Market Update: Crypto Market Cap Breaks Past $1 Trillion

Crypto Market Cap Reaches 1 Trillion

Crypto Market Cap Reaches 1 Trillion

BREAKING: Last night, the entire crypto market cap broke past USD $1 Trillion. This escalation is indicative of the global pace of crypto adoption as Bitcoin, Ethereum, and crypto tokens around the ecosystem break past all time highs as the world is awakened to the true utility of digital assets. Fueled by the economic uncertainty posed by the COVID-19 pandemic and the macroeconomic response of countries worldwide, we expect this momentum to continue as regulation strengthens, Wall Street and global institutions validate the utility of crypto, and the world leans more and more on digital commerce. 

As global sentiment shifts to embrace crypto, we are here to educate the world on the power of the blockchain ecosystem and enable true financial sovereignty. Please reach out to us for educational inquiries and our recommendations on how to get involved in the next great shift in global finance.

By Liam McDonald

2020 in Crypto: Top Stories of the Year and a Look Towards the Future

Crypto 2020 - Sarson Funds Cryptocurrency Financial Advisors

Crypto 2020 - Sarson Funds Cryptocurrency Financial Advisors

Reflecting on a year that brought its handful of challenges, 2020 proved the importance of adaptation. Life in a digital world became inevitably crucial, and as changes in everyday life were made rapidly, the cryptocurrency ecosystem followed suit.

With more talk than ever surrounding the world of decentralized banking, we’ve compiled the top stories of 2020. 

Throughout the year, our team focused on understanding the importance of digital asset data security. With the emergence of quantum computing capabilities, we’ve identified Crown Sterling as one of the leading engineers of the future of quantum-resistant data security. Led by mathematician Robert Grant, Crown Sterling has created the first quantum-resistant digital asset, the Crown Sterling token. The token, protected by their new quantum-proof encryption algorithm, CrownEncryptOTP, provides lifelong protection of user-sensitive data. As cryptocurrencies grow vulnerable to quantum-hacking, this future-proof digital asset provides a pathway toward progressive and sustainable encryption advancement. 

In October, the crypto ecosystem welcomed PayPal into the space. The company announced they would be adding Bitcoin and crypto transactions to their payment options for users. CEO Dan Schulman hopes this change will drive momentum for PayPal’s 375 million users and registered merchants to become more comfortable with digital payments through the crypto ecosystem. Tech giants Square and Venmo followed suit with integrating buying, holding, and selling capabilities for cryptocurrencies. The commercial adaptation by large institutions is positively shifting public comfortability towards digital payments as they are continuously mainstreamed. 

Aside from the use of digital assets in big tech, Wall Street began to embrace Blockchain as well. Leaders in the finance world such as J.P Morgan, Guggenheim, and AllianceBernstein have all noted that cryptocurrencies are here to stay. Overcoming CEO Jamie Dimon’s 2017 claim that Bitcoin was a “fraud,” JP Morgan proceeded to release their ‘JPM Coin,’ in addition to their new branch for digital asset operations and custody services, Onyx. JPMorgan spearheaded the use of blockchain on Wall Street, and it is no surprise that Guggenheim and AllianceBernstein were so quick to follow as blockchain proves to be a profitable and efficient way to secure transactions without lag time or third-party interference. Bitcoin is becoming increasingly valued as a medium of exchange, as growing adaptation occurs on Wall Street and beyond. 

As Bitcoin continued to gain value with record-breaking prices, business intelligence company MicroStrategy bought  70,470 Bitcoin, a total of 1.1 billion dollars. CEO Michael Saylor says, “The acquisition of additional bitcoins announced today reaffirms our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value.”

A common saying for the new year: out with the old, in with the new. In the world of Fintech, rather, out with traditional financial services, in with decentralized banking. Brian Brooks and the OCC began emphasizing the cost effectiveness and efficiency of removing third parties. As we saw with the shift from postal services to email, instant and direct financial services solutions are now being provided by decentralized finance (Defi) platforms to simplify the future of banking. With Defi’s increasing capabilities, the entire banking system will soon be forced to adopt blockchain technology. 

In September, Kraken, one the largest US-based crypto exchanges, made history as the first digital asset company in the United States to receive permissions as a bank charter. The Wyoming-based Special Purpose Depository Institution will offer depository, custody, and fiduciary services for cryptocurrencies. The integration of both banking efforts along with crypto services is projected to expand into a variety of initiatives including cryptocurrency debit cards, mobile banking, etc., paving the way for regulatory adoption from banks everywhere.

In the last month of 2020, the SEC filed a lawsuit against Ripple Labs. The company had raised over $1.3 billion dollars through the sale and distribution of XRP, which was recently declared an unregistered security.  XRP is one of the largest and most valuable coins in the crypto industry, known for its rapid speed and accessibility in over 50 countries. The SEC plans to ban Ripple’s ability to participate in XRP’s market trading. The case is being referred to as “the crypto trial of the century.” 

In 2021, we expect the pace of crypto adoption and innovation to continue as competition from big tech grows. Crypto’s integration into banks and the strengthening of regulation will add to the continued growth of the ecosystem,  making for 2021 to be another year of crypto’s outperformance of traditional finance.

By Liam McDonald

Protecting Your Bitcoin From Quantum Computing Risk: Cold Storage with the Ledger Nano X

Guaranteeing Bitcoin Safety with Quantum Computing Advancements

Guaranteeing Bitcoin Safety with Quantum Computing Advancements

As discussed in the first part of our quantum computing risk advisory, taking your Bitcoin off of centralized exchanges and keeping them safe in cold storage (off exchanges) is a sure way to guarantee the protection of your digital assets. Our recommendation for the best hardware to store your assets on is the Ledger Nano X, which enables users to control their coins through the personal storage of their private keys. The Ledger Nano X is the first and only certified hardware wallet on the market.

When users activate their Ledger Nano X, private key ownership is restored to the rightful owner of the coins, taking control away from centralized exchanges that typically hold and control wallet addresses, public and private keys of their holders. When all three of these, especially private key ownership, is returned to users, users become the true owners of the coins as private key storage is removed from the centralized cloud. When wallets and keys are taken off exchanges, quantum computers have no way of beginning to find them, as referenced in part one, and no complicated tactics are needed to continue safety assurance.

With the Ledger Nano X, users have access to millions of private key passwords for their wallets, so they can engage in as many transactions as they want and have automatic wallet and key regeneration to completely sidestep risk of quantum hacking. The encyclopedia of randomly-generated private passwords is accessible through a recovery phrase, which must be kept private by the user, or else they risk hackers gaining access to all of their private key combinations.

We have no paid partnership with the Ledger team, we are simply recommending our best practices as the future of the crypto ecosystem evolves alongside quantum computing. You can purchase the Ledger Nano X, here.

For more information on quantum computing, the risks and opportunities associated with it, be sure to explore our Cryptography Lite Paper and Digital Asset Investor Guide to Cryptography.

By Liam McDonald

Bitcoin is Here to Stay: Wall Street Adopts the Asset Class of the Future

Wall Street Adopts Bitcoin Cryptocurrency Financial Advisors

Wall Street Adopts Bitcoin Cryptocurrency Financial Advisors

The past few months have welcomed several notable institutions and investors into the digital asset community. From Paul Tudor Jones to Square, PayPal and JPMorgan, the next wave of acceptance is reaching top tier asset managers.

This week, both Guggenheim and AllianceBernstein released statements declaring digital assets a legitimate asset class, with Guggenheim announcing a possible allocation of up to 10% of their $5.3 billion Macro Opportunities Fund into the Grayscale Bitcoin Trust (GBTC).

As one of the largest asset managers on Wall Street, Guggenheim is taking a leading role in recognizing the true use cases and profitability behind a decentralized financial infrastructure, and their impending asset allocation to GBTC is validation that this asset class is not going anywhere.

As the world becomes increasingly digitized and the pace of innovation is more cutthroat than ever, Guggenheim’s validation of Bitcoin is indicative of their foresight into the future of asset management. With their vision of a digital asset-backed financial future, Guggenheim is living up to their fiduciary commitment to drive future returns for their clients by allocating up to $530mm into the asset class of the future.

Alongside Guggenheim in their recognition of cryptocurrencies as an asset class is Wall Street giant AllianceBerstein. Earlier this week, Inigo Fraser Jenkins, Co-Head of Bernstein Research’s Portfolio Strategy team released a statement claiming that digital assets “do have a place in asset allocation.”

Coming back on his 2018 remarks that digital assets do not present a convincing use case because their historic volatility ruled them out as a means of transaction, Fraser Jenkins’ recent statement is credited to Bitcoin’s lower price volatility and therefore strengthened foundation as a store of value asset. On Bitcoin’s viability as a store of value, Fraser Jenkins told CoinDesk that Bitcoin’s downward trend of price volatility “makes it more attractive both as a store of value and as a medium of exchange.”

There is no denying that Bitcoin is earning the respect of Wall Street. Massive allocations from MicroStrategy, Square, and legendary investors like Paul Tudor Jones along with crypto integrations from PayPal and JPMorgan are delivering Bitcoin on a gold platter to the global investment community. The momentum from the past few months has made one thing clear: Bitcoin is not going anywhere, and as Bitcoin is here to stay, regulation will soon follow to project the world into a future of universal digital asset adoption.

By Liam McDonald

Brian Brooks of the OCC Claims DeFi Will Soon Replace Traditional Banking

OCC Says Decentralized Finance Will Soon Replace Traditional Financial Services

Current Comptroller of the Currency and former Coinbase Chief Legal Officer Brian Brooks claims that decentralized finance (Defi) will soon replace the need for traditional banking services.

At DC Fintech Week on Oct 19th, Brooks stated that a financial future governed by permissionless, autonomous financial technology is not far away. At the rate that Defi is moving, Brooks claimed, “decentralization is very likely an unstoppable force out t here. Decentralized networks, by definition, are cheaper, faster, and more resilient than any kind of centralized structure.”

Brooks compared Defi’s momentum next to traditional banking with email’s disruption of the postal service, adding “with email, we don’t need aggregation anymore – we can do it directly with each other.” Just as email removed the need for third party mediation of communication, Defi allows individuals to perform financial services directly with each other through the algorithms within decentralized networks. Brooks stated, “It is possible for you to just go online and say, ‘Hey, listen, I’ve got $10,000 here and I’d like to earn five percent’… and the algorithm will find someone who does and all of a sudden there’s no longer a value in the bank aggregating all of that money together.”

As opinion-leading individuals like Brian Brooks of the OCC spread the word on what the future of finance will look like, this should not be Armageddon for banks. Rather, to stay afloat in an ever-changing world, Banks must adapt and adopt the momentum of fintech innovation, especially as it pertains to the promising future of blockchain technology and cryptocurrencies. If banks want to survive, they must take part in pioneering the future of blockchain technology.

By Liam McDonald

CME Bitcoin Futures Data Shows Promising Rates of Adoption Amidst Economic Uncertainty

CME Bitcoin Futures Data Shows Increasing Adoption Rates During Pandemic

CME recently released promising Q3 2020 data showing that Bitcoin and digital assets are finding life in the face of global economic uncertainty. According to a recent press release, CME Bitcoin futures and options are growing at increasing rates next to previous quarters even before the COVID-19 financial crisis.

Some important trends to highlight from CME’s press release:

  • Bitcoin Futures’ open interest averaged more than 10.5K contracts per day in Q3 2020, while open interest reached a record of 15,406 contracts on August 17th, 2020.
  • The Q3 record average for open interest of 10.5K contracts per day is up 127% since Q3 2019, stunning the average open interest from even before the Coronavirus pandemic struck global economies, showing that even a world-wide pandemic cannot stifle Bitcoin’s pace of adoption.
  • Number of large open interest holders (LOIH) grew 64% since Q3 2019 to an average of 79 in Q3 2020.
  • Q3 Average daily volume (ADV) of Bitcoin futures reached 8,960 contracts per day.
  • Bitcoin is strengthening its positioning as a global mechanism for financial freedom as 40% of trading volume derives from outside of the United States.

These strong trends are indicative that the pace of adoption of Bitcoin and related digital assets is stable, resilient, and forceful enough to endure even the harshest of economic conditions, opening the world’s eyes to the true legitimacy of digital assets as a hedge against inflation risk and a legitimate approach to value protection.

By Liam McDonald

Treasury Department Evaluating a Government-Sponsored Digital Dollar

Treasury Department Exploring Use of FedCoin

According to Deputy Treasury Secretary Justin Muzinich, the Treasury department is exploring multiple possible avenues to support a central bank digital currency tied to the US dollar. The Boston Fed is taking a leading role in this exploration, partnering with MIT’s Digital Currency Initiative to evaluate more than 30 different blockchain networks to test scalability, efficiency, and ability to support US financial infrastructure.

Muzinich noted in a statement, “There are clearly efficiency benefits and cost benefits to using a distributed ledger… And I also think, more broadly, it’s important for government to embrace innovation and not be scared by it.” As Muzinich states, the US must take initiative and embrace the pace of global tech innovation, especially as China is already leading the charge.

Muzinich also noted how crucial it is for the government to begin regulating cryptocurrencies, as they offer versatile solutions to many governmental and corporate financial operations. While compliance to AML rules presents a barrier for governmental adoption of digital currencies, we believe that with the rate of innovation that the crypto ecosystem is experiencing, solutions to AML and KYC concerns are not far away.

To remain a global economic superpower, the United States must position itself along the cutting edge of financial technology, and adopting blockchain technology as the backbone of its future financial system is the most progressive, stable, and secure approach to ensuring future economic competitiveness.

By Liam McDonald

Kucoin Hack: Guarantee the Safety of Your Digital Wallet

Sarson Funds: Protect Your Digital Assets After Kucoin Hack

Weekly Analyst Thoughts

This week, I want to highlight the dangers of centralized finance (Cefi) and hot wallets (cryptocurrency wallets connected to the internet) by reflecting on the recent $150 million-dollar KuCoin hack. One of the major problems with Cefi exchanges like Coinbase, Kraken, Bittrex, and KuCoin is that the cryptocurrency user does not actually control the asset. The Cefi exchanges control the funds with private keys, making them a honeypot for hackers due to the large amount of money that is stored on these exchanges. There is a phrase in the cryptocurrency community to hammer home the point of Cefi exchanges: “Not your keys, not your coins.” If cryptocurrency users and investors continue to relinquish their private keys to these Cefi exchanges, these hacks will continue to occur. A nice middle ground is to set up a multi-signature wallet, which needs multiple keys, with a custodian, so if the custodian or the investor ever loses their key, they can easily access the wallet from utilizing additional keys. A good example of this multi-signature solution would be Casa, a provider of custodian storage solutions for digital wallets.

Although hot wallets are extremely convenient to use for buying, spending and selling crypto, there is a hardware wallet that rivals hot wallets: Ledger Nano X. Ledger Nano X improves upon its predecessor, Ledger Nano S, and its’ annoying USB cable and limited storage. The Ledger Nano X can hold up to 100 different cryptocurrency wallets with the help of Ledger Live and has a Bluetooth connection that enables investors to forgo connection via a USB cable.

In summary, KuCoin’s $150 million-dollar hack is a stark reminder of the dangers of centralized finance and hot wallets. Two solutions to Cefi and hot wallet hacking problems include using custodians like Casa to hold your private keys and using cold storage wallets like Ledger Nano X.

By Jacob Stelter