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Binance has launched a fiat-to-crypto exchange on the island of Jersey, a self-governing dependency of the United Kingdom.

Binance Jersey will target those in the UK and Europe, for the first time offering Binance users a way to purchase bitcoin and ethereum with fiat currency (via pound sterling or euros). The new exchange is entirely separate from the original Binance exchange but it will feel familiar to any current users.

Binance is the world’s largest cryptocurrency exchange by volume but currently only facilitates crypto-to-crypto trades. The new Binance Jersey platform will use the same technology to open up channels for fiat pairs.

As is customary for almost any fiat-to-crypto exchange, registering on Binance Jersey requires a Know Your Customer (KYC) identity check before your account is verified.

Much like Malta, the jurisdiction of Jersey has welcomed cryptocurrency and blockchain projects. The island’s regulator, Jersey Financial Services Commission (JFSC), has previously approved the world’s first bitcoin investment fund as well as offering clarity on initial coin offerings (ICOs) and crypto exchange operations.

Further reading: Best Cryptocurrency Exchanges in 2019 (The Most Comprehensive Guide)

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People love to compare the bitcoin crash to the dot-com bubble.

I get it. It makes a good headline. At the end of 2018, Bloomberg, CNBC, and Fortune were quick to print stories like this:

The Crypto Crash of 2018 Is Now Worse Than the Dotcom Bust

Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash

Bitcoin is unfolding like the dot-com crash, just 15 times faster

If you look at bitcoin’s run-up in 2017, it does look worse than the dot-com bubble.

bitcoin vs dot com bubble chart
Source: WSJ

But these charts ignore one crucial thing:

The dot-com bubble was EIGHT times bigger than crypto

We’ll start with market capitalization.

The market cap of the NASDAQ Composite Index (which tracks tech stocks) during the peak of the dot-com boom was $6.7 trillion.

The crypto market cap at its peak was $828 billion.

In other words, the dot-com bubble was eight times bigger than crypto.

crypto market cap vs nasdaq market cap

The absence of Wall Street

The second big difference between the dot-com bubble and the crypto bubble is a complete absence of institutional traders.

Almost no-one on Wall Street was trading bitcoin in 2017. Most family investment offices and hedge funds didn’t hold crypto either.

Whether it’s a good thing or a bad thing, the “big money” hasn’t come to crypto yet. The two bubbles are completely incomparable when the investor base is so widely different.

Bitcoin was a bubble…

Don’t get me wrong. The bitcoin spike in 2017 was a bubble. A big one.

It had all the hallmarks of a big financial bubble: mania, greed, delusion, and capitulation. And the 80% drop is painful.

But if we’re going to put this in context with historic bubbles, let’s use a relative scale, not percentage drops. 

Bitcoin’s “dot-com moment” may yet be still to come

Bitcoin’s “dot-com moment” won’t happen until we see much bigger volumes of money flowing into it.

This infrastructure is building… Nasdaq and NYSE are launching on-ramps for crypto. A bitcoin ETF may be on the horizon. Institutional-grade custody is coming.

Only when these things are in place will we see the kind of money required for a “dot-com” level run-up.

And if that happens, the fall will be truly enormous when it bursts.

A version of this article appeared in our exclusive newsletter. If you’d like Block Explorer’s cutting-edge analysis in your inbox every Tuesday, sign up now.

bitcoin hack how to avoid

New Zealand based crypto exchange, Cryptopia, was hacked on January 14th.

In a statement released on Twitter, Cryptopia said the exchange “suffered a security breach which resulted in significant losses.”

The platform is currently in “maintenance mode” while the team assesses the full scope of the damages. Although no official figures have been released, Larry Cemark, analyst at The Block, suggests as much as $3.5 million worth of ethereum and CENNZ tokens were stolen.

New Zealand police and the High Tech Crimes Unit are currently investigating the breach.

The news comes after $1 billion in cryptocurrency was stolen in 2018. The full Cryptopia statement is below.

Cryptopia Exchange Hack Statement

cryptopia exchange hack

Bitcoin whales

Bitcoin has been lauded as the “answer to income equality” and “the dawn of the single greatest wealth transfer in history.”

It’s not.

The vast majority of bitcoin in circulation is owned by a tiny elite. Just like the vast majority of global money is owned by the 1%.

It’s time to reassess the idea that bitcoin is a model for redistribution of wealth and equality.

The 1% own 87% of Bitcoin Supply

According to research published in China’s National Business Daily, almost 90% of circulating bitcoin supply is held in just 0.7% of wallets.

The huge concentration of crypto wealth can probably be attributed to cryptocurrency exchanges like Coinbase and Binance. Crypto exchanges hold funds in their wallets on behalf of its users, so that wallet may represent thousands of crypto users.

In terms of monetary value, the 0.7% of wallets control $62 billion in bitcoin (correct on January 7th).

Limited Bitcoin Supply

The research also revealed that 97% of crypto wallets held less than one bitcoin.

The limited bitcoin supply (only 21 million bitcoin will ever be created) means that only a fraction of people on earth can own a full bitcoin. As Jameson Lopp pointed out, there aren’t even enough bitcoins for each Coinbase user.

To become part of the bitcoin 1%, you need only a modest 0.28 BTC, according to one estimate. And that’s before you consider lost and stolen coins.

While bitcoin is a model for economic freedom, it is unlikely to alter existing wealth structures. The 1% will still hold the vast majority of money supply, whether it’s fiat or digital.

Further reading: Who are the Bitcoin Whales? (Criminals, Traders, and Early Adopters)

blockchain association SEC clarity

The Blockchain Association has called on the Securities and Exchange Commission (SEC) to issue more formal guidance on cryptocurrencies. As such, it has outlined a proposed regulatory framework based on previous SEC comments.

Through a post on Medium, The Blockchain Association attempts to codify language issued by the SEC’s Corporation Finance Direction William Hinman. Titled The Hinman Token Standard, Blockchain Association suggests the following guidance:

“A project should meet the standards for decentralization if it more decentralized than the Bitcoin or Ethereum networks on June 14th, 2018.”

The logic behind this statement stems from Hinman’s clarification in June 2018 that bitcoin and ethereum were not considered securities. It follows that if bitcoin and ethereum were sufficiently decentralized on that date, then other projects should aim to meet that standard.

“This uncertainty has a stifling effect on investment”

The SEC has yet to issue any formal guidance on the issue. However, it has shut down various crypto projects and initial coin offerings (ICOs) it deemed illegal.

Further, the SEC chairman Jay Clayton publicly said: “I believe every ICO I’ve seen is a security.”

If cryptocurrencies are considered securities, they will be subject to much more stringent investor regulations. As the Blockchain Association explains, “we must know when tokens qualify as securities and when they do not so innovators know which regulatory regime applies.”

The contradicting statements and lack of clarity is stifling creativity and forcing promising startups out of the US.

“More decentralized than the Bitcoin or Ethereum networks on June 14, 2018”

The Blockchain Association’s proposed guidelines suggest the SEC stick to its conclusion that Bitcoin and Ethereum are sufficiently decentralized. Future policymaking should use this starting point as a foundation, they urge.

The association argues that this is a reasonable starting point with room for a somewhat centralized leadership when required.

Other proposals suggest implementing The Howey Test to cryptocurrency projects. The Howey Test outlines the definition of a security or investment contract and circles around the expectation of profit from a particular promotor or third-party.

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