All posts in “Cryptocurrencies”

VertoFX raises $2M for its African and EM currency trading platform

VertoFX, an Africa and emerging markets-focused currency trading and payment startup, has raised a $2.1 million seed round, led by Accelerated Digital Ventures.

The London based company, with a subsidiary in Lagos, Nigeria, has created a platform that allows businesses and banks to exchange and make payments in exotic foreign currencies that don’t often convert or trade conveniently across businesses or banks.

For example, South Africa’s Rand is Africa’s most convertible and traded currency—with lower spreads and transaction costs—while currencies of countries such as Ethiopia or Egypt may be difficult or expensive to trade or transact B2B payments in.

“That’s the reason we are utilizing technology to create a marketplace model and price discovery to create liquidity for these currencies,” VertoFX founder Ola Oyetayo told TechCrunch.

There are around 40 global currencies that are considered exotic or illiquid, most of them in frontier markets in Asia, Africa, and the Middle-East, according to Oyetayo.

VertoFX curency startup AfricaAnd there’s a revenue opportunity to creating a convenient online marketplace for trading and payments in these currencies.

“Our research says there’s about $400 billion being done by small and medium scale businesses in Africa alone in transactional volume on an annual basis. If we take 1 percent of that as a commission or transaction fee, that’s a $4 billion addressable market, just in the continent,” said Oyetayo.

vertofx founders Anthony Oduwole and Ola OyetayoVertoFX was founded in 2017 by Oyetayo and Anthony Oduwole—both ex-global bankers born in Nigeria. The company was part of Y-Combinator’s 2019 winter cohort and processed around $7 million in transaction volume last month, according to Oyetayo.

VertoFX is registered as payment services provider with the UK’s Financial Conduct Authority. Current clients include several undisclosed banks and San Francisco based payment venture Flutterwave.

VertoFX doesn’t release revenue figures, but confirmed it earns a commission, or spread, on each transaction that is processed on its platform. There are currently 19 currencies on the platform and the ability to settle in 120 countries, including China and the U.S.

VertoFX is also moving into offering market research—toward potential subscription services—on the currencies it trades, according to Oyetayo.

The startup will use the round for platform development, expand the currencies, and gain licenses in new countries. “We’ll also use the round for hiring, primarily in compliance and regulator type roles,” said Oyetayo.  VertoFX already has a developer team in India and is looking at local developer talent for its Africa offices.

ADV’s Ryan Proctor confirmed the VC firm’s lead on the investment round, which also included participation from YC and several local angel investors in Africa, Oyetayo told TechCrunch.

On the possibility of becoming acquired by a big bank, VertoFX isn’t so interested, according to Oyetayo.

“We both come from big banks and if we’d wanted to go down that route we’d have developed this more as software as a service platform,” he said.

“We’re playing the long-game here and I don’t think acquisition is the end-game,” he said.

Bitcoin rollercoaster continues as price dives below $10,000

Just a week ago, as the price of one bitcoin surpassed $10,000 for the first time in more than a year, it appeared that the rise of the most popular cryptocurrency is unstoppable. 

Each day, Bitcoin hit new highs, almost touching $14,000 on June 27 — and then the growth abruptly stopped and the price started going the other direction. Five days later, and one bitcoin dropped to $9,835, having fallen more than 10 percent in the last 24 hours according to CoinMarketCap. (During the couple of hours needed to write this text, the price recovered to $10,225.)

The prices of other popular cryptocurrencies followed suit. Ethereum is down to $282, a 4.5 percent decline in 24 hours, and XRP is down to $0.395, a 3.4 percent decline in that same period. 

So what has changed in the last week? Frankly, not that much. 

The consensus amongst prominent cryptocurrency investors and traders appears to be that Bitcoin has simply risen too high, too fast. Investor Mike Novogratz, for example, called the recent pump a “frenzy,” and said he’d sold some of his Bitcoin last Wednesday, and that he wished he’d sold more. Days before the crash, trader Alex Krüger said prices will pull back “eventually.” Crypto researcher Jameson Lopp warned about the dangers of Bitcoin going “parabolic.”

Even with the price dropping, however, most pundits remain optimistic. Novogratz later said that he thinks prices will consolidate between $10,000 and $14,000 before “next move higher,” adding that he’s still “very bullish.”

Krüger, too, thinks the price will “eventually break higher,” adding that there is still positive news ahead for the cryptospace, and echoing the oft-heard sentiment that this cryptocurrency bull run will match or surpass the last one. 

In terms of actual news, nothing hugely negative has happened since Facebook dropped its Libra bomb. Even though the launch of Facebook’s crypto platform and stablecoin is likely a year away (or more), banks and institutions are taking notice

Other than that, the news has been positive. On the Bitcoin front, cryptocurrency exchange Binance has just announced that it’s soon launching futures trading, with testing commencing in a few weeks. The Ethereum Foundation has announced “spec freeze” for the major new version of Ethereum called ETH 2.0. This means the code for ETH 2.0 has been finalized, and even though there’s still a lot of testing and bug fixing to be done, this makes it more likely that ETH 2.0 will launch on schedule, i.e. in January 2020. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

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Bitcoin nears $10,000 as total value of all cryptocurrencies surpasses $300 billion

On November 28, 2017, the price of one bitcoin hit the magical figure of $10,000. At the time, it seemed ridiculous; Bitcoin was this weird internet money that wasn’t quite money and that cost a couple hundred dollars per coin just a year ago. 

The second most popular cryptocurrency at the time, Ethereum, had an even crazier run: from about 10 bucks early in the year to $480. Both cryptocurrencies then continued to rally before crashing far below those levels in 2018. 

Now, Bitcoin is once again on the brink of reaching $10,000, and Ethereum is very near $300, for the first time in nearly a year. 

In some ways, this bull run — and it’s definitely a bull run at this point — is very different from the last one. The market has matured; institutional investors have more avenues to invest in cryptocurrencies. Bitcoin has solved some of the issues that plagued it in 2017; Ethereum is on the way to a total overhaul of its core technology, which may launch as soon as late 2019. 

A familiar run

But price-wise, it’s amazing how closely the current situation resembles the one in late 2017. It took three months for the price of Bitcoin to rise from $3,000 to $10,000. Right now, the price of Bitcoin is $9,791 according to CoinMarketCap. Three months ago, it was $4,083, and just four months ago, it was at $3,393. 

Just like in 2017, trading was choppy, with the prices sometimes dropping by more than $1,000 in a matter of days. But the bearish periods were short, and the price recovered quickly. Ethereum’s growth has been a little less explosive than in 2017, but largely followed a similar pattern. Right now, the price of Ethereum is $286. 

The $10,000 and the $300 price levels for Bitcoin and Ethereum, respectively, are important psychological barriers, and not only because they’re nice and round. Last time, those levels were when the “cab driver” effect was in full swing: Everyone was talking about Bitcoin; Coinbase was adding hundreds of thousands of users on a weekly basis. People who’d never even considered stocks were suddenly stocking up on Ethereum and other cryptocurrencies. 

Another important mark has been reached on Friday: The collective market cap of all cryptocurrencies surpassed $300 billion again, according to CoinMarketCap. This hasn’t happened in exactly one year. 

In it for the tech? Good.

I’ve taken a look at the developments on the market this May, and things remained largely unchanged since then. Same warning applies: Just because Bitcoin once went crazy and surged a hundred percent after it had hit $10,000, doesn’t mean it’ll happen again. 

But it’s a good moment to take a step back and look at how the technology has evolved since 2017. 

Bitcoin’s core developers have stayed true to their mantra of doing things slowly but surely, with the system’s security being the highest priority. As a result, Bitcoin has kept its security record pristine (exchange hacks, scams and swindles of all sorts are another matter, but they aren’t Bitcoin’s fault). The block size debate that raged throughout 2017 has died down, partially due to an upgrade called SegWit, which alleviated the problem somewhat. A mobile app for Lightning Network, a promising scalability solution that’s been in development for years, was released as alpha software a few days ago. Technologies like Schnorr signatures and Taproot are being implemented right now, with the goal of increasing scalability and privacy. 

Opponents will point at Bitcoin development being glacially slow, but Bitcoin has remained relevant by staying secure and not doing much. It hasn’t become a widely used payment solution, but it’s solidifying its position as digital gold; an asset that most investors buy because they expect for it to retain value, while at the same time considering it to be an anchor for some portion of the global financial system (the verdict on whether Bitcoin really is a good store of value is still out, and might not be settled for many more years). 

Ethereum, a platform for decentralized apps, hasn’t fully solved its scalability issues, meaning that you still can’t run software with millions of daily active users on top of Ethereum. But Ethereum developers are hard at work on Ethereum 2.0, a major upgrade to the system which introduces a new, proof-of-stake consensus mechanism, which wastes far less energy than proof-of-work (used today by both Bitcoin and Ethereum), as well as sharding, a complex solution for making Ethereum more scalable. 

In 2017, one of the main drivers for Ethereum’s growth was the initial coin offering or ICO, a way of crowdfunding a startup by selling blockchain tokens to investors. The ICOs are now largely gone, stifled by more stringent regulations, but they’ve been replaced by the IEO (initial exchange offering), which is essentially the same thing, only organized and vetted by a cryptocurrency exchange. The success of some recent IEOs, especially those ran by Binance, have added a new wave of optimism to the space. 

Then there’s the white-and-blue elephant in the room. Days ago, Facebook, together with a very strong list of partners, launched Libra, a new open-source blockchain that will host a non-volatile cryptocurrency of the same name. Libra will be integrated into Facebook products such as Messenger and WhatsApp via Calibra, a proprietary digital wallet from Facebook. With a launch date set for the first half of 2020, the Libra announcement sent strong ripples throughout the cryptocurrency industry, both as a threat and as a sign of potential mainstream adoption. 

And all of this is just a tiny portion of what’s happening in the crypto space. 

As always, cryptocurrency price movements appear to be decoupled from actual developments in the space, driven instead by speculation. But technological progress has been made, and governments, institutions and big tech companies appear far more interested in crypto now than they were two years ago. Let’s see how things unravel this time around. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

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Facebook’s cryptocurrency could be announced next week with major partners

Facebook’s long-rumored cryptocurrency might not be a rumor anymore a week from now.

The Wall Street Journal reported on Friday that the social media giant had recruited “more than a dozen” companies to fund its upcoming cryptocurrency, reportedly called Libra. Among those companies are notable names in the payment processing space, such as PayPal, Mastercard, and Visa. 

That means when Facebook reportedly unleashes its Libra white paper next week, it will do so with the blessing of several companies that could have been hurt by this had they not invested in it themselves. As the Journal report pointed out, these companies stand to benefit if Libra actually takes off.

Mark Zuckerberg is coming for cryptocurrency.

Mark Zuckerberg is coming for cryptocurrency.

Image: David L. Ryan / The Boston Globe / getty

Facebook apparently wants around $10 million from each backer, and that money would be used to create the digital currency. The backers could then act as nodes in a new payment network that would verify and record transactions, but the Journal‘s report said neither Facebook nor the group of backers would directly control Libra.

If the report is to be believed, Facebook users will be able to send Libra to each other or use it to facilitate purchases on or off the social network. It’s not difficult to see why companies like PayPal and Visa would want to back Libra; Facebook has more than two billion users who could potentially hop on the Libra bandwagon.

It’s also easy to see why Facebook would do this. It could be a new source of revenue for a company that relies mostly on digital advertising for its income right now. Facebook could benefit financially from becoming even more of an e-commerce platform than it already is.

Finally, it’s perhaps the easiest to see why people might be skeptical of this. Facebook’s track record on privacy is notably poor and some might not trust the company to do this correctly. This could also make Facebook look like even more of a monopolistic titan to those who want the company to be broken up, like co-founder Chris Hughes

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CoinBits launches as a passive investment app for bitcoin

Erik Finman is a twenty-something bitcoin maximalist as famous for his precocity as he is for his $12 bet on the currency a few years ago.

Now, Finman, who built his first company while still in High School, is launching a new startup called CoinBits, which allows users to passively invest in bitcoin.

The idea, according to Finman, is to democratize access to the currency by letting everyday folks invest nominal sums through well-known mechanisms like roundups on transactions made with a credit or debit card or through regular transactions from a customer’s savings or checking account to bitcoin through CoinBits.

Every transaction also helps Finman’s own bitcoin holdings grow and makes the young entrepreneur a little wealthier himself through his bitcoin holdings.

Users can make one-time investments of $10, $25, $50, or $100 dollars through the web-based platform and can establish a level of risk for their holdings.

Finman’s app collects no commissions on transactions and 98% of the Bitcoin is stored offline — for safety.

“Overall, investing in Bitcoin is complicated and can feel almost impossible,”. said Finman. “Coinbits allows you to put that spare change in Bitcoin. For example, if you spend $1.75 on French fries, that remaining 25 cents is invested automatically.”

Withdrawals are handled by CoinBits which will give users same-day processing for a 50 cent-fee and offers an easily downloadable record for accountants to deal with any gains or losses associated with bitcoin.

Given the fractional nature of these investments, and the volatility of bitcoin, it’s hard to know what real value investors can reap from these small transactions, but it’s a less risky way to experiment with building bitcoin holdings than take a huge flyer on the market.