Brave New Coin: New Tools Arriving for Institutional Bitcoin Investors

OTC:GBTC

Investors interested in the cryptocurrency market or invested in the publicly traded Grayscale Bitcoin Trust (OTC:GBTC), which provides investment exposure to Bitcoin, have few ways to obtain information and analysis. Generally, they need to access multiple websites in order to get all the data they need. This can be challenging when the crypto market fluctuates rapidly. There will soon be a new solution designed to provide the broad tools that crypto investors need.

Founded in 2014, New Zealand-based Brave New Coin (BNC) provides data, analysis and research to a global network of market participants. Through its more than five years of operating history, the company has developed expertise in blockchain and cryptocurrency, becoming a leading provider of data solutions for institutional, as well as retail investors. The company has created a robust platform that investors can use to analyze blockchain and crypto and help make informed investment decisions. To unlock many of the platform features, the company is introducing the Brave New Coin token.

The Brave New Coin or BNC token will be available for sale through an initial exchange offering (IEO). Unlike an initial coin offering (ICO), in which the company offering the token conducts its own public launch, an initial exchange offering is overseen by an exchange. To participate in an IEO, a user just needs an account on the exchange and needs to have funds in that account. Fundraising via an IEO is generally conducted through the fundraising platform of a relatively high-profile exchange. This allows users to buy tokens using funds directly from their proprietary exchange wallet.

BNC’s IEO is slated to begin on November 4, 2019, and continue through November 8, 2019, unless the tokens are sold out sooner. Moreover, generally with an IEO, if the exchange’s user base is sufficiently large, a company might be able to lower its external marketing expense allocated to the fundraising process. Recently, Japanese-based exchange Liquid.com announced that it will be hosting the BCN token IEO.

Liquid is a global cryptocurrency platform that provides trading, exchange, and other financial services powered by blockchain. Liquid was founded in 2014. It claims more than $50 billion in transactions on its exchanges over the past two years, according to its website. Trade publications have reported that Liquid closed on a series C funding earlier this year that put its valuation at over $1 billion. Liquid has also entered into a joint venture to expand its crypto trading services into the U.S.

BNC Pro

BNC has created an ecosystem of proprietary and third party applications, including news-feeds, research and market data products that aggregate important information about the blockchain and crypto sectors, BNC Pro. Moreover, the BNC Pro interface resembles that of other more established investment tools (see image below). Management therefore believes that it will be familiar to members of the investment community and thus be relatively easy to adopt.

BNC Pro has been in development for over a year and a half. It connects to all the major crypto exchanges and will be distributed by channel partners, including through white label arrangements. The company has indicated that it is engaged in discussions to partner with several large companies.

As noted, until now investors and other finance professionals have had to use multiple different websites to obtain similar information, which often makes it difficult to analyze changes quickly in a rapidly fluctuating crypto market. Thomson Reuters offers some information; Bloomberg provides coverage, Coinmarketcap.com and others offer price and volume data and the Grayscale Bitcoin Trust (GBTC) offers investment exposure. However, BNC management believes that the BNC Pro platform will be the only robust destination for the full range of information.

Management Has Extensive Experience

BNC’s CEO, Fran Strajnar, entered the emerging cryptocurrency and blockchain communities early. He co-founded Brave New Coin and its parent company, Techemy. The company’s general manager is a senior executive who was formerly with International Data Corporation (IDC), a leading market intelligence firm. The company also notes that operating managers overseeing its various operations have significant experience.

BNC seeks to fill an investment void by offering a dedicated ‘all-in-one’ workstation that essentially provides one-stop shopping for all important data related to blockchain and crypto. BNC Pro is a turnkey cryptocurrency management platform that the user can customize to his or her own needs. BNC Pro provides a full suite of applications to enable investors to track and manage their crypto investments in one digital location.

BNC already provides indices and market data through NASDAQ, Amazon Alexa, TPICAP, Refinitiv, and several other prominent platforms. The commercial launch of its proprietary platform, BNC Pro, is expected in late-November 2019. BNC Pro will be available under a freemium model. Anyone can create an account and begin using the free tools. To purchase premium items, however, the company’s BNC token can be used to pay for software licenses for premium features. If a user prefers, transactions can also be paid for by using a credit card.

The Crypto Market is Dynamic: News and Volatility Make Real-Time Analysis Key

Bitcoin was the first decentralized digital currency. It was introduced in 2009 and one Bitcoin was worth roughly $0.003 in early 2010, according to Coinmarketcap.com data. By September of 2017, the Bitcoin / dollar exchange rate had climbed to over $4,000. It is now over $8,000, although the valuation has been volatile. Specifically, the value of Bitcoin has fallen more than 50% since the cryptocurrency reached a high that exceeded $19,000 in December 2017. BNC management believes that investor interest in crypto remains strong and that volatility will drive demand for a one-stop crypto financial information tool.

Moreover, since Bitcoin, other cryptocurrencies such as Litecoin, Ethereum and Dash have emerged, with additional crypto coins being introduced all the time. At this point, there are more than 2,000 cryptocurrencies that command an aggregate valuation of over $250 billion, according to Coinmarketcap.com. Despite recent volatility, the valuation and perceived potential of both cryptocurrency and blockchain technology have generated substantial interest. 

In part, this is because cryptocurrency has created tremendous rewards and challenges for investors. Nevertheless, it is often difficult for individuals to acquire tokens for either commercial or investment purposes. Not surprisingly, traditional financial intermediaries have put up some roadblocks. For example, JPMorgan Chase, Bank of America, and Citigroup at one point decided not to process cryptocurrency purchases using credit cards, according to CNBC. Capital One Financial also moved to prohibit Bitcoin purchases using credit cards, citing “the limited mainstream acceptance and the elevated risks of fraud, loss, and volatility inherent in the cryptocurrency market.”

Thus, investors who want to gain exposure to the cryptocurrency market have few options through financial institutions or through the stock market. One way is via the Grayscale Bitcoin Trust (GBTC), as noted. While the financial services sector has moved to curtail crypto purchases, many “are evaluating blockchain as a cheaper way to settle transactions,” according to Investor’s Business Daily (IBD). Blockchain is the underlying digital architecture that supports many digital cryptocurrencies including Bitcoin. Blockchain is a decentralized and encrypted ledger that offers a secure method to store records and other information in a way that can be verified. Each block in the blockchain contains a hash – a digital fingerprint or unique identifier – and timestamped batches of prior transactions, as well as the hash of the previous block. The hash connects the blocks and prevents any block from being altered or inserted between two existing blocks. Each new block reinforces the verification of the previous block and therefore the overall blockchain. 



This characteristic is also believed to make it transparent if an attempted hacking tries to alter any part of the blockchain. According to IBM, blockchain architecture gives participants the ability to share a ledger that is updated, through peer-to-peer replication, every time a transaction occurs. Peer-to-peer replication means that each participant (node) in the network acts as both a publisher and a subscriber. Each node can receive or send transactions to other nodes, and the data is synchronized across the network as it is transferred. Blockchain is viewed as a secure option for financial transactions that also provides flexibility and scalability. 



“Blockchain is a public ledger technology that uses digital signatures and cryptographic hashing to provide a record of secure transactions that cannot be altered,” according to Techrepublic. Specifically, blockchain is thought to be safe, immutable and transparent because no single person or party within the chain can alter the record without the agreement of all parties in the chain. 

Blockchain technology also has broader applications beyond cryptocurrencies. Among other features, it can be used to process transactions, manage medical records, and verify and confirm proof of ownership. Blockchain can also record and track intangible assets such as intellectual property, patents, copyrights, or branding. In discussing blockchain, an article in the Harvard Business Review notes that, “Contracts, transactions, and the records of them are among the defining structures in our economic, legal, and political systems. They protect assets and set organizational boundaries…. With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision.”

The blockchain market is forecast to grow to $7.683 billion by 2022, up from $241.9 million in 2016, according to a December 2017 study by market research firm Markets and Markets, a compound annual growth rate of 79.6%, reflecting rising demand for blockchain and valuation of cryptocurrencies. 

Given the expanding cryptocurrency market, it is also generally expected that a growing number of countries will impose or tighten regulations, which we believe will also drive increased need for greater transparency and access to data. For instance, the IRS has conducted an investigation of customers who traded Bitcoins on Coinbase, according to Fortune magazine. The Coinbase cryptocurrency exchange was ordered to provide the IRS with information on all customers who engaged in transactions valued at $20,000 or more from 2013 to 2015. According to Forbes, this likely impacts an estimated nearly nine million transactions made by more than 14,000 different account holders. Fortune notes that the IRS opened the investigation partially because only 802 people had reported their Bitcoin gains or losses in 2015.

Forbes notes that “the IRS is concerned that many U.S. taxpayers may not be accurately reporting the gains or income they have generated from their cryptocurrency transactions. Since the majority of cryptocurrency transactions have likely resulted in significant gains due to the surge in value in most cryptocurrencies, coupled with the fact that the gains are likely short-term capital gains (subject to ordinary income tax rates) since the cryptocurrencies were likely held less than 12 months, the IRS has good reason to be concerned.” 

Conclusion

With growing investor interest and potentially increased regulatory oversight, a dedicated crypto tool would seem to be a valuable asset to crypto investors and traders, we believe. IBD noted last month that “Bitcoin and blockchain technology have taken off as they gain more mainstream acceptance, from exchange operators like CME and CBOE to Wall Street investment banks and mobile payment company Square… The rise of blockchain technology may also threaten the dominance of FANG stocks — Facebook, Amazon.com, Netflix and Google parent Alphabet…. In response to this emerging revolution, Facebook launched its own blockchain division.”

An April 2019 Forbes article commenting on crypto volatility noted that “The bitcoin price exploded at the beginning of the month, leaving traders and analysts unsure of what exactly caused the sudden upswing and causing many to doubt whether bitcoin, ethereum, Ripple’s XRP, litecoin, EOS, and bitcoin cash would be able to hold on to their recent gains.” In short, the crypto market is dynamic, making it critical that news flow and analysis be available in real-time, we believe.

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