Novogratz Addresses Tether’s Shortcomings, Roubini’s Remarks

Mike Novogratz, the founder of Galaxy Digital Holdings and an avid supporter of cryptocurrencies, has said that Tether has nobody but itself to blame for the recent issues they have been facing.


Novogratz Addresses Recent Tether FUD

Bitcoin bull Mike Novogratz believes that Tether (USDT) needs to be more transparent. He was speaking recently at a conference in Frankfurt, and his observations were published in an article on Bloomberg.

The billionaire investor, founder of Galaxy Digital Holdings, and former partner at Goldman Sachs said, “I think Tether didn’t do a great job in terms of creating transparency.” He added that the digital asset will need time to regain the lost trust.

Tether

Tether, a U.S. dollar-backed stablecoin, experienced panic selling earlier Monday based on rumors that many leading exchanges were going to delist the coin. Traders and investors dumped their USDT holdings in favor of Bitcoin and other stable currencies like the Circle-backed USD Coin (USDC) and Gemini USD (GUSD). This led to a 7% drop – from USDT’s Sunday high of $0.995 to a low of $0.925 on Monday.

“The concept of stablecoins make sense,” Novogratz said, adding that stablecoins have more of a transactional character than other cryptocurrencies like Bitcoin. He further mentioned that he would prefer a stable coin like GUSD as it is backed by a U.S.-based bank like State Street to maintain its backup reserves.

Tether earlier had a banking relationship with Noble, a Puerto Rico-based bank, which recently ran out of cash and is likely to be put up for sale. As reported by Live Bitcoin News, Tether is known to have withdrawn its cash reserves from Noble and switched over to Bahamas-based Deltec Bank.

Seeking to clarify some of the statements made in the Bloomberg article, Novogratz later tweeted:

Also Talks About Roubini’s Senate Remarks

Responding to the recent attack on cryptos by economist Nouriel Roubini during a Senate hearing, Novogratz said that the rise in custodian firms will help give the asset class a boost. He added that these firms have the potential to replace credit card companies. Roubini had called digital money, “the mother of all scams and (now busted) bubbles.”

“You can agree with Roubini on several points, but he is judging cryptocurrencies as if it was a PhD student. Cryptocurrencies are third- or fourth-graders, so still in need to mature,” Novogratz said.

Nouriel Roubini

Observing that the bubble last year was the result of speculation by retail investors, he argued that the investments into cryptocurrency infrastructure and custodian services will help the industry mature.

Novogratz, along with Goldman Sachs, earlier this week announced the investment of over $15 million in BitGo’s custody services arm. He also referred to Fidelity setting up a subsidiary for custody of digital assets.

He believes that custodians may also take over a significant part of the business currently done by credit card companies like Mastercard or Visa. “The transaction costs are much cheaper,” he said, adding “The least the proliferation of custodians will do is drive fees much lower.”

With growing competition from USDC and GUSD, which are more open in their operations, Tether needs to bring transparency in its working if it must maintain its current lead in the stablecoin space.

Do you agree with Novogratz that lack of transparency is hurting Tether? Let us know in the comments below.


Images courtesy of Twitter/@novogratz and Shutterstock.

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The Daily: A Dirty War on Bitcoin

The Daily

Today’s installment of The Daily is all about dirty tricks. The sort of tricks designed to convince the world that Bitcoin is bad. Spending bitcoin, mining it, or allowing the Chinese to mine it ahead of the U.S. — all bad, according to American Express, the White House (allegedly) and a handful of other haters. Needless to say, we’ll set the record straight on all counts.

Also read: How Bitcoin Mining Can Help Nuclear Reactors

American Express Fuels Anti-Bitcoin FUD

American Express’ decision to promote a tweet emphasizing the energy consumption of Proof-of-Work cryptocurrencies has been met with astonishment, with r/Bitcoin describing the act as “anti-crypto propaganda.” As one Redditor quipped: “Ah we’ve moved into the ‘then they fight you’ with shitty marketing phase.” Mining is the most widely misunderstood component of Bitcoin, and one which the media and corporations consistently get wrong, be it through ignorance or ulterior motives.

The Daily: The Dirty War on Bitcoin

As news.Bitcoin.com recently noted, “You’ll often hear from mainstream media and uninformed economists that bitcoin burns more energy than a whole country. And while that accusation is far from the truth, as we’ve explained before, you’ll be surprised to hear something you are not being told — it’s way better to burn excess energy than waste it.” Readers can reach their own conclusions as to why American Express might be interested in playing up Bitcoin’s energy consumption, but it’s safe to say that environmental concerns have nothing to do with it.

No, the White House Doesn’t Care
About Bitcoin Mining

The Daily: The Dirty War on BitcoinHow much thought does the White House give to bitcoin mining? “Not a lot,” would be most people’s response, but then most people don’t work for Ripple. A clickbait piece in Forbes yesterday (Oct. 16) titled “China’s Bitcoin Dominance Is Worrying Trump’s White House — And Pushing It Toward Ripple” provoked derision in most quarters of the cryptocurrency space. Few, outside of XRP acolytes, took the article seriously, but there was one notable exception — Nouriel Roubini.

The fervent bitcoin-hater shared the Forbes article, asserting that the White House was “waking up” to the risks of Chinese mining pools, and credited his U.S. Senate testimony with highlighting the “national security risks” of enabling China to control 80 percent of bitcoin mining. As previously noted by news.Bitcoin.com, the location of cryptocurrency mining has no bearing on the network’s security, and Bitmain’s dominance is unlikely to feature in President Trump’s daily briefings. Nor, for that matter, is the mining-free alternative offered by Ripple’s native cryptocurrency, no matter how desperately its marketing team tries to insinuate such. Preston Byrne, predictably, was having none of it:

The Daily: The Dirty War on Bitcoin

The Case for Post-Bitcoin Maximalism

You’ve heard of Bitcoin maximalism. Now say hello to post-Bitcoin maximalism, the next level of wokeness. While thought pieces generally aren’t the preserve of The Daily, which is more news-oriented, Ferdous Bhai’s treatise on post-bitcoin maximalism warrants a mention. The widely shared post, published on Oct. 15, takes aim at those who wish to define what Bitcoin is and how it should be used. By way of example, the post includes Giacomo Zucco’s much-maligned slide that professes to share four universal truths about Bitcoin.

The Daily: The Dirty War on Bitcoin

Dismissing these notions, and others expressed by maximalists, Bhai writes: “One of the major reasons I believe we haven’t seen a war on Bitcoin is the existence of altcoins. Altcoins are insurance against state-level attacks on Bitcoin … From a game theory perspective, state-wide attacks on Bitcoin is a dumb idea, as long as the threat of one or more altcoins to replace Bitcoin’s role exists … Bitcoin is not the end-goal; it’s a means to our goal of censorship-resistant, permissionless, denationalized money that we can opt in and out voluntarily, not by coercion, social engineering or threats of violence.”

As Bitcoin grows stronger, attacks against it from governments, from legacy payment providers, and from concern trolls will only increase. It’s a dirty war.

What are your thoughts on today’s news tidbits as featured in The Daily? Let us know in the comments section below.


Images courtesy of Shutterstock, Twitter, and Medium.


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Senator Elizabeth Warren Throws Shade at Cryptocurrency

Senator Elizabeth Warren of Massachusetts, a potential 2020 presidential contender, recently threw shade at cryptocurrency in a Senate hearing, but she wasn’t alone.


One of the ironies of modern life is that people elect politicians who are good at speaking glibly and looking presentable on TV. However, said politicians are often bewildered and flummoxed by new technology, and yet we live in an era of technological innovations being introduced every few years. At a recent U.S. Senate hearing, a number of politicians, notably Elizabeth Warren, threw some shade at cryptocurrency.

Senate + Cryptocurrency = FUD

A number of senators attending a recent Senate Banking Committee hearing had something to say about Bitcoin and cryptocurrency, and it wasn’t favorable. First in the firing line was Elizabeth Warren (D-MA), who said ICOs were being used to scam small investors and that cryptocurrency was easy to steal.

Bitcoin

This is somewhat rich in that she’s calling cryptocurrency a scam. Critics have long maintained that Elizabeth Warren is lying about her purported Native American heritage. They believe she used her supposed heritage as a scam to gain an advantage in the job market, although no documentation exists to bolster her claim. Warren has refused to take any DNA test to prove her assertation.

Warren was joined in her FUD by several other senators. Senator Sherrod Brown (D-OH) did say that he wished blockchain and cryptocurrency would allow unbanked individuals to enjoy financial services, but he said that real-world applications have been few and that there are a lot of scams. He envisioned families losing their life savings by being scammed by a fraudulent ICO.

Senator Mike Crapo (R-ID) expressed concern over the volatility of the cryptocurrency ecosystem and pump-and-dump schemes. Senator Doug Jones (D-AL) trotted out the old favorite of cryptocurrency being used by criminals. Jones said that criminals are always two to three steps ahead of law enforcement when it comes to cryptocurrency.

In Defense of Crypto

CoinCenter Research Chief Peter Van Valkenburgh attended the committee hearing and defended cryptocurrency. He stressed that the government should use a light touch in regulating the virtual currency industry just like it did with the internet.

Washington, DC

Peter Van Valkenburgh also pointed out that it would be best if the federal government took the lead in regulating cryptocurrency as opposed to letting each state decide a course of action, saying:

Federal pre-emption of state cryptocurrency regulation would be a wide choice that would make America a world leader and protect consumers.

Finally, he also stressed that law enforcement is not clueless when it comes to Bitcoin and criminal enterprise. He pointed out the fact that there is a trail that can be easily followed, which usually results in law enforcement being able to track down wrongdoers.

It seems that many Senators are still not willing to fully jump onto the cryptocurrency train. This is somewhat disheartening after the recent roundtable held in Washington by Representative Warren Davidson (R-OH). Of course, it’s not like centralized financial institutions have donated heavily to politicians over the years to ensure the status quo. It looks like the Blockchain Association has a lot of work in front of them in trying to lobby Washington for better, non-intrusive regulations.

Are you surprised by the FUD offered by the senators? Let us know in the comments below.


Images courtesy of Shutterstock.

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