BY TIANA CLINE



Current processes that track commodities such as palm oil through the supply chain require a lot of time and effort to perform, and often leave out valuable information around sustainability claims. Can blockchain solve the problem?



IN ITS PUREST FORM, PALM oil has a deep red color and a rich fragrance. When it was first discovered by Ca’da Mosto, a 15th-century explorer, he documented that it has “the scent of violets, the taste of olive oil and a color which tinges food like saffron”. Palm oil has been consumed as both food and medicine for thousands of years in West and Central Africa. While it remains a beloved, traditional part of African cuisine, it is a product that has become industrialized globally – bleached, refined, deodorized and relabeled to the point that it is now a hidden, food-like substance. Today, palm oil can be found in everything from ultra-processed foods to cosmetics and household cleaning products. It’s an indispensable ingredient, one linked to controversy ranging from slave labor to deforestation and greenhouse gas emissions. Can the blockchain help?



“Technology is a significant enabler of traceability and transparency, especially when it comes to knowing exactly where our raw material is coming from, even when it passes through many different hands on its way to us,” says Andrew Wilcox, the senior manager for sustainable sourcing and digital programmes at Unilever. “Getting full traceability and transparency in our supply chain is a crucial part of this journey.”



According to Wilcox, current processes that track commodities – such as palm oil – through the supply chain require a lot of time and effort to perform, and often leave out valuable information around sustainability claims. “There are currently no viable methods for preserving origin data at the scale of the commodity supply chain. This means that by the time the commodities are manufactured into products for consumers, products are simply marked as being sustainable or non-sustainable. This results in consumers rightfully questioning some of these claims.”



And that is where GreenToken comes in, a ‘chain-of- custody’ blockchain developed by SAP to help companies keep track of their bulk commodity supply chain sourcing, especially for raw materials like palm oil which is known for being especially difficult to trace.



“The supply chain is long and complex and until recently, has not had the benefit of a joined up digital transformation in recording palm [oil] movements from end-to-end,” says James Veale, GreenToken’s co-founder. GreenToken is one of the first initiatives to address that and make it into a repeatable standard.



“Ninety percent of the world’s raw materials are traded on a bulk basis. This means they are mixed with other identical raw materials at some point in the supply chain, causing most of the information to get hidden or lost,” adds Wilcox. “With GreenToken, tokens are created by commodity buyers (mills in the case of palm oil) and a range of information related to the crop (origins or sustainability credentials) are captured within the token. As the crop moves to each stage of the supply chain (e.g., a refinery), a request is made 



o transfer the digital tokens.” The blockchain tokens are therefore a digital twin for the crops, enabling a ‘virtual segregation’ even if the materials have been mixed with materials from a different source.



“The GreenToken blockchain has the ability to record RSPO certified palm at the grower delivery to the mill level and track that palm throughout the extended supply chain,” explains Veale. “In this way, the sustainable volume is made transparent on the blockchain wherever it may be in the supply chain, giving the end buyer a lot of confidence in their purchase.”



Certification from the Roundtable on Sustainable Palm Oil (RSPO) can take many years to achieve and the proven certified sustainable percentage is relatively small.



“End users can only claim that their palm oil is certified sustainable if they can trace it back to grower deliveries to an originating crush mill. As the supply chain is long and complex with much commingling and processing, and as off takers do not want to make unsubstantiated claims,” says



Veale. “Digital systems like blockchain can help carry this proven sustainable certification along the value chain to the off-taker, quicker, cheaper and with full auditability and so accelerate the evidence down the supply chain to the end consumer.”



Palm oil is the most land-efficient vegetable oil and the main source of livelihoods for millions of farmers and communities from Cameroon to Sierra Leone. There are 10 countries that make up the Africa Palm Oil Initiative with the biggest plantation (to date) sitting in Liberia.



As Russia’s War on Ukraine rages on and sunflower oil exports drop significantly, food producers are struggling to seek replacements and palm oil is making an unforeseen comeback that could potentially derail sustainability efforts if technology like the GreenToken blockchain doesn’t step in.



According to one plant-based company in South Africa that originally abstained from using palm oil, the sunflower oil shortage has made them seriously



Ultimately, the GreenToken blockchain will not only give consumers much-needed assurance that the palm oil they’re using is ethically-grown, it will help recognize the sustainability efforts of growers and smallholder farmers. “When we have a system that is potentially able to maintain and verify a tamper-proof record of commodities and their credentials, it gives more confidence that the premiums we pay for sustainable raw materials are impactful and can incentivise the production and purchase of sustainable commoditiesthroughoutthesupplychain,”saysWilcox.“We want our consumers to have the confidence when picking up a Unilever product that the product has been made with sustainable palm oil.”

Screenshot 2022-09-14 at 10.22.33

Connecting Palms In Africa: Blockchain For The Supply Chain

<h2 id="h-topline">TOPLINE</h2>



Digital assets firm Jump Crypto said Thursday it replaced the $325 million worth of tokens allegedly stolen from its portfolio company Wormhole Portal, a platform that helps users transfer cryptocurrency between the Solana and Ethereum blockchains, in one of the biggest hacks ever to hit the booming—and largely unregulated—decentralized finance space.



<h2 id="key-facts">KEY FACTS</h2>



Jump Crypto, the cryptocurrency-focused investment arm of quant trading firm Jump Trading, which has&nbsp;<a href="https://www.forbes.com/sites/rebeccaszkutak/2021/09/14/jump-capital-raises-350-million-and-doubles-down-on-crypto/?sh=68875db226de">raised</a>&nbsp;more than $700 million in capital,&nbsp;<a href="https://twitter.com/JumpCryptoHQ/status/1489301013408497666" target="_blank" rel="noreferrer noopener">tweeted</a>&nbsp;Thursday afternoon that it had &#8220;replaced&#8221; 120,000 stolen Ethereum-based tokens &#8220;to make community members whole&#8221; and support Wormhole but provided no further details about the bailout.



Jump&#8217;s tweet came hours after blockchain platform Wormhole, which launched last August and holds roughly $1 billion in deposited funds,&nbsp;<a href="https://twitter.com/wormholecrypto/status/1489232008521859079?s=20&amp;t=IYFEdB9yWoO4mM2okL7SgQ" target="_blank" rel="noreferrer noopener">confirmed</a>&nbsp;on Twitter that funds involved in the hack had been &#8220;restored,&#8221; and said on Telegram that &#8220;all funds are safe.&#8221;



Wormhole previously notified users of a possible hack on Twitter at about 4 p.m. ET Wednesday,&nbsp;<a href="https://twitter.com/wormholecrypto/status/1488976115750383626?s=20&amp;t=Iw5TGKo9Cp8f6gfWDIqPUA" target="_blank" rel="noreferrer noopener">saying</a>&nbsp;its network was down for maintenance as the firm looked into a potential attack.



About an hour later, Wormhole&nbsp;<a href="https://twitter.com/wormholecrypto/status/1489001949881978883?s=20&amp;t=Iw5TGKo9Cp8f6gfWDIqPUA" target="_blank" rel="noreferrer noopener">said</a>&nbsp;its network had been exploited and claimed about 120,000 tokens of a cryptocurrency known as wrapped ether, which tracks the value of the world&#8217;s second-largest cryptocurrency, ether, had been stolen—representing some $325 million in value.



In a message embedded onto the Ethereum blockchain, Wormhole offered the attacker a $10 million bounty to return the funds,&nbsp;<a href="https://www.elliptic.co/blog/325-million-stolen-from-wormhole-defi-service" target="_blank" rel="noreferrer noopener">according</a>&nbsp;to blockchain analytics company Elliptic, which called the Wednesday incident the fourth largest cryptocurrency hack ever.



Soon after the heist, analysts at blockchain security firm CertiK said the hack represented the largest-ever attack on the Solana network and an &#8220;unfortunate reality&#8221; for the booming decentralized finance space, which has heated up among investors alongside the broader cryptocurrency industry over the past year, despite a growing number of similar hacks.



<h2 id="crucial-quote">CRUCIAL QUOTE</h2>



&#8220;[Jump] believes in a multichain future and that @WormholeCrypto is essential infrastructure,&#8221; Jump, which&nbsp;<a href="https://thefullfx.com/jump-trading-buys-certus-one/" target="_blank" rel="noreferrer noopener">acquired</a>&nbsp;Wormhole&#8217;s parent company for an undisclosed amount in August, tweeted Thursday, referring to the type of protocol Wormhole uses to allow users to swap tokens between different blockchains. &#8220;That’s why we replaced 120k ETH to make community members whole and support Wormhole now as it continues to develop.&#8221;



<h2 id="tangent">TANGENT</h2>



Even though the space only started gaining traction in 2020, there have been more than $2 billion in direct losses suffered by decentralized finance services due to hacks and exploits, according to Elliptic on Wednesday. In August, hackers&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/10/more-than-600-million-stolen-in-ethereum-and-other-cryptocurrencies-marking-one-of-cryptos-biggest-hacks-ever/?sh=70c80e727f62">breached</a>&nbsp;blockchain-based platform Poly Network and extracted more than $600 million in cryptocurrencies, marking DeFi&#8217;s biggest hack ever. Those funds were&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/12/hacker-finally-returns-nearly-all-600-million-stolen-in-ethereum-other-tokens-after-major-crypto-heist/?sh=5cd80c6c19cb">eventually</a>&nbsp;returned .



<h2 id="what-we-don-t-know">WHAT WE DON&#8217;T KNOW</h2>



It&#8217;s still unclear who the alleged hacker is and whether Wormhole is still working to retrieve the stolen funds.



<h2 id="big-number">BIG NUMBER</h2>



$192 billion. That’s the market value of all decentralized finance tokens, according to cryptodata&nbsp;<a href="https://defillama.com/" target="_blank" rel="noreferrer noopener">website</a>&nbsp;DeFi Llama. The space shot past a $250 billion valuation for the first time ever in December but has since fallen amid a&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2022/01/10/looking-ugly-crypto-market-crash-intensifies-after-300-billion-sell-off-how-low-can-bitcoin-prices-go/">broader</a>&nbsp;cryptocurrency market sell-off.



<h2 id="key-background">KEY BACKGROUND</h2>



Securities and Exchange Commission Chairman Gary Gensler has repeatedly said the decentralized finance industry, also known as DeFi, deserves more government scrutiny. Such platforms largely sidestep traditional intermediaries like central banks and exchanges for financial services and instead rely on blockchains and cryptocurrencies to process transactions. Gensler has said the practices can implicate securities, commodities and banking laws, and last year&nbsp;<a href="https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03" target="_blank" rel="noreferrer noopener">called</a>&nbsp;on Congress to ramp up its authority over the cryptocurrency industry, which he likened to the “Wild West.”&nbsp;



<h2 id="further-reading">FURTHER READING</h2>



<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/12/hacker-finally-returns-nearly-all-600-million-stolen-in-ethereum-other-tokens-after-major-crypto-heist/?sh=5cd80c6c19cb">Hacker Returns Nearly All $600 Million Stolen In Ethereum, Other Tokens After Major Crypto Heist</a> (Forbes)



By Jonathan Ponciano, Forbes Staff

Millennial generation boy on smart screen

Jump Crypto Fronts $325 Million In Stolen Crypto One Day After Solana’s Biggest Hack Ever

<h2 id="h-topline">TOPLINE</h2>



Wormhole Portal, a platform that helps users transfer cryptocurrency between the Solana and Ethereum blockchains, said Wednesday afternoon a hacker had stolen more than $325 million worth of tokens in what experts call one of the biggest hacks ever in the booming $192 billion decentralized finance space—an area regulators seem keen to crack down on after a slew of high-profile heists.



<h2>KEY FACTS</h2>



Blockchain platform Wormhole, which launched last August and holds roughly $1 billion in deposited funds, notified users of a possible hack on Twitter at about 4 p.m. ET Wednesday,&nbsp;<a href="https://twitter.com/wormholecrypto/status/1488976115750383626?s=20&amp;t=Iw5TGKo9Cp8f6gfWDIqPUA" target="_blank" rel="noreferrer noopener">saying</a>&nbsp;its network was down for maintenance as the firm looked into a potential attack.



About an hour later, Wormhole&nbsp;<a href="https://twitter.com/wormholecrypto/status/1489001949881978883?s=20&amp;t=Iw5TGKo9Cp8f6gfWDIqPUA" target="_blank" rel="noreferrer noopener">said</a>&nbsp;its network had been exploited and claimed about 120,000 tokens of a cryptocurrency known as wrapped ether, which tracks the value of the world&#8217;s second-largest cryptocurrency, ether, had been stolen, representing some $325 million in value.



In a message embedded onto the Ethereum blockchain, Wormhole offered the attacker a $10 million bounty to return the funds,&nbsp;<a href="https://www.elliptic.co/blog/325-million-stolen-from-wormhole-defi-service" target="_blank" rel="noreferrer noopener">according</a>&nbsp;to blockchain analytics company Elliptic, which called the Wednesday incident the fourth largest cryptocurrency hack ever.



Wormhole did not immediately respond to&nbsp;Forbes&#8217;&nbsp;request for comment, but it&nbsp;<a href="https://twitter.com/wormholecrypto/status/1489036273012682753?s=20&amp;t=kLVkos0r2-xt_Zrq1PFiiA" target="_blank" rel="noreferrer noopener">said</a>&nbsp;shortly before 7 p.m. that the network&#8217;s vulnerability had been &#8220;patched&#8221;; it&#8217;s still unclear who the alleged hacker is and how Wormhole users may have been affected by the heist.



Soon after the attack, analysts at blockchain security firm CertiK said the hack represented the largest-ever attack on the Solana network and an &#8220;unfortunate reality&#8221; for the booming decentralized finance space, which has heated up among investors alongside the broader cryptocurrency industry over the past year, despite a growing number of similar hacks.



Even though the space only started gaining traction in 2020, there have been more than $2 billion in direct losses suffered by decentralized finance services due to hacks and exploits, according to Elliptic on Wednesday.



<h2>BIG NUMBER</h2>



$192 billion. That’s the current market value of all decentralized finance tokens, according to cryptodata&nbsp;<a href="https://defillama.com/" target="_blank" rel="noreferrer noopener">website</a>&nbsp;DeFi Llama. The figure shot past $250 billion for the first time ever in December but has since fallen amid a&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2022/01/10/looking-ugly-crypto-market-crash-intensifies-after-300-billion-sell-off-how-low-can-bitcoin-prices-go/">broader</a>&nbsp;cryptocurrency market sell-off.



<h2>KEY BACKGROUND</h2>



Securities and Exchange Commission Chairman Gary Gensler has repeatedly said the decentralized finance industry, also known as DeFi, deserves more government scrutiny. Such platforms largely sidestep traditional intermediaries like central banks and exchanges for financial services and instead rely on blockchains and cryptocurrencies to process transactions. Gensler has said the practices can implicate securities, commodities and banking laws, and last year&nbsp;<a href="https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03" target="_blank" rel="noreferrer noopener">called</a>&nbsp;on Congress to ramp up its authority over the cryptocurrency industry, which he likened to the “Wild West.”&nbsp;



<h2>TANGENT</h2>



In August, hackers&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/10/more-than-600-million-stolen-in-ethereum-and-other-cryptocurrencies-marking-one-of-cryptos-biggest-hacks-ever/?sh=70c80e727f62">breached</a>&nbsp;blockchain-based platform Poly Network and extracted more than $600 million in cryptocurrencies, marking DeFi&#8217;s biggest hack ever. Those funds were&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/12/hacker-finally-returns-nearly-all-600-million-stolen-in-ethereum-other-tokens-after-major-crypto-heist/?sh=5cd80c6c19cb">eventually</a>&nbsp;returned.



<h2>FURTHER READING</h2>



<a href="https://www.forbes.com/sites/jonathanponciano/2021/08/12/hacker-finally-returns-nearly-all-600-million-stolen-in-ethereum-other-tokens-after-major-crypto-heist/?sh=5cd80c6c19cb">Hacker Returns Nearly All $600 Million Stolen In Ethereum, Other Tokens After Major Crypto Heist</a> (Forbes)



By Jonathan Ponciano, Forbes Staff

Business fund investor planning for investment in crisis

Solana’s Biggest Hack Ever: $325 Million In Crypto Allegedly Stolen From $1 Billion Decentralized Finance Platform

<h2 id="h-topline">TOPLINE</h2>



The price of bitcoin fell to a three-month low Monday morning, continuing a slide that began when the Federal Reserve sparked a broad sell-off last week by cautioning it may move more quickly than previously expected to reverse policy meant to bolster the economy during the pandemic, and experts forecast the latest crypto drawback could persist for weeks if the central bank’s hawkish stance becomes more aggressive.



<h2>KEY FACTS</h2>



Bitcoin fell as much as 5% to $39,692 by 9:45 a.m. ET, according to crypto data website CoinGecko, bringing its losses to more than 12% since the Fed&nbsp;<a href="https://www.forbes.com/sites/sergeiklebnikov/2022/01/05/stocks-plunge-after-fed-minutes-show-central-bank-could-remove-more-stimulus/?sh=5e92fe304448">warned</a>&nbsp;on Wednesday it may move more aggressively to remove pandemic-era stimulus as it looks to combat high levels of inflation.



In a weekend email, analyst Yuya Hasegawa of cryptocurrency broker Bitbank cautioned he expects the world&#8217;s largest cryptocurrency could continue falling until the broader market, which has similarly&nbsp;<a href="https://www.forbes.com/sites/sergeiklebnikov/2022/01/05/stocks-plunge-after-fed-minutes-show-central-bank-could-remove-more-stimulus/?sh=5e92fe304448">struggled</a>&nbsp;since the Fed&#8217;s Wednesday announcement, digests the likelihood of the Fed hiking interest rates as soon as March.



Though Hasegawa said bitcoin could fall as low as $40,000 in the near term, the analyst cautioned the government&#8217;s consumer price index report due out Wednesday could intensify the price weakness if it shows inflation spiked more than expected, further justifying the Fed’s decision to ease stimulus and raise rates.



In a Monday note, Marcus Sotiriou, an analyst at UK-based digital asset broker GlobalBlock, said he expects bitcoin will hover around $40,000 even if the CPI report on Wednesday shows inflation rose more quickly than expected last month, positing the recent sell-off has likely priced in much of the negative expectations.



On Thursday, crypto billionaire <a href="https://www.forbes.com/sites/nathanvardi/2018/02/07/michael-novogratz-galaxy-digital-ethereum-crypto-cryptocurrency-ether/">Mike Novogratz</a>, the CEO of financial services firm Galaxy Digital, <a href="https://www.bloomberg.com/news/articles/2022-01-06/mike-novogratz-sees-bitcoin-finding-bottom-at-38-000-40-000" target="_blank" rel="noreferrer noopener">told</a> CNBC the selloff could push bitcoin down another 8% from current prices to as low as $38,000—a level unseen since early August.



“I&#8217;m not nervous in the medium term but we&#8217;re going to have a lot of volatility in the next few weeks,” the staunch bitcoin bull said told CNBC, before pointing to&nbsp;<a href="https://cointelegraph.com/news/crypto-funds-attracted-9-3b-in-inflows-in-2021-as-institutional-adoption-grew" target="_blank" rel="noreferrer noopener">booming</a>&nbsp;institutional adoption as a bullish indicator for the nascent space.&nbsp;



<h2>TANGENT</h2>



Bitcoin was far from alone in falling Monday morning. Over the past 24 hours, ether, binance coin and sol were down as much as 5%—pushing losses to roughly 20% apiece over the last week.



<h2>WHAT TO WATCH FOR</h2>



Though Fed officials last month said they project only three interest rate hikes this year, Goldman Sachs chief economist Jan Hatzius said Monday he expects the central bank will actually hike interest rates four times this year given a &#8220;greater sense of urgency&#8221; than he previously expected in the Fed&#8217;s Wednesday announcement.



<h2>CRUCIAL QUOTE&nbsp;</h2>



&#8220;Bitcoin remains vulnerable to a breach of the $40,000 level, and it could get bad for ether if it breaks the $3,000 level,&#8221; Oanda Senior Market Analyst Ed Moya wrote in a Friday email. Ether prices clocked in at about $2,985 on Monday.&nbsp; &#8220;The long-term outlook is still bullish for both the top two cryptocurrencies, but the short-term is looking ugly.&#8221; Meanwhile, Novogratz wasn&#8217;t alone among billionaire crypto investors cheering bitcoin on during its latest sell-off: &#8220;So. much. money. patiently waiting to [buy the dip] in bitcoin,&#8221;&nbsp;<a href="https://www.forbes.com/profile/barry-silbert/">Barry Silbert</a>, the founder and CEO of crypto firm Digital Currency Group, wrote on Twitter Saturday afternoon.



<h2>CONTRA</h2>



Despite bitcoin&#8217;s bouts of intense volatility, Goldman Sachs co-head of global foreign exchange Zach Pandl wrote in a note to clients last week that the cryptocurrency could top $100,000 in the next five years. Pandl said he expects bitcoin&#8217;s share of the crypto market, currently about 41%, &#8220;will most likely rise over time as a byproduct of broader adoption of digital assets&#8221; and that the cryptocurrency will increasingly compete with gold as a hedge against inflation.&nbsp;



<h2>BIG NUMBER</h2>



$1.9 trillion. That&#8217;s the value of all the world&#8217;s cryptocurrencies Monday morning, down more than $300 billion, or 14%, since Wednesday and more than $1 trillion below an all-time high of $3 trillion in November.



<h2>SURPRISING FACT</h2>



Over the last five years, bitcoin prices have skyrocketed nearly 4,300%. However, the cryptocurrency is down nearly 40% from a record of $69,000 set in November.



<h2>FURTHER READING</h2>



<a href="https://www.forbes.com/sites/roberthart/2022/01/06/major-cryptocurrencies-including-bitcoin-ethereum-plummet-after-fed-minutes-signal-looming-interest-rate-hikes/?sh=6e1e04f3794a">Major Cryptocurrencies—Including Bitcoin, Ethereum—Plummet After Fed Minutes Signal Looming Interest Rate Hikes</a> (Forbes)



By Jonathan Ponciano, Forbes Staff

Daily Life In Edmonton During The Covid-19 Pandemic

‘Looking Ugly’: Crypto Market Crash Intensifies After $300 Billion Sell-Off—How Low Can Bitcoin Prices Go?

<p id="h-startups-are-supposed-to-specialize-but-opensea-s-founders-thrived-by-building-a-wide-open-market-for-creating-and-trading-all-manner-of-nfts-whether-art-music-or-gaming-now-that-they-re-centimillionaires-and-poised-to-become-billionaires-they-have-other-worries-competitors-fraudsters-and-the-next-crypto-crash">Startups are supposed to specialize, but OpenSea’s founders thrived by building a wide-open market for creating and trading all manner of NFTs, whether art, music or gaming. Now that they’re centimillionaires and poised to become billionaires, they have other worries: competitors, fraudsters and the next crypto crash.&nbsp;



In March 2020, as Covid-19 began to spread, OpenSea founders Devin Finzer and Alex Atallah held a gut-check phone call. Their five-person startup had built a platform on which users could create, buy and sell all sorts of nonfungible tokens (NFTs)—computer files used to track ownership of unique digital assets like art and music on a ledger known as a blockchain. Yet 26 months after going live, they had just 4,000 active users doing $1.1 million in transactions a month, which translated (given OpenSea’s 2.5% sales commission) to a paltry $28,000 in monthly revenue. The NFT market had a “dead feeling,” recalls CTO Atallah, who conducted his side of the call from the basement of his parents’ Colorado home, where he had gone to work as New York locked down. Ominously, Rare Bits, a direct and better-funded competitor, had just announced it was folding. The pair set a do-or-die goal of doubling business by the end of the year—and met it in September.&nbsp;



Finally, in February 2021, the NFT market roused from hibernation—and went crazy. In July, OpenSea processed $350 million in NFT trades. That same month, in a round led by Andreessen Horowitz, it raised $100 million in venture capital at a $1.5 billion valuation. In August, as NFT hype (and FOMO) reached a fever pitch, volume spiked tenfold to&nbsp;<a href="https://dune.xyz/rchen8/opensea" target="_blank" rel="noreferrer noopener">$3.4 billion</a>—an $85 million commission windfall for OpenSea in a month when it likely burned less than $5 million on expenses. Although transactions have since retreated to around $2 billion a month, the platform now has 1.8 million active users and a dominant share of the market. It’s up to 70 employees and is scouting for dozens more, including much-needed customer service reps.&nbsp;



Recently, there’s been talk of another round of venture investment at a valuation that could reach $10 billion. With a 19% ownership stake each, CEO Finzer, 31, and Atallah, 29, are centimillionaires on the cusp of becoming crypto’s newest billionaires.&nbsp;



Yet Atallah was humble as he chatted in November at a restaurant in New York’s kitschy new Margaritaville Resort Times Square, sitting near its 32-foot Statue of Liberty replica, which hoists a cocktail instead of a torch. He was there for the third annual&nbsp;<a href="https://www.nft.nyc/" target="_blank" rel="noreferrer noopener">NFT.NYC</a>&nbsp;convention, which boas­ted 5,500 registrants with 3,000 on the waiting list. Young enthusiasts prowled the hotel wearing&nbsp;<a href="https://opensea.io/collection/boredapeyachtclub" target="_blank" rel="noreferrer noopener">Bored Ape Yacht Club</a>&nbsp;sweatshirts—a tribute to a collection of 10,000 simian NFTs whose owners treat it as a social club as much as a collectible or investment.&nbsp;



You might say humility was at the heart of Finzer and Atallah’s successful strategy. Some advisors had urged them to specialize in an NFT niche—say, art, gaming or music. But they opted to build a category-agnostic platform because they didn’t think they were prescient enough to predict which NFT types would catch on.&nbsp;



Beyond casting a wide net, Finzer says, OpenSea has thrived simply by “being in the right place at the right time” and listening to users about what they want. The platform tracks NFTs on ethereum and other blockchains, and all purchases are made in crypto. Sellers can opt for a fixed-price or auction format. Artists can reserve a percentage of each resale price. Ultimately, Finzer sees the NFT ownership verification model working for anything from concert tickets to real estate—he’s just not sure what will succeed when. “I’ve always had a pretty gray view of the future,” he says.&nbsp;



Despite its sudden success, OpenSea faces big and varied risks—from fraud and another NFT market bust to new competition. In October, Coinbase, the nation’s largest crypto exchange and an original investor in OpenSea, announced it will launch its own NFT peer-to-peer marketplace. Within weeks, Coinbase had 2.5 million sign-ups for its waiting list, and CEO Brian Armstrong was predicting the new business “could be as big or bigger” than its core crypto trading business.&nbsp;



OpenSea’s open-market approach heightens the risk of counterfeits, scams and fraud—just ask Amazon or eBay. For example, a scammer can copy an image of someone else’s art and sell it as an NFT on OpenSea. Finzer says the site is working on an automated way to spot fakes and has moderators who investigate suspicious offerings. Still, people can present problems too. In September, Finzer&nbsp;<a href="https://opensea.io/blog/announcements/employee-information-use-at-opensea/" target="_blank" rel="noreferrer noopener">requested the resignation</a>&nbsp;of OpenSea’s head of product after Twitter users&nbsp;<a href="https://twitter.com/0xZuwu/status/1437921263394115584" target="_blank" rel="noreferrer noopener">discovered</a>&nbsp;a crypto wallet linked to that executive was buying NFTs shortly before they appeared on the price-moving OpenSea home­page—in other words, he was allegedly frontrunning his own employer’s decisions.&nbsp;



While they come across as humble, OpenSea’s founders are hardly low on ambition. Raised in the Bay Area by a physician mom and a software engineer dad, Finzer says he was “devastated” to be rejected by Harvard, Stanford, Princeton and Yale. (He settled for Brown.) After a short stint as a Pinterest software engineer, he cofounded his first startup, Claimdog, in 2015 and sold it to Credit Karma a year later.&nbsp;



As a kid, Atallah, the Colorado-born son of Iranian immigrants, made spreadsheets to compare the attributes of everything from birds to brow­sers. After graduating from Stanford, he worked as a programmer before teaming up with Finzer. In January 2018 they entered the Y Combinator startup accelerator with an idea for paying users crypto to share their Wi-Fi hotspots. But at that point, CryptoKitties—the cartoonish virtual cats whose ownership records were digitally inscribed on the ethereum blockchain—had captured the public imagination. “It was the first time people who didn’t really care about crypto were suddenly getting interested in it for reasons other than flipping a coin. I thought that was really powerful,” Atallah says. They quickly pivoted to OpenSea and later moved their operation to New York City.&nbsp;



Much like Beanie Babies, their cloth-and-stuffing ancestors, CryptoKitties turned out to be duds as investment-grade collectibles—the supply was too great to make most of them worth much. After spiking in early 2018, interest in both crypto and NFTs went into hibernation.&nbsp;https://view.ceros.com/forbes/sidebar-2-3-1?heightOverride=741



What awakened the market in early 2021 wasn’t OpenSea’s doing. Instead, platforms like the billionaire Winklevoss twins’ Nifty Gateway&nbsp;<a href="https://www.forbes.com/sites/michaeldelcastillo/2021/04/05/revenge-of-the-winklevii-facebook-winklevoss-bitcoin-nft-billionaire-revenge/?sh=4c2e24a01572">captured attention</a>&nbsp;with curated, high-quality art. Last March, Christie’s auctioned the NFT for digital artist Beeple’s “Everydays: The First 5000 Days”&nbsp;for $69 million, the third-highest price ever paid for work by a living artist.&nbsp;



As NFTs fetched eye-popping prices, more and more ordinary folks decided they too wanted to become creators, collectors or speculators—and turned to OpenSea, with its anyone-can-be-an-artist ethos, built-in secondary market and handy features. For instance, the site has an advanced filtering system so users can find NFTs with the rarest—and theoretically most valuable—attributes. (Only 46 Bored Apes have solid-gold fur, and they command a hefty premium.) When a new NFT is created and recorded on ethereum, the site automatically spawns a webpage displaying it—a nice feature as NFTs became a status symbol, with people sharing their OpenSea pages and changing their Twitter profile pictures to an NFT they own. “It became this circular feedback loop, driven by envy and desire. And OpenSea really captured that market,” observes Richard Chen, a partner at VC firm 1Confirmation and an early OpenSea investor.&nbsp;



Dani, 27, a former fashion designer living in Georgia, has turned a $17,000 investment in NFTs like the World of Women into a portfolio worth $715,000. AJ, a 37-year-old former gaming company CEO from North Carolina, put less than $10,000 into NFTs and now values his digital assets at $1.3 million. He recently convinced his gastroenterologist brother to start buying NFTs. The brother, in turn, hooked his own buddies. “They’re pretty much doing colonoscopies and then checking their phones for new NFT drops,” AJ says.&nbsp;



Sounds like a bubble, all right, raising the question of how OpenSea will fare when it bursts. Responds Finzer: “We have a large amount of padding in case we need to weather a winter.” 



<a href="https://www.forbes.com/sites/jeffkauflin/"></a>By Jeff Kauflin, Forbes Staff

Non-fungible token art.

What Every Crypto Buyer Should Know About OpenSea, The King Of The NFT Market

“I’m a geriatic Millennial,” laments Alexis Ohanian, the 38-year-old cofounder of Reddit. “Even I don’t understand it all.”



He’s referring not to the online oddities—memes, GIFs, NSFW comment threads— that have turned Reddit into&nbsp;<a href="https://www.forbes.com/sites/abrambrown/2021/02/08/fresh-off-gamestop-mania-reddit-raises-250-million-in-new-funding/">a prosperous virtual hangout spot</a>&nbsp;with over 50 million users. Instead, he’s talking about another topic that takes up a lot of the internet’s attention today: NFTs.



As a guy who’s lived on the web for decades, Ohanian’s being modest, but his comment gets at a core truth. The NFT world is a hard-to-navigate space, full of unfamiliar people, complex ideas and jargon galore, like what even is an NFT. (For the record, it is a non-fungible token,&nbsp;<a href="https://www.forbes.com/sites/abrambrown/2021/02/26/what-is-an-nft-and-should-you-buy-one/">a digital collectible or art</a>&nbsp;bought and sold through online marketplaces.) Ohanian will do his best to work through it all as the cohost of a podcast launching today dedicated to NFTs,&nbsp;<a href="https://itsprobablynothing.xyz/" target="_blank" rel="noreferrer noopener">“Probably Nothing,</a>” available on Spotify and Apple Podcasts, the name a nod to how the virtual asset is often dismissed as fundamentally worthless.



For a cohost, Ohanian has teamed up with another internet enthusiast,&nbsp;<a href="https://www.forbes.com/sites/abrambrown/2020/09/23/everything-youve-wanted-to-know-about-gen-z-but-were-afraid-to-ask/?sh=3425d5cf3d19">24-year-old Tiffany Zhong</a>, whose startup, Islands, offers a platform for digital influencers looking to better monetize their following. The pair originally met at a Y-Combinator hackathon in 2014 when Zhong was still in high school: She went and a built a speed-reading app, he was then a Y-Combinator partner. (Ohanian has also since started his own venture capital firm, Seven Seven Six.) They struck up a friendship more recently after noticing they had similar interests on Twitter.



“We were just exchanging NFT memes with each other, talking about interesting projects. It’s grown out of a conversation we’ve had in our DMs”—their direct messages between each other on Twitter—“for several months,” says Zhong.



They’re not the only ones thinking about NFTs, which have become one of the biggest stories of 2021. A year ago, the digital assets recorded less than $10 million a month in sales. By constrast, $323 million worth of NFTs traded hands on a single day in August, a record unbeaten for now.MORE FOR YOU<a href="https://www.forbes.com/sites/abrambrown/2021/09/23/in-bid-for-growth-a-new-clubhouse-feature-aims-to-increase-private-chats/">A New Clubhouse Feature Aims To Increase Small, Private Chats—And Deeper Engagement</a><a href="https://www.forbes.com/sites/abrambrown/2021/09/22/facebook-apple-privacy-change-software/">Facebook Admits It Reported Faulty Numbers To Advertisers, Blames Apple</a><a href="https://www.forbes.com/sites/petersuciu/2021/09/13/aocs-tax-the-rich-dress--ultimate-fashion-statement-or-display-of-hypocrisy/">AOC’s ‘Tax The Rich Dress’ – Ultimate Fashion Statement Or Display Of Hypocrisy</a>



But as even money and attention has picked up, the space remains seperate from the regulated world of mainstream finance and investment, making it a place uncomfortably rife with speculation and speculators. To defend against any criticism of bias, Zhong and Ohanian say they will be open about their own crypto investments on the podcast and have publicly published links to the digital wallets containing their holdings. “People are starting to looking for more content in this space, to look for people who are not trying to pull a fast one,” Zhong says. “We want to be the go-to space with legitimate guests and topics that span being a collector, a creator and an investor in this space.”



Unsurprisingly, many of those guests aren’t exactly household names, such as Farokh Sarmad, an active NFT investor, and ThankYouX, an artist whose work has been sold by Phillips auction house. Zhong and Ohanian also plan on speaking to people like Keith Grossman, the president of&nbsp;Time&nbsp;magazine, which&nbsp;<a href="https://time.com/5948741/time-nft-covers/" target="_blank" rel="noreferrer noopener">has offered</a>&nbsp;some of its archival covers as NFTs, and Noah Davis, the Christie’s executive who helped established the company as an early mover in this world through&nbsp;<a href="https://www.forbes.com/sites/abrambrown/2021/03/11/beeple-art-sells-for-693-million-becoming-most-expensive-nft-ever/">a record-setting $69.3 million sale</a>&nbsp;of a collage by the artist Beeple in March.



It was around that same time when Ohanian “was talking about the future investment portfolio and how it was gonna look much different,” he recalls. “It’s not going to be just stocks and bonds.”



“The same trends that made Reddit work 16 years ago, are now acting out way more effectively, way faster,” he says, pointing to the speed at which fast online communities can form and flourish today. “And that&#8217;s pretty damn exciting.”



By Abram Brown, Forbes Staff

Web Summit 2018

A New Alexis Ohanian Podcast Hopes To Be A Clarifying Guide To NFTs

Sotheby’s, the world’s largest art and luxury auction house, is betting on the digital art world by joining a $20 million seed round investment in Delaware-based NFT studio Mojito, joining the likes of Future Perfect Ventures, Creative Artists Agency and NEA’s Connect Ventures.&nbsp;



The investment values the firm at $100 million, according to a statement, and Future Perfect partner Jalak Jobanputra will take a seat on the company’s board. Mojito plans to use the new capital to develop its engineering teams in order to continue building the Mojito platform, and to create more partnerships to launch brand-specific non-fungible token (NFT) marketplaces that work differently from today’s standard of Amazon and eBay-type platforms.



Sotheby’s joins the increasing number of traditional art dealers and collectors adopting NFTs as part of their repertoire, as digital art keeps gaining momentum. But Sotheby’s is taking its relationship with digital art a step further by making its first investment in a crypto company, betting on the success and prevalence of NFTs and other crypto assets as serious marketable goods.



“We believe in the future of using blockchain to expand ownership of digital assets,” says Charles F. Stewart, Sotheby’s CEO. “There is a huge amount of focus and interest in NFTs. We hear about these categories from most of our existing clients and collectors, but we are also engaging with a rather large new audience who is very focused on this category. Sotheby’s mission is to promote access and ownership of exceptional art and luxury objects, so focusing and developing this area makes a lot of sense.”



Sotheby’s&nbsp;<a href="https://www.sothebys.com/en/digital-catalogues/natively-digital-a-curated-nft-sale" target="_blank" rel="noreferrer noopener">first NFT sale</a>&nbsp;took place less than five months ago, and it stood as a one-off event. Now, with a new customized marketplace specifically designed to auction NFTs and an investment in the startup behind it all, the auction house seems to be all in. Last week, Sotheby’s launched its NFT marketplace, Sotheby’s Metaverse, along with a new curated sale,&nbsp;<a href="https://metaverse.sothebys.com/" target="_blank" rel="noreferrer noopener">Natively Digital 1.2: The Collectors</a>, that will be taking bids through October 26. A second iteration of Sotheby’s first NFT sale, Natively Digital, the auction features 53 pieces from the holdings of 19 notable collectors including NFT Girl, Steve Aoki, AOI and Paris Hilton. In addition to tracking the assets on the ethereum blockchain, the marketplace lets bidders pay in ether, bitcoin and USDC cryptocurrencies, as well as fiat currencies.



Earlier this year, auction house Christie’s first NFT auction kicked off the crypto luxury goods explosion with the more than $69 million sale of “Everydays — The First 5000 Days,” by the artist known as Beeple. Not long after, Guggenheim Partners’ co-founder announced plans to build the world’s largest NFT museum just blocks away from the MoMA in a skyscraper overlooking Central Park. Over the past seven months, NFTs have been adopted as a way to generate revenue (and get attention) from an entirely new vertical for firms including Gucci, Burberry, and Balenciaga. Total NFT transaction volumes over the same period have increased from just over $52 million to $408 million, according to NFT market analysis platform NonFungible.com.



So, it’s perhaps no coincidence that Mojito is also the first startup to branch out from Serotonin, a marketing and venture firm that helps companies get attention using applications built directly on a blockchain, called Web3. Mojito builds and maintains NFT marketplaces — like Sotheby’s Metaverse — for companies to participate in the booming market on their own terms. Mojito’s marketplaces are compatible with Ethereum apps.



“The crypto space has gotten a bad rap for being inaccessible and hard. We want to help lower the barrier to entry, make it easy, make it fun, and give brands space to make it their own,” says Dan Kinsley, CEO and cofounder of Mojito. “I’m passionate about decentralization in general and helping bring users into the space, and this is a great conduit for that.”



<a href="https://www.forbes.com/sites/isabelcontreras/"></a>By Isabel Contreras, Forbes Staff

Screenshot 2021-10-22 at 09.18.13

Sotheby’s Makes First Crypto Investment, Backing NFT Startup Using Ethereum Blockchain

As bitcoin hovers near its all-time high, a growing number of cryptocurrency companies are proving they can take a tiny set of resources and turn them into highly profitable enterprises very quickly.&nbsp;



Dydx, a four-year-old San Francisco startup that lets traders outside the U.S. buy and sell cryptocurrency-based financial products, recently processed more transaction volume than Coinbase, the most valuable crypto company in America. On September 27 and 28, Dydx recorded $18.6 billion in transactions, compared with $5.9 billion for Coinbase, according to&nbsp;<a href="https://www.coingecko.com/en/exchanges/dydx_perpetual#statistics" target="_blank" rel="noreferrer noopener">CoinGecko</a>. That has helped Dydx pull in $75 million in revenue so far in 2021. It expects to hit $125 million before year’s end, with $81 million in net profit, says 28-year-old founder and CEO Antonio Juliano. That would equate to a sky-high net profit margin of 65%.&nbsp;



Juliano grew up in Pittsburgh and went to Princeton to study computer science. Like crypto billionaire&nbsp;<a href="https://www.forbes.com/sites/stevenehrlich/2021/10/06/the-richest-under-30-in-the-world-all-thanks-to-crypto/">Sam Bankman-Fried</a>, he didn’t have a burning interest in crypto before he entered the industry. He just knew he wanted to join a tech startup and later become an entrepreneur. In 2014, venture capitalist Fred Wilson visited one of Juliano’s entrepreneurship classes at Princeton and spoke about Coinbase, giving Juliano an idea for where to work after college. He graduated in 2015 and joined Coinbase as a software engineer, becoming its 100th employee. He stayed for a year, did a short stint at Uber and then started a search engine for cryptocurrency applications, which failed because his timing was too early, Juliano says.



He decided he wanted to build something on top of Ethereum, the popular cryptocurrency software that acts like a decentralized computer with applications running on top. After studying financial markets and watching Coinbase’s growth, he got the idea for Dydx. “The way most financial markets evolve is, first of all, an asset is created, then it&#8217;s traded on spot exchanges,” he says, referring to exchanges that let you directly own an asset—like Coinbase does for bitcoin.&nbsp;



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



“Then assets are traded on margin exchanges. And then, eventually, people make derivative products on top of an asset that people want to trade. So it seemed like a pretty logical next thing to build,” he says.&nbsp;



In late 2017, at the peak of the<a href="https://www.forbes.com/sites/jeffkauflin/2018/10/29/where-did-the-money-go-inside-the-big-crypto-icos-of-2017/?sh=e54adca261bb">&nbsp;initial coin offering boom</a>&nbsp;in crypto, he landed $2 million in seed funding from Andreessen Horowitz, Polychain Capital and Coinbase cofounders Brian Armstrong and Fred Ehrsam, among other backers. Dydx launched in 2018 and let users buy ether “on margin,” meaning they could borrow money through the Dydx platform to buy crypto, a strategy traders use to get additional leverage and maximize their profits (potential losses are magnified, too).&nbsp;



By 2019, Dydx was processing about $1 million a day in transactions. The next year, it pivoted to focus on “perpetual swaps,” a derivative popularized by Hong Kong crypto exchange Bitmex. Perpetuals track the price of bitcoin, but they don’t require you to own actual bitcoin. Unlike futures, the financial derivatives that have been widely used for over a century, perpetuals don’t have an expiration date. After launching them in 2020, Dydx soon grew to trade between $10 million and $30 million a day.&nbsp;



Two big changes brought on Dydx’s volume spike this year, according to Juliano. In April, Dydx implemented a blockchain technology called&nbsp;<a href="https://starkware.co/" target="_blank" rel="noreferrer noopener">StarkWare</a>, which dramatically speeds up cryptocurrency transactions made through Ethereum. Before this change, people trading on Ethereum-based, decentralized exchanges often had to wait 60 seconds for trades to finalize, and they had to pay Ethereum “gas” transaction fees of $50 to $100. With StarkWare, the gas fees are much lower, and Dydx pays them. “Now you make a trade, and it instantly updates like a normal website would,” Juliano says. “That&#8217;s pretty different from what most people are used to in decentralized finance.”&nbsp;



The second big change was that Dydx partnered with a Switzerland-based&nbsp;<a href="https://dydx.foundation/blog/introducing-dydx-token" target="_blank" rel="noreferrer noopener">foundation</a>&nbsp;to launch a Dydx cryptocurrency token, and then aggressively pursued a marketing tactic called “liquidity mining.” That’s a fancy term for offering monetary rewards for people to trade on an exchange. Dydx can offer the self-minted currency as the reward, creating a low-cost way to fund incentives. “Tokens can really throw fuel on the fire for growth with a product that already has product-market fit,” says Juliano.&nbsp;



The effects of these changes have been staggering. Dydx’s daily volume jumped from about $30 million in July to $450 million in August, then to&nbsp;<a href="https://www.coingecko.com/en/exchanges/dydx_perpetual#statistics" target="_blank" rel="noreferrer noopener">$2 billion</a>&nbsp;over the past month. (The spike at the end of September arose because trading awards get distributed at the end of the month, and people feel more urgency to trade when the deadline approaches.) Dydx has just 6,000 active customers who each trade hundreds of thousands of dollars a day in crypto on average.&nbsp;



One downside of offering the “liquidity mining” incentives to traders: It can attract “wash trading,” when a single person creates two accounts and trades with himself to collect the rewards. One day in August, Dydx noted that&nbsp;<a href="https://dydx.foundation/blog/en/epoch-0" target="_blank" rel="noreferrer noopener">$1.7 billion</a>&nbsp;of the cryptocurrency token compound was traded on its platform. That was about ten times more than the amount of compound that changed hands on all other crypto exchanges combined. Dydx investigated, concluded it was wash trading and didn’t pay trading rewards to the offending users.&nbsp;



“That prompted us to take a really active stance against wash trading,” says Juliano. “We have active monitoring programs that use both common sense and technical analytics to try to identify wash trading.” He thinks between 1% and 5% of Dydx’s volume in August was wash trading. In September, he says it dropped to 0.1% due to the new monitoring measures.



Most of Dydx’s users are in Asia and Europe—due to tighter regulatory restrictions in the U.S., Dydx blocks all U.S. residents from using its platform—and in September, China’s central bank announced that all crypto-to-crypto transactions were illegal. China has a&nbsp;<a href="https://www.coindesk.com/learn/china-crypto-bans-a-complete-history/" target="_blank" rel="noreferrer noopener">long history</a>&nbsp;of cracking down on crypto, and residents have largely found ways around the government bans. But if China finds a way to block or dampen crypto derivatives trading in the country, it would undoubtedly have a negative impact on Juliano’s business. “Dydx isn’t based in China and doesn’t market to Chinese users, so we aren’t a good source for comments on China regulation,” Juliano says.



Unlike Coinbase and other brokerages, Dydx doesn’t let people store money on its exchange, and it doesn’t have any regulatory licenses. It doesn’t perform the “know your customer” checks required of regulated financial institutions, although it uses a third-party service to help monitor users’ digital wallets for illicit funds. This bare-bones approach to regulation keeps compliance costs low and profit margins high. Juliano thinks it won’t get him into hot water with U.S. regulators. “Dydx has been in contact with the CFTC and other government regulators for a long time now,” he says. “I think we first met with them about three and a half years ago, and we&#8217;ve submitted multiple comment letters to them.” He adds, “It really comes down to the fact that we just don’t support U.S. customers.”



Dydx last raised venture capital funding in June at a $215 million valuation, according to PitchBook. It was then processing about $25 million a day, or about 1% of what it transacts today. If it raised money again, that valuation would rise steeply, but Juliano doesn’t plan to raise more venture funding since the company is so profitable. He says he’ll continue to keep head count low, likely not exceeding 50 people over the next year. “A small team with the highest quality people can out-iterate and out-ship larger teams, especially in such a new market.”



Even with a small staff, over the next three to five years, “Our highest-level goal is to become one of the biggest exchanges in crypto, period,” he says. To hit that goal, he’ll have to outpace not only Coinbase, but also <a href="https://www.forbes.com/sites/stevenehrlich/2021/10/06/the-richest-under-30-in-the-world-all-thanks-to-crypto/?sh=3b7eff343f4d">FTX</a>, which processes about $15 billion a day, and Binance, which does a whopping $90 billion.

Screenshot 2021-10-19 at 06.53.26

How A 19-Person Cryptocurrency Startup Surpassed Coinbase In Daily Trading Volume

TOPLINE Tanzania became the latest country to signal its support for digital assets this weekend as its president instructed financial authorities to prepare for widespread use of cryptocurrencies, elevating bitcoin prices further after El Salvador <a href="https://www.forbes.com/sites/roberthart/2021/06/09/el-salvador-makes-history-as-worlds-first-country-to-make-bitcoin-legal-tender/?sh=5313aaa7eaa3">became the first country</a> to make bitcoin legal tender last week and Elon Musk outlined <a href="https://www.forbes.com/sites/jonathanponciano/2021/06/13/musk-denies-bitcoin-pump-and-dump-and-says-tesla-will-resume-transactions-once-this-mining-goal-is-reached/?sh=60560104aa2a">plans</a> for Tesla to resume accepting bitcoin as a form of payment. 



<h3 id="h-key-facts">KEY FACTS</h3>



President Samia Suluhu Hassan&nbsp;<a href="https://www.cityam.com/bitcoin-closes-in-on-40000-as-elon-musk-and-tanzania-give-the-markets-a-lift/" target="_blank" rel="noreferrer noopener">called</a>&nbsp;on the Tanzanian Central Bank Sunday to begin “working on” facilitating widespread use of cryptocurrencies in the East African nation.&nbsp;



While many in Tanzania have not yet embraced decentralized finance, Hassan&nbsp;<a href="https://twitter.com/Benji_Fernandes/status/1404105080157126657?s=20" target="_blank" rel="noreferrer noopener">said</a>&nbsp;the Central Bank should “be ready for the changes and not be caught unprepared.”



Hassan is one of the most senior politicians to signal support for digital assets since El Salvador&nbsp;<a href="https://www.forbes.com/sites/roberthart/2021/06/09/el-salvador-makes-history-as-worlds-first-country-to-make-bitcoin-legal-tender/?sh=5313aaa7eaa3">voted</a>&nbsp;to adopt bitcoin as legal tender last week and helped give the flagging market a boost.



The announcement helped bitcoin gain nearly 10% in 24 hours, nearly reaching $40,000 a token Monday morning.



The token was also buoyed on by <a href="https://www.forbes.com/sites/jonathanponciano/2021/06/13/musk-denies-bitcoin-pump-and-dump-and-says-tesla-will-resume-transactions-once-this-mining-goal-is-reached/?sh=60560104aa2a">news</a> that Tesla would resume its use of bitcoin when there is proof the asset is obtained using around 50% clean energy.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Our President tells the Bank Of Tanzania to learn more about Cryptocurrencies 🙌🏽 <a href="https://t.co/UfstRm1ktw">pic.twitter.com/UfstRm1ktw</a>&mdash; Benjamin Fernandes 🇹🇿 (@Benji_Fernandes) <a href="https://twitter.com/Benji_Fernandes/status/1404105080157126657?ref_src=twsrc%5Etfw">June 13, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 id="h-what-to-watch-for">WHAT TO WATCH FOR</h3>



There is growing popular support for bitcoin adoption in Nigeria that also gained momentum over the weekend. Russell Okung, an NFL player of Nigerian descent,&nbsp;<a href="https://bitcoinmagazine.com/culture/bitcoin-letter-to-nigeria-government" target="_blank" rel="noreferrer noopener">penned</a>&nbsp;an open letter to the Nigerian president imploring the country to adopt a Bitcoin standard so as to avoid “falling behind.” Twitter and Square CEO Jack Dorsey, one of the most high profile crypto enthusiasts,&nbsp;<a href="https://finance.yahoo.com/news/jack-dorsey-tweets-support-nigerian-121200414.html" target="_blank" rel="noreferrer noopener">tweeted</a>&nbsp;his support of the idea a number of times over the weekend.&nbsp;



<h3 id="h-key-background">KEY BACKGROUND</h3>



While reaching its highest point in several weeks, bitcoin, along with the wider crypto market, is still recovering from a tailspin that rapidly&nbsp;<a href="https://www.forbes.com/sites/roberthart/2021/05/19/leading-crypto-exchanges-down-as-bitcoin-and-ether-plummet/?sh=17aad93154ee">wiped</a>&nbsp;over $700 billion from the market’s value. This slump was primarily induced by Tesla&nbsp;<a href="https://www.forbes.com/sites/joewalsh/2021/05/12/tesla-will-stop-accepting-bitcoin-as-payment-due-to-environmental-worries-musk-says/?sh=fa7a9ca6e9ff">announcing</a>&nbsp;it would no longer accept bitcoin due to environmental concerns and China&nbsp;<a href="https://www.forbes.com/sites/jonathanponciano/2021/05/18/china-bans-banks-from-crypto-business-saying-speculative-trading-seriously-infringing-on-financial-order/?sh=455a4d677898">cracking</a>&nbsp;down on the assets. Support from the likes of El Salvador, alongside other countries and banks that may begin to&nbsp;<a href="https://www.cnbc.com/2021/06/08/bitcoin-2021-el-salvador-adoption-could-be-huge-for-cryptocurrency.html" target="_blank" rel="noreferrer noopener">adopt</a>&nbsp;bitcoin, or other cryptocurrency tokens, the market has slowly started to recover, though remains volatile. Beyond Tanzania, lawmakers in a number of Latin American countries have&nbsp;<a href="https://cointelegraph.com/news/latin-lawmakers-don-lazer-eyes-on-twitter-in-support-of-bitcoin" target="_blank" rel="noreferrer noopener">expressed</a>&nbsp;at least a casual interest in following El Salvador’s footsteps, including Brazil and Panama.&nbsp;



<h3 id="h-further-reading">FURTHER READING</h3>



<a href="https://www.forbes.com/sites/roberthart/2021/06/09/el-salvador-makes-history-as-worlds-first-country-to-make-bitcoin-legal-tender/?sh=5313aaa7eaa3">El Salvador Makes History As World’s First Country To Make Bitcoin Legal Tender</a>&nbsp;(Forbes)



<a href="https://cointelegraph.com/news/tanzanian-president-urges-central-bank-to-prepare-for-crypto" target="_blank" rel="noreferrer noopener">Tanzanian president urges central bank to prepare for crypto</a> (Coin Telegraph)



By Robert Hart, Forbes Staff

TANZANIA-POLITICS-SWEARING-IN-CEREMONY

Tanzania Considers Crypto—And Boosts Bitcoin—As Nations Line Up Behind El Salvador To Embrace Decentralized Finance

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.



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“My feeling is that within the next three to five years, Bitcoin [will] take over gold&#8217;s market cap.” – Ran Neuner
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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">“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>

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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>

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Binance Spinoff Aims To Be Bitcoin-Powered Venmo Of Africa

Bitcoin

Bitcoin’s Guardian Angel: Inside Coinbase Billionaire Brian Armstrong’s Plan To Make Crypto Safe For All

Take a close look at trading activity on BKEX—a cryptocurrency exchange founded in 2018 and registered in the British Virgin Islands—and you’ll see something odd. Compare its transactions side-by-side with those of Binance, one of the largest crypto exchanges in the world, and you’ll notice BKEX’s trading history is a replica, printing the same numbers delayed by a few seconds. 



According to CoinMarketCap, BKEX has $1.1 billion in daily volume, making it the 20th-largest exchange on the planet. Yet it seems to be simply copying Binance’s trade history and passing it off as its own, in perhaps the laziest attempt in history to fool people into thinking it’s a lively place to trade digital assets.   



A new report by Alameda Research, a 20-person crypto trading firm with offices in Hong Kong and Berkeley, California, reveals a clever set of tricks used by crypto exchanges to fabricate volume. 



In the wake of other reports on phony trades, including one by digital asset manager Bitwise indicating that 95% of all transactions are bogus, Alameda felt it could create better research by leveraging its trading data and experience. 



READ MORE | <a rel="noreferrer noopener" aria-label="Is Forex A Scam Or Money Goals? (opens in a new tab)" href="https://www.forbesafrica.com/investment/2019/04/01/is-forex-a-scam-or-money-goals/" target="_blank">Is Forex A Scam Or Money Goals?</a>



The startup was cofounded in 2017 by Sam Bankman-Fried, 27, an MIT alum and former trader at high frequency trading outfit Jane Street. Gary Wang, 26, a fellow MIT grad and former Google software developer, is his cofounder. The firm has $100 million in assets, and over the past month it has traded $1 billion a day on average, making it one of the largest crypto trading firms in the world. 



Exchanges make money by charging users to trade, and they have many reasons to artificially inflate volume. More activity means a higher rank on the still-popular website CoinMarketCap, which can attract new users. 



Exchanges also charge fees to new cryptocurrency projects that want to get listed in their marketplace, and the perception of popularity helps them command higher rates. Since an exchange’s place of business is just a website or an app, and many located outside the U.S. are unregulated, it can publish any numbers it wants and call them trades. 



Meanwhile, CoinMarketCap continues to insufficiently vet exchanges’ transaction volume, often taking companies at their word and publishing dubious numbers. 



According to Alameda’s research, another method exchanges use to juice their statistics is sneaking in large, fake transactions amid a flurry of smaller ones. CoinEgg, a Hong Kong-registered exchange that trades $1.1 billion a day reported by CoinMarketCap, recently employed this tactic with litecoin (LTC) trades. 



During a period when Alameda observed 15 different offers to buy and sell litecoin in a maximum quantity of 134 LTC, several trades printed as large as 2,000 LTC, as if a buyer appeared out of thin air. 



Trading marketplaces typically publish their “order book,” showing a list of bid prices at which people are willing to buy an asset, plus a separate set of offer prices where people are willing to sell. 



READ MORE | <a rel="noreferrer noopener" aria-label="How Cryptocurrency Scams Work (opens in a new tab)" href="https://www.forbesafrica.com/investment/2019/05/14/how-cryptocurrency-scams-work/" target="_blank">How Cryptocurrency Scams Work</a>



For instance, Bill might be willing to buy bitcoin at $10,000, while Mary wants to sell at no less than $10,050. For a trade to happen, a new buyer must be willing to pay the $10,050 that Mary is offering, and the vast majority of trades that clear will align with orders that previously showed up in the order book, unless two users place offsetting orders at the same exact time. 



Yet on some exchanges, trades get executed at prices and sizes that fall outside anything sitting on the order book. On Digifinex, a Singapore-based crypto trading venue, Alameda observed bids and asks for bitcoin between $8,296 and $8,298, but several trades printed at $8,290 and $8,293, prices lower than what anyone was willing to sell at.



On LAToken, a Moscow digital exchange, Alameda saw bids and offers with a maximum size of 1.6 bitcoin in the order book. Implausibly, several trades sailed through at sizes up to 20 bitcoin. LAToken founder Valentin Preobrazhenskiy says his platform only has a “tiny share” of 20-bitcoin orders and that exchanges use inflated volumes as a marketing tool. 



“The situation would change when large exchange-ranking sites would add a section for trading volumes based on trades reported to regulators,” he says. On Singapore-based ABCC, the best bid and offers Alameda saw were for sizes less than one ether, yet several transactions materialized with sizes of up to 11 ether. 



Among trading venues, there’s also the well-worn method of simply printing transactions that fall in the middle of the bid and ask prices, which Alameda’s research spotted in IDAX and Coineal. In total, Alameda’s report gives examples of fishy trading patterns on 60 different crypto exchanges. Aside from LAToken, none of the exchanges named above responded immediately to&nbsp;Forbes’&nbsp;request for comment.&nbsp;



The methodology behind Alameda’s research was to test each exchange on six different criteria. First, they manually looked at an exchange’s order book and observed where trades printed. If more than 10% of transactions didn’t appear on the order book, it failed on this dimension. Another test involved observing the percent of an exchange’s trades that took place at the best available bids or offers.&nbsp;



A third criterion was to analyze how much Alameda itself traded on a given exchange, since the startup deals in “virtually every cryptocurrency,” considers its algorithms “exchange-agnostic” and estimates that it trades 5% of all global crypto volume. 



<blockquote class="wp-block-quote">“If we trade more than .5% of an exchange’s reported volume, we consider that exchange to pass according to this criterion,” the report  reads. For more details on its methodology, see the full report.</blockquote>



Beyond exchanges’ bad behavior, the report has other provocative insights. It claims that crypto—including both “spot” trades of actual digital assets and derivatives, like bitcoin futures—trades $38 billion in real volume a day, and 87% of that happens on Asian exchanges, with just 9% happening on U.S. venues. The strict regulatory environment in the U.S. is likely a contributing factor in Asia’s dominance, Alameda says.&nbsp;



Compared with Bitwise, which released a follow-up fake volume reportin May 2019, Alameda thinks more crypto volume is real. For large exchanges like OKEx and Huobi, which were founded in China, Alameda estimates about 70% of their transactions are authentic. 



Bitwise is much more skeptical, as is the Blockchain Transparency Institute, which has estimated that more than 60% of Huobi’s volume is fake and more than 90% of OKEx’s volume is fabricated. 



A Huobi spokesperson says it doesn’t engage in wash trading, but that it has observed some market-makers doing so on its platform, and it takes steps to stamp them out.



 An OKEx spokesperson says the company isn’t involved in and doesn’t tolerate wash trading, adding, “Recently we have joined the Data Accountability &amp; Transparency Alliance (DATA) led by CoinMarketCap, as a commitment to reveal as much data as possible.”



-Jeff Kauflin; Forbes Staff

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The Anatomy Of A Fake Cryptocurrency Trade: How Exchanges Create Phony Transactions

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>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>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>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>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



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Tag: Cryptocurrency

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