Billionaire bitcoin enthusiast Tim Draper is backing a new cryptocurrency for the first time

• Draper was an early supporter of bitcoin and its underlying blockchain financial ledger technology.
• He told Reuters in an interview he will for the first time participate in a so-called "initial coin offering" of Tezos slated later this month.
• Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies.

Venture capitalist Draper wins US Marshals bitcoin auction.

Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed until now: Buying a new digital currency offered by a technology start-up.Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called "initial coin offering" (ICO) of Tezos slated later this month.

Tezos, a new blockchain platform launched by a husband-and-wife team with extensive Wall Street and hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc., the creator of Tezos, but did not disclose details. Draper, who scored big as an early backer of Skype and Baidu, becomes the first prominent venture capitalist to openly embrace initial coin offerings. This would be a significant stamp of approval for this new financing model Blockchain start-ups. Some investors have expressed concern about the lack of regulatory oversight for ICOs.

                                         Bitcoin on the rise

Over the last year, blockchain start-ups have been raising cash by creating and selling their own currencies or tokens in unregulated offerings that bypass banks or venture capital firms as intermediaries. Interest in these deals has been stoked by the runaway performance of the original cyber currency, bitcoin, which has surged more than 67 percent in the last six weeks to hit a record high. "The best thing I can do is lead by example," said Draper, on his plan to participate in Tezos' token offering.

"Over time, I actually feel that some of these tokens are going to improve the world, and I want to make sure those tokens get promoted as well. I think Tezos is one of those tokens." Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies. But Draper said the contract terms with his investors allow investing in pretty much any vehicle. "I think most investor contracts did not anticipate something like an ICO," said Draper. "But we did anticipate that certain things are going to happen and finance is going to be transformed."

Draper said his firm has specifically carved out money for non-traditional investments. Tezos is similar to bitcoin and other blockchain platforms, but its design allows for decentralized and automated upgrades. Most software platforms provide for automated updates, but blockchains remain notable exceptions because update procedures are typically centralized. Tezos touts itself as the first blockchain platform to overcome that hurdle.

Tezos was created over a span of three years by Kathleen and Arthur Breitman. Arthur Breitman had worked at the high-frequency trading desk at Goldman Sachs and was an Options Market maker at Morgan Stanley, while Kathleen Breitman is a former management associate at Bridgewater Associates, the world's largest hedge fund. Unlike previous ICOs, Kathleen Breitman said, Tezos' deal would not be capped by a set number of tokens to be created. "What we're going to do is allow as many people who want to buy into the crowd sale over a two-week period," she said.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Bitcoin Is Advancing Rapidly Like In Early Days Of Internet

Alan Zibluk – Markethive Founding Member

Jim Harper is a vice president at the Competitive Enterprise Institute. A former counsel to committees in both the US House of Representatives and the US Senate, he served as Global Policy Counsel for the Bitcoin Foundation in 2014. In this opinion piece, Harper discusses the longstanding developer conflicts that have come to define bitcoin's governance, arguing that just because there haven't been any results yet, doesn't mean there won't be.

  
Two years ago today, politics invaded the world of bitcoin development.

It's been non-stop controversy ever since. But Gavin Andresen's essay series, "Time to Roll Out Bigger Blocks," didn't introduce politics to bitcoin. And the cure for what ails its highly controversial development ecosystem isn't getting rid of politics. Bitcoin actually needs more and better politics. How bitcoin politics are practiced is up to the community, which might take some lessons from principles of good government.

When Andresen 'went public' with his arguments for bigger blocks, that was the result of political failings on all sides that long predated his writing. Put simply, there are many competing visions for bitcoin's optimal uses, its future, the risks it faces and how to manage them. While minor improvements to the code continue, nobody so far has been a good enough politician to get their broader vision for bitcoin widely adopted. So, what gets people to abide by difficult group decisions, even when the decisions go against them?

Lessons from government

The US Constitution requires 'due process' in both the Fifth Amendment and the Fourteenth Amendment. That means that US citizens and residents are supposed to get fairness of two types from their governments:

1. Systems designed to produce correct answers
2. The right to participate in decisions that affect them.

Elections operate along the same lines, giving everyone, including the losers, a say in who will operate the government. Bitcoin is meant, in part, to help people escape the grasps of hugely fallible governments, of course. But, you might ask, isn't bitcoin an apolitical system that resists governance? Governance and government are not the same. Every human system, including bitcoin, has governance. Bitcoin governance is whatever influences or directs the community's decision-making and the software's many encoded policies.

Bitcoin is also inherently political. Politics is essentially human relations at scale. When politics are practiced well, we don't notice it. It's politics done poorly, or running against our interests, that we speak ill of, along with the politicians who practice it. With a few noisy exceptions on the social media margins, everyone involved in bitcoin protocol and software development is a good faith actor. So, why are their efforts to move forward drawing heaps of derision and failing to advance their visions? It may be the failure to respond to the demand for due process.

Theory of open-source

Bitcoin is a category buster, so let's talk about the due process in terms of economics. In theory, markets work because a large number of buyers and sellers have perfect information, products are homogeneous, transaction costs are low or non-existent and everyone is rational. In practice, buyers and sellers are under-informed, transaction costs are often high and the decision-making of humans is driven away from correct choices by psychological, social, cognitive and emotional factors.

There's a 'perfect markets' theory for open-source software development, too, and it especially fails with respect to bitcoin. It holds that developers will perfectly perceive the needs of the community and respond to them, that miners will clearly recognize their economic interests and act in accordance with them, that bitcoin users will all oversee this process well, guiding the other sectors of the bitcoin ecosystem toward its highest and best use. It turns out that everyone isn't an expert in coding, in economics and in perceiving their own interests in an uncertain cryptocurrency future.

Miners and users don't follow the 'perfect governance' script very well themselves, but bitcoin development seems to diverge from theory the most. Developers, it turns out, are humans, who have limited time, information and capacity for cognition. Nobody could incorporate the information necessary to advance the bitcoin project consistent with all the goals held for it across the ecosystem. These fascinating 'developer-humans' exhibit human behaviors like trusting people they know and discounting information from people they don't know.

That's no basis for criticizing any developer, of course, but the leading development team, Bitcoin 'Core' sometimes seems to speak with a unified voice, and sometimes seems to vanish behind the theory that open-source development is just uncoordinated people from which coding decisions emerge.

The solution

In a system with worldwide usage and strong network effects, that makes a lot of people feel they are being denied due process. A lot of people feel they aren't getting a say in a project they feel passionate about. It's easy, despite the fact of good faith all around, to fall into thinking that the process is not designed to produce a correct outcome.

As a congressional staffer in the 1990s, I participated in a meeting where some academics suggested what the future of telecommunications regulation would look like. "Bits – everything will be bits," they said. The direction of communications technology was obvious already, and perpetuating its regulation was not my preferred goal. But, the meeting was bemusing because in Congress, knowing the right answer is 10% of the problem or less. Getting people convinced of the right answer is the other 90%. There are many right answers for bitcoin's future. Perhaps, if there were more bitcoin politics, more people could be brought on board with one or more of them.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Bitcoin surges above $1,500 to record as more investors bet on 'digital gold'

• Bitcoin rose more than 4 percent to hit a record price of $1,553.18, according to CoinDesk.
• Gold futures traded more than 1 percent lower to near $1,232 an ounce and haven't been above $1,500 for about four years.
• Speculation of a bitcoin ETF in the U.S. and increased interest from Japanese investors also supported bitcoin prices.
•  
• Bitcoin on the rise  

Alan Zibluk – Markethive Founding Member

  

Bitcoin sailed past the $1,500 mark on Thursday,

pushing the total value of the digital-currency market above $40 billion for the first time. Litecoin, another prominent bitcoin rival, advanced 22% to $25, its highest level in more than three years, after Coinbase, one of the most popular digital-currency exchanges in the U.S., enabled trading in the cryptocurrency. The top 14 most heavily traded digital currencies have all realized astounding gains over the past month as investors who have booked large profits trading bitcoin and rival Ethereum have sought to diversify and increase their chances of cashing in on the next big cryptocurrency rally, according to Chris Dannen, founder of Iterative Instinct a New York-based cryptocurrency venture fund.

“Not only are the smaller coins obscure and cheap, but they represent a chance to get those huge returns all over again,” Dannen said. The price of a single bitcoin BTCUSD, +2.25%  has more than tripled since the beginning of 2016, when it traded around $450. It peaked at $1,589 on Thursday, according to the CoinDesk bitcoin price index. One ether token traded at $90.95. Dash, the fifth most popular token, traded at $96. Bitcoin’s advance has coincided with its growing acceptance by regulators. A law passed by Japanese lawmakers earlier this year that allows financial institutions to participate in the digital-currency market took effect in April.

Also, regulators in Russia and India have signaled their willingness to legalize bitcoin and its peers. However, bitcoin trading volume in China, once its largest market, plunged after authorities forced the largest exchanges in the country to institute transaction fees and halt withdrawals until they could upgrade their anti-money-laundering systems. New rules require exchanges based in China to verify customers’ identities. In March, the Securities and Exchange Commission rejected two proposals that would have led to the creation of bitcoin-focused exchange-traded funds. But the decision elicited only a brief dip in the bitcoin price.

The SEC has since said it would review its March 10 decision that effectively killed the Winklevoss Bitcoin Trust. Grayscale’s proposal to allow its Grayscale Bitcoin Investment Trust to begin trading on the New York Stock Exchange’s ETF platform is currently being reviewed, but a decision isn’t imminent. The value of cryptocurrencies, however, have varied dramatically between exchanges, prompting Charles Hayter, the chief executive officer and founder of Cryptocompare, to worry about a possible pullback.

On Bitfinex, one of the largest digital currency exchanges in the world, customers paid a $100 premium as they scrambled to move their assets off its platform. The exchange announced two weeks ago that it would temporarily suspend dollar withdrawals after it was effectively cut off from the financial system. “Cryptos have hit a period of volatility as the markets have become dislocated. Prices on exchanges are showing huge discrepancies in terms of pricing and arbitrage is rife,” Hayter said.

Bitcoin’s advance has coincided with its growing acceptance by regulators. A law passed by Japanese lawmakers earlier this year that allows financial institutions to participate in the digital-currency market took effect in April.Also, regulators in Russia and India have signaled their willingness to legalize bitcoin and its peers.However, bitcoin trading volume in China, once its largest market, plunged after authorities forced the largest exchanges in the country to institute transaction fees and halt withdrawals until they could upgrade their anti-money-laundering systems. New rules require exchanges based in China to verify customers’ identities.

In March, the Securities and Exchange Commission rejected two proposals that would have led to the creation of bitcoin-focused exchange-traded funds. But the decision elicited only a brief dip in the bitcoin price. The SEC has since said it would review its March 10 decision that effectively killed the Winklevoss Bitcoin Trust. Grayscale’s proposal to allow its Grayscale Bitcoin Investment Trust to begin trading on the New York Stock Exchange’s ETF platform is currently being reviewed, but a decision isn’t imminent.

The value of cryptocurrencies, however, have varied dramatically between exchanges, prompting Charles Hayter, the chief executive officer and founder of Cryptocompare, to worry about a possible pullback. On Bitfinex, one of the largest digital currency exchanges in the world, customers paid a $100 premium as they scrambled to move their assets off its platform. The exchange announced two weeks ago that it would temporarily suspend dollar withdrawals after it was effectively cut off from the financial system. “Cryptos have hit a period of volatility as the markets have become dislocated. Prices on exchanges are showing huge discrepancies in terms of pricing and arbitrage is rife,” Hayter said.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

Gold and Silver vs Bitcoin and Litecoin

  

A lot of financial experts tend to think of Bitcoin and Litecoin

as the digital counterparts of gold and silver. All four assets have seen significant value changes over the past few years. One thing that stands out right now is how Bitcoin is worth more than 1 Oz of gold, and Litecoin is worth more than 1 Oz of silver. Perhaps there is some truth to this comparison after all.

Gold and Silver

It is evident these two precious metals have always had a bit of an interesting relationship. Silver has always been considered to be the “little brother” of gold, which also explains why it has a much lower value. However, silver is still a precious metal, and only second in most people’s minds to gold. From a collector’s and an investor’s point of view, diversifying precious metal holdings into both gold and silver has been a popular decision over the past few years. The value of silver has gone through some interesting highs and lows over the past few years as well. Right now, one Oz of silver is valued at US$16.59, whereas it hit over US$40 in late 2011.

One of the downsides of precious metals is how they seem to only gain value during times of financial distress. The same can be said about gold, as it is a somewhat volatile asset these days. Right now, one Oz of gold is worth US$1,237.92, compared to over US$1,700 at the end of 2011. Despite these declines, both gold and silver are still popular assets, even though they may not necessarily generate a lot of profit.

Bitcoin and Litecoin

Although comparing gold and silver to Bitcoin and Litecoin is the same as comparing sea shells to diamonds, there are some interesting correlations. Litecoin is the “little brother” to Bitcoin and is highly regarded among cryptocurrency enthusiasts. In this regard, the value of Litecoin often represents a fraction of Bitcoin’s, similar to how gold and silver relate to one another.

Looking at the current prices, it is not hard to see why this comparison still holds up. Bitcoin is valued at US$1,550 right now, whereas Litecoin has surpassed the US$20 mark at the time of writing. In this regard, both popular cryptocurrencies have successfully surpassed the value of gold and silver when measuring both in ounces. An interesting development, that much is evident. In the end, comparing Bitcoin and Litecoin to gold and silver is somewhat understandable, albeit it is not the best metric by any means. It is true Bitcoin is still the “king of crypto” whereas Litecoin is its loyal right-hand man. However, they are not the only contenders right now, Comparisons like these only carry so much weight, yet it provides an interesting way to look at popular cryptocurrencies.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

What is the Bitcoin Dominance Index?

  

There are quite a few intriguing metrics to determine the position of Bitcoin in the financial market. However, there is also such a thing called the Bitcoin Dominance Index. This “index” measures the market cap of Bitcoin compared to the overall market cap of all cryptocurrencies in existence. It is an interesting factor to look at, although it doesn’t necessarily tell the whole story either.

Most people are well aware of how Bitcoin has always been looked at as the dominant cryptocurrency. Over the past few years, the market cap of Bitcoin was by far the largest compared to all altcoins. That situation slowly came to change thanks to the introduction of Ethereum, Dash, Monero, and other coins gaining some major traction. Ever since that time, things have started to change for the Bitcoin Dominance Index. Even though the popular cryptocurrency is still dominating the overall market, its undisputed position has taken a few bumps along the road. In fact, Bitcoin’s dominance has dipped to 59.7% over the past six months, which is an all-time low. This is good news for people who hold diversified portfolios, though, that much is certain.

To put this into perspective, Bitcoin still generates most of the trading volume in the fiat currency market. Moreover, altcoins mainly get their trading volume from the Bitcoin trading pair as well. Without Bitcoin, there would be very little to no trading volume for a lot of altcoins, even those which have started to gain mainstream traction as of late. This puts the Bitcoin Dominance Index in a rather awkward spotlight. Bitcoin is only responsible for 59.7% of the total cryptocurrency market cap. However, most of these altcoins still derive their value based on how they are valued against bitcoin. This is also what creates most of the altcoin volatility as of right now, as a bullish Bitcoin trend will send the altcoin/BTC trading value on a wild swing. Most altcoins have proven to be somewhat resilient in this regard, though.

Moreover, the Bitcoin Dominance Index is not necessarily the best reference when it comes to gauging Bitcoin and altcoin values. Some of the listings on the platform are subject to significant discussion. Forked coins, currencies with a massive premine or instamine, or relaunched projects are all counted as part of the overall cryptocurrency market cap. While these coins have some form of value to the right people, it goes to show there are quite a few factors capable of skewing the numbers. In the end, the Bitcoin Dominance Index provides some interesting metrics, yet it is only a snapshot of how things are evolving. Bitcoin’s dominance is certainly waning, though, which nobody can deny right now. Diversification remains a critical part of being successful in the cryptocurrency industry, that much is evident.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

   Blockchain is an exciting technology,

but for it to go mainstream governments must be able to regulate it.The headlong pace of technological change produces giant leaps forward in knowledge, innovation, new possibilities and, almost inevitably, legal problems. That’s now the case with blockchain, today’s buzziest new tech tool. Introduced in 2008 as the technology underpinning Bitcoin, a digital currency that is created and held electronically without any central authority, blockchain is a secure digital ledger for any kind of data. It simplifies record keeping and reduces transaction costs.Its range of applications in commerce, finance and potentially politics continues to widen, and that has triggered a debate around how to regulate the tool.

Alan Zibluk – Markethive Founding Member

Project Manifest, is gaining traction with potential partners,

 the effort to track everything from auto parts to medical devices remains tightly held under non-disclosure agreements. Still, that isn't stopping those involved from dropping hints about the group's progress. Soon after providing a sneak peek at the technology last week, Dan Doles, CEO of supply chain tech firm Mojix, revealed plans for an upcoming test, describing a more academic project being spearheaded by another Project Manifest member, Auburn University. In total, Doles said a group of more than a dozen companies is now working on the project in the laboratory.

He told CoinDesk:

"We're working with the lab down there, they've lined up seven retailers and six brand owners to participate in this."

Revealed exclusively to CoinDesk in January of this year, Project Manifest debuted just a week after Microsoft and Mojix confirmed the participation of two professors and 10 students in the project. Further, while details of Project Manifest’s work with Auburn University's renowned RFID Lab are not being disclosed, lab director Justin Patton told CoinDesk that a white paper is currently being developed and that the names of additional participants are likely to be revealed upon completion.

To give an idea of the scope of the work being undertaken by Auburn University's lab, sponsors include Mojix, along with Amazon, FedEx, Target, Home Depot and more. By making improvements to traditional radio frequency identification (RFID) technology, and combining it with the electronic data interchange (EDI) transaction standard, the group has already been able to make improvements to the traceability of supply chains using existing centralized databases, Doles explained. However, Mojix and the rest of Project Manifest are now working to turn a distributed ledger into the "connective tissue" that gives complicated cross-industry supply chains real-time accuracy, according to the CEO.

"We're automating the writing, shipping and receiving of transactions in smart contracts on the blockchain," said Doles, adding:

"What I suspect is, it will bring to surface all of these issues of applying blockchain to enterprise."

Increasingly this year, the global supply chain has come in the sights of blockchain disruptors. With the strong correlation that exists between efficient supply chain management, increased revenue and profit, a number of companies have entered the space.

Enterprise embrace

In April, US software firm SAP Ariba partnered with blockchain supply chain startup Everledger and shortly thereafter IBM joined up with Chinese supply chain management firm Hejia for its own blockchain trial. Another recent trend is that 'blockchain supply chain' also means moving trade finance to a blockchain, with Taiwanese manufacturing giant Foxconn spinning off a related startup with P2P lender Dianrong, and Chinese lender CreditEase launching its own blockchain service.

As industry leaders continue to push the technology, Mojix, too, has plans: namely, to deal with the issues of incorporating blockchain benefits into existing enterprise applications. "The next step is we're going to take two to three retailers and set up automated verification, RFID readers, so we can track either shipments or receipts," said Doles, as he used one of his company’s readers to scan a box of shirts from several feet away.

Testing the theory

If all goes as planned, decentralizing the supply chain could have trickle down effects to smaller contractors, according to Microsoft's global business strategist in charge of blockchain. Rhodes believes that the results of improving multi-party work flows include improved cash flow and stronger margins. "Ultimately," said Rhodes, "companies will be able to radically change how they think about supply chain insurance, financing, and letters of credit."

To test that idea the Project Manifest proof-of-concept currently being built is being designed use specially designed 'adapters' that connect RFID scanners directly to the ethereum blockchain. Brand-owners that ship goods, and the retailers that receive them, would then automatically trigger a diverse set of smart contract functions.

Doles concluded:

"If we can solve that problem and create a secure way to verify the perfection of those contracts, then we have a way to expand upward and outward from there."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

  

Attorney Sharon Klein at the law firm Pepper Hamilton, along with Joe Guagliardo,

who chairs the Blockchain Technology Group at the firm, have been looking at blockchain's implications for healthcare for more than a year.Attorney Sharon Klein first started thinking seriously about blockchain's implications for healthcare about 18 months ago. And she's hardly the only one.

Blockchain has been attracting a lot of attention in healthcare, with many technology stakeholders excited about the potential the new data storage paradigm could hold for cybersecurity and interoperability. But while the digital ledger technology has promise, blockchain will struggle to dovetail with the existing realities of privacy law.

"It's the implementation – in this regulatory environment, particularly given everything else that healthcare needs to deal with – that's the question," said Klein, a partner in the health sciences department at law firm Pepper Hamilton and chair of its privacy, security, and data protection practice. "Is this something people are going to want to devote time, energy, money to? It has a lot of good applications. But we have so much to do."

Klein, who will speak at the HIMSS Health Privacy Forum in San Francisco on May 12, serves on the newly reconstituted HHS task force for cyber security. And, according to her, blockchain is on the agenda. "All kinds of data can be stored with blockchain," said Klein. "But from a privacy perspective, it matters whether the data that is stored can be considered protected health information and therefore regulated. And then all of the regulatory drag then is applicable."

For instance, she said, "HIPAA contains a 'patient bill of rights.' So if I, as the patient, want to go see my healthcare records, I just raise my hand and you've got to give them to me. How's that going to work with blockchain?" Or consider the potential implications for updating business associate agreements –  even medium-sized healthcare providers have hundreds of them on file. "It would break my brain to think of how many business associate agreements you'd have to actually execute, and who would execute them," said Klein. "The structure is so inflexible, and very different from any industry's structure when it comes to exchanging of data. That's the hurdle we have to get through."

Blockchain is an exciting emerging technology, to be sure, but it's one that was barely being talked about back when the privacy and security rules under HIPAA and HITECH were drafted, she said. And as it stands today those laws "probably don't meet with the blockchain technology as it is currently constructed." So the question, from a regulatory perspective, should be: Are there easier ways to put blockchain to work in healthcare, even around the margins, that don't need to get tangled up in existing privacy law? "Are there mechanisms, perhaps at the edges, that are not PHI, not as regulated as PHI, that could be utilized in the way that blockchain in healthcare allows?" she said. "You have to start somewhere."

In the near term, Klein said, "the more that private industry self-regulates and has some standard-setting, I think that is going to increase adoption." Klein's colleague Joe Guagliardo, who chairs the Blockchain Technology Group at Pepper Hamilton, agreed. "There's an important point for everyone who's talking about blockchain to understand, whether you're a regulator or a healthcare institution or a technologist," he said. "We're hearing that blockchain is going to revolutionize the way we interact with and store data. But it's not going to happen tomorrow. It may never happen that digital ledger technology is going to replace current infrastructure, because of the regulations.”

Ultimately, it boils down to how important that transformation really is. "What can we do in the healthcare space, what smaller projects can we do, that don't have the regulatory hurdles?,” he said. “And can we take some baby steps that don't require breaking down all the walls? Let's find smaller problems we can solve as a starting point."

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member