Bitcoin with Black Friday discount

Bargain hunting: Bitcoin with Black Friday discount

Black Friday not only boosts sales in retail and wholesale. Bitcoin also comes along with a “discount” today – the result of an unhealthy price rally.

The latest Bitcoin share price development is probably best described as a “rollercoaster ride”. On Wednesday, the largest crypto-currency jumped to its all-time high. But as quickly as the Bitcoin share price had cleared the way to the record high the previous days: It ended at 19,315 US dollars. From the summit it went just as quickly to the bottom of the valley. Since then, Bitcoin Up has lost almost 2,500 US dollars in value, and with a 24-hour minus of 2.9 per cent has moved further away from the 17,000 dollar mark. At the time of going to press, Bitcoin was quoted at 16,815 US dollars.

Bitcoin price in weekly chart

As is so often the case, various market developments have mutually amplified each other and triggered the current slide in share prices. The most banal reason: Bitcoin itself. In just two weeks, the digital currency has risen by US$ 4,000 to its annual high. Too much in too short a time, as it now turns out.

Just how unhealthily the market has bloated can be seen from the immense range of fluctuation in market capitalisation. On Wednesday, market capitalisation reached an absolute peak of 360 billion US dollars, but fell by 16 percent to 300 billion dollars in just one day. With currently around 318 billion US dollars, it is recovering from the shock. But the pump-and-dump pattern shows Rapid growth was at a high price. The rapid rise of Bitcoin has paid off for investors and has put the price under pressure by profit-taking.

On 26 November, for example, some 2,394 Bitcoin changed hands for the equivalent of 40 billion US dollars and flowed straight back onto the stock markets. As the following chart shows, BTC inflows to the Exchanges have often correlated with a decline in prices in the past. If BTCs are not repurchased to the same extent, the volume of supply will eventually overflow, which can lead to short-term setbacks. This was particularly evident in the market crash in mid-March.

Cryptosoft: The hybrid ICO

Hybrid ICOs are what analysts call those who compromise in all three areas – reach, compliance and cost efficiency. One example is RightMesh. RightMesh has established a subsidiary in Switzerland and designed its RMESH token to be classified by Swiss regulators as a pay coin (and not as security). A dedicated law firm ensured that RightMesh met the relevant KYC and AML requirements. The token was also not offered in countries where ICO tokens are generally classified as securities, such as the United States. The RightMesh team researched how the RMESH token would be classified in over 27 jurisdictions. However, this care is associated with corresponding costs. In addition, there is no guarantee that a token will retain its status within a jurisdiction.

“This manual review of investors, regulatory research and selective issuance is a good example of how a company can work with regulators to achieve compliant token distribution, although it also illustrates the huge costs in terms of finance, time and human resources that are currently being incurred, the authors of the study state.

The fourth cryptosoft way: head in the sand

Not every cryptosoft company is willing to find a way to counter this trilemma. Although many (even “the silent majority” according to the analysts) have already considered an Initial Coin Offering as a cryptosoft financing scam instrument, they do not do so in view of the associated (and above mentioned) uncertainties.

“We have talked to several stakeholders who have seriously considered raising capital for new companies through token issues, but have so far held back and decided that the (known and unknown) costs of achieving a compliant ICO that reaches a sufficient pool of distributed investors are currently too high to proceed.

As a result, many companies are either taking a blanket decision not to implement an ICO, or are adopting a wait-and-see approach in the hope of a more transparent (and at best global) regulatory environment.

A – not entirely altruistic – proposed solution

Since such globally uniform regulation is not yet foreseeable and passivity is not a viable option for every company, the analysts propose a solution in which ICOs regulate themselves. This reveals the biased character of the study.

The iComply system, i.e. one of the authors of the study, is proposed as a possible approach. The platform iComplyICO is supposed to enable the implementation of ICOs with automated Compliance:

“Before the Token Sale of the ICO begins, the rules for who can hold them and may act are coded into the digital tokens. In order to purchase the tokens, individuals must demonstrate that they meet these requirements by verifying their identity in accordance with the appropriate multijurisdictional guidelines and then whitelisting their wallet.”

Those wishing to follow the process in more detail will find more detailed descriptions of what such self-regulating ICOs can look like, both in the study and on the corporate side.