The Block

Crypto Simplified.


“I was a big part of the reason why bitcoin was so popular around the world today. I did it the first time and I'm doing it again with bitcoin cash"
- Roger Ver,  early bitcoin investor

The Big Block

Stablecoins are, as some would like to say, the “Holy Grail” of cryptocurrencies. They promise to offer the stability of fiat currencies while maintaining the censorship-resistant features of cryptocurrencies. With the recent string of announcements¹ from stablecoin companies, we’ve decided to take a look at the growing asset class.

Before we examine how stablecoins can survive in the crypto-ecosystem, we must first understand the three core classes of stablecoins:

  • Fiat-backed: Fiat-backed stablecoins are collateralized by fiat currency — maintaining a one-to-one ratio with their respective fiat currency. Traditionally, these stablecoins try to maintain a peg to the U.S. dollar.

  • Crypto-backed: Crypto-backed stablecoins are collateralized by cryptocurrencies. Instead of maintaining a one-to-one ratio, crypto-backed stablecoins attempt to peg their prices to a fiat currency by maintaining a greater collateral-to-stablecoin ratio. Collateral could be a single cryptocurrency or a basket of different cryptocurrencies.

  • Algorithm-backed: Algorithm-backed stablecoins are not collateralized. These stablecoins attempt to maintain their fiat peg through a monetary policy similar to central banks.

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BLOCK TALK

Building blockchain marketing teams, and why it’s critical for mainstream adoption

So-called “blockchain experts” on both the investment and technology sides of the space will argue about a great many things. But there’s one thing we can all agree on: For the industry to grow, we need products that solve real consumer problems. A whole generation of would-be tech entrepreneurs came of age with a false sense of security when it comes to product development. This feeling of confidence, currently rampant among blockchain founding teams with successful (and frequently over-valued) ICOs under their belt, has not been stronger or more misguided since the dot-com bubble of the late 90’s.

The problem is partially related to the origins and make-up of “blockchain industry culture.” Early adopters and significant players in the space come from very technical and academic backgrounds, and a majority of crypto founding teams are, unfortunately, more professional than they are business savvy. Their ability to innovate — or at least articulate innovative ideas in a white paper — on blockchain technology, decentralization, governance models, and complex tokenomics has paid off so far. So far this year ICOs have already raised more money, at around $7 billion, than in all of 2017. And that’s despite the market losing over 70% of its value since January. Investors at all levels have been primarily guided by FOMO, with both retail investors and venture capitalists flooding the market with cash in hopes of riding the next major technological innovation wave. And while the FOMO is probably inspired by profits made during the last technological boom, the industry is bound to repeat some of the same mistakes as well.

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Around The Block

Mining vs. mining: Bitcoin may be an energy hog, but nothing eats quite like gold

Often referred to as “digital gold,” bitcoin has taken a lot of criticism over the energy costs of “mining” it. But the computation-heavy process that bitcoin uses appears to be far less resource intensive than the energy costs to produce the yellow metal. A detailed analysis at LongHash attempted to approximate the total energy expended on bitcoin mining and concluded it was about $4.3B worth.  — More


Star Business Insider journalist Frank Chaparro joins The Block

Frank Chaparro, a finance reporter at Business Insider, will be joining The Block as senior correspondent, beginning on September 24. He will continue to cover the intersection of digital assets and Wall Street as he did at Business Insider. He will focus more deeply on cryptocurrency, including the protocols, people and products that are defining the ecosystem. — More


Tezos to launch mainnet on Monday  — More

Ethereum’s Constantinople hard fork will activate on testnet in October — More

European Central Bank: We have no plans to issue digital currency — More

Bank of America Merrill Lynch to launch bitcoin derivatives for clients — More

Survey: 1 in 4 Millennials plan to invest in cryptocurrencies — More