In this week’s edition, we address the latest batch of reasons why bitcoin can’t seem to climb into the green, review Coinbase’s blog about supporting more coins, mention a few of the winners in an otherwise down market, and cover a few more esoteric stories to come out of last week.

BTC Remains in Doldrums, But Still Faring Well in Long-Term

The price of BTC sank 5.5% over the course of the week, forming monthly lows at around $6,100 before climbing back up ever so slightly into the $6,300+ area. Though bitcoin is down 44% in the last 6 months, it is still up 122% over the last year, as it was at a price of exactly $2,000 per coin this time last year. To put things into perspective of how well bitcoin is still faring against traditional investments, consider that the S&P500, a basket of 500 stocks chosen as representatives of the entire stock market, is only up 13.26% over the same time period.

btc vs SP500

Bitcoin (thick blue line) 365-day % returns compared to S&P500 (thin blue line).

Though some fear that the great “Crypto Bubble” of 2017-18 still has some deflation to undergo before the worst has passed, it is worth taking time to note that many tech stocks decimated during the Dotcom Bubble of 1997-2000 went on to achieve resounding success. Companies like Cisco, Qualcomm, eBay, and Amazon suffered losses as great as 86%, yet enjoyed several hundred-fold gains since and currently sit near or at all-time highs. Ergo, it stands to reason that bitcoin and other cryptocurrencies that are capable of providing something useful in the advancement of society could go on to also achieve magnificent gains after panic in the markets has all but completely subsided.

US DOJ: Russian DNC Hackers Have BTC Connection

Not helping bitcoin’s credibility issue was the revelation late last week that Russian hackers blamed for publishing and disseminating emails hacked from the Democratic National Committee (DNC) paid for servers used to host the information with bitcoin. In a 29-paged indictment filed on Friday, the U.S. Department of Justice charged 12 Russian nationals with conducting “large-scale cyber operations to interfere with the 2016 U.S. presidential election.” The indictment claims that the conspirators not only hacked DNC email servers to obtain potentially damaging information about candidate Hillary Clinton but also used false identities to hide their connections to the Russian government, paying for a network of computers across the world using bitcoin. To further obfuscate their identities and source of funds, the bitcoin was either mined directly, bought from decentralized exchanges, or bought using prepaid gift cards. It was then laundered through other exchanges in the form of altcoins. From the indictment:

“Although the Conspirators caused transactions to be conducted in a variety of currencies, including U.S. dollars, they principally used bitcoin when purchasing servers, registering domains, and otherwise making payments in furtherance of hacking activity. Many of these payments were processed by companies located in the United States that provided payment processing services to hosting companies, domain registrars, and other vendors both international and domestic. The use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.” – Case 1:18-cr-00215-ABJ

In this case, the anonymity offered by bitcoin was only a perceived anonymity as blockchain forensics experts were able to trace the source of transactions to the identities of some of the defendants, some of which were officers in the Russian military. Not many specifics are given as to how the Department of Justice managed to hunt the hackers down using the blockchain but it is theorized that blockchain analytics company Chainalysis was hired to help with the case. The case brought against the Russian hackers by Special Counsel Robert Mueller – who served as Director of the FBI from 2001 – 2013 – seeks to confirm allegations of election interference put forward by members of the Clinton campaign, who shortly after her surprise loss to Donald Trump in the 2016 election, began blaming the Russian government of covertly trying to sabotage her run for the presidency.

Bancor DEX Hacked, Customer Funds Safe

Another mega-hacking revelation to come out last week’s news (though largely less political) was from the Tel Aviv-based project Bancor (BNT), which made headlines last year when it raised over $150 million in ETH in less than six hours. Bancor is a decentralized exchange dedicated to the cheap, easy conversion of one Ethereum token to another, and currently supports 98 different tokens, including its own, BNT. On Tuesday, Bancor announced that one of its main wallets had been hacked of $23.5 million worth of ETH, BNT and Pundi X (NPSX). Luckily for customers, the wallet hacked was owned by Bancor itself and used to provide liquidity to its exchange.

The price of BNT dropped 36% on the news, from $3.23 to $2.05, over the course of 2 days. Much like volume on the Bancor exchange, the price of BNT has yet to rebound. Bancor has been roundly criticized for a number of reasons, but harsh critiques are likely to come with the territory in an extreme nature of fundraising success. All in all, $12 million of the total had been taken in the form of ETH with the remained in the form of the other two tokens. Details of the hack remain shrouded in mystery, but by July 12, all services and token trading functions had resumed.

Coinbase “Exploring” the Addition of 5 Coins to its Services

Coinbase, one of the world’s biggest, oldest and most trusted bitcoin exchanges announced plans last week to consider adding 5 new coins to its immensely successful trading platform. Already servicing 4 coins (BTC, LTC, BCH, ETH) with fiat currency trading pairs in 32 countries, the 5 coins slated for addition are:

Cardano (ADA) – High-minded Proof of Stake coin designed by a team of academics, smart contract-heavy, high on the market cap ranking without much real-world utility; still, speculated by many to be a rival to Ethereum in upcoming years.

Basic Attention Token (BAT) – Ethereum token used by advertisers in the cryptocurrency-centric Brave browser to pay for ads.

Stellar Lumens (XLM) – Spearheaded by ex-Ripple executive Jed McCaleb, the Stellar payment protocol has been popular within fintech circles and uses a novel cryptocurrency protocol called SCP.

Zcash (ZEC) – Zcash, enjoying newfound popularity after the successful implementation of a recent hardfork, is a privacy-oriented coin that employs a “zero-knowledge proof”-based consensus mechanism to give its users an option of anonymity if they so choose to enable it when initiating a transaction.

0x (ZRX) – Also known as District 0x, this ERC20 token is an open protocol that is used for smart contracts and operations in a decentralized eBay-type service where merchants, goods and users are broken down into categorizational “districts.”

The last time Coinbase added a coin, BCH, it helped it skyrocket to new highs as investors anticipated a flood of new users enabled by its addition to the exchange. Indeed, all 5 coins/tokens experienced a sharp uptick in price moments after the announcement and have been doing well compared to most others since. In response to the news, competing US-based bitcoin exchange Kraken jokingly announced that it would be considering adding “over 1600 new coins” to its own platform, “pending the outcome of (their) highly sophisticated review process.”

Coins Bucking the Trend

In an occasional segment we like to run in the Weekly Roundup, especially when the market has been down (as is often the case in 2018), we present to you a few coins that have managed to post some gravity-defying gains in a time period when all other coins seems to be flailing. This week we have 3 certifiable winners to report on, all posting significant gains against bitcoin and the dollar as well in the last few days.

  1. TenX (PAY) (38%) – Founded by extreme sports athlete-turned-medical doctor Julian Hosp, TenX is a bitcoin debit card that has the rather incredible feature of offering a 0% charge for purchases and only a 1% charge for cryptocurrency-to-fiat conversions. Hosp made news earlier in the week by re-affirming a prediction made in January that bitcoin could still see $60,000 before the end of the year. Regardless of whether or not he is right, his prediction certainly has brought attention to his token, which has increased from $0.63 to $0.97 in the 6 days since his appearance on CNBC.
  2. MOAC (MOAC) (27%) – MOAC, an acronym for “Mother of All Chains” is a next-gen, multi-layered blockchain cryptocurrency that heavily emphasizes the use of smart contracts in its design. It is currently enjoying a bump in attention and price courtesy of the outcome of a well-planned World Cup betting competition hosted by its foundation. Over the last week, the coin has shot up 50% in value, from $2.92 to $4.92, incurring most of these gains in the last 24 hours. Currently with a market cap of over $150, it remains to be seen whether or not the coin will continue to fare well. What is certain is that MOAC’s PR team is a well-organized bunch.
  3. 0x (ZRX) (17%) – As previously mentioned, District 0x recently benefitted from Coinbase’s published suggestion that it may be soon added for trading to the mega exchange. But what else does it have to offer that made it incur gains larger than the 4 others named by Coinbase? In addition to providing a decentralized method of merchant listings (who offer products in and wish to accept cryptocurrency), it expands on Ethereum’s API base, making it easier for developers to create DApps suited to the particular needs of their business. Along with BAT, 0x has proven to be one of the more popular Ethereum tokens ever developed and has enjoyed immense popularity since its release last year.

Also in the News

  • Is the fund record-breaking and oft-criticized EOS (EOS) the real deal? After a troubling beginning (if you can define “trouble” by raising way too much money during your ICO), the EOS mainframe has finally launched and the 5th ranked coin by market cap is now being viewed as potentially a lethal weapon against competitors, perhaps even putting its mother coin, Ethereum, in actual “trouble”. For the moment, EOS doesn’t pose much of a threat to Ethereum as it would still need to gain an additional $40 billion in market cap to remove Ethereum out of its long-held #2 position in the rankings.
  • More bad news for Roger Ver as Bitcoin Cash (BCH) undergoes additional scrutiny by self-proclaimed white hat hackers BitPico. BitPico, which ran its own test of bitcoin’s Lightning Network to test whether or not its claims were up to snuff, recently set their sites on BCH, now claiming that almost 50% of servers hosting Bitcoin Cash nodes could be traced back to a single “rack” owned by Chinese search giant Alibaba.
  • A new high-end smartphone with built-in cryptocurrency multiwallet is finishing testing and about ready for primetime, says blockchain tech developers Sirin Labs. The novel-looking phone will have a price tag of about $1,000, support a wide variety of cryptocurrencies, and carry the namesake of deceased bitcoin developer Hal Finney, in tribute to his honor.
  • Ethereum founder and crypto celebrity Vitalik Buterin revealed his true thoughts about centralized exchanges (re: every exchange that is not decentralized), exclaiming in a live broadcast interview with TechCrunch that he hopes they “go burn in hell as much as possible.” The reason for this being the fact that he sees the listing barrier of $10 to $15 million for some exchanges inexplicably high for certain coins and tokens, which should be listed on their own merits and potential value to society.