Coinbase CEO Brian Armstrong Commits His Digital Currency Fortune to Charity

Brian Armstrong Coinbase CEO | Twitter | LinkedIn

Having launched GiveCrypto.org earlier this year to make direct cryptocurrency transfers to people living in poverty, Brian Armstrong — CEO of US crypto exchange giant Coinbase — has now promised to give a huge chunk of his fortune away to charitable causes.

“This year, I started my first philanthropic effort, GiveCrypto.org, which makes direct cash transfers to people living in poverty. I’m excited about the potential for this organization to help people, but I’m still early on my journey of discovering how to have the most impact via philanthropy.”

Per a report on CNBC, Armstrong signed the Giving Pledge, becoming the first cryptocurrency entrepreneur to pledge to donate the majority of his wealth for the greater good.

The Giving Pledge is a campaign started in 2010 by billionaires Bill Gates and Warren Buffett, which seeks to encourage the world’s wealthiest to use their fortune to help make the world...

 


Facebook is planning to launch its own stablecoin digital currency

The United States-based global social tech giant would be the largest entrant to the consumer blockchain, and cryptocurrency space.

Facebook's blockchain boss, David Marcus. WSJD

Facebook could become the most important company in Crypto.

News broke yesterday that Facebook is building a stablecoin (crypto coin) that will be launched to allow WhatsApp users in India to transfer money. Of course, the immediate reaction of those in the space was to start yelling. Many people were excited, others were upset about the company’s recent privacy issues, and some felt that a Facebook stablecoin didn’t fit the authentic ethos of the crypto industry.

All of these reactions missed the mark though.

Zuckerberg and the Facebook team have never been interested in playing it safe. The highly talented team consistently looks to invent and/or grow products that change the world. If Facebook is building a stablecoin for WhatsApp, this is less about crypto and more about building a globally dominant product that changes the way billions of people live their lives.

David Marcus who leads the blockchain team is the former President of PayPal. Kevin Weil is the VP of Blockchain Product, previously served as the VP of Product at Instagram, and was once the SVP of Product at Twitter. Evan Cheng is the Director of Blockchain Engineering and was a former senior manager at Apple. And finally, Morgan Beller is the unsung hero of the group — the woman who leads blockchain strategy, but worked solo on the project for a period of time before she was able to build internal support and recruit some of the company’s best talent.

Couple these individuals with Facebook’s notorious "Growth Team" and you have a recipe for success. The Growth team is the company’s secret weapon. They are brought in like a SWAT team to solve the hardest problems by leveraging immense amounts of data and the proprietary analytical tools that have been built over the years. This team has helped four separate Facebook product teams scale their offerings to over a billion users each (Facebook main app, Messenger, Instagram, WhatsApp).

So what exactly is the potential for this team?

The holy grail would be to build the world’s dominant payment system. This would be a direct competitor to Visa and Mastercard, but it is more likely to happen than you may think. Facebook has billions of users and tens of millions of merchants. This gives the company a leg up on competitors as they bootstrap the network effects needed to lock in both sides of a marketplace.

If Facebook could successfully build the product and drive adoption, they will have a chance to transition from a social network to one of the largest financial services companies in the world. This move would allow them to take a small percentage on each transaction and reduce the dependency on their advertising-based model.

This won’t happen overnight though. Facebook needs to

(1) create a viable stablecoin (not that easy)

(2) launch the product in India’s large market (significant opposition from government and financial institutions)

(3) drive sustainable adoption,

(4) expand to other jurisdictions and other digital currencies, and then

(5) build out additional financial services to serve their customers.

It wouldn’t be surprising to see Facebook back their way into becoming a new-age bank for digital natives outside the United States.

Facebook could be the most important company in crypto. They have 2+ billion people who use their services daily. Anything they launch will quickly become the most popular product in the industry….maybe even one of the most popular products in the world.

Mark Zuckerberg has dedicated his life to changing the world. Most people in tech don't trust him and would love to see him fall. Many people no longer trust him ... and still, get your popcorn ready — I wouldn’t bet against this team (and in most cases, it boils down to the team)

TechCrunch Covered The Breaking News

Jon Russell For TechCrunch

Facebook looks to be jumping on the blockchain wagon with plans to introduce its own stablecoin, according to a report from Bloomberg.

The social network company — under fire for a seemingly constant stream of privacy snafus of late — created an internal blockchain divisionin May and, while there has been plenty of speculation, the exact nature of its work is unclear.

The Bloomberg report is a first solid suggestion at what will come from the new division and, according to the publication, it’ll be a stablecoin that “let[s] users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India.”

Facebook  offered a non-committal response.

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share,” it told Bloomberg in a statement.

If the U.S. giant does carry out the plan that Bloomberg is reporting it would (easily) be the largest company to embrace consumer blockchain service. That’s both in terms of the size of the business — a $376 billion market cap and annual revenue of more than $40 billion — and the user base it touches. Facebook reaches more than 2.2 billion people for its core social network, 1.5 billion for WhatsApp, 1.3 billion for Messenger and a further one billion via Instagram.

That makes this a thread worth pulling, so let us get into it.

Former PayPal CEO David Marcus heads up Facebook’s blockchain division — Marcus is also a former board member at crypto exchange Coinbase

Yet another stablecoin

Stablecoins have become all the rage in the blockchain space during the second half of this year, with scores of projects popping up to provide solutions — but let’s start with why.

The concept is simple: a cryptocurrency that is pegged to a fiat currency and therefore immune to the often wild valuation swings.

Blockchain as programmable and border-less money has potential, but stability is a huge concern. Bitcoin, for example, hit a record high of nearly $20,000 one year ago; today its price is just over $4,000 but, symbolically, it fell below that figure in recent months. The ride for “altcoins” has been even bumpier.

Stablecoins offer a way to deposit money ahead of buying into Bitcoin, Ethereum or other tokens more quickly than a bank account. They also allow profits to be moved from volatile tokens and, among other things, are a more stable way of sending crypto to another person (or business) without being subject to moving prices.

Yet, despite a simple premise, there are no current examples of a proven and successful stablecoin, despite the many who have thrown their hats into the ring.

Tether, the highest-profile project, is dogged by concerns around its financial backing. The organization behind it has never shown that it has the required fiat currency to back the tokens in the market, while its value has previously slipped below $1.....

READ MORE

 


Bitcoin Is a Declaration of Monetary Independence - Nick Spanos

OPINION

Op Ed: Bitcoin Is a Declaration of Our Monetary Independence

Nick Spanos is an early adopter and innovator in the blockchain space. He is best known for launching Bitcoin Center NYC, the world’s first live cryptocurrency exchange, in 2013, right next to the New York Stock Exchange — as immortalized in the Netflix documentary “Banking on Bitcoin.” As part of Bitcoin Magazine’s series of interviews and op eds leading up to the 10th Anniversary of Bitcoin, Nick shares his thoughts an early Bitcoin adopter.

Nick Spanos - Founder - Bitcoin Center NYC Twitter | @nickspanos | LinkedIn

Before Bitcoin, I worked tirelessly for liberty-minded political candidates for many years. These candidates, the most prominent of whom was Dr. Ron Paul, spoke out against the Federal Reserve Bank because of its role in inflating the money supply which devalued the life savings of hard-working people. In almost every case, the mass media would sharply (and often unfairly) attack the image of the candidate with half-truths and misinformation, decimating our poll numbers, until they were sure that we would be defeated on Election Day. No matter how hard we worked or how much money we raised, we were no match for what I call the political bosses of today, the mainstream media.

After two decades of struggle, I thought I had wasted my life fighting unwinnable battles. Then one day, I read the Bitcoin white paper. I read it half a dozen times and I thought, “Finally, I have a weapon that cannot be destroyed on Election Day.”

Bitcoin for me is not an instrument for financial investment. Bitcoin for me is a declaration of our monetary independence.

When I started the Bitcoin Center in 2013, I had a flourishing real estate business in downtown New York. I had an established career in developing technologies for political campaigns. Because of bitcoin’s reputation in the mainstream media back then, I knew that many of my relationships would be destroyed if I emerged as a public figure in the cryptocurrency space.

When I launched the center, a press release was sent out revealing me as the founder even though I never wanted that information to go public. Immediately, concerned friends and family started calling me, asking me what I was getting myself into and wondering if I had lost my mind. Bitcoin was for illicit activities on the internet, they told me. This is nothing but video game money, said others.

My life mission of personal freedom was more powerful than anything anyone could ever say to me.

I knew I had to bring Bitcoin out of the back alleys and onto Wall Street for...

 


Coinbase Cryptocurrency Exchange Adds Cash Withdrawals to PayPal

Big news for the digital currency economy with Paypal payments integrating with CoinBase. Growing the bridge between cryptocurrency and digital payments for consumers.

Major US Crypto Exchange Coinbase Adds Cash Withdrawals to PayPal

Major American cryptocurrency exchange Coinbase has introduced free of charge cash withdrawals to online payment system PayPal, according to an announcement published Dec. 14.

From now on, Coinbase’s United States-based customers are able to withdraw their cash balances to Paypal. The service for other countries will reportedly be rolled out some time in 2019.

Coinbase and PayPal previously integrated in 2016, when Coinbase added support for the payment platform in addition to major credit cards. At the time, Coinbase users were able to sell Bitcoin (BTC) and have their fiat funds deposited to a PayPal wallet. The integration was subsequently terminated due to technical difficulties.

With this move, Coinbase has enhanced its range of services,...


an academic argument for Bitcoin vs. Fiat

bitcoin vs fiat
bitcoin vs fiat

Editor’s Note: This piece constitutes the views and opinions of the writer and does not necessarily reflect the beliefs of CoinCentral.

Bitcoin vs. fiat is more than an academic argument. It’s a fierce battle between a manipulated monetary regime and one of honest weights and measures. It’s time for you to envision the benefits of a decentralized, non-manipulated monetary system.

Out of Thin Air

Fiat currency is any medium of exchange the government deems as legal tender. A $20 bill in your pocket buys $20 worth of goods and services. It’s only paper (muslin) with ink and a special electronic doodad embedded in it. Probably costs pennies to make. It’s backed by nothing of tangible value (gold, silver, land, etc). It’s money only because the US Treasury and Federal Reserve (Fed) say it is.

From Sound Money to Broken Promises

Before 1913, only the US Congress had currency creation authority. Every new dollar was backed by gold and silver in Fort Knox. This backing of USD with gold and silver ceased on August 15, 1971. That’s when President Nixon refused to honor France’s demand for physical gold in exchange for its USD reserves. The USD has been decoupled from the gold standard ever since. Worse, the national debt is now in a nonstop, parabolic ascent.

Dialing for Dollars

When the US Treasury needs money, they give the Federal Reserve (Fed, a privately owned, for-profit corporation) a ring. Say the Treasury needs $50 billion dollars. The Fed creates an electronic checkbook with a $50 billion account balance. In exchange for the cash, the Treasury gives the Fed $50 billion dollars of Treasury bonds. You can learn more about this financial alchemy in Robert Prechter’s book, Conquer the Crash.

Bitcoin vs fiat Cleveland Federal Reserve Bank
The Fed has controlled the US monetary system since 1913. Will Bitcoin eventually become a superior alternative in the 21st century? Graphic credit: Pixabay

Taxpayers on the Hook

You’re probably wondering who pays the interest on that $50 billion batch of bonds, right? Surprise! You’re the one who pays the interest, via your US federal tax bill.

Can’t be, you say?

You need to consider this quote taken from the Grace Commission Report of 1984:

“….100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government.”

Let’s say your Federal income tax bill is $9,000 for 2018. Most of your tax liability will pay the Fed interest on the bonds. Part of it will cover federal pension payments. None of your tax payment will pay for any government services.

Bitcoin vs. fiat USD creation and...

Blockchain Technology And The Disruptions It Is Causing In The Financial Industry [infographic]

The cryptocurrency industry has given birth to a whole host of interesting and useful technologies. One such technology that is making a huge difference in many industries is the blockchain technology.

This type of technology facilitates online transactions and it could potentially revolutionize the way that the financial industry operates. This article and infographic look at what the blockchain technology is and how it is causing disruptions in various industries.   

What Is The Blockchain Technology?

Blockchain technology can be used as an online transaction facilitation. This technology uses a public ledger to record transactional data, and the process is sent through a peer-to-peer network. The transactions are encrypted and there are no centralized control or middlemen.

Basically, a blockchain transaction is conducted in the following way. The instigating party sends a transaction request through the peer-to-peer network. This transaction request is authenticated on the blockchain public ledger and added to it as a new block of data. This data is then passed through the peer-to-peer network to the recipient and finalized.

The following facts are some of the benefits of blockchain based transactions:

- The decentralized nature means no central control

- The lack of a middleman means lower transaction fees

- Encryption means greater security

- The peer-to-peer network means faster transactions

As you can see, blockchain offers many benefits. Generally, blockchain based transactions are faster, cheaper, and more secure than traditional online transaction methods.    

What Industries Are Already Using The Blockchain Technology?

Currently, the most widespread use of blockchain technology is the authentication of cryptocurrency transactions. This is essentially what makes cryptocurrencies possible, so any person that participates in crypto coin trades, gambles at an online Bitcoin casino or even uses Bitcoin to pay products and services is directly dependent on blockchain tech. Whilst this technology is still in its infancy, it has already progressed hugely and many industries are actually experimenting with it in some interesting ways.

Possibly one of the most interesting implementations of the technology is what the government of Sierra Leone has actually this year. It held a blockchain based elections, which created the first-ever public vote that couldn’t be refuted or disputed. Due to the blockchain public ledger, each vote is recorded and there is irrefutable proof of its creation and content.

Blockchain technology is also being used in the energy supply industry, charitable organizations, cloud technologies, and even supply chain management, to name a few examples. As this type of technology develops and becomes widely accepted, we should only see an increase in its usage.

Furthermore, we should see a greater variety of different uses for the blockchain technology. It is clear that the financial industry must pay heed to it, as it could supersede traditional online payment methods in the future.

The infographic below provides additional information about this type of technology:  

 


Token Review: Curaizon's Healthcare Ecosystem Improves Drug Adherence

Curaizon is developing technologies to address the largest area of waste in the global healthcare system.

They say that necessity is the mother of all inventions. This is especially evident when you look at what Curaizon  are doing in the world of drug adherence. Curaizon has been around since 2015 and they have been developing drug-adherence technologies to combat what has become the largest area of waste in healthcare today. Patients not taking their drugs cost the worlds health services more than $700 Billion in avoidable waste every year. With more than half of all adults now on some kind of long-term medication, it is imperative that they take their medicines as prescribed. The problem is that only half of us take our medications in this way, which leads to...


The SaveDroid ICO Exit Scam that Wasn’t

Cryptobriefing ran an interview with Yassin Hankir of Savedroid, who secured a bit of notoriety by faking an exit scam.

The nightmare of many an investor in ICOs is that the whole thing is a con, and that the con artists’ exit strategy is an anonymous beach somewhere and a secret bank account. Hankir dramatized that nightmare. After raising $50 million in Savedroid’s ICO, he tweeted out a photo of himself in an airport, in front of a departures-and-arrivals screen, making a thumbs-up gesture. This he juxtaposed with another photo: of a bottle of beer on a beach.

This was not, though, a flamboyant scammer’s “exit.” It was a show, intended to dramatize Hankir’s view that such scams “create a significant risk to the market,” because without trust “the whole market will break down.”

Savedroid is still around, and it has 100,000 installs on the Google App store. Its website claims that the token (SVD) will soon be listed on exchanges. But as Cryptobriefing observes: it isn’t yet. And the make-believe scam did it no favors.


ICO & Token Generation Audience Development Marketing

Source oneQube by Peter Bordes

360-degree audience development and marketing strategies are mission critical to get your brand above the noise as blockchain proliferation accelerates, and the number of companies looking to launch ICO's and Tokens grows exponentially. 

Blockchain companies need customized, multifaceted programs, and the ability to execute simultaneously across all organic and paid channels in order to compete effectively for market share. We have developed a proprietary data-driven audience automation software stack for ICO and token generation event (TGE) marketing, and a team of audience architect specialists who are obsessed with developing powerful highly engaged audiences for our partners. Not just for their launch, but for the full life cycle from ICO/TGE launch to post-event to build brand awareness, platform adoption and visibility in their cryptocurrency and token markets.

The cryptocurrency space is becoming exponentially more competitive. In order to have a successful token launch, projects have to communicate their value proposition and connect to relevant audiences at scale. Having a technology partner that has the necessary tools and ability to identify, communicate and engage with token buyers significantly impacts our partner's ability to deliver their message at the right time, right place and right method to their target market.

Launch a Successful ICO / TGE by leveraging our Audience Development and Engagement Platform

The blockchain space is in its nascent days and many of the marketing tactics deployed in other industries are not effective. The use of antiquated siloed mass marketing tactics are ineffective compared to the hub and spoke ecosystem approach developed by oneQube. For instance, when looking at any given ICO / TGE, a company cannot expect to effectively rank their keywords in a timely enough fashion to achieve the desired result. If they are not leveraging and syncing all channels simultaneously to accelerate their keyword ranking trajectory.

OneQube focuses on driving direct and measurable results for our partners. We use a combination of Organic Audience Development, Paid Social Media, Organic Community Management, Email Nurturing, Community Activation, Content and Social Amplification to drive interested parties to their website to learn more about their project and drive conversions.

Establishing trust and credibility within your community and potential users of the platform is key to a successful token generation event. Together with our clients, we put great effort into building trust with the audience. Creating a highly engaged passionate audience, and enabling our partners to harness the powerful collective network effect of that audience.

We leverage our network of thought leaders and add additional exposure through networking our partners with advisors and business development relationships to help our customers build their business, increase their visibility, reach their target token buyers and successfully convey their message.

oneQube ensures our clients build the reputation and awareness for their token to have the most successful project launch. As well as developing and executing a post-event marketing strategy to build their business and cryptocurrency markets.

CLICK TO READ FULL ARTICLE


Omega One, Trade Execution, and a Diagnosis

Omega One's vision is to build a bridge between traditional markets and digital assets, using world-class technology and trading algorithms. By improving liquidity and security in digital asset trading, we are laying the groundwork for a more efficient, decentralized and inclusive financial system.

On June 21, 2017, on one of the world's largest crypto exchanges, the price of ether fell 99.9% in less than a second, before rebounding just as quickly.

Omega One's Alex Gordon-Brander explains how this crash happened and how a liquidity solution like Omega One's could prevent these kinds of crashes in the future.

Omega One,  a trade execution system that will use a crypto-economic protocol mediated by the Omega token (OMT), launches this summer.  The token will be on sale from June through August, with the goal of $110.5 million. The system and the tokens are part of a project to resolve issues of illiquidity, insecurity, and opacity and thus to advance the mainstream appeal of cryptos.

This report on the Main Bloq looks at a number of the considerations that bear on whether that project will succeed, what the risks are, and what will be the rewards. We will be working in large part from the Omega One’s white paper.

 

      

The management team is of impressive pedigree.

The Two CEOs

Alan Keegan was the CEO when the Omega One white paper was drafted. He has since stepped down from that post but remains active with the title of co-founder. Keegan previously worked at the world’s largest hedge fund, Bridgewater Associates, as an expert on currencies and cryptocurrencies. There, his research and observations about historical trends and market conditions were studied by senior central bankers and global policymakers around the world.

Alex Gordon-Brander, of Bridgewater FX Trading and Tech, is the new CEO. When he was at Bridgewater, he managed portfolio construction apps and wrote the specifications for algorithmic trading. The smart order routing of the system he introduced there saved money for clients of that huge hedge fund manager by breaking up their large currency orders.

Smart routing is also, as it happens, an important issue in the cryptocurrency world. Indeed, in a sense, smart routing is critical to the program since if Omega One is not able to fill a trade from orders in its own dark pool, it will route the trade in whole or parts to other exchanges around the globe to complete.  The Omega One white paper calls this process “liquidity harvesting.”

Before he went to Bridgewater, Gordon-Brander was with MarketAxess, and while there he acquired a patent on the MarketAxess bond trading platform.   

Gordon-Brander’s LinkedIn profile says that he has been “designing alternative currency systems since before the Bitcoin white paper.”

           

Other Critical Team Members

Omega One’s technology partner is ConsenSys, the world’s largest blockchain company. Gordon-Brander was formerly Chief Business Architect there.

Daniel Flax is Omega One’s Chief Technology Office. He has been the CIO at Cowen and Co.,; the CTO at The Street; Vice President, Engineering, at CAN Capital; and managing director of trading systems at the New York Stock Exchange. At the NYSE he led a transition to digital trade execution and settlement.

Ron Garrett is Omega One’s chief operations officer. He has the additional title “ConsenSys Liaison,” which is itself revealing of the close connection between the two entities.

Joseph Lubin, who is both the founder of ConsenSys and a co-founder of Ethereum, is an advisor to the Omega One team. Back at the turn of the millennium, Lubin was a VP Technology, Private Wealth Management Division, Goldman Sachs. He left there to join a startup, Blacksmith Applications, which was developing trade management and processing solutions for a range of corporate clients. Lubin directed their New York office.

 

Two Important Advisers on Compliance Issues

Bart Chilton, a former Commodity Futures Trading Commissioner will be advising Omega One on compliance issues. From 2001 to 2005, Chilton was a senior advisor to Senator Tom Daschle (D-SD), before working at the Farm Credit Administration and eventually (2007) receiving George W. Bush’ nomination to the CFTC.

While at the CFTC, Chilton took a special interest in allegations of the illegal cartelization of the precious metals markets and their derivatives. An activist in this field, a board member of the Gold Anti-Trust Action Committee, has described Chilton as “the modern-day equivalent of Eliot Ness.”

Such a concern with the integrity of the gold and silver markets is pertinent to Chilton’s interest in Omega One’s project. After all, many people who are distrustful of the post-Nixon system of “fiat money,” and who fear the failure of that system, tend to look toward the markets in precious metals as a hedge against fiat failure. That fear has also, in recent history, been one motive for interest in alternative or cryptocurrencies.

 

Juan Llanos is on the advisory board of the Wall Street Blockchain Alliance. He maintains a blog, ContrarianCompliance.com, where he discusses cryptocurrencies, blockchains, and regulators.

In that blog he has emphasized that a rule of “know your customer” (KYC) has morphed into both “Know Your Transaction” (KYT) and “Know Your Funds Flow” (KYFF). In the course of his career, Llanos has helped devise a number of innovative financial products, including Mexico’s first prepaid debit card. More recently, Llanos led Bitreserve strategies on compliance and transparency.

In 2008, Llanos received permanent residency in the United States in recognition of his “extraordinary ability” in anti-money laundering and countering the financing of terrorism.

A final note on compliance: Omega One says that it is working with the law firm of Debevoise & Plimpton as well as with ConsenSys’ lawyers on  meeting legal and regulatory mandates.

Debevoise is one of the leading law firms in servicing FinTech. Its part of the Blockchain Legal Industry Working Group created last year by the Enterprise Ethereum Alliance, and it has its own FinTech focused podcast, with the wonderfully apt blockchain-world name, “Appetite for Disruption.”

 

How is John Mack Involved?  

John Mack, a former CEO of Morgan Stanley, though not a member of the management team, is an enthusiastic backer of the Omega One project and an investor. A year ago, he told a Bloomberg reporter that he had been “watching and investing in the cryptocurrency market over the last several years, and … I find Omega One to be an important next step in the emergence of this new economy.”     

Mack’s involvement has certainly helped mainstream the Omega One project. But enough about the people involved in the project. What is the project? Specifically, what problems does it hope to solve?

 

Illiquidity, Security, Opacity

The big problems faced today by cryptocurrency markets and the parties engaged in them are, as the Omega One team sees them, as follows:

  • Illiquidity, causing the realized costs of trading to climb at times to multiples of published commissions and fees;
  • hacking/security risk, which especially afflicts the most liquid of cryptocurrency markets; and
  • A lack of transparency, leaving parties unclear about the actual costs.

Omega One would increase liquidity by offering “a private dark pool and trading algorithms connected to all the world’s crypto exchanges.”

As of the summer of 2017 the estimated value of all crypto hacked from exchanges was above $2 billion. Omega One would improve security by “intermediating between blockchain wallets and on- or -off-chain exchanges with our own balance sheet.”

Further, it would heighten transparency by offering benchmarking and analytics to its members that would “allow them to audit the market impact of their trading.”

 

Some Trade Execution Particulars

The solution to the above listed problems involves a seven-step trade execution process, understood thus: a member enters a “parent order” trading against funds in the Omega Wallet; the fund availability will be verified; the parent orders will then be turned into “net orders” in the internal matching engine; based on the trading engine’s assessment of available liquidity it will break chunks of these net orders into “child orders”; these will then be broken down further into “street orders” -- these are the actual orders that are executed on an exchange; the public exchange will fill the order, thus adding funds to or withdrawing funds from the balance sheet manager; the Omega One Wallet and the Omega Private Exchange will then take care of the settlement (the back office work, as we used to call it when people were involved in it); and finally, the private exchange will confirm the transaction with the member via user interface/API.

The Omega One Wallet is “a decentralized, trust-less and non-custodial portfolio … made up of a set of linked wallets on multiple blockchains” including Ethereum, Bitcoin, and Omni. What’s new and significant about the Omega wallet, versus other wallets, even decentralized ones, is its built-in interface to the remainder of the Omega ecosystem, which will allow for secure automated settlement.  

When the Omega Private Exchange receives an order, it will automatically verify and lock the funds in the relevant wallet, thus shielding the Omega One membership from settlement time mismatches across blockchains. In an ETH-BTC transaction, for example, “the member’s BTC will settle to her wallet on the bitcoin blockchain before the ETH leaves her wallet on the ethereum blockchain, enabling truly trustless listing.”

The Omega One website says, “There have not yet been any pre-sales, main sales, or tokens created at this point. Token mechanics and participation requirements (including whitelisting) will be released shortly before the token launch. Any information you may have seen about token details is inaccurate.”

     

The Diagnosis is a Sound One

Omega One is certainly right in its diagnosis of the difficulties that cryptocurrencies face if they are to become a mainstream investment option. A recent report by Context Capital Partners looked into investment sentiment as of the start of 2018. It said that 70% of institutions surveyed planned to increase their exposure to “alternative investments” in general in 2018, largely because the bull market in many traditional asset classes is looking old and weary.

Despite this hunger for non-traditional investments, there is still a great resistance (says the Context report) to cryptos. Only 11% of the institutions surveyed are looking to add cryptos to their portfolios. That is a sizeable niche, but it is still a niche. By way of contrast, 51% of those surveyed are planning on a greater allocation to ESG strategies this year.

So: why only 11% for cryptos? Some commentators have attributed the resistance to ‘media bias’ and some to non-rational psychological issues. But to a great significant extent the resistance is perfectly rational and it turns on exactly the three problems that Omega One has identified and addressed.

Omega One says in its white paper that it is the institutional asset managers whose buy-in “will take the crypto markets to the next level of maturity.” Its proposed trade execution system is designed to make that buy-in painless.

Omega One’s approach to addressing these problems is right. Predictably, then, it is not entirely unique. Their most direct competition comes from Ox, an exchange protocol on the Ethereum blockchain that boasts many of the same features, though with less formidable infrastructure. They are also in effect competitors with Kyber Networks (KNC). Kyber’s ICO closed on September 17, 2017. Kyber is a decentralized exchange that focuses on crypto-assets conversion.

     

The Wisdom of Cyber Spatial Crowds

The question of how to compare those three networks, and others with related functions, as platforms or as investments, has been much discussed on social media, inclusive of reddit.


A Reddit Exchange of Views

An exchange of views on Reddit offers a good display of what the relevant public is thinking about when it compares these systems. In that exchange, in September 2017, “self ETH trader” said that these networks are all “essentially trying to solve the same problem” and asked for guidance on “which has the most potential to succeed.”

One of the views expressed on the resulting chain was that Ox has the more realistic business plan because it is going to “deliver something soon, gain market share and then be able to iterate on the product and improve over time.”

But another participant, Voltaire585, said that he likes “the Omega One strategy for liquidity where they would fulfill your order on a non-decentralized exchange if they couldn’t settle on their order book, which will give them the training wheels till their order book is big enough to sustain itself.”

And another view, expressed by “ethfanman” was that Kyber has the inside track, because they “will support cross-chain trading in 2019 according to their roadmap, so it is not ERC-20 only.”  

 

Jackson Palmer’s Analysis

Jackson Palmer, best known as the creator of Dogecoin, and now the proprietor of a YouTube channel on cryptocurrency with more than 25,000 subscribers, has posted a 23 minute video, picked up by CryptoGeeks.com, discussing the issue.

Palmer says that competition is heating up in the market for decentralized exchange in the Etherium space, and in his video he runs through the major players, beginning with exchanges that use old-fashioned order books. It is at about 11:20 in the video that our host comes to the issue of decentralized exchanges that dispense with order books and that trade by identifying “reserve contributors.” He begins this portion of his discussion with Kyber.

Palmer observes that this requires a KYC inquire for any reserve contributor, and he suggests that they inquiry might be scary to some potential parties.

A broader issue with such an arrangement, he adds, is that “as a buyer, you don’t have a lot of control. You basically have to agree to whatever the reserve operators are setting as the price.” The reserve operators may compete in a healthy way, but that needs to be “tested in practice.” Palmer also expresses some concern that the managers of Kyber have not been entirely transparent.  

Palmer’s video doesn’t get to Omega One until about 17:30 into the discussion, and once there he begins by saying that it might not be considered a “decentralized exchange” properly speaking at all, though it has many of the same characteristics. Despite the semantic quibble, he is favorably impressed that Omega One draws upon the centralized exchanges to assist its own liquidity needs as necessary.

After making that point, he says that “the really cool thing that I see about Omega One is that you get all the benefits of a decentralized exchange” but the cost, time efficiency, and liquidity of centralized exchanges.

In general, he also says, “it’s going to take awhile to perfect” blockchain technology, cryptocurrencies, and the decentralization that many see as the promise of them both. Near the end, at about 21:30 Palmer says that the features of Omega One will likely allow it to move to cross-chains more smoothly than its competitors.

 

The Timeline

Cross-chains are key at this point in the development of the industry. One might argue that what the world of cryptocurrencies needs, more even than the mitigation of any or all of the three important problems listed above, is this: to become one financial space, not several. What it needs is the exchange of one cryptocurrency for another, across a very wide range of cryptos, the exchange of a ETH for a Ripple’s XRP, in a seamless and trustless way.

OMT is, as the Omega One white paper says, “ERC20 compliant with the aim of being able to leverage the functionality of the Ethereum blockchain as much as possible and seamlessly interact with other ERC20 tokens.”

The Omega One road map looks forward to a Release 1.1 - 1.x, no sooner than the final quarter of this year when the team will introduce “additional crypto crosses.” They also expect to introduce fiat currencies into the mix. In their words, that will entail bridging “the fiat/crypto membrane.”

Relatedly, the team also looks forward to adding analytic power at 1.x. “A central source recording meaningful data and interacting 24/7 with crypto exchanges will go a long way toward filling the data gap in the crypto markets” so all participants get the data they need to continue innovating.

That membrane is a legal/regulatory one as well as a technical one.

Even beyond that, Omega One looks forward to becoming a utility. Release 2.0 would depend on “technical development in the broader crypto ecosystem including improvement in the efficiency of double-blinding smart contracts, and the movement of liquidity to reliable, fully decentralized exchanges.” If this happens, then completely non-custodial and trustless liquidity will move freely through the Omega One platform, safe from information leakage or front running.

That plus a self-improving artificial intelligence trading logic engine, which could allocate OMT as fees back to member “who had a meaningful impact on improving trading logic,” would make the platform “a community owned and run a public utility.”   

 

Why didn’t Omega One launch last year?

Omega One had planned the launch of its product and the ICO for last year. Why no launch yet?

Management has said it decided to split its capital requirements into two buckets. Rather than fund everything through a token sale, it would fund product build and launch costs through equity capital, and thereafter fund balance sheet and membership incentives through token sales. This meant that it made sense to postpone the token sale until there was a completed product and those membership incentives had immediate significance.

The distinction between these buckets was already implicit in the white paper issued before the decision was made the make the separation between them a chronological one. The white paper discussed product build and launch costs, including staff salaries, office space, equipment, etc. But the paper also said that its “primary need for capital” was “to build a large enough balance sheet that we can provide risk intermediation and settlement facilitation for a meaningful volume of daily trades.” Risk intermediation requires offsetting trades and that in turn means that the trading limit must be proportional to the size of the balance sheet.

 

A Final Thought

Omega One will be testing whether traders really demand a low-vol market, that is, one where even transactions large by today’s standards will have little impact. Much of their white paper is devoted to working out examples of how big an impact specified transactions can have, in a spirit of: isn’t this awful?

If there are a lot of traders who think that is, in fact, awful, then Omega One is a great play. But if the world of cryptocurrency turns out to be more accepting of volatility than this team believes, if the community has learned to shrug at such examples as just the-way-things-are, then Omega One’s near future could be a very rocky one.

Omega One WHITE PAPER