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October 19, 2018
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cryptocurrencies

KZen raises $4 million to bring sanity to crypto wallets

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KZen, a company run by former TC editor Ouriel Ohayon, has raised $4 million in seed to build a “better wallet,” obviously the elusive Holy Grail in the crypto world.

Benson Oak Ventures, Samsung Next, Elron Ventures invested.

Ohayon, who has worked at Internet Lab and founded TechCrunch France and Appsfire, wanted to create an easy-to-use crypto wallet that wouldn’t confound users. The company name is a play on the Japanese word kaizen or improvement and it also points to the idea of the zero-knowledge proof.

Omer Shlomovits, Tal Be’ery, and Gary Benattar are deep crypto researchers and developers and helped build the wallet of Ohayon’s dreams.

“We wanted something that did not feel like a pre-AOL experience, that was incredibly superior in terms of security, and simple to use,” he said. “We wanted a solution that brings peace of mind and that did not force the user into compromising between convenience and security which is, unfortunately, the current state of affairs. We quickly realized that this mission would not be possible to achieve with the same tools and ideas other companies tried to use so far.”

The app is launching this month and is being kept under wraps until then. Ohayon is well aware that the world doesn’t need another crypto wallet but he’s convinced his solution is the best one.

“The market does not lack solutions,” he said. “On the contrary, there are software wallets, hardware wallets, paper wallets, vaults, hosted custody. But there is no great solution. To be able to use a crypto wallet you either need a good dose of Xanax or a master’s degree in computer science or both, unless you want to depend on a central entity, which is even worse as the news are reminding us weekly.”

We’ll see as they use the cash to launch a crypto wallet that anyone – not just Xanax-eaters – can use.

News Source = techcrunch.com

How a Ugandan Prince and a Crypto startup are planning an African revolution

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Crypto and blockchain enthusiasts have been railing for years against the centralized world of banks, but many have been doing so from the privileged vantage point of developed countries. But what if blockchain technology turned out to be most revolutionary in emerging economies?

Take Africa for instance. Consumers in those countries became so frustrated with the banking fees imposed on their transactions every time the wanted to merely top up their mobile airtime, that airtime minutes alone actually became a form of money. Banking in the way it’s been developed for the developed world simply does not work when a transaction to top up a phone can cost more than the airtime itself.

South African-based startup Wala realised this early on. It had developed a smartphone app which acted like a wallet, facilitating customer transactions via the app with existing banking infrastructure. But the high banking fees for nearly every function was hurting Wala’s customer base and the company’s early business model as a mobile wallet for the smartphone generation.

They needed a Zero-fee solution, but the existing financial system just didn’t work. That’s when they realized they could switch to a cryptocurrency and allow payments across a peer-to-peer network for merchants, offering airtime, data, electricity bills – even the ability to pay school fees.

Today Wala, which raised $1.2 million selling ethereum-based “$DALA” tokens in an initial coin offering (ICO) in December last year, is facilitating thousands of transactions in daily accounts across Uganda, Zimbabwe and South Africa, with most of those are micropayments under $1.

Since the launch of their $DALA currency in May 2018 (currently accessible through the Wala mobile application) over 100,000 $DALA wallets have been opened and over 2.5 million $DALA transactions have been processed, says the company. The multi-chain crypto asset – at least right now – uses Ether for the wallet and Stellar for transactions, though it is not locked to any one platform.

Through $DALA protocols (Kopa, Soko and Kazi), consumers have access to borderless, low cost, efficient, and unique financial services enabling them to earn, save, borrow, and transact in a new, decentralized, financial system.

But Wala does not plan to stop there.

Today, Dala, announces it has partnered with a  gigawatt-scale solar program for Uganda to create a blockchain-enabled clean energy economy.

Here’s how it’s going to work:

Long-time energy company CleanPath Emerging Markets Uganda (CPEM) is partnering with the Ugandan Government and the Ugandan Ministry of Energy and Mineral Development on the project which will mean Ugandans are able to buy solar energy using $DALA from this massive new infrastructure project.

CPEM will use the DALA blockchain platform to manage its ledger, its vendor contracts, and its partner commitments. The company has over 11,000 MWs of renewable energy experience already under its belt.

The $1.5 billion program aims to create a new clean energy economy in Uganda, not only creating employment and kick-starting a clean energy economy but new economic development in Uganda. Ugandan consumers will be able to buy solar power in $DALA, workers to be paid in $DALA and the program will even run on $DALA.  

Tricia Martinez, Wala cofounder and CEO, told me at the recent Pathfounder event in Oslo: “The numbers we’ve seen since the launch of $DALA have been staggering, and a large portion of our current users are Ugandan, so this partnership is a natural next step to allow users the opportunity to further benefit from using $DALA. The high level of user traffic also shows us that Ugandans are ready to use crypto assets in their day-to-day transactions.”

But the story wouldn’t have come about without an enlightened African Prince who could have stepped straight out of the mythical kingdom of Wakanda, as featured in the recent smash hit Black Panther movie.

For the founder of CPEM is Prince Kudra Kalema of the Bugandan Kingdom (a Ugandan royal family), whose ancestry goes back to at least the 14th Century. Buganda is now a kingdom monarchy with a large degree of autonomy from the Ugandan state.

“We’re truly excited about this program and our partnership with Dala”, says Prince Kudra Kalema of the Buganda Kingdom, who is also Managing Partner and Co-Founder at CP-EM. “By providing Ugandans with an opportunity to access clean energy through $DALA, we’re fostering a more inclusive decentralized financial system not possible with legacy technologies.”

In an exclusive interview with TechCrunch, Prince Kalema told me: “My family considers itself to be the custodian of the land, and I have been searching for about a decade to find solutions that would improve the country. But what could we work on when people couldn’t even switch their lights on?”

It became obvious to him that the biggest issue was affordable electricity. And to do it in a renewable way, and it had to be solar. Microgrids turned out not to be the solution. And it had to be at scale.

But the question is, why did he hit on cryptocurrency?

“We began using the $DALA protocol because it became very clear that the financial structure in Uganda was not adequate. It was clear we needed something. There is no way the Uganda Shilling is stable enough for the type of programme we are doing. Wala was already invested in the same country and wasn’t just about the idea of a running a crypto coin in an emerging market, but was also about creating the best type of financial institutions for the country. That goes hand in hand with what we are doing. It became a no-brainer.”

“Ugandans are saying that what we have right now does not work.” — Prince Kudra Kalema

He says the $DALA crypto combined with his solar project will be much easier to run in Uganda than in countries like the US: “Over 80% of Ugandans are under 35, and very well educated. I don’t like the term leap-frogging, but this is what this is. They don’t have to unlearn anything that was there before. They are eager to figure out and learn about a solution that will help them. When you look at how quickly mobile money was adopted by Ugandans — it became powerful not because it was imposed but because people yearned for it. Ugandans are saying that what we have right now does not work. The banking transaction fees, the cost of remittances… — it’s difficult for them to be enthusiastic about something they know doesn’t work already.”

Uganda continues to be a market hungry to adopt new technology, and the recent announcement that Binance is launching a fiat to crypto exchange in the country is a recent example of this.

He added: “Uganda has always been at the forefront of these types of things. Even before we were a protectorate of the British Empire, Uganda was part of the region where people would travel to find out how to deal with things in Africa. We had an intricate tribal system. The British didn’t invade, they made it a protectorate because of this.”

The details of the plan are ambitious. Prince Kalema’s CPEM plans to create a gigawatt-scale solar power development program in Uganda providing clean energy to 25% of the population and creating 200,000 new jobs in the clean energy economy. 

The program would more than double the current electricity generation capacity in Uganda (equivalent of about 2 average US coal power plants) where 75% of the UG population has no access to energy.

By using $DALA Ugandans will be able to consume energy at zero transaction fees, use it for everyday purchases, and also convert it back to fiat Ugandan currency via agents/merchants and cryptocurrency exchanges.

It will even allow CPEM and the government of Uganda to make grants of free power available to the poorest, while keeping a completely auditable and tamper-proof record of these grants. 

The story of how a small startup came to take African markets by storm begins in 2014.

Initially backed by angel investor and a social-impact VC (Impact Engine) in the US, Tricia Martinez’s Wala (pictured above) joined the Barclays Techstars Accelerator in London in 2016. It later set up shop in Cape Town, South Africa and started growing its team (it’s now at a total of 12 staff).

Not long after, South African VC Newtown Partners invested and Wala then issued the $DALA crypto-asset and set up the Dala foundation. It’s perhaps no coincidence that Newtown is headed-up by Vinny Linghams (of the well-known Civic and ethereum-based, project).

Martinez is passionate that cryptocurrency is going to be the solution emerging markets like Africa have wanted and needed for years: “The fact that the unit of account and store of value for this program is $DALA proves its utility and shows its potential to become a preferred financial system across emerging markets. We’re excited to be involved from the ground-level and look forward to playing our part in creating a just and accessible financial system for consumers.”

She says both the Prince and the Ugandan government “needed a partner that can help drive the financial inclusion to get them into a more efficient digital system. That’s when they heard about us. When we started talking we both saw the opportunity to actually build an entire ecosystem built on a crypto asset.”

“So it’s not just that consumers are buying that energy cryptocurrency, but the workers who are building our energy grids will get paid in it. So they’ve become very passionate about blockchain especially from the energy perspective, to create transparency. Working with the government to create more accountable records of what they’re building out could even reduce the potential for corruption.”

As Martinez points out: “In the hands of over 100,000 users in Uganda, already people are purchasing their electricity needs, products and services. The goal with this project is for people who are getting the energy to be able to then tap into all these other services that we offer. We’re also going to be launching cashing agents so that people can go to those mobile money agents around the corner to cash in and cash out to their wallet.”

It’s clearly a big project. Some observers will see the words ‘Uganda and Cryptocurrency’ in the same sentence and no doubt come out with some kind of trite, dismissive, assessment.

But Wala’s experience on the ground — and it cannot be emphasized enough how important that is, compared to the armchair commentators at most blockchain conferences in the Western world — combined with the hunger of an emerging nation, a passionate Prince and the ingenuity of its people should not be underestimated.

News Source = techcrunch.com

Report: Most ICO project financing unaffected by crypto market crash

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Despite a bear market that has seen the price of Ethereum drop by over 80 percent since the start of the year, most projects that raised money via an ICO remain unaffected, according to the findings of a new report.

Bitmex, best known for a crypto trading service, claims to have crunched the numbers on over 200 of the biggest ICOs and found that, on average, most projects have already converted what they had raised in crypto into fiat currency. That’s not to say that they did so immediately or that 100 percent of the proceeds have been converted — many projects didn’t, and haven’t — but the general trend is that most have reaped the paper gains of their ICO without being stung by the crash.

One Ethereum — technically an ‘Ether,’ the crypto token associated with the Ethereum Foundation and the Ethereum Blockchain — was worth nearly $1,400 in January, a then record. That valuation has plunged during 2018, to the point that the cryptocurrency ducked below $200 during September, raising alarm among some in the community over its long-term sustainability.

Ethereum’s rollercoaster ride over the last twelve months including a record valuation of nearly $1,400 in January 2018

It’s easy to assume, therefore, that ICO projects — which raise the majority of their funds in Ethereum — have been hit hard. But the Bitmex research appears to suggest that many projects managed to convert their crypto and also retain a decent amount of Ethereum, too. It’s, of course, important to remember that this is a report, not gospel truths, but there’s plenty of insight to dig into.

Bitmex suggests that the projects it looked at collectively still hold 3.8 million Ethereum, or around one-quarter of the crypto total that they originally raised. If that’s true — and the accuracy will vary from project to project — then it’s a big win. Not only do projects get the money they thought they’d earned from their ICO, but they also retain some ‘skin in the game’ and are thus incentivized by the future value of Ethereum.

According to Bitmex, the deficit between total Ethereum value raised and the total amount of Ethereum cashed into fiat is just $11 million. Spread across over 200 projects, that’s quite low and it leaves plenty of Ethereum for future opportunities. Estimated unrealized Ethereum gains — i.e. crypto raised that hasn’t been cashed out — stands at $93 million, and that’s based on the current ‘low’ value of Ethereum.

The Bitmex data is fairly skewed by the huge EOS ICO — which raised around $4 billion in crypto earlier this year. Not only does the EOS project inflate the numbers, but it also continuously offloaded Ethereum during its year-long token sale making it tricky to track value.

Nonetheless, even taking EOS out of the acquisition, the shortcoming between ‘paper’ ICO raises and the net conversion to fiat is $79 million and that’s padded out by the $93 million in estimated unrealized gains.

Despite the industry-wide figures, there are examples of companies who quickly cashed their crypto into fiat in order to plump for a sure thing, and others who held off converting the pile or cashed out small bits when needed. The situation is certainly more challenge for any ICOs happening right now, although — as we wrote recently — the market has shifted towards private sales which makes tracking the flow of money a great detail more challenging.

You can read the full report on the Bitmex blog here.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

News Source = techcrunch.com

Coinbase now lets users buy ‘bundles’ and launches its own index for the top 50 coins

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Coinbase is shaking things up quite a bit lately and its latest tools are geared toward cryptocurrency traders just getting their toes wet.

On Thursday, the company announced that it would add a feature called Coinbase Bundle. The new offering lets users purchase a market-weighted sampling of Coinbase’s five available cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ethereum Classic. The idea is that a bundle of coins offers users a starter pack for cryptocurrency trading on the platform with stakes of their choosing. In reality, until Coinbase adds more coins, it’s not exactly a diversified portfolio so much as a slightly counterbalanced selection of Coinbase’s current limited offerings.

In June, Coinbase introduced index funds targeted toward institutional investors in the U.S. While those funds required an investment between $250,000 and $20 million, Coinbase Bundle is geared toward the casual individual investor with bundles that start at $25. For beginning traders that prefer to follow rather than beat the market, betting on broad growth over time, a product like Coinbase Bundle makes sense. Or rather it will when Coinbase adds a lot more coins.

Users who buy a Coinbase Bundle can expect to see the funds appear in their wallet like normal. There, the funds will behave like separate assets that can be sold and sent elsewhere.

Beyond bundles, Coinbase is also launching a few educational cryptocurrency tools geared toward anyone still learned the ropes. The first of those tools is Coinbase Asset Pages, the company’s own CoinMarketCap-like database where anyone can view details about the top 50 coins by market cap, whether they’re listed by Coinbase or not.

Like other resources, Coinbase’s new tool will provide “historic trading data, current market cap, a description of the cryptocurrency, and links to relevant white papers and project websites.” Unlike other resources, Coinbase artificially lists its own offerings at the top rather than depicting those coins where they actually fall in terms of market cap.

Coinbase is also launching a dedicated learning hub on its site where new users can browse topics like “What is blockchain?” and “Where do cryptocurrencies get their value?” — in many cases, a good question. Given Coinbase’s appeal to brand new users, it’s kind of surprising that this didn’t already exist. Particularly that it wasn’t implemented late last year when many wide-eyed investors bought it at all-time highs and were handed big losses in the months to come.

After mainstream interest in digital currencies cooled from the fever-dream highs of late 2017, making Coinbase’s famously user-friendly entrypoint into the cryptocurrency world even more approachable for first-time buyers, if many remain, can’t hurt. The company is also clearly readying for its plan to list coins well beyond its current limited offerings, a transformation that will see the platform evolve from its historical identity as a blue chip stock shop to something more akin to digital currency’s attractive, well-lit corner store.

Coinbase’s new top 50 asset pages and learning hub are live now. Coinbase Bundles, limited to the U.S. and Europe, will start showing up for users today and the rollout will continue through the next few weeks.

News Source = techcrunch.com

Crypto mining giant Bitmain reveals heady growth as it files for IPO

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After months of speculation, Bitmain — the world’s largest provider of crypto miners — has opened the inner details of its business after it submitted its IPO prospectus with the Stock Exchange of Hong Kong. And some of the growth numbers are insane.

The document doesn’t specify how much five-year-old Bitmain is aiming to raise from its listing — that’ll come later — but it does lift the lid on the incredible business growth that the company saw as the crypto market grew massively in 2017. Although that also comes with a question: can that growth continue in this current bear market?

The company grossed more than $2.5 billion in revenue last year, a near-10X leap on the $278 million it claims for 2016. Already, it said revenue for the first six months of this year surpassed $2.8 billion.

Bitmain is best known for its ‘Antminer’ devices — which allow the owner to mine for Bitcoin and other cryptocurrencies — and that accounts for most of its revenue. 77 percent in 2016, 90 percent in 2017, and 94 percent in the first half of 2018. Other income is generated by its mining farms, shared mining pools, AI chips and blockchain services.

The company is fabless, which means it develops its own chip design and works with manufacturing partners who bring them to life as physical chips. Those chips are then used to power mining hardware which lets the owner earn a reward by mining Bitcoin and other cryptocurrencies. Bitmain claims over 80,000 customers with just under half of sales in China and the rest overseas.

The company said it posted $701 million in net profit in 2017, up from $104 million in 2016. For the first half of this year, it is claiming a gross profit of $743 billion. (Operational profit touched $1 billion for that period.)

That’s quite staggering growth, but there are some signs that 2018 comes with more challenges.

Margins are down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively.

Interestingly, Bitmain accepts Bitcoin and other cryptocurrencies as payment for its miners, with some 27 percent of purchases last year paid for using crypto. As a result, those payments aren’t included in revenue but do show up as “investing cash inflow” when they are converted to fiat and used in the business. That’s a 2018 accounting problem right there.

As a result, Bitmain has a negative net cash used in operating activities position but those become positive when factoring in the crypto. The company said it received $887 million in crypto in the first half of 2018, $872 million in 2017, $56 million in 2016 and $12 million in 2015 — that’s based on rate at cost. Data appears to show that Bitmain cashed $484 million in crypto in 2017, and in the first half of 2018 that figure was $382 million.

The wild ride of 2017, however, led the company to over-estimated demand and, as a result, its inventory ballooned by $1 billion.

Here’s Bitmain explanation of how it managed to get it so wrong:

In early 2018, we anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies price in the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there had been significant market volatility in the market price of cryptocurrencies in the first half of 2018. As a result of such volatility, the expected economic return from cryptocurrency mining had been adversely affected and the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018. Going forward, we will actively balance our business growth strategy, inventories and cryptocurrency asset levels to ensure a sustainable business growth and a healthy cash flow position, and we will adjust our procurement and prediction plan to maintain an appropriate liquidity level.

Despite an extra $1 billion in inventory, Bitmain estimates it has the working capital — including crypto pile and the result of its IPO — to sustain operations for at least another 12 months. That, according to its figures, is around $343 million in cash and cash equivalents but clearly it needs another megahit product or for the market demand to rise again.

Indeed, Bitmain just last week announced its newest mining chip — shrunk down to 7nm — which it believes will offer more power and greater efficiency for miners. That progress coupled with the rising value of crypto — i.e. what owners of Bitmain miners can earn — has helped the company steadily raise the price of its hardware.

Average selling price for its Bitcoin mining machines in 2015 was just $463, but that jumped to $767 in 2016, $1,231 in 2017 and $1,012 in the first half of 2018.

Bitmain co-founder Jihan Wu is the face of the company and one of its largest shareholders with a 20 percent stake

Beyond mining, the company is also developing AI chips, the first of which launched last year. They are used for developing cloud systems, as well as object, image and facial recognition purposes.

Citing third party figures, Bitmain claims to have a dominant 75 percent of the ASIC mining hardware market. It is investing heavily in R&D, which reached $73 million last year and $86 million during the first half of 2018. In addition, around one-third of its 2,594 employees are listed as working in research and development.

It’s likely that Bitmain sees more revenue in crypto than any other company on the planet

Bitmain’s document confirms the company raised some $784 million across Series A, Series B and Series B rounds.

Its investor roster is fairly public thanks to leaks and it includes the likes of IDG, Sequoia China, and Kaifu Lee’s Sinovation fund. However, the prospectus does confirm that shareholders include retailer NewEgg, EDBI — the corporate investment arm of Singapore’s Economic Development Board — and Uber investor Coatue. Founders Ketuan Zhan and Jihan Wu are the largest shareholders and they control 36 and 20 percent, respectively.

We can expect Bitmain to flesh out the prospectus with more juicy information, including a target raise which will also generate its valuation. But for now there are over 400 pages of information to process, you can find them all right here.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

News Source = techcrunch.com

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