This week in crypto: China is Bakkt
If you subscribe to Coin Confidential, you’ve probably noticed I’ve been a little quiet over the last few months.
But now, in the immortal words of Arnold Schwarzenegger, I’m back!
Or should that be, Bakkt?
Because since I’ve been away a lot has happened in the world of crypto. Far too much to, much to go Bakkt over entirely in this week’s update.
Enough Bakkt puns already? Okay, I’ll stop.
From now on, if you subscribe to CoinConfidential.com, you can expect a weekly summary of the most interesting stories in crypto and 1-3 in-depth crypto articles every month.
These in-depth articles will come in two varieties:
Features exploring major themes and developments in crypto. Or unbiased reviews of crypto projects, exchanges and DApps.
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Okay, with that out of the way, let’s get Bakkt to it. Sorry.
China goes all in on crypto
I mean, technically, this didn’t happen this week. But it was close enough, so I’m putting it in here.
It was also some of the biggest news to hit crypto in a very long time.
If you’ve been in this scene a while, you’ll remember the first time bitcoin hit $5k.
That was back on the 2nd of September 2017.
I remember the date because I was on holiday at the time, and I got a few out of the blue messages from friends and family asking how they could invest in Bitcoin. Never a great sign.
The next day, Bitcoin took a steep dive, and it didn’t recover for over a month.
China banned crypto.
As Bloomberg reported on the 11th of September 2017:
“China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market after the country outlawed initial coin offerings last week.”
That news hit crypto hard, with many communities mourning the death of crypto investing.
Of course, we all know what happened over the next few months. Bitcoin touched $20k and the crypto market swelled to over $800 billion.
And again, of course, we all know what happened after that. The crypto winter, AKA coin capitulation.
That’s all old news now. But it does put this week’s China news into context.
You see, back in September 2017, Chinese demand was fuelling most of crypto’s price rises. It was the number one, the MVP.
Then, after crypto hit new heights without China even playing a part, the crypto wold became indifferent towards Chinese demand.
(At least when it came to trading, Bitcoin mining is another case entirely – which we won’t dive into today.)
But, back in 2017, as I said, it was all about China.
Now that fearless leader, Xi Jinping has come out and said the following:
“Major countries are stepping up their efforts to plan the development of blockchain technology. Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative and industrial aspects of this emerging field.”
Source: South China Morning post
Many are expecting Chinese crypto demand to overflow once again.
Bitcoin sees biggest daily gain since 2011
And right on cue, Bitcoin’s price explodes.
Xi Jinping made those remarks on the 25th of October. Then this happened:
If the chart isn’t clear, that’s around a $2,500 price jump.
Coin Telegraph reports the spike going even higher, to $10,500. That’s a 43% increase in less than 24 hours. Bitcoin’s biggest since 2011.
As I type, Bitcoin is sitting around $9,345, so the Xi Jinping pump seems to be hodling.
More puns. I know. Sorry.
The question now is, what happens next?
Most likely this is just another ploy in the US-China tennis match. So all eyes are now on America, and its response.
If the US decides it doesn’t want to lose out to China in terms of blockchain tech, then it could be great news for crypto prices.
Of course, the flipside is that the US may now see China AND blockchain as the enemy and really start cracking down on crypto in an attempt to show China who’s boss.
Here’s hoping it’s the former. Not only for crypto prices, but because this technology has to power to change the world, and our lives, for the better.
Although, it also has the power to make people’s lives a misery, with total state control of everyone’s assets and identity.
(I’ll go into that in much more detail in an upcoming feature on the impact nation state cryptocurrencies could have.)
Guangzhou announces 1 billion Renminbi ($150 million) fund for blockchain projects
It seems it wasn’t all just talk. Following on from Xi Jinping’s speech, one of China’s main manufacturing cities, Guangzhou, has announced a $150 million blockchain fund.
“Chinese officials from Guangzhou have introduced subsidies totalling 1 billion RMB ($150 million) for “outstanding blockchain projects,” according to a local news outlet. The funding threshold is up to $1.5 million for public blockchains and $500,000 for private chains.”
As you may have expected, as a result of all this Chinese pro-blockchain news, cryptos with Chinese connotations have been doing pretty well this week.
Here’s a quick screenshot I took of some of the biggest Chinese crypto projects just after the Xi Jinping news broke:
Bakkt to launch a “consumer product” in 2020
While coin confidential was away Bakkt came Bakkt into the spotlight, when it finally launched its futures platform in September.
It was only around a year late. But hey, who’s counting?
If you’re not familiar with the Bakkt saga, here’s a brief recap:
- Bakkt is Intercontinental Exchange’s (ICE) foray into crypto.
- ICE is the entity that owns many major stock exchanges and marketplaces around the world, including the New York Stock Exchange. It’s kind of a big deal.
- Back in 2018, ICE announced it was launching Bakkt – a platform for institutions to trade crypto, with futures, custody, options, the whole shebang – in December 2018.
- It set a firm date of the 9th of December 2018 for the launch of its futures platform.
- The 9th of December came and went and Bakkt did not appear.
- At the time many of the crypto community were hoping Bakkt would “save crypto”. So this missed deadline generated a lot of discussion.
- Then the saga began, more promises, more missed deadlines.
- Eventually, Bakkt’s endless delays turned it into a meme and a many wanted nothing more to do with it.
- Of course, Bakkt’s futures platform did eventually launch in September 2019, almost a full year late.
And what happened when it launched, did it “save crypto”?
Nope. Crypto didn’t really respond too much. It was a bit of a non-event.
But in the weeks since its launch, Bakkt has been quietly generating momentum. On the 25th of October 2019, it set a trading record “of 1,179 contracts” according to Bakkt’s official blog.
It also announced it will launch Bitcoin options this December… bringing Bakkt memories of last December’s failed futures launch.
And, in that same blog post, it also broke the news that it will be launching a “consumer app to make it easy for consumers to discover and unlock the value of digital assets”.
This consumer app is set to launch sometime in the first half of 2020. At least they’re keeping the timings vague this time around.
Tezos set to tokenise £500 million of UK property
2020 is shaping up to be a big year for blockchain.
Following on from that Bakkt news, the Tezos Foundation announced on the 30th of October that it is teaming up with tZERO to tokenise £500 million ($646 million for my American friends) of UK property.
According to the Tezos Foundation, this will be the first property-backed security token offering (STO) in the UK.
Tezos is an interesting project. Not least because of the ICO drama and ongoing court case, which I could – and probably will – fill a whole feature with. But also because of the way it’s going about its business.
It seems to be mainly working with high-profile real-world financial projects and showing how blockchain technology can improve them.
From what I can see, it wants to be “the Ethereum” of STOs.
First there was the announcement in February it was working with Elevated Returns to tokenise $1 billion of real estate (source).
And then in July, the Tezos Foundation revealed it was working with BTG Pactual, Latin America’s biggest investment bank, to tokenise another $1 billion of assets.
Now with this latest announcement, it’s clear that Tezos is becoming a major player when it comes to STOs.
Should Ethereum be worried?
Honestly, probably not.
There is certainly enough room in the world for more than one major STO platform.
It’s not like we only have one brand of car in the world, or only one bank, or only one software company.
But when it comes to crypto, for some reason, people see it as winner takes all. In reality, massive developments like this help crypto as a whole.
They help people to see that crypto is more than just a “get rich quick scam” or “magic internet money”.
Crypto is here to stay. And there is no doubt that it’s going to change the world – and our everyday lives.
Okay, that’s it for this week.
Don’t forget to subscribe, and you can look forward to another one of these next weekend.
I’m also working on a complete guide to DeFi lending and Decentralised Finance. But I don’t expect to get that finished for another couple of weeks.
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