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What is NVT?

If you’ve been tracking analysis articles in the crypto world, you’ll likely have come across the term NVT as a rough metric that is – more and more frequently – used to value bitcoin and other cryptos. So what is it and why is it important?

Network Value to Transactions is simply the ratio of the market cap of the crypto to the volume of daily transactions. If a network is more frequently used, we would expect its value to be higher. Comparing different networks, we can see whether one has a significantly higher or lower valuation than we might expect for the amount of actual use it supports.

Comparing different networks’ NVT values, we can see that LTC has a higher NVT than BTC and is – by this metric – more overvalued than bitcoin.
Conversely, DOGE could be considered more undervalued than bitcoin.
NVT is a good and logical starting point, but it’s a blunt metric. It doesn’t take into account a number of significant factors, such as: off-chain (exchange-based) transactions, spam attacks (lots of useless transactions), the difference between old and new addresses, and so on.

A more exciting, complex and nuanced approach along the same lines is Network Value to Metcalfe (NVM) ratio. We’ll be looking at that in a future article, but you can read more about it here.


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Evidence builds: Crypto is a millennial thing, and for good reason

Right from the early days, bitcoin adoption has been driven by Millennials. The tech-savvy younger generation – Millennials or GenY, born in the 1980s and 1990s – are intuitively more comfortable and confident in the idea of computer-created money. The previous generations, especially the post-war Baby Boomers, struggle to get their heads around the concept of online cash; these were people who grew up without computers, and who were given notes and coins every time they got paid. The skepticism shown by the likes of Warren Buffett is largely a generational issue. (He didn’t like the internet much either.)

But accessing the Opportunity of blockchain money isn’t all about confidence with new technologies. That’s the Means, not the Motive. More and more surveys are now showing not only that crypto is being driven by Millennial coders, businesspeople and adopters: they’re showing why.

The reality is that Millennials have been priced out of almost every other asset class. They are the biggest victims of the Global Financial Crisis, sidelined by the legacy of an irresponsible older generation. Property is too expensive to buy. The stock markets are at an all-time high. Interest rates are so low there’s no income to be gained from bank deposits. At the same time, this generation is heavily indebted by the costs of their education, under water before they even start earning properly.

So is it any wonder that they have seized the opportunity offered by blockchain – not just for return on investment, but to change the financial system that has ignored them or, worse, mortgaged their future to keep Boomers happy?

As of 2019, Millennials will outnumber Baby Boomers, who are now retiring. That cohort is the new generation of business, political and social leaders. What happens when Millennials aren’t only driving the tech, but constitute the largest voter demographic and taking key regulatory decisions too?

Check out Andrew Gillick’s article on the demographic factors driving crypto adoption.


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The history of bitcoin in one chart

This is a great outline of bitcoin’s progress since its launch in January 2009.

The chart on this article is very enlightening. Rather than focusing on price (as everyone else seems to do), it looks at what currencies bitcoin is being exchanged for – and why.

As you can see, over the course of bitcoin’s history, different currencies have played a greater or lesser role. In the early days, the dollar dominated. Then the Chinese Yuan took over, until China cracked down on bitcoin. Now, the Japanese Yen is bitcoin’s largest trading currency, but volume is coming from an increasing range of sources.

The chart reflects four different stages in bitcoin’s lifespan. The first was the early days of Gox and the Silk Road. When these imploded in 2013 and early 2014, China picked up the reins – overnight, almost all of the volume migrated to the Yuan. China ruled bitcoin in mining and trading volumes until March 2016, when Japan declared crypto legal forms of money. Stage three started with a rapid increase in Yen volumes, and Yuan trading dropped off a cliff – all but ending with the Chinese government’s action against exchanges. And fourthly, we have the Tether and alts stage, where bitcoin is bought using other currencies, and to invest in other currencies and tokens, rather than as an investment in its own right. In other words, more and more activity is occurring within the crypto ecosystem, as well as money coming into and out of it from fiat.

All of this doesn’t indicate the next stages, though it’s clear that the crypto scene is still in a state of flux. The article concludes on a thoughtful note.

‘And as I hope to elaborate in a follow-up post, the chart confirms that the biggest factor in the bitcoin market is the very one it was designed to avoid: government policy decisions.’


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IBM collaborating on FDIC-insured Tether competitor

You’ve probably noticed that here at Inferno, we love Tether. In fact, we love anything that gives us regular opportunities for humour, and USDT is just about the biggest joke there is in the crypto world (competing for the title with Roger Ver and Agustin Carstens).

USDT, just to recap, is a so-called stablecoin. It’s a blockchain token that is supposedly backed with real dollars, but Tether don’t want to prove they actually have those dollars, or that they got them legitimately, and they don’t allow you to exchange USDT for real dollars.

Other than that, Tether is totally legit.

Sarcasm aside, the crypto ecosystem desperately needs alternatives to Tether. That’s why we’re so pleased that TrueUSD has just launched. It’s another stablecoin, based on the same idea of backing a blockchain token 1:1 with actual dollars, but TrueUSD have implemented a legal/regulatory framework around that, and they don’t hold customer funds. Basically, they’re what Tether always should have been, but has been too shady to do properly. And we hope and expect they will succeed because of that.

But wait, there’s MOAR!

Because IBM are getting in on the action with Stellar, through their Stronghold trading platform. Stronghold USD will be 1:1 backed, like Tether and TrueUSD. However, ‘The stablecoin is also purportedly protected by FDIC Insurance, something no other stablecoin or cryptocurrency company – bar Coinbase and Gemini – can claim. Founded in 1933 in the throes of the Great Depression, the FDIC is a federal agency that provides deposit insurance for clients at commercial banks and savings institutions, covering amounts up to $250,000.’

If this is the face of stablecoins to come, then the writing is on the wall for the likes of Tether. (And that’s the way we like it.) Reliable stablecoins are a critically important development for the progress of the crypto movement. We really shouldn’t have to settle for USDT.

Read more.


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Lopp: more meatspace crypto attacks on the way

It used to be the case that what happened in crypto, stayed in crypto. No more.

One of the unwelcome side-effects of the massive increase in value across the crypto markets has been an extension of the Wild West culture from cyberspace into the real world (aka ‘meatspace’). A growing list of people have been held up at gunpoint or otherwise threatened for their bitcoins, or because of their involvement in crypto.

Jameson Lopp, a well-known bitcoin developer who himself was SWATted last year, courtesy of one anonymous member of the crypto world who didn’t agree with his views on the scaling debate, comments:

‘23 physical attacks targeted against crypto owners cataloged thus far. 10 of them occurred in the past 6 months. Seems to be strong evidence that the rate of physical attacks is accelerating.’ See

Lopp has started an open source repository of physical attacks, so that the community can ‘help keep track of the dynamic security landscape for crypto asset owners’.

Check it out here: Hopefully, you won’t ever need to add to it.


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How ‘decentralised’ is Bancor, anyway?

TL;DR Bancor was hacked but the team were able to freeze BNT tokens, suggesting there’s more to this platform than first meets the eye.

Bancor was one of 2017’s most successful ICO, raising $153 million in crypto for a decentralised exchange. More than that, it’s a particular kind of exchange: instead of trading peer-to-peer with other users, you trade with a smart contract. You send one token to the Bancor contract, and it sends back another token from its reserve. That means you’re not restricted by the offers being made by other traders — in other words, liquidity is guaranteed. It’s a brilliant idea.

Bancor was recently hacked (see One of the wallets used to upgrade the project’s smart contracts was compromised, which enabled the hacker to transfer out just under $13 million in ETH from the reserve, plus another $10 million in BNT, Bancor’s native currency. No customer funds were stolen.

It’s not a huge amount by the staggering scale of previous crypto hacks (here at Inferno, we don’t raise an eyebrow at anything under $50 million any more). But the interesting development here is that the Bancor team were able to freeze the stolen BNT to prevent them being cashed out, as the ETH already has been.

This is a feature built into the BNT smart contract, and the creators make no apology for it. In fact, they advocate it for other tokens. ‘We firmly believe that this ability is a preventative measure essential to most tokens and necessary to protect the network and token holders in a state of emergency.’

This has shocked a few crypto purists, who have rightly drawn attention to the fact that Bancor have influence over all BNT trading. There is centralised control of BNT, and a single point of failure. No other tokens can be controlled in this way, of course, hence the reason they couldn’t freeze the stolen ETH.

As a result of the measures built into its smart contracts, Bancor was able to freeze $10 million of BNT. But at the same time, they showed that they cannot be considered decentralised, and that there is therefore a major vulnerability in their platform.

Did they win the battle but lose the war?


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Syscoin and Binance: All Your Funds are SAFU

A single Syscoin changed hands for 96 BTC ($600,000) at one point, as attackers sold coins at vastly inflated prices through hacked exchange accounts.

It’s still not clear exactly what happened to Syscoin, but the results were plain to see on Binance’s charts and orderbooks. Initially it seemed possible that the Syscoin blockchain was the victim of yet another 51% attack, following GameCredits, Bitcoin Gold, and others. This was denied by the Syscoin team, who released this statement: The TL;DR is that ‘everything is normal and the blockchain is working as expected’. There were some irregularities on the blockchain that pointed to serious problems and caused substantial concern given the trading anomalies, but these appeared to have more to do with a software upgrade than an attack. Whether the timing was planned or coincidence is yet to be established.

Either way, a significant amount of SYS were deposited to Binance through a series of hacked accounts. These accounts had enabled API access, in many cases presumably to allow bot trading. A little later than the other exchanges that were warned of the suspicious activity, Binance halted trading and shut down all APIs, forcing users to create new ones and emphasising they should only do so if there was a genuine need for API access. By then, funds left on the hacked accounts had been used to buy SYS up to a high of 96 BTC per coin. In total, the hackers were able to withdraw 7,000 BTC from Binance.

Binance has rolled back the irregular trades. It has also offered zero-fee trading for all users who traded SYS during the meteoric rise. (There was no additional charge for the lesson that greed will get you burned.) All Binance users have been offered a rebate on trading fees for the inconvenience. You can find out more at

Lastly, Binance has established a Secure Asset Fund for Users, or SAFU. 10% of the trading fees they collect will be placed in the SAFU to compensate users in the event of future issues. This is not just an insurance policy but a reference to a humorous video that did the rounds a few months ago, when one Binance user posted their take on a 2001-inspired dystopian future ruled by the exchange:


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The Wolf of Wall Street on bitcoin

Yesterday we included a mention of Jordan Belfort’s thoughts about bitcoin in our market report ( Belfort, who made his fortune selling and manipulating worthless stocks to unsuspecting investors, knows a thing or two about pump-and-dump schemes.

Belfort has warned bitcoin investors that they are in for more pain. In a video posted on YouTube, Belfort states that this is the ‘beginning of the end’. Belfort is a believer in blockchain technology and even cryptocurrencies, but believes there is too much wrong with bitcoin itself and that the #1 digital currency is not the future. ‘Get out if you don’t want to lose all of your money,’ he warns.

He describes bitcoin as ‘teetering on the edge’ in the video, which was uploaded on 23 June, just as bitcoin plunged to its year low of $5,800. ‘There’s a very good chance it’s going to crack. And when it really cracks, you’re not going to be able to sell on the way down, there will be no liquidity.’ When that happens, he says, all the fraud and scams will come out of the woodwork, including the revelation that a number of major exchange were really inside jobs designed to cover up other problems. ‘I feel bad for you “hodlers” out there,’ he says, ‘but at a certain point in time you’ve got to wake up and smell the coffee… if you think $6,100 is anywhere close to the bottom, you’re f***ing crazy!’

‘When it goes down, this thing isn’t going down $100 at a time. It’ll go from $6,000 to $2,000 like THAT, and you won’t be able to sell it. Take that to the bank.’

Back in February, Belfort predicted prices of over $50,000, before bitcoin finally crashed to nothing. In other words, he appeared to expect one last bubble — the mother of all bubbles — before it implodes forever like one of the pink sheets stocks he sold to unwitting investors. ‘The next stage, you will see it really skyrocket, there will be a short squeeze, it will go even higher and then eventually it will come caving in, it’s almost a guarantee. If you were the most disciplined person and get in and get out there is probably a short window to make some money.’ (See

That didn’t come to pass, but Belfort is worth listening to as someone who knows the way financial assets can be manipulated. However, like so many others before him — Warren Buffet included — he appears to make a basic category error in comparing bitcoin to stocks, rather than gold (which also doesn’t generate revenues and doesn’t have ‘intrinsic value’). More accurately, it’s an entirely new asset class that arose at a unique time in human history, that doesn’t compare well to anything else.

To watch Belfort’s YouTube clip, see

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Report confirms: Tether is on its way out

TL;DR — Tether is not the future of crypto. Prepare for a long goodbye.

Tether recently announced an ‘audit’, in which a law firm with access to its accounts confirmed that the company has all the money it needs to back USDT 1:1.

No doubt Tether hoped this would end speculation that it has been running a fractional reserve, artificially inflating crypto prices with fake money, and instil renewed respect and greater confidence in USDT. Sadly for Tether, this was not the case.

Tether parted ways with their original Auditor almost six months ago, bringing speculation to boiling point that either the company didn’t have the money to back their token, or that the means by which they had acquired those funds was murky enough for an audit to reveal serious problems. This time, law firm Freeh, Sporkin & Sullivan prepared the report.

FSS are not an accounting firm. Apparently, it was too difficult to get an audit because of the unclear rules around this emerging industry. ‘We’ve gone for the next best thing,’ claimed Tether’s legal counsel.

The audit won’t satisfy many people in crypto, Inferno included. There are still too many question marks over the company. This is evidence that they have the funds to back USDT — around $2.5 billion right now — but we’re almost certain there are skeletons in the closet about how they got those dollars.

There are other problems. We have no idea what Tether’s liabilities are. It doesn’t matter if a company has $2.5 billion in assets if they have $2.6 billion in liabilities — or, in Tether’s case, $10 million. (That would still mean the token wasn’t fully backed.) And a law firm has a very different role from an auditor. Law firms act for the client, whilst auditors have to remain independent because their judgements have impacts on third parties, not least those who hold and use USDT in this instance.

Two other newsworthy items. Phil Potter, Bitfinex’s Chief Strategy Officer, is leaving his job with the exchange. His public reasoning was as follows. ‘As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team. It’s been an incredible journey over these past four years, and while I wish my colleagues success and good fortune in their ongoing endeavors, I am also looking forward to new opportunities for myself in the days ahead.’

Maybe. We won’t say that this is a rat leaving a sinking ship, because Tether isn’t sinking. But ‘pivoting away from the U.S.’ is code: they cannot operate in the U.S. because the U.S. views their activity as utterly illegal. A more apt analogy would be a rat leaving a ship that has been more and more associated with piracy over the last year, and that other ships don’t want to go near.

The second piece of news is that Tether just created another $250 million in USDT, one of few large print runs this year. Apparently it’s business as normal.

What comes out of all this is that the picture for Tether and Bitfinex is far less clear than was believed a few months ago. These companies, so critical to the crypto landscape, cannot shake their toxic image. And they are part of the Old Guard: the crypto companies that grew up and grew big in the era before regulation, when crypto was still the Wild West. Tether may be a $2.5 billion behemoth, but it’s an old one that’s built on rotten foundations. With the professionalisation of the sector and enforced regulatory frameworks, it’s destined to lose market share against legitimate newcomers like TrueUSD — those who do the same thing as Tether, only better and with assured compliance (

The bottom line: Tether is on borrowed time. In a regulated crypto world, it cannot maintain its supremacy. Its importance will dwindle. Likely anyone who worked there and companies that rely on them will be viewed as radioactive. It won’t happen overnight, but Tether is on its way out.

Read the full report at


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Did CBOE futures just tank bitcoin?

Fundstrat’s Tom Lee thinks so:

‘Bitcoin sees dramatic price changes around CBOE futures expirations. This was something flagged by Justin Saslaw at Raptor Group. We compiled some of the data and this indeed seems to be true,’ comments Lee. ‘Overall, bitcoin has fallen 18 percent in the 10 days prior to CBOE contract expiration. A broader observation is there is significant volatility around these expirations. And on average, the price recovered by day six [after expiration].”

CBOE futures expire monthly: Expiration occurs two days before the third Friday of the month. In June, that occurred on 13th, when the bitcoin price hit its four-month low of $6,120.

Lee — a former managing director at JP Morgan — has a pretty good track record of predicting the crypto markets, but he was dead wrong about the impact Consensus would have on bitcoin’s price. Previously, the key event has resulted in significant bull moves, leading Lee to state the same would likely be the case in 2018. Instead, bitcoin experienced a substantial decline in the days during and after the conference. In fact, Lee’s prediction coincided with the local high for bitcoin, just below $10,000 — a level it has not recovered since. Lee has acknowledged his mistake, citing lack of regulatory clarity for the failed rally:

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‘Tuesday Inferno market report
Bitcoin has found support at the $7,800 level, but the medium-term direction is unclear.’

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