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‘Damn Huge’: Germany Opens Up to Institutional Crypto Funds

A new law means that around 4,000 existing institutional investment funds will now be eligible to invest in crypto assets. 

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In brief

  • New legislation enabling 4,000 Spezialfonds to invest in crypto assets becomes law in Germany on July 1.
  • Spezialfonds are favored by institutional investors, and interest in them is now exploding, according to analysts.

In Germany, new legislation enabling managers of the most popular institutional investment funds—the so-called Spezialfonds—to allocate 20% of them to crypto-assets is set to come into force on July 1.

The measure has been hailed as a big boost to Germany’s position as a financial investment hub, and experts believe it will nurture the crypto industry as a whole by further legitimizing the asset class. 

“The addition of crypto assets in Spezialfonds is an important step for their acceptance,” German parliamentarian Frank Schäffler told Decrypt. “Here, the law is going in the right direction and we expressly welcome it,” he added. 

The law cleared Germany’s federal parliament, the Bundestag, last Thursday, and is due to be rubber-stamped by the country’s Federal Council imminently. It will apply to both existing Spezialfonds and to new ones set up by institutional investors such as financial institutions, insurance companies, and pension funds. In all, around 4,000 existing investment funds will now be eligible to invest in Bitcoin and other crypto assets, Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC) told Decrypt

“This is damn huge,” Hildebrandt said. Around €1.2 trillion ($1.8 trillion)  is invested into Spezialfonds, which have fixed investment conditions, and “right now, 0% of the funds are invested [in cryptocurrencies], because they’re just not allowed.”

Hildebrandt has lobbied for over two years to update the legislation in this area, alongside BVI, the nation’s Asset Management Association. When the new regulations become law on July 1, if Spezialfonds (excluding those designed purely for physical assets—around a third) choose to place even a 1% fund allocation in crypto, the impact on the crypto industry would be enormous, he said.

“This won’t happen overnight, but we are talking about the largest investment vehicle that we have in Germany—literally all the money is in there,” he said. Theoretically, up to €350 billion ($422 billion) could enter the crypto market from Spezialfonds alone, he explained. (For comparison, Bitcoin’s current market cap is $1 trillion.)

Institutional crypto investment vehicles in Germany

There is no United-States equivalent to Spezialfonds, but they’ve been likened to the Special Investment Funds (SIFs) in Luxembourg, and Qualifying Investor Funds (QIFs) in Ireland. These types of investment vehicles are attractive to institutions because they allow for flexibility and are much less restrictive in requirements for liquidity, diversification, restrictions on borrowing, and leverage. Simultaneously, a robust regulatory framework provides assurance for investors.

Now, the funds are set to become the latest addition to the tools institutions have at their disposal enabling them to buy into digital assets without purchasing actual cryptocurrency—thus circumventing the need to deal with crypto exchanges or digital wallets. 

BaFin Germany
The German financial regulator has made moves to legitimize digital assets. Image: Shutterstock

Germany’s bold moves follow its introduction of law at the beginning of 2020 allowing banks to sell and store cryptocurrencies. 

Financial Services company ETC Group became the first to launch a Bitcoin ETP on the German stock exchange in 2020, after Germany’s financial regulator, BaFin, recognised cryptocurrencies as financial instruments. 

Since then, Bitcoin exchange-traded funds (ETPs) have proliferated on Germany’s exchanges, with crypto-asset management firm Iconic Funds due to list its Bitcoin ETP this week. Leading fund administrator State Street will serve as the administrator of the upcoming ETP, in a first for the international bank. Fidelity Digital Assets and Coinbase Custody will be the custodians.

The Frankfurt-based startup is a joint venture between crypto-asset management group Iconic Holding and Cryptology Asset Group, which was founded by legendary entrepreneurs Christian Angermayer and Mike Novogratz.

“There is massive and rapidly growing demand from all sorts of investors who want to access crypto assets,” said Michael Geister, Iconic’s Head of Crypto ETPs, noting that the European market for crypto ETPs has grown to over $5 billion in assets under management “in a short period of time.”

Hildebrandt believes crypto-enhanced Spezialfonds could be even bigger, and said interest from institutions in them is “exploding.” Germany, he explained, is a country that is very keen on regulatory compliance. 

If this “insane” interest bears out and all the eligible funds were to invest their full 20% allocation in Bitcoin, that would constitute around a third of the crypto asset class’s current market capitalization. That, however, is an extreme case—“which will never ever happen,” he said.

But he’s a lot closer to his dream.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://decrypt.co/69323/damn-huge-germany-opens-up-to-institutional-crypto-funds

Blockchain

Mining Bitcoin: How to Mine Bitcoin

Introduction to Bitcoin Mining Mid-19th century California gold miners were called “forty-niners” after the year 1849, but this rush actually spanned from 1848-1853; it took five years for a quarter-million people to flood the state in search of “free wealth”. Satoshi Nakamoto first published the white paper on cryptocurrency back in 2008, and Bitcoin was … Continued

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Introduction to Bitcoin Mining

Mid-19th century California gold miners were called “forty-niners” after the year 1849, but this rush actually spanned from 1848-1853; it took five years for a quarter-million people to flood the state in search of “free wealth”. Satoshi Nakamoto first published the white paper on cryptocurrency back in 2008, and Bitcoin was launched in 2009. Today, in 2019, there are at least a million bitcoin miners around the world. A single bitcoin (or “1 BTC”) is worth almost $10,000, give or take a few hundred dollars, and there are around 1,800 new bitcoins mined every day, meaning there’s a whopping $18,000,000 being ‘created’ every day.

Not bad for ten years. No wonder everyone wants to learn how to mine bitcoin.

A Brief History on Money

Cryptocurrency is math that can be used as money.

Money is, fundamentally, an accounting of debt; you owe someone for a good or service, and giving them money erases that debt. Banks are giant ledgers, accounting for every transaction – when you paid for your coffee, this “ledger” sees that you lost $2 and the coffee shop gained $2.

Paper dollar bills do not record this specific transaction – who lost and who gained those $2 – but they act as evidence of a transaction having taken place at some point. In fiat currency, a state is the ultimate arbiter or holder of all the debts – and the one that mints, or makes, the currency in the first place. They account for how much currency they put out, and approximately how much is present now; the only road bump being that they do not know every transaction in between.

In cryptocurrency, no one person or entity controls a central ledger, because this “ledger” is effectively on every computer connected to the network of that currency; everyone has it. Since each unit of the cryptocurrency is composed of math, as opposed to physical substances like paper or gold, this math effectively records every transaction

So Where Does it Come From?

Fiat currencies are “made” (or rather, minted) by states, and accounted for by banks, but these currencies are often directly or indirectly made from precious metals that are mined from the Earth – which is why so many people flooded California in the mid-19th century. Minting is a middle step between the mining and the currency.

Cryptocurrency cuts out that middle step; bitcoin is “minted” and made from BTC mining.

If bitcoin is commercialized math, then mining is the process of solving all its equations. A common, yet accurate, joke explanation is, “imagine if you could solve puzzles, then use those solved puzzles as money”. Bitcoin is that, but on a much larger and astronomically more complex scale; bitcoin mining is both the process of solving puzzles, and the process of verifying other solves puzzles.

That said, these “puzzles” (called “blocks” in BTC mining) are operating on a very complicated scale. BTC mining is basically the process of racing to correctly the correct number out of 115,792,090,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 possible options – and doing so hundreds, thousands, maybe even millions of times a day. This takes some pretty hefty computing power.

How to Mine Bitcoin

Despite a lot of chatter about bitcoin mining software, it is really a matter of hardware; software is just the most accessible way to access this hardware.

“Winning” or solving – and receiving payout for – is a combination of computational power and a bit of luck. If you accomplish this, you can get about 12.5 bitcoins, though starting in 2020, that will become 6.25. The number of bitcoins you receive for solving a block cuts in half every 210,000 blocks – which is roughly every four years, since the blocks get more and more complicated over time. This will keep going until 21 million bitcoins have been mined, a cap built into the system. There are currently only 3.17 million bitcoin left to be mined.

How to Mine Bitcoin in the Hard(ware) Way

There are two types of “miners” you can buy: application-specific integrated circuit (ASIC) or graphics processing unit (GPU). These are not only very expensive to buy, but they also take up a lot of electricity and require a powerful network connection. This is why mining calculators exist – these are various apps and sites into which you can input details on your miner, your power cost, and your network cost, to figure out how much profit (if any, even) you will turn.

It is usually pretty low, and these days, mining with your own hardware is only really advised for people who already happen to have lots of hardware and great network on hand, and would not need to go out of their way to get those.

That just leaves…

How to Mine Bitcoin With Bitcoin Mining Software

At 12.5 BTC per block, when bitcoins are worth $10,000 each, that’s $1,250,000 on the line every time you are competing with other miners to “guess the right number” first. This takes far more computer power than most people can afford on their own.

As such, the most common way to get in on BTC mining is to join a collective of miners and “rent” the mining tools – known predominantly as cloud mining.

The biggest advantage is that there is a much lower barrier to entry when you cloud mine bitcoins. The biggest disadvantage is that instead of getting the reward all to yourself, you are splitting those bitcoins with other people, and typically a lot of them. Winning a million dollars doesn’t mean as much when you’re splitting it with a million people.

Step 1: Choose Your Wallet

Before you start working for a job, you want to know how you will be getting your pay. By the same token, before you start mining for bitcoins, you should know where you will keep your bitcoins once you earn them.

Online wallets are typically the most convenient, and easiest to use. They are also typically the most efficient for actually using your bitcoins to purchase goods and services, and you will have your bitcoins even if you lose all your devices. That said, this does put you in a similar position with a bank. If the host is experiencing heavy traffic or DDOS attacks, you may not be able to access your funds, and if they are hacked, you can lose your bitcoins entirely.

Hardware wallets are the opposite extreme. As physical objects, are completely offline, and thus cannot be hacked or otherwise remotely attacked. As long as you have your hardware wallet and a device to access it with, you will be able to access your funds. But what you gain in remote security is lost in personal security; if you lose your device or it’s physically stolen from you, you lose your bitcoins.
The middle-ground between these is “software wallets” or “desktop wallets” (though these can also be mobile apps). These are on your local device, so even if exchanges go down or are attacked, you still have your bitcoins, and the only way you can lose them to remote exploitation is if you, the specific individual, are targeted and hacked, which is very unlikely. But, it can still be used to conduct transactions and otherwise go online as necessary. That said, this is also vulnerable to loss if you lose your physical device (i.e. if someone steals your computer).

Step 2: Find Your Cloud

Mining companies are the computing clouds or collectives of miners. While joining such a company might be couched in terms of renting the hardware, another way to look at it might be that you are investing.

The amount you invest, or the rate at which you rent, is known as a “mining package”, which you pick once you join a mining company. You can also invest ahead of time in new technology that will be coming out at a later date. That said, investing in something that doesn’t exist yet is always a heavy risk.

There are many sites in which you can find comparisons between companies, including user ratings and reviews. Be careful with the
reviews – while they can be insightful, many are also full of people attempting to get new ‘recruits’ specifically with referral codes, which will net the refer-er a small bonus or profit.

Step 3: Pick Your Pool

A “pool” is basically the team of miners that you choose to join up with, and contribute your invest or computing power. If you are just starting out mining bitcoins, you should start by joining an “older” (or rather, more established and vouched-for) pool, and perhaps one with lower fees. The payout or profit from these will usually be on the low side, but they are also less risky.

As you get the hang of bitcoin mining and learn how pools work, you can start venturing out to other pools that aren’t as established and carry higher risks, but also higher rewards.

Buy Bitcoin, Ethereum, XRP, and other cryptocurrencies on Coinsquare, the world’s home for cryptocurrency.


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Source: Coinsquare: Mining Bitcoin: How to Mine Bitcoin

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptocanucks.com/mining-bitcoin-how-to-mine-bitcoin/

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IDEX’s ‘hybrid liquidity pool’ aims to tackle some of DeFi’s biggest problems

DeFi’s tremendous growth hasn’t come without obstacles; the nascent industry still struggles with high costs, failed trades and front-running.

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IDEX, a San Francisco-based decentralized exchange, has unveiled new protocol upgrades designed to solve two of the biggest issues with DeFi — slippage and front-running. 

The exchange claims that its Hybrid Liquidity protocol solves these challenges by combining an order book and trading engine with the liquidity pools of an automated market maker, or AMM.

“The novel exchange design protects users from the most glaring pitfalls of AMMs, including failed trades and front-running, by instantly executing trades against the best combination of limit orders and pooled liquidity,” the company said, adding:

“This approach generates higher returns for liquidity providers while also allowing for more advanced trades like stop-loss and limit orders.”

IDEX cites research from Dune Analytics showing that up to 5% of transactions on Ethereum-based decentralized exchanges fail due to complications like “too much slippage or insufficient gas prices.” Data from Etherscan and Dune Analytics also show that roughly 22% of Uniswap transactions between Apr. 15-21 failed.

Uniswap is the second-largest decentralized exchange by trading volume, according to Coingecko. Mdex takes the top spot, based on 24-hour transactions as of Thursday.

DeFi, which stands for decentralized finance, is one of the biggest trends in the cryptocurrency market, but the industry’s rapid growth over the past 12 months hasn’t come without complications. Exorbitant costs, smart contract risks and the higher likelihood of user error are just some of the biggest pain-points dragging on adoption. Security is also an issue, as evidenced by the theft and exploitation of hundreds of millions of dollars worth of DeFi assets.

Nevertheless, DeFi remains on track to grow considerably during the next leg of the bull market. Currently, more than $137 billion has been locked into the ecosystem, according to industry data.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/idex-s-hybrid-liquidity-pool-aims-to-tackle-some-of-defi-s-biggest-problems

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Blockchain

Crypto Firm Coin Metrics Raises $15 Million Led by Goldman Sachs

Crypto analytics firm Coin Metrics has raised $15 million in funding led by investment bank Goldman Sachs for the company’s global expansion.

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Crypto analytics firm Coin Metrics has raised $15 million in funding led by investment bank Goldman Sachs. Founded in 2017, the firm is planning to use the funding proceeds to grow in Europe and Asia, creating new products while expanding its current offerings.

Coin Metrics Raised $15 Million Led by Goldman Sachs

Coin Metrics, a crypto data provider to institutional clients, has raised $15 million through investors led by Goldman Sachs Group, according to an announcement from the company. The Series B financing will be used to expand on the company’s global expansion.

Coin Metrics provides cryptocurrency market data, feeds, indices, and network risk solutions with clients such as Fidelity Investments, Osprey Funds, and BlockFi.

READ  Goldman Sachs CEO Sees ‘Big Evolution’ Coming to Crypto Space

BlockFi, Acrew Ventures, Morningside Group, and Warburg Serres Investments also participated in the funding round.  While Castle Island Ventures, Highland Capital Partners, Fidelity Investments, Avon Ventures, Communitas Capital, and Collab+Currency each contributed to their respective stakes in the company.

The managing director at Goldman Sachs, Mathew McDermott, will be serving on Coin Metrics’ board of directors.

“Data is critical for the mainstream adoption of crypto assets by traditional investors and financial services players. Our clients will greatly benefit from Coin Metrics’ institutional-grade data insights and emerging risk management tools,” he adds.

Goldman Sachs Shows Interest in Bitcoin

Goldman Sachs has been showing an increased interest in Bitcoin this year. In mid-March, the investment bank filed with the U.S. Securities and Exchange Commission for launching a Bitcoin exchange-traded fund (ETF). Besides, a month later, it announced that it would soon offer bitcoin investment vehicles to its clients.

READ  Facebook Aims to Hire People in Ireland for Libra Project

On leading Coin Metric’s investment round, Marianna Lopert-Schaye, firmwide strategy at Goldman Sachs, said:

“We are excited to be leading their (Coin Metrics) Series B, thereby enabling their growth and supporting their mission to be the leading provider of data-driven market insights and intelligence for institutions in crypto.”

#Coin Metrics #Goldman Sachs #Series B Funding Round

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.cryptoknowmics.com/news/crypto-firm-coin-metrics-raises-15-million-led-by-goldman-sachs

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Blockchain

Bitcoin, Polkadot, Bitcoin Cash Price Analysis: 06 May

Many of the market’s altcoins like Polkadot and Bitcoin Cash, at press time, were refusing to follow Bitcoin’s lead to trade sideways and consolidate on the charts. With ETH climbing to a new ATH and

The post Bitcoin, Polkadot, Bitcoin Cash Price Analysis: 06 May appeared first on AMBCrypto.

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Many of the market’s altcoins like Polkadot and Bitcoin Cash, at press time, were refusing to follow Bitcoin’s lead to trade sideways and consolidate on the charts. With ETH climbing to a new ATH and the altseason well and truly in flow after BTC’s market dominance fell again, such contrarian price actions are likely to be even more frequent in the short term.

Bitcoin [BTC]

Source: BTC/USD on TradingView

While the rest of the market has surged in the time being, Bitcoin, the world’s largest cryptocurrency, has traded within a $10,000-channel range for the past two months. While the king coin did register an ATH of close to $65k back in April, at the time of writing, it was well below the same, valued at just under $59,000.

The king coin’s on-chain metrics and trading volumes have remained healthy, however, with many in the community expecting greater highs from the crypto once BTC breaches the aforementioned range.

While the mouth of Bollinger Bands was closing in to suggest that price volatility may fall soon, Chaikin Money Flow registered an uptick that saw it move above zero.

The cryptocurrency was in the news a few days ago after Tesla sold some of its Bitcoin holdings to prove its liquidity, a move that fueled quite a stir in the community.

Polkadot [DOT]

Source: DOT/USD on TradingView

At the time of writing, Polkadot was ranked 8th on CoinMarketCap’s charts, with its position on the same superseded by the performances of other alts such as Cardano and Dogecoin over the past few months. Unlike Bitcoin, DOT has been on an uptrend somewhat since the market-wide depreciation event over the 24th and 25th of April. In fact, the last 7 days saw DOT climb by 19%.

Parabolic SAR’s dotted markers were observed to be under the price candles, a sign of the bullishness prevailing in the DOT market. Something similar was pictured by Awesome Oscillator’s histogram, with the same expected to head above the half-line soon.

As highlighted by a recent analysis, if the present breakout continues, the next targets for DOT would lie at the $40 and $42-levels.

Bitcoin Cash [BCH]

Source: BCH/USD on TradingView

Until a few days ago, Bitcoin Cash’s price action was destined to mimic BTC’s. This changed recently, however, with the fork coin surging by almost $500 in a 24-hour window. On the back of the said hike, BCH also climbed to touch levels unseen this year.

At the time of writing, corrections had started to set in despite an uptick in trading volumes being seen.

While the MACD line registered a sharp divergence from the Signal line on the charts, Relative Strength Index was dipping towards the equilibrium zone after a brief foray into the overbought zone.

As was the case last time, right now, it’s still difficult to ascertain if the crypto will be able to sustain its press time price action.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/bitcoin-polkadot-bitcoin-cash-price-analysis-06-may

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