consensus 2018

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Cryptocurrency Market Dropped $52 Billion in Blockchain Week, Factors and Trends

Blockchain Week New York City aka Consensus 2018 was highly anticipated within the cryptocurrency ecosystem with many analysts expecting the event to trigger a new bullish momentum for Bitcoin and altcoins. The market, however, managed to lose $52 billion during the week of the conference.

Consensus 2018 Turned Out to be a Dud for Bitcoin Bulls

Prior to Consensus 2018, Fundstrat Global Advisors’ technician Robert Sluymer said Bitcoin had bottomed and the upside was days way. At the time, he was of the opinion that the digital currency is in a stage of general recovery and that the Blockchain Week will be the next big catalyst for Bitcoin.

Fundstrat’s analysts had observed rallies following past Consensus events and there was no reason not to expect the same pattern. Fundstrat’s CEO Tom Lee predicted Bitcoin to push back over $15,000 and hit close to its all-time highs again. This, however, clearly didn’t happen. Not yet, at least.

The cryptocurrency market lost $52 billion in market capitalization during the Blockchain Week. Bitcoin is now priced at $8,360, having touched the $8,000 line on May 18. That milestone price is holding the bears for now, as investors try to figure out what went wrong.

For starters, the hot topic at Consensus 2018 was regulation. Lack of fresh perspective among experts didn’t provide much enthusiasm for the community gathering in Manhattan. Additionally, there was a lot of focus on the failings of the industry and not enough attention on problem-solving, especially regarding fundamental problems such as scalability and centralization.

Will the Cryptocurrency Market Recover?

Yes, cryptocurrency investors are required to accept the possibility, no matter how small, that the market will not recover from here. Chances are that it will, though. Blockchain Week NYC was probably an unexpected speed bump. Not only it did not trigger the bullish momentum, but it has also frustrated mounting expectations from enthusiasts.

So, instead of having the market adding gains from Consensus 2018 onwards, it will probably be triggered by some other event. In fact, the digital currency market doesn’t need a specific event to recover its upside. Technically, analyst Aayush Jindal said ‘there is a monster bearish trend line forming with resistance at $8,300 on the 4-hours chart of the BTC/USD pair.’ Bitcoin might only need to break that area to continue the long-term bullish run.

While some Barclays analysts did predict Bitcoin will continue on the ‘downward spiral, former Skype COO said the recent price stagnation of Bitcoin ‘will appear trivial by the end of the year. Fundstrat’s Tom Lee predicts Bitcoin will reach $25,000 in 2018 and $125,000 by 2022, and Tim Draper, an early backer of Tesla, Skype, and SpaceX, is confident that bitcoin will reach $250,000 by 2022.

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‘BitLicense Refugees’: ShapeShift, Kraken Talk Escape from New York

If you wanted to hear red-meat rhetoric about New York State’s regulatory approach, a fireside chat Tuesday between two of the cryptocurrency industry’s most outspoken leaders delivered.

For example, the audience at Consensus 2018 in New York City cheered when ShapeShift CEO Erik Voorhees invoked a local icon to make the case that the state’s BitLicense was a case of regulatory overreach.

Here we are two miles from the Statue of Liberty and you cannot sell CryptoKitties in the state without that license. That’s the absurdity of what’s happened here,” he said.

And Jesse Powell, the CEO of Kraken, got some laughs at the expense of former New York Attorney General Eric Schneiderman.

When Scheniderman’s office sent a request for information to Kraken (along with several other exchanges) earlier this year – three years after his company stopped doing business in New York – it felt like “a slap in the face,” Powell said.

But then “it turns out this asshole actually slapped people in the face,” he quipped, referring to the allegations of physical abuse that forced Schneiderman to resign shortly afterward.

Yet between these zingers and applause lines about the BitLicense – which both executives blame for driving their companies out of state – there were subtler points made. The conversation highlighted the challenges facing both the industry and regulators worldwide as governments come to terms with the ramifications of cryptocurrency.

Powell, for example, pointed out the tension between anti-money-laundering regulations and customer privacy protections. In the case of the BitLicense, he said, Kraken would have had to “disclose all the information about our entire global client base to the state of New York.”

That was not only distasteful, Powell said, but “potentially illegal” under the privacy laws of other countries.

“To service New York today, what we’d have to do is create a special purpose entity just to service New York and completely firewall off” all the exchange’s other users to protect their privacy, he said.

Alternative models

Widening the lens, Powell contended that the U.S. “has really failed” by leaving it up to local regulators to figure out how to deal with cryptocurrencies.

“In others parts of the world, it’s an issue that’s being taken seriously by heads of state – presidents, prime ministers. It’s not something that’s relegated to individual regulators at a state level,” he said. “It should be treated as a national economic and national security issue, maybe even an international issue.”

Powell cited Japan’s Virtual Currency Act as an example of “reasonable” regulation. Although the law is “not perfect,” he said, “we’re already seeing an explosion of business in Japan” as a result of the clarity it brought.

Voorhees, however, held up a different U.S. state as an example of how to do things right: Wyoming, which recently passed a package of five blockchain-related laws.

The two most important ones, in his view, were a law that excludes tokens from being automatically categorized as securities, and another that excludes digital asset companies from being automatically classified as money transmitters.

“That’s the model people should be looking at, they’ve done it the best,” Voorhees said.

And despite using the phrase “statist oppression” early in the conversation to describe his feelings about New York when the BitLicense was created, Voorhees later clarified that he thinks regulators generally have good intentions.

But their aims can be met today by means other than imposing bureaucratic, bank-style regulations on businesses that want to be nothing like traditional financial institutions, he argued.

“The crypto industry and regulators can find common ground in realizing that this incredible new technology can achieve many of the noble goals of the regulators such as protecting consumers,” Voorhees said.

Regulatory hopscotch

Ultimately, though, the two executives depicted cryptocurrency as a highly mobile activity that can easily relocate when any jurisdiction starts to appear heavy-handed.

Powell said Kraken’s main office is located in San Francisco only as a convenience because that’s where he lived when he started the company. Crypto businesses can basically pick up and move anywhere in the world they want to be, he said.

And users need not always move to another place, use a VPN to mask their IP address or even break the law to get around restrictions; Powell shared a tip for New York residents who feel deprived because of the way the BitLicense has limited their cryptocurrency trading options.

“If you’re here stuck in New York and you can’t trade how you want to trade, set up a Wyoming LLC and you can trade through that and have your business trade for you,” he said.

Further limiting regulators’ power, Powell said, the rise of decentralized exchanges will give users even more alternatives.

“If they can’t do what they want on Kraken they’re doing to do it on a decentralized exchange,” he said.

And Voorhees said “regulatory hopscotch” by exchanges and other businesses that move from one country to another is only a symptom of a broader phenomenon that won’t easily be resolved.

He concluded:

“Bitcoin basically broke down the borders of how value moves across humanity. There is no way that an invention like that doesn’t run straight into the jaws of regulations. And that conflict is going to be one of the great themes of my lifetime.”

Photo via Wolfie Zhao for CoinDesk. Left to right: CoinDesk research director Nolan Bauerle, Jesse Powell and Erik Voorhees. 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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AWS Partners with ConsenSys to Simplify Enterprise Blockchains

Cloud computing giant Amazon Web Services (AWS) is partnering with the ethereum design studio Consensys to make enterprise blockchains easier and faster to deploy.

Announced Tuesday at Consensus 2018, the two firms’ business blockchain cloud service, Kaleido, aims to smooth the onboarding process for enterprise consortium members – a major challenge in the space – while simplifying the operation of private blockchain networks.

“We have been following ethereum closely as it’s what many of our customers have been exploring, especially for enterprise use cases,” Matt Yanchyshyn, the global technical lead for AWS’ partner program, told CoinDesk.

However, he stressed that AWS is “protocol-agnostic,” noting that the company also supports Hyperledger’s Sawtooth and R3’s Corda platforms.

Indeed, AWS is no stranger to the space, having announced back in 2016 that it would start working with blockchain startups, offering dedicated technical support and infrastructure for the firms involved.

More recently, in April of this year AWS unveiled a new service for launching out-of-the-box blockchain networks for the ethereum and Hyperledger Fabric protocols.

Now, however, the unit of Amazon has aligned itself with one of the most influential organizations in the ethereum community. “Working with ConsenSys will allow us to further understand customer needs and help accelerate their blockchain efforts,” Yanchyshyn said.

Those who were around at Ethereum DevCon 1 back in 2015 might be reminded of ConsenSys’ first stab at offering ethereum in the cloud, via Microsoft’s Azure platform. But Kaleido aims to take the concept further.

Michael Dickson, the enterprise blockchain business development lead at ConsenSys, said Microsoft’s early blockchain-as-a-service was essentially a set of scripts to enable users to quickly stand up a sandbox environment for blockchains.

“This is great when you are starting out and you are experimenting, but it will only get you so far,” he said. “What we are seeing now is enterprises really have an appetite to try to get their projects all the way to production,” which Kaleido can handle.

Enterprise challenges

Stepping back, enterprises looking to participate in some kind of shared blockchain architecture face an array of physical networking and performance challenges around connecting their respective data centers.

In terms of managing participation in a blockchain consortium, one of the most commonly asked questions is how to onboard members. The process can take weeks, but a public cloud can reduce that time dramatically, according to Dickson.

Then there’s the complexity that goes with advanced cryptography and consensus algorithms, not to mention governance, another big area of concern going forward.

Kaleido’s “shared IT” approach can deal with changes such as defining a new version of a smart contract, for example, said Dickson.

“It’s about having the right tools and processes in place so that a consortium can set up policies that say ‘there need to be so many votes or signatures collected before this contract gets deployed,'” he said.

The AWS-Consensys venture also brings a step closer the goal, increasingly shared by enterprise blockchain professionals, of connecting their private blockchains to the ethereum mainnet.

The platform offers a “state relay” between a private chain that a group of enterprises can set up and operate and a public blockchain.

“This allows you to configure a time interval and based upon the time interval, it aggregates together hashes and writes those up to the mainnet, so on the public blockchain,” said Dickson.

In this way, the public blockchain serves as a ledger of last resort, as it were.

“So you get this permanent data point out on the mainnet that is irrefutable and acts as an objective arbitrator should a disagreement appear on the private chain,” Dickson said.

Quorum in the cloud

Kaleido allows users to switch between several consensus algorithms and choose between two packages: Geth, which is the most popular client for the ethereum blockchain app platform; and Quorum, the enterprise version of ethereum developed by JPMorgan Chase.

Offering JPMorgan’s Quorum as an alternative package within Kaleido is timely, given that the Wall Street giant is widely known to be considering a spin-out of the project.

According to sources familiar with JPMorgan’s thinking, IT management across a wide range of Quorum users was becoming burdensome to the bank. Kaleido seems to be designed to shoulder that task.

“In the enterprise ethereum space, Quorum is a very popular choice. It gives our users the ability to send private transactions between a certain subset of members on a private chain,” Dickson said.  “It was a no-brainer for us to include as an option on the platform.”

Amazon Web Services image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Consensus 2018 Will be the Next Big Catalyst for Bitcoin, Analyst Says

Blockchain Week New York City, the annual conference also known as Consensus 2018, kicked off yesterday.

Based on the market reaction in the previous three events, analysts expect the prices of Bitcoin and altcoins to move upward. Fundstrat’s technician Robert Sluymer says Bitcoin has bottomed with an upside seen from here.

Blockchain Week New York to Trigger Next Bullish Momentum, Says Fundstrat Analyst

The most important annual conference for the cryptocurrency ecosystem is taking place in New York while Bitcoin sits just above the 50-day moving average. While the blockchain industry gets together to move the technology forward, digital currency investors wait on the sidelines and hope for the best.

According to Robert Sluymer, managing director and head of technical research at Fundstrat Global Advisors, a lot of people are looking for clarity on projects as uncertainty around regulation still looms. He added that it should all become clearer as ‘we move around Consensus.’

With regard to the technical analysis, Sluymer told CNBC that he expects Bitcoin to shake a few traders, but to hold around the 50-day average, which is fairly close to where we are now.

“Bull-bear scenario developing where folks are arguing it’s getting lower. Our view is this is a much bigger bottom that has developed. If that’s the case, this pullback will be relatively shallow. It’s already pulling back from the 200-day. It’s sitting just above the 50-day moving average. So, between the $8,800 and $8,200 – and I know it’s a big range – but that’s where we will see support and we think Bitcoin continues higher from here.”

Regulatory risk is the fundamental issue driving the downward pressure on cryptocurrencies, but Sluymer is confident that the market has bottomed. He is of the opinion that it is in a stage of general recovery and that the Blockchain Week will be the next big catalyst for Bitcoin.

Fundstrat’s Global Advisory forecast is based on three data points, the past events in 2015, 2016, and 2017. All of the previous conferences were followed by a bullish response from the cryptocurrency market.

The week-long event includes high-profile names such as St. Louis Federal Reserve Bank President James Bullard, European Parliament member Eva Kaili, and Twitter CEO Jack Dorsey, among other movers and shakers in the cryptocurrency world.

The organization expects to host approximately 8,000 people, half of whom are coming from abroad. Last year’s event had a turnout of 2,700 attendees, which shows how much the blockchain community has grown in size and importance in a single year.

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