TOPLINE Shares of Coinbase, the nation’s largest crypto exchange, skyrocketed nearly 60% within minutes of their public-market debut on Wednesday, propelling the nine-year-old company’s market capitalization to more than 12 times its last private valuation of $8 billion in 2018 and marking another instance of booming demand lifting the still-nascent cryptocurrency space to meteoric highs.



<h4 class="wp-block-heading" id="h-key-facts">KEY FACTS</h4>



Listed on the Nasdaq exchange under the ticker COIN, shares started trading at about 1:30 p.m. EDT Wednesday and immediately surged to a price of more than $398, eclipsing the $250 reference price set on Tuesday.



The soaring stock price boosted the firm’s market capitalization to roughly $105 billion, making Coinbase one of the 100 most valuable publicly traded companies in the United States and more valuable than both New York Stock Exchange parent Intercontinental Exchange and Nasdaq Inc.—combined.



Eschewing the traditional initial public offering that enlists investment banks as intermediaries and underwriters to sell shares ahead of trading, San Francisco-based Coinbase opted instead for a&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2021/01/29/coinbase-investors-say-it-could-hit-100-billion-valuation-when-it-goes-public/">direct listing</a>, selling 114.9 million shares on Wednesday directly to the public.



“I wanted there to be just a true market on day one that set the price, not something that was set behind closed doors,” Coinbase&#8217;s billionaire CEO, Brian Armstrong, said on CNBC Wednesday, calling the direct listing “more true to the ethos of crypto.”



Ahead of its listing, Coinbase&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/04/06/coinbase-posts-record-18-billion-revenue-as-crypto-market-shoots-past-2-trillion-direct-listing/">reported</a>&nbsp;first-quarter revenue that climbed nearly 900% from $190.6 million in the same period last year, blowing past the $585 million it nabbed in the fourth quarter.



Update 5 p.m. EDT: Coinbase shares closed Wednesday at a price of roughly $328, up 31% from the reference price and giving Coinbase a market capitalization of about $86 billion.



<h4 class="wp-block-heading" id="h-crucial-quote">CRUCIAL QUOTE&nbsp;</h4>



“The Coinbase [listing] is a watershed moment and historical event for the crypto industry and something Wall Street will be laser-focused on to gauge investor appetite going forward,” Wedbush Analyst Dan Ives said in a Wednesday morning note to clients, calling Coinbase a “barometer” for growing mainstream [crypto] adoption.&nbsp;



<h4 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h4>



Coinbase’s foray into the public market comes after a massive year of growth for cryptocurrencies, fueled by inflationary concerns and heightened institutional adoption. Morgan Stanley and Goldman Sachs started offering cryptocurrency to their wealthy clients just last month, and companies like Tesla, MicroStrategy and payments fintech Square have purchased billions of dollars of bitcoin as a means to diversify their largely U.S. dollar-based balance sheets. Up a staggering 825% over the past year, bitcoin hit its latest high, of just under $65,000, early Wednesday morning. The total cryptocurrency market is worth more than $2.2 trillion.



<h4 class="wp-block-heading" id="h-chief-critic">CHIEF CRITIC</h4>



“Even though Coinbase’s revenue surged over the past 12 months, the company has little to no chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion,” says David Trainer, the CEO of investment research firm New Constructs. “The crypto markets are very young, and we expect many more companies to compete for the profits Coinbase enjoys today.”



<h4 class="wp-block-heading" id="h-tangent">TANGENT</h4>



Coinbase joins a growing rank of buzzy tech companies that have started trading over the past year—to varying degrees of fanfare. Gen-Z gaming platform Roblox, which similarly opted for a direct listing, jumped more than 50% on its&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/03/10/roblox-valuation-hits-42-billion-as-gen-z-gaming-giant-skyrockets-50-in-ipo/">first trading day</a>&nbsp;in January and has since climbed about 6% higher. Airbnb and Doordash debuted in December, and both roughly doubled on their first day of trading, but&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2020/12/10/airbnb-ipo-shares-valuation-billion-more-than-marriott-hilton-hyatt/">Airbnb</a>&nbsp;has jumped about 25% since then, while&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2020/12/09/doordash-ipo-shares-first-day-of-trading/">DoorDash</a>&nbsp;has tanked 23%.



<h4 class="wp-block-heading" id="h-what-to-watch-for">WHAT TO WATCH FOR</h4>



Crypto regulation. “With cryptocurrencies’ astronomical price jumps, and as they become increasingly embedded in the global financial system, investors must expect much greater government scrutiny,” Nigel Green, the CEO of $12 billion advisory deVere Group, said in a Wednesday note, adding that Coinbase’s direct listing will help the firm reach a wider investment base other than “the usual crypto evangelists.” Gary Gensler, a blockchain and cryptocurrency professor at the MIT Sloan School of Management, was&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/04/14/gary-gensler-confirmed-sec-chairman/">confirmed</a>&nbsp;as the Securities and Exchange Commission’s new chairman on Wednesday, and one SEC official has said&nbsp; he’s “sympathetic to the call for regulatory clarity” in the space.



<h4 class="wp-block-heading" id="h-further-reading">FURTHER READING</h4>



<a href="https://www.forbes.com/sites/jonathanponciano/2021/04/13/bitcoin-hits-new-high-ahead-of-coinbase-listing-but-74-of-fund-managers-think-its-just-a-bubble/">Bitcoin Hits New High Ahead Of Coinbase Listing, But 74% Of Fund Managers Think It&#8217;s Just A Bubble</a>&nbsp;&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/jonathanponciano/2021/04/06/coinbase-posts-record-18-billion-revenue-as-crypto-market-shoots-past-2-trillion-direct-listing/">Coinbase Posts Record $1.8 Billion In Revenue As Crypto Market Shoots Past $2 Trillion</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/michaeldelcastillo/2020/02/19/coinbase-billionaire-brian-armstrongs-plan-to-make-bitcoin-ethereum-xrp-safe-for-all/">Bitcoin&#8217;s Guardian Angel: Inside Coinbase Billionaire Brian Armstrong&#8217;s Plan To Make Crypto Safe For All</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/jeffkauflin/2021/01/29/coinbase-investors-say-it-could-hit-100-billion-valuation-when-it-goes-public/">Coinbase Investors Say It Could Hit $100 Billion Valuation When It Goes Public</a> (Forbes)



By Jonathan Ponciano, Forbes Staff

In this photo illustration, the Nasdaq Stock Market logo

Coinbase Skyrockets In Nasdaq Listing, Landing $105 Billion Valuation On First Day Of Trading

Over the last six months, Bitcoin has been on a constant upward rise. Experts wonder: will it eclipse gold’s market cap in the years to come?



With Bitcoin making headlines again in 2021, one might be inclined to say that the volatile nature of this 12-year-old social experiment is not that volatile in the long run.



“We are now seeing more institutional investment come into play, with greater investments and interest in crypto from some of the biggest names in the business – Visa, Facebook, PayPal, Square, JP Morgan… This is going some way to allaying the doubts that have previously undermined Bitcoin,” says Marius Reitz, the General Manager for Africa of Luno, the global cryptocurrency exchange that added almost a million new South African customers during 2020, and over 250,000 so far in 2021. It recorded $8.3 billion in transactions worldwide and processed nearly $3 billion in volumes in South Africa last year.



In February, South African-born billionaire tech entrepreneur Elon Musk, the founder of the electric car company Tesla, announced a $1.5 billion investment into the cryptocurrency. One of the reasons behind this considerable investment was to enable the company to have the right kind of liquidity when it starts accepting payments in Bitcoin.



“If you look at Bitcoin now, over the last six months, it’s been on a constant upward rise with very little volatility in hindsight. Where in the past, we used to have 40% corrections, the largest correction we’ve seen in the last few months has been 25%. So I am not sure that volatility applies to a technology that is already starting to get adoption,” offers Ran Neuner, a South African cryptocurrency investor and the co-founder and CEO of Onchain Capital, a Blockchain investment fund and advisory service.



Bitcoin was created with the objective to be a new type of currency, a replacement for traditional FIAT currencies (government-issued currency not backed by a physical commodity such as gold), however, it has become a store of value, over being a currency.



<div class="wp-block-group"><div class="wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow">
<div class="wp-block-media-text alignwide is-stacked-on-mobile" style="grid-template-columns:40% auto"><figure class="wp-block-media-text__media"><img loading="lazy" decoding="async" width="1024" height="768" src="https://www.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner-1024x768.jpg" alt="" class="wp-image-50793 size-full" srcset="https://cms.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner-1024x768.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner-300x225.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner-768x576.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner-1536x1152.jpg 1536w, https://cms.forbesafrica.com/wp-content/uploads/2021/04/Ran-Neuner.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure><div class="wp-block-media-text__content">
“My feeling is that within the next three to five years, Bitcoin [will] take over gold&#8217;s market cap.” – Ran Neuner
</div></div>
</div></div>



Bitcoin is now considered to be the new gold. Gold has been a store of value for centuries now and currently has a market cap of $11 trillion. Since Bitcoin’s conception, its market share has grown to $1.1 trillion over the past 11 years.



“My feeling is that within the next three to five years, Bitcoin [will] take over gold&#8217;s market cap,” adds Neuner. “The question is what is gold’s market cap going to be then? The answer will depend on how many US dollars are printed and if the US keeps printing US dollars, then gold’s market cap could be $20 trillion, but my opinion is that Bitcoin will eclipse gold within the next three to five years.”



Compared to 2017 or 2018, we are starting greater adoption and usage of the cryptocurrency market as a whole with Bitcoin driving the market. The more large companies like JP Morgan or Tesla take on assets like Bitcoin to their portfolio, the greater its adoption by the greater public and with some investors making claims that Bitcoin will rise to $140,000 per coin.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We are now seeing more institutional investment come into play, with greater investments and interest in crypto from some of the biggest names in the business.” – Marius Reitz</blockquote>



“I really do think whilst others are talking about Bitcoin, there’s a lot of other cryptos and decentralized finance networks that are doing spectacular things, if you just look at Ethereum as the second crypto, there are more use cases for that ecosystem, and that ecosystem is growing at a phenomenal pace,” says Ian Ferrao, a telecoms executive currently serving as the Regional Director for East Africa at Airtel Africa. Ferrao is a cryptocurrency fan and spends his spare time researching and investing in various crypto tokens, liquidity mining projects and NFTs (non-fungible tokens).



Bitcoin seems to be what began paving the way for the cryptocurrency market, and over Ethereum.



With the next biggest crypto mirroring Bitcoin, it is safe to say that Bitcoin still is the daddy of all cryptos and really before you can get into the whole market of cryptos, one first needs to get into Bitcoin.



Sadly, there are a number of scams engulfing the cryptocurrency space, so investors need to be guarded.



“We encourage responsible investing which includes never investing in something you don’t understand, and never spending more on speculative technologies like Bitcoin than you can afford to lose. We also recommend making a small investment initially if you are unsure so that you can familiarize yourself with the Luno platform and the cryptocurrencies on offer. We do expect further volatility in the crypto space, so we advise care and encourage people to learn more about cryptos,” says Reitz.



If you are interested in buying Bitcoin, but do not know how to do it safely, here is a step-by-step guide on how to go about it.



Step 1: Get a Bitcoin wallet. This can be downloaded onto either a PC or smartphone. The wallet is there to store your Bitcoin in the same way you would keep cash in the wallet in your back pocket.



Step 2: Buy Bitcoin. You’ll need to go to a cryptocurrency exchange in order for you to turn your FIAT into Bitcoin. The best exchange to use would be dependent on the country you live in, if you are based in Africa, the best option would be Luno as it is the only registered exchange on the bitcoin.org website. A list of all exchanges can be found in the same place.



Step 3: Move your Bitcoin from the exchange to your wallet. The exchange should give you a temporary wallet to store your crypto from which you can send the crypto to your personal wallet. This is the most important step as it is highly advisable not to keep your crypto in an exchange due to the potential possibility of the exchange getting hacked and all your crypto is gone with the wind.



The writer too has some experience in this area, having bought my first Bitcoin in February 2018, valued at around $8,000 per coin at the time. In March last year, when the Covid-19 pandemic hit and more people began investing their money into Bitcoin, I decided to have a look at what mine was worth. In just over two years, the coin value had climbed to an all-time high of around $45,000.



With stability becoming a bigger part of Bitcoin, it is clear that this asset is an investment that shouldn’t be overlooked even if it&#8217;s not understood. Bitcoin’s profit potential is speculated to continue soar and now is a great time if there were any to buy some Bitcoin. Watch this space for more on what looks to be the future of money.



By Peter Engelbrecht

Digital Composite Image Of Cropped Hands Using Computer Keyboard By Bitcoin Icons

The Surge Of The Big Daddy Of All Cryptos

It’s everyone’s dream to get paid to do nothing. Bitcoin miner Layer1 is turning that dream into reality — having figured out how to make money even when its machines are turned off.&nbsp;



Layer1 is a cryptocurrency startup backed by the likes of billionaire&nbsp;<a href="https://www.forbes.com/profile/peter-thiel/#20734ccc533a">Peter Thiel</a>. In recent months, out in the hardscrabble land of west Texas,&nbsp;<a href="https://www.forbes.com/sites/christopherhelman/2020/02/28/why-is-this-peter-thiel-backed-startup-mining-bitcoin-in-west-texas/#57cf2dc55174">the company has been busy</a>&nbsp;erecting steel boxes (think shipping containers) stuffed chockablock with high-end processors submerged inside cooling baths of mineral oil. Why west Texas? Beause thanks to a glut of natural gas and a forest of wind turbines, power there is among the cheapest in the world — which is what you need for crypto.&nbsp;



“Mining Bitcoin is about converting electricity into money,” says Alex Liegl, CEO and co-founder. By this fall Layer1 will have dozens of these boxes churning around the clock to transform 100 megawatts into a stream of Bitcoin. Liegl says their average cost of production is about $1,000 per coin — equating to a 90% profit margin at current BTC price of $9,100.&nbsp;



So it’s odd how excited Liegl is about the prospect of having to shut down his Bitcoin miners this summer.&nbsp;



Already this year west Texas has seen a string of 100-degree days. But the real heat and humidity don’t hit until August, which is when the Texas power grid strains under the load of every air conditioning unit in the state going full blast. During an intense week in 2019, wholesale electricity prices in the grid region managed by the Electricity Reliability Council of Texas (ERCOT) soared from about $120 per megawatthour to peak out at $9,000 per mwh. It was only the third time in history that Texas power hit that level. And although the peak pricing only lasted an hour or so, that’s enough to generate big profits. Analyst Hugh Wynne at research outfit SSR figures that Texas power generators make about 15% of annual revenues during the peak 1% of hours (whereas in more temperate California grid generators only get 3% of revs from the top 1%).



Turns out that running a phalanx of Bitcoin miners is a great way to arbitrage those peaks. Layer1 has entered into so-called “demand response” contracts whereby at a minute’s notice they will shut down all their machines and instead allow their 100 mw load to flow onto the grid. “We act as an insurance underwriter for the energy grid,” says Liegl, 27. “If there is an insufficiency of supply we can shut down.” The best part, they get paid whether a grid emergeny occurs or not. Just for their willingness to shut in Bitcoin production, Layer1 collects an annual premium equating to $19 per megawatthour of their expected power demand — or about $17 million. Given Layer1’s roughly $25 per mwh long-term contracted costs, this gets their all-in power price down 75% to less than 1 cent per kwh (just 10% of what residential customers pay).&nbsp;



It may seem like grid operators are paying Layer1 a lot for something that might not even happen, especially with coronavirus reducing electricity demand, but it makes total sense, says&nbsp;<a href="https://uh.edu/uh-energy/about-uh-energy/energy-fellows/blog-posts/ed-hirs/index.php" target="_blank" rel="noreferrer noopener">Ed Hirs</a>, a lecturer in energy economics at the University of Houston and research fellow at consultancy BDO: “It’s a lot cheaper option than building a whole new power plant or battery system just to keep it on standby.”&nbsp;



And although this may be a new concept for cryptocurrency miners, it’s been done before. Two decades ago industrialist Charles Hurwitz bought up power-hogging aluminum smelters in the Pacific Northwest and&nbsp;<a href="https://www.forbes.com/forbes/2001/0402/053.html#34cccc1d3da9">made more money reselling electricity</a>&nbsp;than making metal. “It used to be called load management,” says Dan Delurey, a consultant with&nbsp;<a href="http://www.wedgemere.com/team/" target="_blank" rel="noreferrer noopener">Wedgemere Group</a>. “In old commercial buildings you might still find telephone wires connected to air conditioning systems so that grid operators could send a signal to shut off.” More recently we’ve seen companies install radio-based devices to control hot water heaters and lighting systems. Indeed, grid management is a hot enough area that in 2017 Italy’s power giant Enel bought Boston-based Enernoc for $250 million and Itron&nbsp;<a href="https://www.forbes.com/companies/itron" target="_blank" rel="noreferrer noopener">ITRI</a>&nbsp;bought Comverge for $100 million. What’s emerged are entities, like Layer1, that Delurey calls the “prosumer” — producing consumer.&nbsp;



As for Layer1, Liegl says his next step is to vertically integrate into financial products, including Bitcoin derivatives and more. “We are building an in-house energy trading division to leverage this into being a virtual power plant.”&nbsp;



His message to any pikers still trying to mine cryptocurrencies from their bedroom PC or even via cloud services: “I can’t think of something more irrational at this point. It’s like if I wanted to dig a hole in my backyard and try to get oil out of the ground.”&nbsp;



&#8211;<a href="https://www.forbes.com/sites/christopherhelman/">Christopher Helman</a>, Forbes Staff, <a href="https://www.forbes.com/energy">Energy</a>

gettyimages-1130794858-170667a

How This Billionaire-Backed Crypto Startup Gets Paid To Not Mine Bitcoin

Yele Bademosi is passionate about helping his home continent of Africa. Born into a missionary home in Ibadan, Nigeria, Bademosi’s mother and father used to deliver medical services and bibles to the Yoruba tribes-people in the forests surrounding&nbsp;his home-town, often going from hut to hut. When he and his sisters were old enough, they helped. “That is my earliest memory in terms of thinking about how to give back,” he says, “But as I grew older, I changed my views to thinking about, how do you actually help people at scale?”&nbsp;



Last year, Bademosi became a director at the venture capital arm of the world’s largest cryptocurrency exchange Binance, which trades $1.5 billion in crypto assets each day. And today he is excited because he’s launching Bundle, one of six African startups the Malta-based crypto exchange is now funding, and the first it launched. The startup is being run by Africans in an effort to get Africans to use cryptocurrency, not as an investment vehicle, but as a global means of exchange. Bundle is essentially a social payments app, similar to Venmo or Square’s Cash App.



It lets users send, receive and spend bitcoin, ether, and Nigerian naira with little more than the recipient’s phone number. Unlike Square though, Bundle will also let users spend Binance coin (BNB), the exchange’s native cryptocurrency, which has been doled out to loyal and active traders using its crypto exchange. In the near future they’ll be able to spend and (more importantly) save Binance U.S. dollars (BUSD), stablecoins backed by U.S. dollars and regulated in the United States.



Bundle joins numerous tech giants working on ventures in Africa. Facebook <a href="https://www.forbes.com/sites/michaeldelcastillo/2020/04/16/libra-compromises-undermine-original-facebook-promise/#41334dc02737">intends</a> to co-launch a cryptocurrency targeting the unbanked and Square’s founder Jack Dorsey recently announced plans to immigrate to the continent. “Regardless of your geography, you should have access to the best financial services. And unfortunately, your geography today defines the quality of financial services that you have,” says Bademosi, who is also Bundle’s CEO. “The same way the internet created freedom of information, I think blockchains create freedom of quality of financial services.”



Born in 1991, the only boy among five sisters, Bademosi always knew entrepreneurship was in his future. Perhaps rebelling from his bossy sisters, he knew he didn’t want to work for others. Bademosi’s first experience with a computer was at an internet cafe. As a child, he’d walk up a flight of stairs to the second floor of his local shopping center, push open a sliding door and frantically scan for cheat codes to his favorite computer games in 30-minute chunks, before his money ran out.



It wasn’t until 2007, when Bademosi was 16-years-old, that he finally got his first computer, an Acer Aspire One Series his parents got for him when he started classes at Lansdowne College, a preparatory school for University, similar to a high-school, in Westminster, England. For the first time, he had unlimited online access and an outlet to focus his burgeoning interests. By the time he graduated two years later, the 6’ 6” Bademosi had not only competed on the school’s football and basketball teams, but studied biology, chemistry, psychology and mathematics. “There&#8217;s a huge difference between what you learn in college in a structured environment and what you can learn online,” he says. “It felt like what I imagined the Enlightenment period felt like for people who lived when the printing press was first available.”&nbsp;



Growing up in Nigeria, he says, meant that students who did well in school were pushed into the sciences. When his youngest sister decided to go into economics, or what he called “liberal-type accounting,” he was in shock. In spite of his entrepreneurial aspirations, he knew he would be expected to either to become a medical doctor like his father, an engineer or an architect. He hated physics though, so passed on engineering, and architecture was out because as he put it, “I couldn&#8217;t draw straight lines.” His father convinced him that even if he didn’t end up practicing medicine,&nbsp;the University of London’s accelerated three-year program meant he’d have extra time afterwards to find a path of his own, and he enrolled in 2009.



In his first year of medical school his father died of kidney-failure. His father’s death gave him the courage to rebel. He had always found that he was more interested in computers than medicine so he dropped out of medical school with plans to build apps for Apple’s OS.&nbsp;After a few unsuccessful months building a social media app Bademosi flew back to Nigeria.



<figure class="wp-block-image"><img decoding="async" src="https://specials-images.forbesimg.com/imageserve/5ea0b91d8c2caa0006e71892/960x0.jpg?fit=scale" alt="Yele Bademosi, Bundle"/><figcaption>Bademosi works in his company&#8217;s office.&nbsp;BINANCE / YUSUF</figcaption></figure>



There he got a job as manager of Starta, devoted to helping African companies get off the ground by providing education, tools, and networking opportunities. After developing a taste for helping startups get off the ground, Bademosi founded his own angel investing firm called Mircotraction. His venture had well connected backers: Nigerian energy and real estate tycoon, Tunde Folawiyo; the CEO of Y-Combinator, Michael Siebel, and Google’s head of ecosystem for sub-Saharan Africa, Andy Volk.



Lagos-based Microtraction is now among the most active investors in Western Africa, having funded 15 companies, including 54gene, an African genomics research startup that recently attracted $15 million from Adjuvant Capital, Y-Combinator and others.



Bademosi had learned about bitcoin in college but it wasn’t until 2017 after he read a book called Master Switch by Columbia professor Tim Wu, that he began to see blockchain as a way to let networks of individuals compete against the likes of Facebook, Amazon, Google, and Apple using a shared technology infrastructure. “We’re not there yet,” he says. ‘But I believe that blockchain and decentralized technologies can open up the internet again, and create a new playing field that new entrants could play on.”



While the jump from medicine to blockchain may seem big , Bademosi sees them as strongly related. “The similarity really is the fact that you have individual organisms, whether that&#8217;s a cell or a human or a computer, acting in their own best interests towards what&#8217;s still a common goal, and there are a bunch of rules they all have to obey.”



Just a few months after founding Microtraction in August 2017, Bademosi bought his first bitcoin and as its price fluctuated wildly he became hooked on crypto asset investing. That led him to Binance, which was, founded in China, and is now doing business from Malta. In November 2018, Binance published a ten-point <a rel="noreferrer noopener" href="https://medium.com/@benjaminrameau/10-reasons-why-binance-labs-is-fully-committed-to-africa-3aeaaa32fe9e" target="_blank">thesis</a> on why it was dedicated to the continent and launched a subsidiary in Uganda. Number four on Binance’s list was Bademosi’s childhood mantra: scalability. 



“For me, blockchains are as big as the internet,” says Bademosi. “And can you imagine Bill Gates or Larry Page or, Mark, Zuckerberg coming to Africa less than one year after the company was started?” He was impressed. So much so, that by January 2019, he had pitched his vision for what Binance should be doing in Africa and instead of taking him up on his advice, the company hired him, making him the first director at Binance Labs focused on investing in Africa-based blockchain startups and leading the Africa chapter of the organization’s incubation program.



So far Binance Labs has invested in five African startups, one from South Africa, one from Kenya, one from Ghana and three from Nigeria, all serving different aspects of the content’s growing crypto economy. Notably, Lagos-based Yellow Card is a way to buy bitcoin even without a bank via local agents, and Flutterwave is the same fiat-to-crypto bridge that lets Binance customers buy cryptocurrency with naira.



<figure class="wp-block-image"><img decoding="async" src="https://specials-images.forbesimg.com/imageserve/5ea0b97cbed92b0006690434/960x0.jpg?fit=scale" alt="Bundle team"/><figcaption>Bundle backend engineer Kenny Shittu (left) meets with blockchain engineer Oluchi Enebeli, user experience designer Ugo Ifezue, backend engineer Seyi Ajonibode and operations associate Chinny Eze at Bundle&#8217;s offices on March 9, 2020   BUNDLE / YUSUF</figcaption></figure>



Binance and its new Bundle have Western competitors in Africa. Facebook’s Libra has its sights set on banking the unbanked. Another potential competitor using cryptocurrency to serve the unbanked is Akon, the Senegalese-American musician whose Akoin project announced recently that it would be the exclusive currency of the Mwale Medical Technology City in Kenya.&nbsp;“Our goal is for akoin to be the official currency of the continent,” says Akon.



To give an idea of the total market up for grabs here, even if the average account holder might only own a fraction of what Western banks require to open an account, the World Bank estimates that 1.7 billion adults around the world are without such access. Fifty-seven percent of adults in sub-Saharan African, or about 350 million people, don’t have bank accounts, according to the World Bank. To help close that gap nearly&nbsp;$700 million was invested in fintech in Africa last year, according to media firm WeeTracker.&nbsp;Of the 1.2 billion people living in Africa, Bademosi estimates only 1.4 million are already using crypto.&nbsp;



In two weeks Bundle expects to add BUSD, a stablecoin pegged to the U.S. dollar, created by blockchain startup Paxos, regulated by the New York Department of Financial Services, and spendable anywhere in the world. One possible financial product that could eventually be offered using this technology would be what amounts to a savings account denominated in U.S. dollars for people living in Nigeria, and eventually other African nations. Instead of Nigerians losing 12% to inflation at current rates by keeping their cash in a savings account, they could be paid interest denominated in U.S. dollars for funds held in custody elsewhere. “Being able to save in stablecoins and earn interest per annum is huge,” says Bademosi. “And we can offer that up to anyone anywhere.”



Users will also be able to cash in and cash out using local fiat currencies. Longer term plans include a physical debit card and the ability to purchase U.S. stocks, Nigerian mutual funds and agriculture debt, and unspecified incentive programs designed to jumpstart the cryptocurrency economy in Africa, according to internal documents provided to&nbsp;Forbes. The documents compare Bundle to Mosaic, the internet browser invented by Marc Andreessen, and credited for weaving together the previously esoteric processes required to use the internet into a single, intuitive browser.&nbsp;



In September 2019, Bundle quietly raised $450,000 from Binance, Pave Investments and other African investors. “We believe Bundle can become one of the key projects that will support Binance&#8217;s mission of scaling the adoption of crypto on the continent,” says Binance CEO Changpeng Zhao (CZ). To help do that, Bundle will be free at launch, with plans to eventually charge 0.5% to 2% per transaction on all short term trades and 3% of assets under management on yearly gains, for longer-term investing. While the finer details of how that works have yet to be announced, we can look to Binance for some intriguing clues.&nbsp;



After creating BNB in July 2017, the asset has grown to a total market value of $2.2 billion, making it the eighth largest crypto-asset according to&nbsp;CoinMarketCap.com, the widely used cryptocurrency markets site Binance recently acquired for a&nbsp;<a href="https://www.forbes.com/sites/billybambrough/2020/03/31/bitcoin-and-crypto-world-rocked-by-massive-400-million-binance-bid-for-coinmarketcap-report/#34f2d302247f">reported</a>&nbsp;$400 million. But it’s the way Binance uses that asset, which users acquire in exchange for making transactions on-site, that Bundle perhaps has the most to learn from.&nbsp;



Binance’s users are allowed to pay their fees on the site using the same BNB cryptocurrency they are rewarded for being regular users, and a new platform, called LaunchPad, lets users raise capital via initial coin offerings (ICOs) also payable in BNB, establishing what cryptocurrency news site CoinDesk <a rel="noreferrer noopener" href="https://www.coindesk.com/the-unbelievable-brilliance-of-binance" target="_blank">called</a> “a virtuous cycle by which its users were incentivized to stay within its platform.” Bademosi, it would seem, has learned his lessons well, a promising sign for the future. “Bundle does an excellent job of putting fiat and crypto side by side,” he says. “And then nudging the user to use some of these digital currencies or assets in innovative ways.”



&#8211;<a href="https://www.forbes.com/sites/michaeldelcastillo/">Michael del Castillo,</a>Forbes Staff, <a href="https://www.forbes.com/crypto-blockchain">Crypto &amp; Blockchain</a>

960×0

Binance Spinoff Aims To Be Bitcoin-Powered Venmo Of Africa

Millions of cryptocurrency investors&nbsp;have been scammed out of massive sums of real money. In 2018, losses from cryptocurrency-related crimes amounted to&nbsp;US$1.7 billion. The criminals use both old-fashioned and new-technology tactics to swindle their marks in schemes based on digital currencies exchanged through online databases called blockchains.



From&nbsp;researching&nbsp;blockchain,&nbsp;cryptocurrency&nbsp;and&nbsp;cybercrime, I can see that some cryptocurrency fraudsters rely on&nbsp;tried-and-true Ponzi schemes&nbsp;that use income from new participants to pay out returns to earlier investors.



Others use&nbsp;<a href="https://www.buzzfeednews.com/article/ryanmac/cryptocurrency-scammers-are-running-wild-on-telegram">h</a>ighly automatized and sophisticated processes, including automated software that interacts with Telegram, an internet-based instant-messaging system popular among people interested in cryptocurrencies. Even when a cryptocurrency plan is legitimate, fraudsters can still&nbsp;manipulate its price in the marketplace.



An even more basic question arises, though: How are unsuspecting investors attracted to cryptocurrency frauds in the first place?



RELATED | <a href="https://www.forbesafrica.com/investment/2019/04/01/is-forex-a-scam-or-money-goals/">Is Forex A Scam Or Money Goals?</a>



<h4 class="wp-block-heading">Fast-talking swindlers</h4>



Some cryptocurrency fraudsters appeal to people’s greed, promising big returns. For example, an unknown group of entrepreneurs runs the scam bot iCenter, which is a&nbsp;<a href="https://medium.com/@nickcryptoltc/ponzi-investment-schemes-new-and-improved-on-the-blockchain-icenter-co-f9ee68f6c8fe">P</a>onzi scheme for Bitcoin and Litecoin. It doesn’t provide information on investment strategies, but somehow&nbsp;promises investors 1.2% daily returns.



The iCenter scheme operates through a group chat on Telegram. It starts with a small group of scammers who are in on the racket. They get a referral code that they share with others, in blogs and on social media, hoping to get them to join the chat. Once there, the newcomers see encouraging and exciting messages from the original scammers. Some newcomers decide to invest, at which point they are assigned an individual bitcoin wallet, into which they can deposit bitcoins. They agree to wait some period of time – 99 or 120 days – to receive a significant return.



During that time, the newcomers often use&nbsp;social media to share their own referral codes&nbsp;with friends and contacts, bringing more people into the group chat and into the investment scheme. There’s no actual investment of the funds in any legitimate business. Instead, when new people join, the person who recruited them gets a percentage of the new funds, and the cycle continues, paying out to earlier participants from each round of newer investors.



Some members work especially hard to bring in new funds, posting&nbsp;<a href="https://www.buzzfeednews.com/article/ryanmac/cryptocurrency-scammers-are-running-wild-on-telegram">t</a>utorial videos and pictures of themselves holding large amounts of money&nbsp;as enticements to join the scam.



<h4 class="wp-block-heading">Lies and more lies</h4>



Some scammers go for straight-up deception. The founders of scam cryptocurrency OneCoin&nbsp;defrauded investors of $3.8 billion&nbsp;by convincing people their&nbsp;nonexistent cryptocurrency was real.



Other scams are based on impressing potential victims with jargon or claims of specialized knowledge. The Global Trading scammers claimed they took advantage of&nbsp;price differences on various cryptocurrency exchanges&nbsp;to profit from what is called arbitrage – simply buying cheaply and selling at higher prices. Really they just took investors’ money.



Global Trading used a bot on Telegram, too – investors could send a balance inquiry message and&nbsp;get a response with false information&nbsp;about how much was in their account, sometimes even seeing balances&nbsp;climb by 1% in an hour. With returns looking like that, who could blame people for&nbsp;sharing the scheme&nbsp;with their friends and family on social media?



<h4 class="wp-block-heading">Exploiting friends and family</h4>



Once a scheme has started, it stays alive – at least for a while – through social media. One person gets taken in by the promise of big returns on cryptocurrency investments and spreads the word to&nbsp;<a href="https://news.bitcoin.com/crypto-scams-comprise-0-6-fraud-australian-consumer-watchdog/">f</a>riends and family members.



Sometimes big names get involved. For instance, the kingpin behind&nbsp;GainBitcoin&nbsp;and other alleged scams in India convinced a number of Bollywood celebrities to&nbsp;promote his book, “Cryptocurrency for Beginners.” He even tried to make himself&nbsp;a bit of a celebrity, proclaiming himself a “cryptocurrency guru,” as he&nbsp;led&nbsp;efforts&nbsp;that&nbsp;costinvestors between&nbsp;$769 million and $2 billion.



Not all the celebrities know they’re involved. In one blog post, iCenter featured a video that purported to be an&nbsp;endorsement by Dwayne “The Rock” Johnson, holding a sign featuring iCenter’s logo. Videos of Justin Timberlake and Christopher Walken were deceptively edited so they appeared to praise iCenter, too.



<h4 class="wp-block-heading">Fraudulent initial coin offerings</h4>



Another popular scam technique is called an “initial coin offering.” A potentially legitimate investment opportunity, an initial coin offering essentially is a way for a startup cryptocurrency company to raise money from its future users: In exchange for sending active cryptocurrencies like bitcoin and ethereum, customers are promised a discount on the new cryptocoins.



Many initial coin offerings have&nbsp;turned out to be scams, with organizers engaging in cunning plots, even renting fake offices and creating fancy-looking marketing materials. In 2017, a lot of hype and media coverage about cryptocurrencies fed a huge wave of initial coin offering fraud. In 2018,&nbsp;about 1,000 initial coin offering efforts&nbsp;collapsed, costing backers at least $100 million. Many of these projects had no original ideas –&nbsp;more than 15% of them&nbsp;had copied ideas from other cryptocurrency efforts, or even plagiarized supporting documentation.



Investors looking for returns in a new technology sector are still interested in blockchains and cryptocurrencies – but should beware that they are complex systems that are new even to those who are selling them. Newcomers and relative experts alike have fallen prey to scams.



In an environment like the current cryptocurrency market, potential investors should be very careful to research what they’re putting their money into and be sure to find out who is involved as well as what the actual plan is for making real money – without defrauding others.



&#8211;Nir Kshetri; Professor of Management, University of North Carolina – Greensboro



&#8211;The Conversation



<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/114706/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important">

gettyimages-951254382-170667a

How Cryptocurrency Scams Work

&nbsp;On a bustling street near the shiny new international airport in Ethiopia’s capital is a small coffee roastery with big dreams.&nbsp;



Nearly 40 Ethiopians &#8211; a third of them women &#8211; sift, roast and package prized Arabica beans for export to Europe under the Moyee brand, founded by a Dutch social entrepreneur.



The roastery, together with the innovative use of blockchain technology to ensure the supply chain is transparent, represents an attempt to keep as much of the profits as possible in Ethiopia, one of the world’s poorest countries.



“It’s the world’s favorite drink. We drink over 2 billion cups a day,” said Killian Stokes, who set up the Irish branch of Moyee.



“The industry’s worth $100 billion and yet 90 percent of coffee farmers in Ethiopia live on less than $2 a day.”



That is partly because most exporters process the beans elsewhere, but also down to price fluctuations and other factors that make coffee growing a precarious business.



READ MORE | <a href="https://www.forbesafrica.com/agriculture/2019/01/24/ugandan-firm-uses-blockchain-to-trace-coffee-from-farms-to-stores/" target="_blank" rel="noreferrer noopener" aria-label="Ugandan Firm Uses Blockchain To Trace Coffee From Farms To Stores (opens in a new tab)">Ugandan Firm Uses Blockchain To Trace Coffee From Farms To Stores</a>



To make things fairer, Moyee has created unique digital identities for the 350 farmers it currently works with &#8211; meaning buyers can see exactly how much each individual grower is paid, with prices set at 20 percent above the market rate.



Now the brand, whose slogan is “radically good coffee”, wants to use blockchain to take that to the next level &#8211; allowing buyers to tip farmers, or fund projects such as a new planting program, through a mobile app.



The U.N. Food and Agriculture Organization (FAO) said in a recent report that blockchain had huge potential&nbsp;to address challenges&nbsp;smallholder farmers faced by “reducing uncertainty and enabling trust among market players”.



The technology, used to underpin cyber-currencies like Bitcoin, allows shared access to data that is maintained by a network of computers and can quickly trace the hundreds of parties involved in the production and distribution of food.



Once entered, any information cannot be altered or tampered with.



<h4 class="wp-block-heading">‘BIGGER THAN THE INTERNET’</h4>



Siobhan Kelly, an advisor to the Food Systems Programme at the FAO, said blockchain would ultimately be “much bigger than the internet”.&nbsp;



“Within 10 years &#8211; it’ll take probably 10 years &#8211; it’s going to be a major revolution, for everything,” said Kelly.



Fruit farmers in Caribbean nations are also looking at using blockchain to attract better-paying customers, bring traceability and build a credit trail.&nbsp;



“It’s an innovation that is poised to empower local farmers in the Caribbean region,” said Pamela Thomas, executive director of the Agriculture Alliance of the Caribbean (AACARI), a regional network of nearly 100,000 farmers.



AACARI’s project has two components: auditing by accredited professionals to ensure farmers adhere to the Global GAP (good agricultural practices) standards, and a digital marketplace where buyers can find detailed information about the produce.&nbsp;



Global GAP is a voluntary standard required by many European and U.S. supermarket chains.



Vijay Kandy, whose company is building the blockchain platform, said the auditing process would allow farmers to deal directly with buyers &#8211; bypassing the middlemen that many currently rely on &#8211; and make access to credit easier.



“One reason why buyers from faraway places or different countries go through middlemen is because they rely on them to make sure farmers are following these good practices,” he said.



One such buyer is London-based Union Hand-Roasted Coffee.&nbsp;



The company sources its coffee directly from growers’ cooperatives to ensure higher quality, pays farmers more than minimum price set by the global Fairtrade organization, and works with more than 40 producer groups in 14 countries.



“We currently undertake direct interviews to verify farmers have been paid, but it’s very time- and labor-intensive to do that and to record all that data,” said Steven Macatonia, who co-founded Union in 2001.



“So to have a much more simple system where we can get a confirmation that payment has been received and how much that is, that could be hugely beneficial,” he said.



Price fluctuations and the impact of climate change make coffee a particularly challenging crop to grow.



“Large companies’ profits usually increase when prices are low, but the profit for farmers does not, and in some cases it may cost them money to produce coffee,” said Aaron Davis, head of coffee research at Britain’s Royal Botanic Gardens at Kew.&nbsp;



Davis’s latest research shows climate change and deforestation are putting more than half of the world’s wild coffee species at risk of extinction.



Ethiopia &#8211; the birthplace of Arabica, the world’s most popular coffee &#8211; is of particular concern. Up to 60 percent of the land used to grow coffee could become unsuitable by the end of the century, Davis found.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The more a farmer is paid, the more resources he will be able to devote to climate resilience,” he said.&nbsp; &nbsp;</blockquote>



Both Davis and the FAO’s Kelly however cautioned that blockchain technology was not going to be a “quick fix”, with farmers around the world facing multiple challenges.



“Farmers need access to affordable seeds, to affordable finance and credit when they need it &#8230; and these things are not going to be given by blockchain,” said Kelly. -Reuters



-Thin Lei Win @thinink

952007732

The Coffee Farmers Betting On Blockchain To Boost Business

As the price of bitcoin cratered last year, falling 83% and erasing $250 billion in market value, one company has secretly been making a killing with some rather unusual business transactions. 



Selling to a paradoxical mixture of bitcoin-believing crypto entrepreneurs and hedge funders out to profit off what they hope is the demise of cryptocurrency, bitcoin lending firm Genesis Global Capital originated $1.1 billion in cryptocurrency loans last year, according to a report released today.



Charging interest rates that ensure that its pockets get lined regardless of whether a customer loves or hates crypto, the company is leading the way as a rising tide of crypto startups compete to stay cash positive in this epic bear market.



“It should be possible for people to go long and short bitcoin,” says Michael Moro, the CEO of Genesis Global Capital. “It can’t just be a long-only market. It should be perfectly okay to take the other side, to think that prices are going to fall, and to make that short bet.”



Genesis passed the billion dollars in bitcoin loans milestone on December 14, 2018, less than three months after announcing it had made $500 million in loans since its launch in March 2018. To put that another way, Genesis made another $500 million in bitcoin loans during the last quarter of 2018.



As the price of bitcoin fell 39% over the last two months of the year, Genesis experienced its busiest period so far. New hedge funds and trading firms utilizing “spot” borrowing, combined with new business including crypto collateral—and even the occasional traditional cash loan in exchange for crypto collateral—increased Genesis’ active loans outstanding to $153 million, up from $23M in Q3 2018.



Interest rates on the cryptocurrency loans range from about 10% to 12% for highly liquid cryptocurrencies like bitcoin, depending on how risky Genesis deems the way the customer plans to use the loan. The less liquid the cryptocurrency, the higher the starting interest rate.



The massive increase in loan originations was jump-started by a 16% drop in the price of bitcoin on November 14, as a result of interest from short sellers looking to profit from the drop. Brian Kelly, a cryptocurrency investor who&#8217;s been a Genesis customer for five years, sees this kind of transaction activity as crucial to the health of the cryptocurrency ecosystem. “Having an active two-sided market should help liquidity improve overall,” he says.



But not everyone shorted crypto. In fact, Moro says that only about 11% of bitcoin loans were used to bet against bitcoin’s rising price. Instead, he says, the most popular use of bitcoin was for companies like bitcoin ATM firms that need to take short-term possession of bitcoin, accounting for 50% of all loans, followed by those buying cryptocurrency on one exchange and then selling on another at a higher rate, a process call arbitrage.



Bitcoin was the most frequently borrowed cryptocurrency, comprising 75% of all the originated loans. Ether (ETH) and XRP were the second and third most frequently borrowed cryptocurrencies, with ETH borrowing more than doubling since Q3 but still comprising less than 10% of the total loan book. XRP composition since Q3 is down 50%, which Moro attributes to the cryptocurrency&#8217;s relative strength over that period. The concentration of loans outside the top three decreased as a result of bitcoin jumping nearly 10% in one month.



Heading into Q4, Genesis&#8217; loan portfolio was about 60% BTC and 40% alt-coins, with XRP constituting nearly 50% of altcoins, according to the report. Prior to Q4, 98% of bitcoin on loan was used exclusively for hedged use cases such as arbitrage, basis capture, and remittance.



Genesis is in the unusual position of being run by a parent company, Digital Currency Group, that has invested in more than 125 cryptocurrency startups globally. That company is headed up by Barry Silbert, the founder of SecondMarket, which was acquired by Nasdaq in 2015 to help startups sell shares before they go public.



As a result of having direct access to this pipeline of venture-backed and, more importantly, venture-vetted crypto startups, Moro’s other company, SEC registered Genesis Global Trading, started unofficially lending crypto as far back as 2014 to what he calls the company’s “friends and family” clients. “We didn’t think about too much of it at the time,” he says. &nbsp;



But by the end of 2017, at the peak of a crypto-frenzy that saw the overall cryptocurrency market reach $800 billion, Moro joined a fleet of other companies looking to profit even in a down market and spun off the trading company’s lending operations into a stand-alone entity.



As a result of this rising interest, Genesis is far from the only company in the space. Last year hedge fund manager Michael Novogratz’ company, Galaxy Digital, invested $52.5 million in crypto lending startup BlockFi. Other competitors include crypto startup Aave, which raised $16.5 million in an initial coin offering (ICO) in part to power its EthLend lending product, and early entrant Salt Lending, which was founded as far back as 2016.



Facing this rising tide of competitors, Genesis is looking to even further diversify its revenue streams. Moro says that while 75% of the $153 million he has in the portfolio is denominated in bitcoin, 13%, or about $20 million, is for lenders who don’t want to sell their bitcoin at today’s low price of $3,381, down from its all-time high of $19,000 in 2017, but want to generate a bit of revenue by using it as collateral for cold hard cash.



“We wanted to see if there was a demand for that, and there was,” he says.



-Michael del Castillo Forbes Staff

RC115698ECF0

Why Genesis Made Over $1 Billion In Bitcoin, Ethereum And XRP Loans

An Ugandan company has started using blockchain, the technology behind virtual currency Bitcoin, to certify shipments of coffee to try to meet growing demand from consumers for more information about where products have come from. 



Carico Café Connoisseur said the move could help to boost farmers’ incomes, as consumers are usually prepared to pay more for goods that can been traced back to their origins.



Blockchain works by providing a shared record of data held by a network of individual computers rather than a single party. Its supporters say this makes it hard to tamper with, and so a secure way to track goods along the supply chain



Carico Café Connoisseur CEO Mwambu Wanendeya told Reuters a blockchain-certified shipment of one of its coffee products, Bugisu Blue, arrived in South Africa last month. He declined to give the size of the shipment, but said it was several tonnes.



Uganda is Africa’s largest coffee exporter followed by Ethiopia, according to the International Coffee Organisation, and has some of the world’s highest quality beans. It predominantly cultivates the robusta variety, but also has extensive fields of arabica trees.



Limited domestic processing capacity means the country exports nearly all of its beans in raw form.



The blockchain certification means consumers can trace the coffee’s journey by using their smartphones to scan the product’s QR codes or via the certification site provenance.org.



Every step of the beans’ journey &#8211; from when farmers drop them off at collection centers to warehousing, inspection by regulators and shipping &#8211; is recorded.



“The idea is to give the consumer an appreciation of what happens on the journey and also to ensure that there’s more linkages with the farmer,” Wanendeya said.



“Traceability is important because people are increasingly concerned that &#8230; farmers get rewarded for their work.”



The process will provide consumers with information such as the type of coffee bean, the year it was harvested, and where it was grown.



Founded in 2016, Carico Café is working with two farmer cooperatives with hundreds of members. Wanendeya predicted the innovation could boost farmers’ incomes by 10 percent.



“Consumers are willing to pay more if they can know where exactly the coffee is coming from,” he said.



Just a phone scan away &#8211; website reveals ethically sourced food



Uganda is keen to increase coffee exports from the current level of around 4 million 60-kilogramme bags per year.



However, a seedlings distribution program it hoped would boost production has yielded modest results, in part because of a decline in interest in coffee among farmers due to often low and unstable prices. -Reuters 



&#8211; Elias Biryabarema

gettyimages-103300178-594×594

Ugandan Firm Uses Blockchain To Trace Coffee From Farms To Stores

Give me bitcoin or your life. Seriously?



<hr class="wp-block-separator"/>



The people behind a rash of bomb threats made across the United States and Canada on Thursday demanded a $20,000 ransom to be paid in bitcoin. Authorities said none of the threats &#8211; emailed to hundreds of businesses, public offices and schools &#8211; appeared credible.



Frankly, the perpetrators would have been better off asking for Turkish lira.



Bitcoin and other cryptocurrencies have long been a favorite ransom tender for cyber criminals thanks to the currencies’ anonymous nature. U.S. cyber security firm Chainalysis estimates that from 2012 through 2017, global ransom payments using bitcoin totaled at least $31 million.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="750" height="490" src="https://www.forbesafrica.com/wp-content/uploads/2018/12/bitcoin.png" alt="" class="wp-image-38139" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/12/bitcoin.png 750w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/bitcoin-300x196.png 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/bitcoin-600x392.png 600w" sizes="(max-width: 750px) 100vw, 750px" /></figure>



Anonymity aside, of course, the big appeal was an incredible run-up in bitcoin’s value over that time. It shot from $5 a coin at the start of 2012 to nearly $20,000 at this time last year, according to data from Bitstamp, one of the larger bitcoin exchanges.



Today? Not so hot.



Bitcoin on Thursday was trading at around $3,250, down more than 80 percent from its record high. In the last three months alone it has plunged 50 percent.



Even the currencies of some crisis-hit economies like Turkey have done better: The lira is up 30 percent since August. -Reuters



<ul><li>Gertrude Chavez-Dreyfus and Anna Irrera</li></ul>



READ MORE |&nbsp;<a href="https://www.forbesafrica.com/investment/2018/12/10/cryptopia-in-crisis-joe-lubins-ethereum-experiment-is-a-mess-how-long-will-he-prop-it-up/">Cryptopia In Crisis: Joe Lubin’s Ethereum Experiment Is A Mess. How Long Will He Prop It Up?</a>



<a href="https://www.forbesafrica.com/focus/2018/01/17/bitcoin-mining-uses-much-power-ireland-heres-thats-not-problem/">Bitcoin Mining Uses As Much Power As Ireland. Here’s Why That’s Not A Problem</a>



<a href="https://www.forbesafrica.com/current-affairs/2017/12/11/actually-okay-completely-ignore-bitcoins-1400-rally/" target="_blank" rel="noreferrer noopener" aria-label="It’s Actually Okay To Completely Ignore Bitcoin’s 1,400% Rally (opens in a new tab)">It’s Actually Okay To Completely Ignore Bitcoin’s 1,400% Rally</a>

gettyimages-932503482-170667a

Bitcoin Ransoms Just Are Not What They Used to Be

South African inventor and investor Stafford Masie on the economy that will unfold as a result of bitcoin offering greater capability than cash.

South African technology entrepreneur and artificial intelligence (AI) enthusiast Stafford Masie has headed Google in South Africa, invented Payment Pebble (a payment solution), and has had over 20 years in IT. At a recent lecture to engineering students at the University of Johannesburg, Masie said: “The future is already here. It is just unevenly distributed.” He also spoke to FORBES AFRICA on the tech forecast for 2019.
<a href="http://www.forbesafrica.com/30-under-30/2018/06/04/under-30-technology/" target="_blank" rel="noopener">READ MORE: Under 30 Technology</a>
AI gone rogue
Almost all industries have been impacted by AI and Masie believes it has potential to lose control.
“AI is the difference between the third and fourth industrial revolution. We now have this algorithm in the world that says we should measure companies by output so companies are trying to do more with less. [Companies are thinking] ‘get rid of the humans and let’s build automation and we increase our operating margin and our share price goes up’. That is not sustainable. That’s the world in which we find ourselves today. AI has already gone rogue. There is no expert of AI in the entire world. It’s still very early.”
Masie says should be seen as plural and not singular.
“Take a look at Uber. It’s a coalition of disparate AIs and a dual special awareness of intelligence. It’s intelligence on the phone, it’s intelligence in the car, it’s all of those things coming together to deliver on that service. That’s AIs, not an AI.
“AI does not need to take away jobs. AI is makes us look in the mirror and ask, ‘should we be doing that work?’ I don’t think we should. I think we have a higher purpose. We need to start rethinking this notion of employment and jobs and start thinking about work. Humans should be released from doing what they are doing today. A job that measures efficiency and productivity will ultimately be taken over by robots…We were not meant to do jobs that measure efficiency and productivity. We were meant to be [creative]. We need to allow humans to have a purpose.”
<a href="http://www.forbesafrica.com/brand-voice/2018/09/10/africas-top-30-tech-start-ups-opens-for-entries/" target="_blank" rel="noopener">READ MORE: Africa’s Top 30 Tech Start-Ups Opens for Entries</a>
Bitcoin will unlock the third economy
Despite experts predicting the fall of Bitcoin and its technologies, Masie predicts otherwise.
“The Bitcoin world is going to be interesting to watch over the next year. That’s very exciting. I just think because it’s still so infantile, it’s still so small. I think Bitcoin wasn’t built for the people who are actually using it today. It was built for the people not financially included in the world today. And what’s exciting in the next few years is to see those people being unlocked and emerging. We have the formal economy, then we have the informal economy. The formal economy has all the financial instruments that you and I use. The security, the credit cards, the bank accounts etc. Then you get the formal economy which is cash.
“But I think bitcoin is going to establish a third economy, and that third economy will surface new transaction types, new value exchange instruments that we still haven’t imagined today and that will come to the fore.
“What excites me more is this third economy that will emerge because Bitcoin offers greater capability than cash. You can program your money. You can expand it, you can create contracts around it. You can exchange value without a third party and that’s what am very excited to see within the next 12 to 24 months, that’s really big for me.”
The tech smoothie
“I’m excited to see what will happen in retail over the next four months. That’s the big one. I can feel it in the water. All the retailers are looking immensely at investing in technology, better customer service, optimization and then there’s logistics in the supply chains driving down production costs, doing more with the humans that they have, sweating their assets, etc. In retail, when you start mixing up the Internet of Things, AI and Bitcoin, that little smoothie looks very interesting to me.”

Stafford-Masie_KM

The Third Economy?

Initial coin offerings (ICOs) see companies create their own digital tokens and sell them to the public.
They are like initial public offerings (IPOs), but investors take no equity in the business, and rather invest in the potential value of the token.
They are proving attractive to firms and investors alike, with over 230 companies raising almost $4 billion in such a way in 2017.
“Initial coin offerings allow companies an easy way to raise capital while bypassing many of the regulations and requirements associated with initial public offerings. ICOs also allow companies to tap into the hype around cryptocurrencies and crowd-sourcing,” says George Etheredge, Research Analyst in the Digital Transformation Practice at Frost &amp; Sullivan Africa.
But are ICOs relevant in the African context? It’s early days, but a number of startups have recently given them a whirl. Nigerian remittances platform SureRemit netted $7 million, while South African company and property investment portal ProsperiProp secured $200,000. 
ProsperiProp founder Llew Morkel says ICOs offer entrepreneurs an opportunity to dip into a global source of capital without having to go through formal channels like banks or venture capitalists.
<a href="http://www.forbesafrica.com/focus/2018/02/12/everybodys-interests-regulate-cryptocurrencies/" target="_blank" rel="noopener">READ MORE: Why it’s in everybody’s interests to regulate cryptocurrencies</a>
“Investor institutions require the entrepreneur to commit to a period of exclusivity while the funder conducts their due diligence. In the event where the application is rejected, the entrepreneur has to start over, often costing valuable time to market. This cycle is discouraging,” he says.
The lack of regulation in this space makes it easier to fund starved African businesses. But it’s also the main drawback of ICOs.
“It’s far easier for groups to set up ‘fake’ ICOs. The general hype around the crypto space may cause investors to be insufficiently diligent,” says Etheredge. 
This is likely to mean the space becomes the focus of more regulation as time passes. 
“One factor here will be those parties that currently make money from the way things are done at the moment will have powerful incentives to lobby for regulation. This is a pattern in most disruptive industries, just look at Uber,” says Etheredge. 
Getting the legal ducks in a row was one of the challenges for ProsperiProp.
“It’s important for an ICO to move inside the guidelines of each country&#8217;s legal framework. The country&#8217;s framework not only protects the ICO investor but also the entrepreneur,” says Morkel.
<a href="http://www.forbesafrica.com/lists/2018/02/08/forbes-first-list-cryptocurrencys-richest-people-meet-secretive-freaks-geeks-visionaries/" target="_blank" rel="noopener">READ MORE: Forbes’ First List Of Cryptocurrency’s Richest People: Meet The Secretive Freaks, Geeks And Visionaries</a>
With all the noise around ICOs, and awareness of potential scams, marketing is key. Wala CEO Tricia Martinez says trust, transparency and community are key elements.
“We quickly recognized that in order to gain trust you must be transparent. And the only way to build a community is by being transparent. Once we gained the trust of the individual and were transparent our community began to grow,” she says.
Africa’s foray into the world of ICOs have been tentative thus far, but those that have made the jump expect more to follow. SureRemit co-founder Adeoye Ojo says they are about more than just capital.
“There needs to be a real utility for the underlying token being distributed. Many businesses are rushing to tokenise without a proper plan to sustain the new economy they are creating. This isn’t unique to Africa,” he says.
Martinez agrees.
“ICOs shouldn&#8217;t be used as a funding mechanism. Only if there is a real use case to build a token economy should an entrepreneur look at this as a potential channel,” she said.
Yet the potential for token sales to provide access to funding cannot be ignored.
“The good thing is that barring countries that have some strict financial regulations about ICOs, almost anybody can participate. This allows projects, including African ones, to have exposure to a diverse audience who can both back and be first users of the product,” says Ojo.
<div id="attachment_36252" style="width: 310px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-36252" class="size-medium wp-image-36252" src="https://www.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-300x200.jpg" alt="" width="300" height="200" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/05/GettyImages-869669262.jpg 2048w" sizes="(max-width: 300px) 100vw, 300px" />Eugene Mutai, bitcoin &#8216;miner&#8217; and software developer, uses the LBRY web site at his home in Nairobi, Kenya. Photographer: Luis Tato/Bloomberg via Getty Images</div>
This diversity, however, also means the usage of ICOs by African companies will depend on how these strategies perform globally.
“They are attractive in an African context as they can, for now, get past regulatory and bureaucratic red tape. However, Africa is some distance behind wealthier areas with respect to crypto adoption,” says Etheredge.
Yet all the signs are that crypto, in Africa and globally, is on the rise. Much of the future of ICOs in Africa may hang on the level of success experienced by first movers like SureRemit, Wala and ProsperiProp. For now, it’s a question of riding the wave and seeing where it goes.
&#8211; By Tom Jackson

Bitcoin surrounded by various world coins

Are ICOs Relevant In Africa?

There are growing <a href="http://www.wired.co.uk/article/six-ways-to-regulate-cryptocurrency-without-destroying-its-future" target="_blank" rel="noopener">calls</a> for regulation of the cryptocurrency market, which is rapidly approaching a market capitalisation of <a href="https://www.cnbc.com/2017/12/18/cryptocurrencies-could-be-worth-1-trillion-in-2018-blockchain-ceo.html" target="_blank" rel="noopener">$1 trillion</a>. But there’s little agreement about the forms this should take.
If the case for government regulation is strong, the case for a clear, coordinated regulatory approach is even stronger. It would increase the flow of institutional capital into cryptocurrency markets. And that would further strengthen corporate governance in cryptocurrency companies.
The trick for regulators is to balance investor protection and systemic stability with the need to protect innovation and encourage capital formation in different legal systems.
At present the regulatory environment is a muddle because there’s rapid divergence in the regulation of cryptocurrencies across jurisdictions. Countries like Japan, while thorough, have a more open approach. China is more strict.
Sovereign governments need to develop coherent frameworks for cryptocurrency oversight. But solutions will only be found through international cooperation in this cross-border market.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/bitcoin-blockchain-billions/" target="_blank" rel="noopener">READ MORE: Bitcoin, Blockchain And Billions</a>
<h2>Growing concerns</h2>
Cryptocurrencies <a href="https://cointelegraph.com/bitcoin-for-beginners/what-are-cryptocurrencies" target="_blank" rel="noopener">originated</a> as an alternative payment mechanism to traditional currencies. But they are now also traded on spot exchanges as highly speculative investment assets.
Recent spin-off crowd funding opportunities such as <a href="http://bitcoinafrica.io/2017/09/08/sarb-says-no-protection-for-ico-investors/" target="_blank" rel="noopener">initial coin offerings</a> have become a particular cause of concern. These involve start-up cryptocurrency companies offering initial investment stakes in new token issues. China and Vietnam have <a href="https://www.ft.com/content/05b2748c-c903-11e7-aa33-c63fdc9b8c6c" target="_blank" rel="noopener">banned</a> them. Japan has taken a friendlier <a href="https://www.wsj.com/articles/regulators-are-looking-at-cryptocurrency-1516836363" target="_blank" rel="noopener">attitude</a> while the UK and the US have adopted a wait and see approach. South Africa, like many other developing countries, offers zero protection to investors in initial coin offerings.
These different responses are due to different legal definitions of cryptocurrencies. The rapidly evolving technology behind them doesn’t help the situation either.
The precise nature of an initial coin offerings depends on its structure as well as its context which can change quickly and have hybrid characteristics of financial instruments.
The definition, and hence legal treatment, of the tokens issued under an initial coin offering can be as diverse as a currency, commodity, security, property, loan, deposit, derivative or forex contract. Agreeing a taxonomy of cryptocurrencies defined by how they’re used is clearly one of the most urgent tasks facing regulators.
<a href="http://www.forbesafrica.com/lists/2018/02/08/forbes-first-list-cryptocurrencys-richest-people-meet-secretive-freaks-geeks-visionaries/" target="_blank" rel="noopener">READ MORE: Forbes&#8217; First List Of Cryptocurrency&#8217;s Richest People: Meet The Secretive Freaks, Geeks And Visionaries</a>
<h2>Towards a taxonomy of cryptocurrencies</h2>
Cryptocurrency expert <a href="https://new.innovatefinance.com/news/lawrence-wintermeyer-steps-ceo-innovate-finance/" target="_blank" rel="noopener">Lawrence Wintermeyer</a> has argued that distributed ledger technology powered digital assets could be organised into three potential buckets: cryptocurrencies, cryptocommodities, and <a href="https://www.forbes.com/sites/lawrencewintermeyer/2018/01/07/my-2018-crypto-predictions/#6294e3976b71" target="_blank" rel="noopener">cryptotokens</a>.
But the lack of harmonisation across jurisdictions is a wider problem than nomenclature.
Cryptocurrency companies sometimes use the distributed nature of these assets – which sit on digital ledgers held by multiple token holders – to argue that there is no issuer. They also sometimes argue that these assets are not securities, and that they should therefore not be subjected to a particular jurisdiction’s securities laws.
There are also clear cross border regulatory <a href="https://www.ft.com/content/32315636-cb01-11e7-ab18-7a9fb7d6163e" target="_blank" rel="noopener">gaps</a>. What makes it difficult to reconcile these is that the assets can easily be transferred and their origins are difficult to trace. Tokens could be issued in a more token-friendly jurisdiction like Japan. The same tokens could land up in the hands of unassuming retail investors in stricter jurisdictions such as the US.
<a href="http://www.forbesafrica.com/focus/2018/01/17/bitcoin-mining-uses-much-power-ireland-heres-thats-not-problem/" target="_blank" rel="noopener">READ MORE: Bitcoin Mining Uses As Much Power As Ireland. Here&#8217;s Why That&#8217;s Not A Problem</a>
<h2>Avoiding money laundering and financial crime</h2>
This cross border confusion allows token companies to pick and choose jurisdictions with favourable rules. This could make money laundering easier.
There are a few steps governments can take to close these gaps.
They should support investment in technology that makes the provenance of tokens clearer while preserving their encryption. Regulators could then enforce an “indicator of origin” as a standard. This would make it less easy for the assets to be transferred illegally.
Offshore centres like Jersey <a href="https://www.ft.com/content/e591541e-007e-11e6-99cb-83242733f755" target="_blank" rel="noopener">have got a lot of bad press</a> in recent the backlash against international financial centres. But there’s a great deal to learn from well-regulated offshore jurisdictions. They are beginning to take the lead with potential applications of international best practice and corporate governance for cryptocurrencies. They offer investors in digital assets an extra set of gatekeepers’ eyes, and potentially, a more calculated risk.
In jurisdictions like Jersey issuers of initial coin offerings have to jump through quite a few hoops. This includes using a regulated service provider which has to make an application to the Jersey companies registry for a consent. The service provider is among a number of <a href="https://www.gov.je/News/2017/Pages/InitialCoinOfferings.aspx" target="_blank" rel="noopener">requirements</a> that provide checks in relation to anti-money laundering and countering the financing of terrorism.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/emperors-new-coins/" target="_blank" rel="noopener">READ MORE: The Emperor&#8217;s New Coins</a>
<h2>Current frameworks and global co-ordination</h2>
But what could a coordinated global regulatory approach to cryptocurrencies look like?
Harmonisation via a code of conduct or voluntary signatory to a global compact could certainly stop token companies from cherry picking jurisdictions to their advantage. Not being signatories to the codes would place token companies outside the market.
A multilateral code of conduct or global convention or compact, such as those administered by the inter-governmental <a href="http://www.fatf-gafi.org/" target="_blank" rel="noopener">Financial Action Task Force on Money Laundering</a>, or a United Nations co-ordinated approach could be model solutions.
Standard regulatory codes are particularly critical for some pockets of the investment community. For example, there has been a significant <a href="https://cointelegraph.com/news/institutional-investors-will-bet-big-on-cryptocurrencies-in-2018" target="_blank" rel="noopener">surge</a> in the establishment of investment funds looking to invest in initial coin offerings on behalf of sophisticated investors.
Standard codes for institutional investors in the first instance, could help both regulation as well as innovation. Institutional investors, unlike retail investors, can withstand, and even benefit from, the upside of volatility over time.
For now, the poorly regulated speculative hoarding of cryptocurrencies reduces the potential of assets like this to become a public good. This ultimately affects the potential value of the tokens by amplifying volatility.
Paying attention to this is important for investors and regulators as well as issuers. There will also have to be a degree of self regulation by issuers as global regulators get up to speed. &#8211; Written by <a href="https://theconversation.com/profiles/desne-masie-252408" target="_blank" rel="noopener">Desné Masie</a>, Visiting Researcher in International Political Economy, <a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894" target="_blank" rel="noopener">Univers</a><a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894" target="_blank" rel="noopener">ity</a><a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894" target="_blank" rel="noopener"> of the Witwatersrand</a>
This article was originally published on <a href="http://theconversation.com" target="_blank" rel="noopener">The Conversation</a>.
<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/91168/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1" />

Why it’s in everybody’s interests to regulate cryptocurrencies

In the world of cryptocurrency, where billion-dollar fortunes can be made overnight, speed is everything — and CZ is the fastest of them all. From closet-size offices in Tokyo — &#8220;I would touch four people if I turned around in a circle&#8221;— the 41-year-old Chinese-Canadian coder runs Binance, a cryptocurrency exchange that has gone from a standing start to the largest on the planet in just under 180 days. CZ (born Changpeng Zhao) cut his teeth making high-frequency trading systems for Wall Street&#8217;s flash boys, and he built Binance to be a Ferrari. His exchange can process a blazing 1. 4 million transactions a second and on a peak trading day in January processed 3.5 billion new orders, cancels and trades. Speculators (some 25% of them from the U.S.) use Binance to trade 120 different coins, generating $200 million in profits for CZ&#8217;s exchange last quarter. BNB, the virtual coin CZ created in August that gives holders a 50% discount on trading fees, has a market cap of $1.3 billion. His stake in Binance and his coins give CZ a personal fortune worth as much as $2 billion.
He is hardly alone in becoming insanely and instantly rich from crypto. Chris Larsen, a longtime tech exec known for cofounding a string of fintech apps, saw his net worth flirt with $20 billion at the height of cryptomania in early January, based on his ownership of 5.2 billion XRP, the tokens of Ripple, the company he founded. XRP has since crashed 65%, but Larsen still tops Forbes&#8217; first crypto rich list, our (necessarily inexact) accounting of the 20 wealthiest people in crypto.
There are now nearly 1,500 crypto-assets in existence, valued at an aggregate of $550 billion, up 31 times since the beginning of 2017. While the prices of individual cryptocoins continue to swing wildly — Bitcoin is down almost 50% from its peak — it&#8217;s clear that blockchain-based currency is here to stay and that these virtual assets have real, albeit volatile and speculative, value. Black-market transactions, tax avoidance by individuals and sanctions-dodging by countries like North Korea fuel part of the demand, but so does a widespread excitement over the technology and an ideological desire for money to be free from the whimsies of nation-states.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/bitcoin-blockchain-billions/" target="_blank" rel="noopener">READ MORE: Bitcoin, Blockchain And Billions</a>
The winners of this digital lottery differ from those in previous manias. The shadowy beginnings, at once anarchistic, utopian and libertarian, drew an odd lot of pioneers who ranged from anti-establishment cypherpunks and electricity-guzzling &#8220;miners&#8221; to prescient Silicon Valley financiers and a larger-than-usual assortment of the just plain lucky &#8220;hodlers&#8221; (the typo-inspired crypto jargon for &#8220;buy and hold&#8221; investors). As in any gold rush, selling the pans and pickaxes &#8211; in this case running exchanges &#8211; is proving a more reliable path to riches than speculation. And, of course, easy money — especially if it&#8217;s viewed as a bearer asset — attracts scam artists and thieves.
Banking heir Matthew Mellon, whose $2 million investment in <a href="https://ripple.com/xrp/" target="_blank" rel="noopener">XRP</a> blossomed into some $1 billion, learned that firsthand in January. The morning after a big bash, the 54-year-old recent divorcé says he discovered four people rooting around his $150,000-a-month Los Angeles party pad. (He didn&#8217;t report it to the police.) The unwanted guests were probably after his XRP and they stole four laptops and two cellphones. They didn&#8217;t get Mellon&#8217;s crypto-fortune — anyone with enough assets to make our list long ago figured out how to secure it. (Sorry, thugs.) In Mellon&#8217;s case, the private keys are divided up and safely scattered in cold storage around the country in other people&#8217;s names. But the incident underscores the weirdness that separates cryptomania from bubbles past.
Identifying the biggest crypto winners and estimating the scale of their wealth is no simple task. The virtual currencies exist almost entirely outside the global financial system, and the newly minted crypto rich live in a strange milieu that blends paranoid secrecy with ostentatious display. Take CZ&#8217;s <a href="https://www.binance.com/" target="_blank" rel="noopener">Binance</a> exchange. It has no real headquarters: Employees are scattered across several countries, and CZ himself seems to change locales the way others change clothes. &#8220;We don&#8217;t want to be in one place right now because of regulatory uncertainty,&#8221; says CZ. Last we heard, CZ and his trademark black hoodie had just popped up in Taiwan.
And CZ is downright normal by crypto-billionaire standards. Former child actor Brock Pierce (The Mighty Ducks, First Kid) dresses like a cut-rate Johnny Depp in Pirates of the Caribbean and is given to making grandiose statements from the balcony of his penthouse in Santa Monica, California. &#8220;This is an opportunity to be a trillionaire &#8211; someone who is positively impacting a trillion living things on this planet,&#8221; he tells Forbes. Pierce once raised $60 million from Goldman Sachs with the help of Stephen Bannon, President Trump&#8217;s former chief strategist, to fund a company that sold virtual swords, chain mail and horses to role-playing videogamers. He also once got into trouble with his partners in a 1990s-era dot-com start-up after they were accused, in civil lawsuits, of sexual abuse of underaged boys. (Pierce has always denied the accusations and was never charged; one of his business partners, however, pleaded guilty to transporting minors across state lines for the purpose of sex.)
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/emperors-new-coins/" target="_blank" rel="noopener">READ MORE: The Emperor&#8217;s New Coins</a>
Pierce was early into the crypto game, first mining Bitcoin and then financing blockchain start-ups and investing in dozens of initial coin offerings. Although he publicly proclaims he is pledging a billion dollars to charity, he refuses to provide documentation that proves he has anywhere near that much money.
Given this opaqueness and crypto&#8217;s hyper-volatility, we are presenting our net-worth estimates in ranges. We based our numbers on estimated holdings of cryptocurrencies (a few provided proof), post-tax profits from trading crypto-assets and stakes in crypto-related businesses. We&#8217;ve also categorized our crypto rich list into five groups: idealists, builders, opportunists, infrastructure players and establishment investors. Many fit into more than one category.
It&#8217;s a near certainty that we&#8217;ve missed some people and that some of our estimates are wide of the mark. But this was equally true when we launched the first Forbes 400 list of America&#8217;s richest people in 1982. At the time, many people said we couldn&#8217;t — or shouldn&#8217;t — publish it. We did so anyway. And we firmly believe we made the world a better place by shining a light on the invisible rich. Just as crypto has evolved from the days of the Silk Road drug site and the Mt. Gox digital hijacking, fortunes of this magnitude should never be allowed to lurk in the shadows. &#8211; Written by <a href="https://www.forbes.com/sites/jeffkauflin/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Jeff Kauflin</a>, FORBES STAFF
<a href="https://www.forbes.com/richest-in-cryptocurrency/#73d03dd11d49" target="_blank" rel="noopener">READ THE FULL LIST OF THE RICHEST PEOPLE IN CRYPTOCURRENCY</a>

Forbes’ First List Of Cryptocurrency’s Richest People: Meet The Secretive Freaks, Geeks And Visionaries

Just a few years into the cryptocurrency revolution, bitcoin mining is already eating up an estimated 20,000 gigawatt hours of electricity per year. That’s roughly 0.1% of global generation, on par with the power demand of Ireland. The primary culprits are bitcoin mining appliances like the Antminer S9, which is a computer processor that does nothing but endlessly crunch algorithms to lengthen the blockchain. An Antminer draws a load of 1.5 kilowatts — enough to power <a href="https://www.georgiapower.com/in-your-community/electric-safety/chart.cshtml" target="_blank" rel="noopener">two refrigerators and a flatscreen TV</a>. If you run an Antminer 24/7 for a year it will produce about 0.85 bitcoins, at a cost of about 15,000 kilowatt hours. Depending on your power prices it will cost anywhere from $600 (at 3 cents per Kwh) to $1,800 (at 9 cents per Kwh) to mine 1 coin. Even with bitcoin having plunged to $11,600 this morning, there’s still money to be made, assuming you can get your machines cheap enough. Walmart <a href="https://www.walmart.com/ip/Bitmain-Antminer-S9-14-TH-s-asic-Bitcoin-miner-Power-supply-included/724184035?wmlspartner=wlpa&amp;selectedSellerId=7506&amp;adid=22222222227136573873&amp;wl0=&amp;wl1=g&amp;wl2=c&amp;wl3=245332564990&amp;wl4=pla-402226074919&amp;wl5=9027582&amp;wl6=&amp;wl7=&amp;wl8=&amp;wl9=pla&amp;wl10=115780710&amp;wl11=online&amp;wl12=724184035&amp;wl13=&amp;veh=sem" target="_blank" rel="noopener">sells</a> the Antminer s9 for $8,200.
But what happens if the bitcoin bubble just keeps expanding? Some <a href="https://www.weforum.org/agenda/2017/12/bitcoin-consume-more-power-than-world-2020/" target="_blank" rel="noopener">naysayers</a> worry that bitcoin mining could eat up all the <a href="https://www.vox.com/energy-and-environment/2017/12/2/16724786/bitcoin-mining-energy-electricity" target="_blank" rel="noopener">world’s</a> power generation <a href="http://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036" target="_blank" rel="noopener">by 2020</a>. Is it a realistic concern? No.
Analysts Michael Weinstein, Khanh Nguyen and their team at Credit Suisse took a look at the issue, and in a research note out today they conclude that fears of cryptocurrencies overwhelming the power grid are overblown. Start by comparing bitcoin’s 20,000 gigawatt hours per year with the 4.3 million Gwh used in the U.S. last year and 6 million by China. The analysts figured that if the price of bitcoin rose to $50,000, miners would find it economic to boost their efforts such that they would consume more than 350,000 gigawatt hours, still less than 2% of world power capacity. The team also calculated the bitcoin price that would be needed to incentivize miners to gobble up all the world’s generation capacity: $1.1 million per coin.
But that’s all assuming existing technology. As cryptocurrencies evolve, they will become more energy efficient. The proof-of-work algorithms run by bitcoin miners are needlessly complex. New coins have simpler algorithms. Ethereum is even shifting from a proof-of-work system to a more easily processed proof-of-stake system.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/bitcoin-blockchain-billions/" target="_blank" rel="noopener">READ MORE: Bitcoin, Blockchain And Billions</a>
Crypto-mining will enjoy the same economies of scale of web servers. From 2000 to 2010 the power consumed by data centers surged from 20,000 gigawatt hours to about 70,000 Gwh. At that rate it wasn’t going to take long for the growth of the internet to outstrip human ability to keep the lights on. Data centers evolved to meet the need, both growing in size and scale, as well as energy efficiency. Since 2010 server farm power demand has barely grown, despite the number of installed servers growing 6-fold. <a href="https://eta.lbl.gov/publications/united-states-data-center-energy" target="_blank" rel="noopener">According to</a> scientists at Lawrence Berkeley Lab, the industry is on track to improve energy efficiency 45% by 2020 with the likes of Google, Amazon and Facebook leading the charge.
Fears of rampant energy usage caused by rampant new marijuana cultivation were similarly half-baked. Utility companies in Colorado, California, Oregon and Washington have seen less than a 2% uptick in power demand linked to pot grows, according to the Credit Suisse team. Pacific Gas &amp; Electric even offers discount power pricing for growers — who have LED bulb technology to thank for keeping their lighting bills low.
There’s also the substitution effect. Crypto-blockchain-based payment systems will eventually replace our hack-prone credit card institutions, which themselves are <a href="http://www.datacenterknowledge.com/asia-pacific/visa-plans-its-first-non-us-data-centers-london-and-singapore" target="_blank" rel="noopener">massive</a> data centers (Visa even has one with a <a href="https://usatoday30.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1" target="_blank" rel="noopener">moat</a>). And somewhere out on the margin, cryptocurrencies are likely to reduce demand for other expensive-to-mine assets, like gold, which according to S&amp;P Global has an all-in cash cost of about <a href="https://marketintelligence.spglobal.com/our-thinking/ideas/gold-mining-companies-hold-operating-costs" target="_blank" rel="noopener">$900 per ounce</a>.
<a href="http://www.forbesafrica.com/investment-guide/2017/12/11/actually-okay-completely-ignore-bitcoins-1400-rally/" target="_blank" rel="noopener">READ MORE: It&#8217;s Actually Okay To Ignore Bitcoin&#8217;s 1,400% Rally</a>
In the long run, says Credit Suisse, the breakthrough far more likely to rile world energy markets is the electric vehicle. If, by 2040, EVs grab a third of new-car market share, the world could require more than 280 gigawatts of additional power generation capacity — or somewhere in the vicinity of 2.4 million gigawatt hours. But again, that’s figuring on current technology. After <a href="http://jes.ecsdl.org/content/164/1/A5019.full" target="_blank" rel="noopener">25 years of improvements</a>, lithium ion batteries are going to keep getting better.
Technology has a way of outwitting the unbelievers. Just a few months ago Jamie Dimon, CEO of JPMorgan, called bitcoin “<a href="https://www.cnbc.com/2017/10/13/jamie-dimon-says-people-who-buy-bitcoin-are-stupid.html" target="_blank" rel="noopener">stupid</a>” and a “fraud.” Last week he said he regretted those comments, saying, “<a href="http://www.foxbusiness.com/markets/2018/01/09/exclusive-jpmorgan-chase-chairman-ceo-jamie-dimon-regrets-saying-bitcoin-is-fraud-but-still-isnt-interested-in-it.html" target="_blank" rel="noopener">The blockchain is real</a>.” &#8211; Written by <a href="https://www.forbes.com/sites/christopherhelman/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Christopher Helman</a>, FORBES STAFF

Bitcoin Mining Uses As Much Power As Ireland. Here’s Why That’s Not A Problem

Forgive me for sounding like a crank, but it&#8217;s okay to totally ignore the Bitcoin rally.
Sure Bitcoin&#8217;s up over 1,400% this year (that&#8217;s as of the time I started typing) and its market capitalization now significantly exceeds that of <a href="https://www.forbes.com/companies/procter-gamble/" target="_blank" rel="noopener">Procter &amp; Gamble</a>, the best performing stock in <a href="https://www.forbes.com/sites/antoinegara/2017/09/19/boom-bust-bankruptcy-how-americas-biggest-companies-performed-in-forbes-first-100-years/#5a247baa612a" target="_blank" rel="noopener noreferrer">Forbes&#8217; first 100 years of existence</a>. Despite Bitcoin&#8217;s boom, the digital currency just doesn&#8217;t seem to have any impact on the important financial issues of the day, whether that&#8217;s saving, borrowing, or conducting everyday transactions.
If Bitcoin doesn&#8217;t influence how you save, how you borrow, or how you transact, then maybe there&#8217;s no point paying attention to its staggering rise in 2017. Now might be a good time to push against fears of missing out (FOMO) on the rally, with good reason.
Does Bitcoin really impact your portfolio or your financial plans? When it comes to retirement there are two major, trillion-dollar themes for savers. Nearly a decade after the financial crisis, Americans are returning to the stock market in droves, having been generally underinvested since the 2008 carnage and the market&#8217;s bottoming a year later. As people return to the market, they&#8217;re doing so using low-cost index mutual funds or exchange-traded funds, instead of high-priced managers. Broadly speaking, this a big positive.
After all, the stock market&#8217;s 10%-plus annualized total return over the past 100-years, and a less impressive 7% annual return since December 1997, is the growing bedrock of America&#8217;s retirement system. Big-data tools now show savers how they can plan their finances to meet retirement and other financial goals with a few mouse clicks. Innovations like target-date funds and <a href="http://www.forbes.com/etfs/" target="_blank" rel="noopener">ETFs</a> are creating new levels of precision when building these plans. All the while, fees are falling fast and Wall Street&#8217;s take is mired a steep decline. These trends are being driven by the BlackRocks, Vanguards and Fidelitys of the world, in addition to robo advisors such as Betterment and Wealthfront.
To all of this, Bitcoin is utterly non existent: It has no influence on stock market returns, it isn&#8217;t part of the fee-disruption equation, 401k plans tracking the S&amp;P 500 are doing just fine this year despite missing on &#8220;crypto&#8221;.
There&#8217;s talk of a stock market bubble with each new record high, but some of the fastest-rising companies on the S&amp;P 500, from <a href="https://www.forbes.com/companies/apple/" target="_blank" rel="noopener">Apple</a> to <a href="https://www.forbes.com/companies/facebook/" target="_blank" rel="noopener">Facebook</a> and Amazon, are luring the most careful investors like <a href="http://www.forbes.com/profile/warren-buffett/" target="_blank" rel="noopener">Warren Buffett</a> to Glen Kacher (<a href="https://www.forbes.com/sites/nathanvardi/2017/11/21/the-tiger-of-silicon-valley-glen-kachers-sizzling-hedge-fund/" target="_blank" rel="noopener noreferrer">read our exclusive profile</a>) and <a href="http://www.forbes.com/profile/stanley-druckenmiller/" target="_blank" rel="noopener">Stanley Druckenmiller</a> due to their fundamentals. We&#8217;ll hear from time-to-time about some <a href="https://www.forbes.com/sites/nathanvardi/2017/11/27/cryptocurrency-hedge-fund-fired-rogue-trader-amid-claims-of-incompetence/#7d651d693a82" target="_blank" rel="noopener noreferrer">hedge fund guy buying Bitcoin</a>, and I&#8217;ve even written <a href="https://www.forbes.com/sites/antoinegara/2017/07/18/the-unreformed-stock-picker-without-a-boss-bill-miller-is-betting-on-amazon-bitcoin-and-bob-dylan/#7646ff3549f8" target="_blank" rel="noopener noreferrer">a story or two about the newest</a> Bitcoin bull, but generally the smart money remains in non-crypto assets.
The S&amp;P 500 trades at a price of 25-times earnings and it carries a dividend yield of about 2%; it&#8217;s not cheap by historical standards but anyone who entered the market in the early 1960s at a similarly expensive valuation and stuck with their plans through good and bad times would likely be enjoying a bountiful retirement. At Forbes&#8217; 100th birthday party, <a href="https://www.forbes.com/sites/antoinegara/2017/09/20/dow-1000000-thats-warren-buffetts-latest-call/" target="_blank" rel="noopener noreferrer">Buffett predicted the Dow will exceed $1,000,000 by the time we turn 200</a>, and that&#8217;s possibly the safest prediction he&#8217;s ever offered.
<a href="http://www.forbesafrica.com/cover-story/2017/09/04/bitcoin-blockchain-billions/" target="_blank" rel="noopener">READ MORE: Bitcoin, Blockchain And Billions</a>
The same theme emerges in the big-short and long-term financial moves people have to make in their lives, for instance borrowing to buy a home, finance an education, or in making slightly smaller auto and big-ticket consumer purchases.
These can be major decisions and the current landscape is marked by plenty of &#8220;disruption&#8221;. Virtually all of it is coming from fintech startups, not cryptocurrencies and their attendant networks. Digital-first companies are becoming mainstays in America&#8217;s largest lending markets; competition is increasing, risk assessments are improving, transparency and seamlessness is rising, consumer costs are broadly plunging.
After all, it&#8217;s a new crop of companies like  <a href="https://www.forbes.com/companies/quicken-loans/" target="_blank" rel="noopener">Quicken Loans</a>, SoFi, GreenSky, Credit Karma, LendingClub that are transforming the way everything from a home loan to a college education or pile of credit card debt is handled. Improving credit access is still one of the big non partisan topics of discussion in America and waves of novel solutions are emerging. Entire financing markets, from clean software interfaces originating loans all the way to new securitization markets to distribute debt to institutional investors have emerged in recent years. Bitcoin is nowhere to be found.
Even in payments and other basic transactions, there&#8217;s a growing menu of digital-first options that casts into question whether cryptocurrencies and their associated networks are actually that relevant.
When it comes to electronic payments, it is still <a href="https://www.forbes.com/companies/visa/" target="_blank" rel="noopener">Visa</a> and MasterCard who are winning on a dollar basis. Payment volumes at Visa increased 41% in 2017 to $7.3 trillion, at MasterCard volumes rose 10% to $1.4 trillion last quarter. Cryptocurrencies seek to disrupt these networks, offering no-cost transactions, but the day-to-day flow of money seems to be falling to the incumbents and it is disrupting the use of cash.
<a href="http://www.forbesafrica.com/focus/2017/10/26/will-battle-soul-bitcoin-destroy/" target="_blank" rel="noopener">READ MORE: Will This Battle For The Soul Of Bitcoin Destroy It?</a>
Meanwhile, the market isn&#8217;t static. PayPal&#8217;s Venmo has made person-to-person payments cost free and utterly seamless, like a social network of money. Small businesses are gaining new options; <a href="https://www.forbes.com/companies/square/" target="_blank" rel="noopener">Square</a> recently reported a 31% quarterly increase in payment volumes as it offers merchant sellers access to better and lower cost transaction networks. The world&#8217;s most valuable private financial technology company is <a href="https://www.forbes.com/companies/stripe/" target="_blank" rel="noopener">Stripe</a> , another distruptor in e-commerce and payments.
Behind all of this, it must be said, is the rule of law.
If you get screwed you may have your day in court. Some entities are bound by investor protections and fiduciary standards. Depending on what&#8217;s being done, there&#8217;s also careful assessments of credit risk, identity, and the like. Yes these entrenched systems are the establishment, but that&#8217;s a major advantage.
Of course, cryptocurrencies like Bitcoin and their associated networks promise to disrupt it all. It is presented as potentially a new way to raise capital (goodbye Goldman bankers), a new peer-to-peer sharing tool for everything from data to real estate deals, a cheap alternative to transactions (sorry, greedy MasterCard), and even a novel take on the concept of currency itself. Some view Bitcoin as a store of value like gold, or a slightly damaged and possibly fake Leonardo Da Vinci painting. Others view it as part a sort of new world order liberated from tax authorities, governments, and money-printing central banks. Maybe it is the 2017 fear and volatility trade since the Cboe VIX index remains in single digits despite a profusion of global risk?
Everyday, price graphs that resemble the textbook definition of every bubble ever in history are bandied about as evidence of Bitcoin&#8217;s validity. Judging by the relentless and inexplicable gains, there are likely new converts to Bitcoin by the minute, or hour. The price rise may also cause skeptics to dig their heels further, increasing their bubble talk.
There&#8217;s another, possibly better option: You can simply stick to your plans and ignore Bitcoin. &#8211; Written by <a href="https://www.forbes.com/sites/antoinegara/" target="_blank" rel="noopener" data-ga-track="contrib block byline">Antoine Gara</a>, FORBES STAFF

Tag: Bitcoin

FORBES AFRICA SOCIAL MEDIA