digital ads and paying out publishers as well as distributors. When implemented, the technology can improve the following:

FRAUD PREVENTION

Advertising has a fraud problem perpetrated by human accounts as well as bots. Usually, bots are created to crawl web pages carrying out helpful tasks, but they have become a medium for carrying out cybercrime.

Popular platforms like Twitter where advertising plays a huge role have reported a bot problem that they’re actively trying to combat. In fact, Twitter has begun making plans to implement blockchain technology in solving this problem.

According to “What Happens Next: How To Reverse The Rising Tide Of Ad Fraud,” a 2017 report, up to $16.4 billion of global advertising revenue was wasted on ad fraud in 2017. Unfortunately, this figure may continue to increase if nothing is done to fix the situation. There are several factors that make blockchain well-suited for fraud prevention, including:

• Immutability
• High levels of security due to its decentralized mode of operation, verification mechanisms and encryption.
• Transparency since transactions can be authenticated.

Overall, blockchain systems make it difficult to commit fraud because transactions are in the open. Also, blockchains do not have a single point of failure and as such, it is difficult to hack them. This can potentially save advertisers and publishers millions each year by protecting them against cybercrime.

DIRECT TO CONSUMER DIGITAL MARKETING

Platforms like Google and Facebook have come under fire recently for consumer-data distribution issues. Because such platforms make a lot of revenue off advertising, they collect consumer data to better target the right target audience. Unfortunately, this could feel like a violation of privacy for many users who would rather have more control over how their data is collected and what it is used for.

Usually, enterprises that run digital ads on larger platforms like Google and Facebook have to pay for this service. Blockchain gives them a way out. Since the information stored on blockchain networks are secured using various encryptions that can only be decrypted using the owner’s private keys, users retain control over their data. As a result, the services of middlemen will no longer be needed in the advertising data collection process. These blockchain platforms create a direct connection between consumers and enterprises.

Companies can also use blockchain to show people who their data is being sold to since the information cannot be deleted or manipulated. This will make consumers feel at ease without having to constantly worry about their data.

PROVISION OF EFFICIENT CROSS-PROMOTIONAL B2B CONTRACTS

Smart contracts are lines of written code in the form of distributed apps on a blockchain network. They are created to set up a binding agreement between parties based on their conditions. The conditions can be external events, like a price point, set of obligations or time limit with an expiration date. Since blockchain transactions can easily be verified, smart contracts cannot be forged and all involved parties can follow up the transaction.

These contracts can be used in any system from voting to app subscription and digital marketing. They help advertisers bypass lawyers and other middlemen by conducting the process of exchanging money, shares or any valuable assets. These contracts are created with conditions that are self-executed in a transparent and conflict-free way.

Influencer marketing is popular among brands but there is currently no regulatory third party to determine how terms are created and followed or even how payments are made. Using blockchain, businesses will be able to clearly state obligations that must be met for payments to be made, and a smart contract will enforce it.

This will make B2B cross-promotional marketing more efficient since several contracts change hands between marketers, writers, bloggers and even social media influencers daily. Ultimately, businesses will protect themselves and save money and time in the event of a contract breach.

TRANSPARENCY IN CONTRACTS AND WITH CONSUMERS

There are lot of cases in which advertising lacks transparency, such as platforms that show advertisers false metrics. For example, a platform could claim to gain millions of impressions on each ad they put out. Normally, there would be no good way to verify this information and find out the truth.

This presents an easy way for platforms to defraud enterprises through false advertisement. However, since a blockchain records such data in a way that cannot be tampered with, it can easily be verified.

FINAL THOUGHTS

Advertising will continue to be the backbone of commerce because most people will not buy a product if they are not given a reason to. However, like many other industries, it is due for a technological reform that will make it more efficient for all relevant stakeholders. Blockchain not only makes the advertising process easier, it makes it faster, more secure and transparent. As this emerging technology continues to develop, there will gradually be more stable versions of it that may become more valuable to advertisers.

Original Post: https://www.mintdice.com/blog/a-new-age-for-digital-advertising-with-blockchain

Coinsource on its Coveted NYC BitLicense, Bitcoin ATM Fees, and Crypto Regulations

coincentral.com

In November 2017, the world’s largest Bitcoin ATM network was granted the much-desired Virtual Currency License by the New York Department of Financial Services, becoming the 9th company to do so.

Coinsource has been gunning for this license since the summer of 2015 and was primarily operating under a provisional license. The newly issued “BitLicense” grants the holder permission to conduct virtual currency activities within the state of issuance. Coinsource joins a list of some fairly influential companies such as BitFlyer, BitPay, Coinbase, Circle, and Square to hold this license.

With over 200 machines in 19 states, Coinsource has played a significant role in providing mainstream users access to cryptocurrency in convenient locations like gas stations. These machines allow customers to insert fiat and buy bitcoin to be stored in their mobile wallet, as well as selling bitcoin for fiat by scanning their mobile wallet.

On one hand, Coinsource has helped popularize and simplify cryptocurrency for thousands of people. Seeing a Bitcoin ATM (occasionally called a BTM) next to a freezer full of Redbulls and shelf with Slim Jims lends a sense of calming familiarity for a relatively overly high-tech concept for the average person.

On the other hand, Bitcoin ATM providers have received their fair share of criticism for charging exceptionally higher fees and premiums for their services. ATMs hover around a 6% to 10% premium on the price of a Bitcoin, whereas Coinbase, a digital exchange also scorched for its extremely high fees, charges 3.99%.

With the rapid growth of Bitcoin ATMs across the country, Coinsource is positioned to become a dominant force in onboarding an equally accelerated growing population of people taking steps to buy their first bitcoins. According to CoinATMrader.com, the number of Bitcoin ATMs has been growing around 4% every period. Of the 3931 machines in October 2018, Coinsource holds a share of roughly 5.1%, which seems to be enough to hold the marketed of “largest Bitcoin ATM network”.

CoinCentral connected with Coinsource CEO Sheffield Clark and General Counsel Arnold Spencer. Enjoy!

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Coinsource has just been awarded the coveted “Bitlicense” by the New York State Department for Financial Services (NYDFS). Can you tell us a bit more about what the Bitlicense is, and what this achievement means for Coinsource?

Sheffield Clark: The “Bitlicense”, more recently known as the “Virtual Currency License”, is a business license for virtual currency activities issued by the New York State Department of Financial Services (NYSDFS) under specific regulations designed for companies operating within the state. The granting of this license is huge victory for Coinsource, as well as also a stamp of approval that allows would-be partners and users to confidently engage with our products and services. Over the next 180 days, we plan on tripling our presence in the state of New York.

Arnold Spencer: Receiving the Bitlicense means that Coinsource faces much less regulatory risk.  We now have a structure under which we know we can operate in New York. During the application process, we faced the possibility that New York would set out certain requirements that we could not meet or that we would have to limit our business model in ways that could cripple our company.  Now we have standards for compliance and a constructive and open dialogue with our regulators.

Additionally, interactions with other businesses – both crypto businesses and traditional businesses — are easier with the Bitlicense.  Banks, and importantly, bank regulators view the Bitlicense as an additional level of comfort with the safety and soundness of our business.  Hardware manufacturers and software programmers know that we are regulated by NYDFS, and they respect that.

The Bitlicense also provides us with credibility as we interact with other regulators.  As we expand into new jurisdictions, we have the momentum of the New York license as well as all the policies and procedures that we created during the Bitlicense application process.  We expect that we will be more favorably received in these new markets because of our success in New York.

Obtaining the Bitlicense required Coinsource to undergo rigorous compliance-based checks by the NYDFS. Can you explain how Coinsource Bitcoin ATMs ensure that the machines are not abused, hacked or used for any illicit activities? What sort of checks and controls does Coinsource perform on users of the ATMs to ensure compliance?

Sheffield Clark: As Coinsource is a nationally licensed and federally regulated company, and we take KYC/AML compliance very seriously. All Coinsource ATMs require proper ID verifications, phone numbers, and more. We do not share or sell any information to 3rd parties whatsoever.

With so many online exchanges now available, can you tell us some more about the long-term goals of Coinsource as a company focused on physical ATMs? How does your business model aim to compete sustainably with e.g. Binance, Coinbase or Bittrex, particularly given that users must register online in advance of using a Coinsource ATM?

Sheffield Clark: Bitcoin ATMs will continue to have a similar appeal for the same reason that regular ATMs do: they’re more direct and accessible. Most people with a casual interest in cryptocurrencies don’t want to jump through the hoops of connecting a bank account, waiting for a money order to transfer, monitoring price charts, making buy and sell orders, etc. We’re offering the simplest access to bitcoin at a competitive rate.

Do you have any usage stats to share with us that may be interesting for our readers? For example, how many users of Coinsource ATM’s, average transaction value, most popular location?

Sheffield Clark: I would say the most interesting data point is that we are the world’s largest bitcoin ATM operator in the world. Unlike all of our competitors, who have to use third-party software integration on existing machines, we offer a full stack service with proprietary software, hardware, and customer support.

One of the blog posts on your website talks about how cryptocurrencies are a solution for the unbanked. How does Coinsource play into this solution? What services can the company offer to the unbanked of the United States?

Sheffield Clark: Simply put, for those unbanked in the U.S., and eventually abroad, a bitcoin ATM that takes physical cash is the most direct way to gain access to the new global financial system. Bitcoin ATM networks provide a resource for stores of value that does not discriminate based on socio-economic history.

Can you tell us about future plans for rollouts in other countries beyond the US? Which countries will Coinsource target next, and why?

Sheffield Clark: We understand that the appeal of cryptocurrency ATMs is universal, and are therefore certainly open to the idea of expanding our reach in the future. However, for now our primary goal is ensuring that Americans in all 50 states have easy access to bitcoin.

Who is your target market? Is there a large unbanked population in the US?

Sheffield Clark: While a sizable minority of Americans remain either unbanked or underbanked, our product is intended for consumers across all demographics who want a simple and accessible option when buying bitcoin.

What are some of the largest challenges projects such as Coinsource will have to overcome in the near future?

Arnold Spencer: International regulatory markets provide a challenge to all crypto companies.  The challenges are complex because the regulations vary from country to country, and each country has a changing, evolving regulatory landscape.  Certain jurisdictions are trying to attract crypto companies by maintaining low regulatory hurdles. But cryptocurrency is a worldwide market and a borderless product.  From our perspective, companies will need to comply with the most restrictive regulations in order to successfully operate worldwide. Simply complying with the regulations for Malta or for the State of Georgia will not enable companies to enter major markets like New York, Tokyo, and London.  

The Coinsource transaction fee is substantially more than other exchange platforms. What value does a Bitcoin ATM bring to justify that large of a fee?

Sheffield Clark: Bitcoin ATMs differ from exchanges in a multitude of ways. With exchanges, there is no ability to execute an immediate sale of coins, and on most exchanges, there is no immediate buy ability either. Exchanges as well as most of Coinsource’s Bitcoin ATM competitors, charge additional “processing fees” on top of the exchange fees. We do not.

Exchanges also require extensive banking and credit card/debit card information from their customers, whereas Coinsource only requires proof of identity in accordance to state and federal banking regulations. Finally, our fees are among some of the lowest in the Bitcoin ATM sphere, allowing the unbanked, the underbanked, and even a first-time bitcoin buyer to walk up to one of our kiosks, insert cash, and immediately purchase and own bitcoin.

What does the relationship with a business location look like? Do they maintain the machines? Receive a portion of the revenue?

Sheffield Clark: Coinsource owns and operates all aspects of their Bitcoin ATM products and services. From live, 7-day customer support, to armored car cash pickup/drop-off services, to machine install and maintenance, the store owners and employees who host Coinsource Bitcoin ATM’s don’t have to lift a finger, it’s a turnkey business model where they receive a check every month for hosting a 2ft x 2ft space and an electrical outlet. Both businesses benefit as well with a substantial increase in foot traffic and sales.  

While it seems that every project offering services/products somewhere in the financial supply chain would need one, few teams have a formal General Counsel. Could you elaborate on the role of General Counsel at a blockchain project?

Arnold Spencer: I handle all legal and compliance issues for Coinsource, working closely with our CEO and our CCO.  Those responsibilities include broad strategic planning issues, like developing and implementing our proprietary compliance program or considering strategic growth strategies based on legal issues in various jurisdictions.  And the responsibilities also include more traditional legal issues, like employment contracts and HR issues.

Coinsource decided at its founding that we would create a culture of compliance, that the company would include working within the legal and regulatory frameworks as a tenet of its mission.  That has been relatively unique among cryptocurrency and blockchain industry. Many of the entrepreneurs in this space are primarily focused on innovation and disruption, which can be valuable.  But there are often gaps between these new business models and existing regulatory compliance schemes. As the General Counsel, I make sure our creativity complies with the law.

How would you counter the argument that Bitcoin, or better yet privacy coins such as Monero/Zcash, will facilitate illicit activity at a massive scale?

Arnold Spencer: Criminals have engaged in illegal conduct long before the emergence of fiat currencies, no less cryptocurrencies.  Cryptocurrency advocates never claimed that this was a solution to criminal activity, but rather that cryptocurrencies had tremendous advantages over physical, fiat currencies.  One of those advantages is that cryptocurrency transactions can be tracked on their blockchain.

We are already seeing law enforcement adopt sophisticated blockchain strategies to investigate and prosecute criminal activity that uses cryptocurrencies.  So we see a trend toward broadscale adoption of Bitcoin among law-abiding companies and individuals. No doubt that criminals will try to use privacy coins for illicit activities, but that simply puts these coins at the same level as cash.

This article by ALEX MOSKOV was originally published at "CoinCentral.com: https://coincentral.com/coinsource-bitcoin-atms/

Bitcoin and other Cryptocurrencies: Time to Regulate

hoganinjury.com

In the financial space, anything unregulated and unregistered would cause doubts and uneasiness. In the case of cryptocurrencies, such as bitcoin, financial regulators all over the world have started to find ways to oversee the blockchain, or the record of all cryptocurrency transactions, as well as to address the irregularities presented by these virtual currencies that mostly bypass financial firms, exchanges, and regulated banks. The most popular of all cryptocurrencies, bitcoin, chiefly operates outside of the conventions of a financial system; and this worries regulators as it has the potential to be linked to money laundering, tax evasion, fraud, and terrorist funding.

In November of last year, a businessman from Brooklyn was charged in a case with promoting currencies, which are backed by investments in diamonds and real estate that, according to the US prosecutors, do not exist. The Securities and Exchange Commission also filed charges.

Earlier this year, more than half a billion dollars in cryptocurrencies from a Japanese exchange called ‘Coincheck’ had been stolen by hackers. Experts say that more of such attacks can be expected in the future, as all of the hackers in the world may now be targeting cryptocurrencies.

For investors and owners of cryptocurrencies, this is worrisome. Here’s what the US regulators are currently doing to address doubts on cryptocurrencies:

Securities and Exchange Commission

SEC is a federal agency responsible for protecting investors and keeping order in markets. In a statement released in March, the SEC argued that under US security laws, digital assets such as coins and tokens offered and sold in initial coin offerings (ICOs) fall under the definition of “security.” The statement may mean that trade digital currencies would be required to be registered with the SEC, just like all of the national securities exchanges such as the New York Stock Exchange.

Internal Revenue Service

For tax purposes, the IRS states that bitcoin must be considered as property; therefore a capital gain or loss must be recorded, or be accessed through the blockchain as if it were an exchange that involves property. If it is used as payment, it should be treated as currency, and the bitcoin price must be converted to its fair market value checked on an exchange.

Department of Treasury

The department is taking the lead and is bringing federal agencies together to coordinate regulation on cryptocurrencies. It has formed a virtual currency working group, which includes the Federal government and the Securities and Exchange Commission, which will be watching bitcoin and other cryptocurrencies closely.

State Laws

Cryptocurrencies started out as “stateless” entities, but the cynicism towards them eventually drew a realization that regulation is necessary. In introducing cryptocurrency regulations, California and New York, which are home to a large number of crypto businesses, are taking the lead. Other states are quickly catching up.  The National Conference of Commissioners on Uniform State Laws had voted in favor of providing a model act for the regulation of cryptocurrency businesses at the state level.

There had been measures in regulating cryptocurrency, and we can expect more developments in the future. Reports on irregularities, scams, and fraud surrounding cryptocurrency are indeed alarming, which is why it is important to remain vigilant and cautious in all of your investment activities; and be on the lookout for bitcoin news and other updates on cryptocurrencies.

Original Post: https://www.hoganinjury.com/bitcoin-and-other-cryptocurrencies-time-to-regulate/

RIPPLE XRP AND R3 CRYPTOS REACH MULTIBILLION-DOLLAR SETTLEMENT

mintdice.com

Ripple, the decentralized platform behind high-speed money transfers using digital products like XRP recently announced that they have reached a settlement with R3, another blockchain enterprise corporation. Thestatement reads:

“R3 HoldCo LLC, R3 LLC, Ripple Labs Inc., and XRP II, LLC announced that they have reached a settlement of all outstanding litigation between the parties. The terms of the agreement will remain confidential and both sides look forward to putting these disputes behind them.”

Despite the announcement, exact details of the settlement remain undisclosed. However, this ends the litigation between both firms, which has lasted for almost a year. Originally, due to a violation of the terms of their partnership, the case has dragged out with both firms going against each other.

Based in San Francisco, Ripple Labs has made several partnerships over the years, aimed at scaling its blockchain financial solutions and encouraging adoption. This is common practice within the industry and has been seen between various corporations from Amazon and Kaleido to IBM and Stellar. Unfortunately, not all partnerships end well for various reasons.

It can be an ugly situation that drags on for a long time just like between R3 and Ripple. It constitutes a loss for the blockchain community, which stands to benefit from any innovation that arises from similar partnerships.

WHAT IS RIPPLE?

Ripple is both a prominent blockchain solutions platform and a cryptocurrency, just like Bitcoin. It is one of the leading digital asset platforms with a current market cap in excess of $18 billion. The Ripple platform itself is an open source protocol designed to allow efficient, secure, fast and cheap financial transactions.

It was created in 2012 by Jed McCaleb (who also founded Stellar) with the aim of introducing blockchain-based, cross-border settlement to the world. The platform serves as an accessible way to transfer money internationally the same way services like Moneygram and Western Union are used to transfer fiat currency. However, it eliminates third parties, the stress and fees associated with the conversion of fiat currencies.

Although the Ripple platform is supported by XRP, its own currency, users are allowed to create their own digital currencies on its network, known as RippleNet. However, XRP is intended for use as a middle ground between fiat and cryptocurrency exchanges so it is safer to use it.

Ripple currently manages a team of more than 200 people and has raised funding of approximately $100 million. The company aims to establish a solid network of banks, to create operating channels across borders. This network also serves as a link between them and the problems they hope to solve in the banking industry.

To this effect, the firm signed a partnership with American Express in November 2017, with the goal of creating a payment channel between the UK and the United States. Compared to Stellar, Ripple is more focused on marketing its products and forming several partnerships for their personal advancement as well as that of the industry. This has mostly paid off except for the few times partnerships have gone awry, as in the case of R3.

WHAT IS R3?

R3 is an enterprise blockchain software firm working with an ecosystem of over 200 members and partners spanning across several industries in the private and public sectors. R3’s 180 professionals work in 13 countries with the support of more than 2,000 financial, technological, and legal field experts, pooled from the firm’s global member base.

They are mostly known for Corda, their open source blockchain platform as well as Corda Enterprise, its commercial version meant for enterprise use. Corda has already become a familiar name in industries likeshipping, healthcare, and even insurance.  

According to the company website, the platform handles the recording, management, and execution of financial agreements for various institutions, to promote seamless commerce transactions. The firm claims that permissionless blockchains are plagued by issues concerning scalability, privacy, and interoperability which make them unfit for global commerce.

Corda was launched as a solution to these issues and in 2018, the launch of Corda Enterprise followed. The enterprise-facing platform multimillion-dollar with the demands of modern day businesses in mind.

Both platforms are flexible and can be used in many industries. They were created in collaboration with the firm’s network of financial institutions, trade associations, professional services firms, regulators, and technology companies. Each contributed to using blockchain and its numerous benefits to the advantages of businesses all over the world.

THE ISSUE BETWEEN RIPPLE XRP AND R3

In September 2017, R3 filed a lawsuit against Ripple for allegedly violating a stipulation in their partnership agreement. This agreement gave R3 purchasing rights of up to 5 billion XRP tokens priced at $0.0085 per unit until the end of 2019. According to the complaints, Brad Garlinghouse, CEO of Ripple Labs attempted to end the contract via an email sent to David Rutter, CEO of R3.

In October 2017, a Delaware judge refused to provide relief to R3, citing lack of jurisdiction. This forced the firm to pursue its litigation in New York and California as opposed to Delaware, forcing Ripple to comply with the terms of the contract.

Ripple Labs later filed a countersuit in California, arguing that R3 previously nullified its right to exercise the XRP options since it failed to fulfill its obligations under their partnership agreement. The firm also filed a bid to fast-track its appeal for an order repealing a lawsuit against R3. This bid was denied in March 2018, by the California state appeals court.

At the time, the value of XRP price rose to a peak of more than $3 per unit, raising the stakes for both firms. XRP is currently trading at a little over $0.45 in light of its recent listing by Coinbase. This represents a nearly 6,000% increase from the price quoted in the initial agreement with R3. The enterprise firm could acquire the entire pile which is currently worth more than $2 billion for just $42.5 million.

Unfortunately, while this litigation between the two former allies has come to an end, Ripple still faces several XRP-related class-action lawsuits from investors. The company, a majority owner of XRP, has been accused of distributing the currency in a way that constitutes an unregistered securities offering.

FINAL THOUGHTS

Ripple is currently the third-largest cryptocurrency by market cap and has seen its fair share of drawbacks in the market. Ripple Labs, its majority share owner, has continued to push the boundaries in promoting their digital asset to create opportunities for integration with the financial sector.

This promotion includes developing lucrative partnerships with established corporations as well as startups to create a useful network that their platform can support. R3 operates the same way by doing what it can to push its technology to enterprises all over the world.

Unfortunately, their partnership has led to a drawn-out litigation that both firms hope to put behind them and move on from.

Original Post: https://www.mintdice.com/blog/ripple-xrp-and-r3-cryptos-reach-multibillion-dollar-settlement

Binance CEO Lauds Fidelity Investments Move into Crypto Market

coincentral.com

Binance CEO “CZ” Changpeng Zhao has lauded Fidelity Investments’ move into the crypto market. A leading multi-national financial services provider, Fidelity recently announced its cryptocurrency custodial services offering, specifically targeting institutional investors.

The financial planning and wealth management firm serves over 27 million customers. It will be the largest Wall Street enterprise to officially offer this service through its crypto-focused subsidiary, Fidelity Digital Assets. The firm will cover several cryptocurrencies including Bitcoin, Ethereum, and an assortment of other digital currencies. Fidelity’s clientele includes over 13,000 firms and brokers, as of October 2018, and assets under the firm’s control are valued at about $7.2 trillion.

In regard to this news, Binance’s CEO, CZ, asked followers on Twitter about the prospect of having just 5 percent of Fidelity’s portfolio invested in the crypto market. He asked, “What happens when a fund like Fidelity allocates a mere 5% of their portfolio to crypto? Have you calculated how much that is?”

CZ Binance

✔@cz_binance

What happens when a fund like Fidelity allocates a mere 5% of their portfolio to crypto? Have you calculated how much that is?

CZ Binance

✔@cz_binance

Nice, institutional money will enter sooner or later, just a matter of time. https://twitter.com/novogratz/status/1052906076142632962 …

Twitter Ads info and privacy

With five percent of the firm’s funds being valued at about $350 billion, it would push the crypto market cap up significantly. His tweet sparked conversations about the probability, with some skeptical fans dismissing this view as simply wishful thinking, while others saw it as something that could occur in the future.

Fidelity Digital Assets

As one of the biggest financial companies in the world, Fidelity’s foray into the nascent sector is expected to have a marked impact on the market, which has been on a bearish stretch since the beginning of the year.

The company’s custodial services will involve cold storage of digital assets. Client’s cryptocurrencies will be held in physical vaults distributed over a wide range of locations, remaining offline as an extra security measure against hacking. For its trading platform, Fidelity Digital Assets plans to use internal cross-engine technology.

By moving into the cryptocurrency market, the company plans on making it easier for institutional investors to get into the high-risk asset class. Going by the service-launch statement issued by Fidelity Investments, the main aim of its digital asset subsidiary is to make digitally-native assets more accessible.

Fidelity Investments History with Cryptocurrencies

According to Fidelity Investments CEO Abigail P. Johnson, the company will continue to invest in new market asset-forms while helping clients understand what they are and how to use them. The financial conglomerate began researching and experimenting with digital assets and blockchain in 2013.

At the time, the company set up a blockchain incubator, and in 2015, it started to accept bitcoin donations through Fidelity Charitable. As of February this year, cryptocurrency contributions accounted for the biggest portion of the firm’s donations at $69 million.

Last year, the company made it possible for clients to view their digital currency balances via Coinbase but didn’t allow trading. This move led to widespread speculation that the financial company was trying to experiment with crypto trading through the exchange. 

According to Fidelity Digital Assets Head Tom Jessop, “The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets.”

Fidelity asserts that distributed ledger technology holds huge potential, especially when it comes to creating a diverse range of business models and financial market systems.

The Custodial Services Problem

According to analysts, the lack of an established custodial service entity is one of the main reasons why institutional investors are fidgety about getting into the industry. Mike Novogratz, a former partner at Goldman Sachs and founder of Galaxy Digital, a cryptocurrency merchant bank, alluded to this situationlast month at Yahoo Finance’s All Markets Summit.

He noted that U.S. companies now have a lot of money kept away for investments in developing sectors, and one of those is the cryptocurrency industry. Mike pointed out the lack of established custodial service companies as a deal-breaker as major companies looking to invest in the sector are less likely to rely on new companies with unverifiable track records.

Most small companies offering such services also lack significant asset-backing to offer assurance to customers.

The Risk of Loss of Funds

Thieves have stolen billions of dollars worth of cryptocurrencies from various crypto companies in the past decade. In 2018 alone, cryptocurrency platforms have incurred losses in excess of $1.8 billion due to hacking. In January, the crypto exchange platform, CoinCheck, lost $534 million in a single heist.

However, the 2014 Mt. Gox hacking was of a biblical magnitude. News of its hacking sent shock-waves across the industry after bitcoins worth over $4 billion at today’s value were siphoned off the exchange. The event became a resounding testament to the risks involved when dealing with cryptocurrencies.

Although the cryptocurrency market has already shown significant promise, fears instigated by such events still spook institutional investors. As such, most are choosing to wait for the entry of more experienced and regulated financial service providers offering crypto custodial services.

Many cryptocurrency investors and industry enthusiasts are hopeful that the entry of Fidelity Investments will contribute positively to the ecosystem. Its entry is expected to lure more players and open up the crypto market by emboldening institutional players looking to move into the space.

This article by ELIZABETH GAIL was originally published at "CoinCentral.com: https://coincentral.com/binance-ceo-lauds-fidelity-investments-move-into-crypto-market/