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First Mover Advantage for DMG and its Blockseer Subsidiary
DMG’s acquisition of Blockseer in 2018 was a strategic move based on the future of compliance and good governance in the cryptocurrency space. Blockseer highlights DMG’s foresight to ensure the Company was developing the right technology and products to unlock adoption in advance of regulatory compliance.
Recently, with Bitcoin and Ethereum prices at all-time highs, along with major announcements of corporations, funds and others taking large positions in Bitcoin, there has been renewed interest in the provenance and traceability of Bitcoins. DMG’s Blockseer was one of the first products to focus on crypto transactions and the provenance of Bitcoin through its tracking and labelling software. This technology was at first focused on wallet-to-wallet transactions on the Bitcoin blockchain but is now being repurposed to look at the Bitcoin blocks themselves during the process of ‘mining’ for Bitcoin and posting Bitcoin ‘blocks’ to the Bitcoin blockchain (transaction processing).
Blockseer’s Mining Pool Technology
Late last year DMG announced the launch of its beta Bitcoin mining pool using Blockseer products. An aspect many cryptocurrency users did not understand about mining pools was, and still is, the lack of transparency in how pools work, and why miners should care about which pool they connect to. Using Blockseer’s IP and the capability to understand the nuances of the Bitcoin blockchain, Blockseer created a process called ‘Clean Block Mining’ together with many other improvements to existing Bitcoin mining pools.
Current centralized mining pools face significant regulatory challenges and security issues which have already negatively affected perception of the industry by policy makers and governments around the world. Many of the existing pools have the following shortfalls:
Existing centralized Bitcoin mining pools are lacking regulatory standards and auditable transparency, and therefore miners may be inadvertently aiding nefarious or criminal users of Bitcoin. DMG’s proprietary KYC and AML technologies represent one of the industry’s best available solutions to provide a legally compliant solution and a regulatory acceptable path forward for Bitcoin miners and the underlying users of Bitcoin in general, without censorship of non-criminal transactions.
DMG intends to monetize Blockseer’s Pool Technology through licensing it to other parties and pools and/or partnerships with other companies and pools. As previously disclosed, DMG will provide updates on the terms and conditions of any potential transaction involving Blockseer’s Pool Technology. DMG is encouraged by the February 16, 2021 announcement of the transaction involving 500.com Limited and BTC.com and believes the market demand is there for robust and technologically advanced Bitcoin mining pools.
Censorship vs. KYC, AML, and Responsible Transactions
In general, miners connect to the Bitcoin protocol via mining pools, the vast majority of which are based in jurisdictions that do not regulate mining pool activities. To date none of these existing pools provides their mining clients with third-party audits, and they may inadvertently be enabling transactions that might not be KYC, AML or Office of Foreign Assets Control (OFAC) compliant. This will increasingly become an issue, especially at the institutional level for all entities involved, when the participants are domiciled in the U.S. or other western countries which are more likely to make KYC and AML mandatory standards.
Censorship - Is It Real?
Many who have been involved with Bitcoin in the early days were, and still are, against government censorship. Bitcoin has its core roots in decentralization and being devoid of Governmental control or manipulation. By filtering transactions based on risk or propensity of risk related to the counterparties’ past history or current activities against known information from reliable sources (including up to 100% verified sources) creates the feeling, whether true or not, of censorship. However, there are multiple arguments to make that Blockseer’s Clean Block technology is not really censorship of the Bitcoin blockchain. The first argument, which is fundamental, is that any transaction that Blockseer may reject can easily be included by any pool which does not use Blockseer’s Clean Block technology and included in its block of transactions. In this regard, transactions that Blockseer would not accept can easily be accepted by any other pool which does not adhere to the same KYC and AML principles. With the number of mining pools active and the split of hashrate between them all, there is no present risk of transaction never being verified by a pool. Additionally, looking back at the spirit of the Bitcoin Protocol, there was no mention for or against adding criminal activities, yet in today’s society people, companies, governments and nations are all focused on weeding out and eliminating the means (whatever it may be) of allowing corruption and criminal activity to thrive and grow. Bitcoin is not immune to this.
DMG’s COO, Sheldon Bennett commented, “Our Blockseer team has continuously focused on strategically targeting the progression of the crypto industry and how Blockseer can ensure its blockchain technology will create industry needed products. Recent changes, along with greater institutional interest moving into Bitcoin, and the regulatory signals in the market, show that this is both a rapidly developing and cutting-edge space for which our products are tailor-made. Blockseer is well positioned to help pioneer this industry with our first two products, Explorer and Walletscore, which allow users to be properly informed, aware and protected in an otherwise often grey space. Expanding on Explorer and Walletscore, Blockseer launched its Pool Platform which will be integrated with Blockseer’s Mine Manager and Walletscore’s Clean Blocks, as one unified platform.”
About DMG Blockchain Solutions Inc.
DMG is a vertically integrated blockchain and cryptocurrency company that manages, operates, and develops end-to-end digital solutions to monetize the blockchain ecosystem. DMG’s businesses are segmented into three main divisions: data centre operations, data analytics and forensics and developing enterprise blockchains. DMG’s data centre operations focus on earning revenues from block rewards and transaction fees by mining primarily bitcoin as well as providing hosting services for industrial mining clients. DMG’s data analytics and forensic services provide technical expertise software products such as Blockseer Pool, Mine Manager and Walletscore, as well as working with auditors, law firms, and law enforcement organizations. DMG’s permissioned blockchain technology is focused on developing enterprise software for the supply chain management of controlled products. DMG’s strategy is to become the domain experts across the business verticals it focuses on. DMG’s management team includes seasoned crypto experts, forensic & financial professionals and blockchain developers with deep relationships throughout the industry.
For more information on DMG Blockchain Solutions visit: www.dmgblockchain.com
On behalf of the Board of Directors,
Daniel Reitzik, CEO & Director
For further information, please contact:
DMG Blockchain Solutions Inc.
Email: [email protected]
Web: www.dmgblockchain.com
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Note Regarding Forward-Looking Information
This news release contains forward-looking information based on current expectations. Statements about the Company’s plans for the Blockseer Pool and its continued development and expected outcomes and benefits, the monetization of the Blockseer Pool, potential transaction(s) with the Blockseer Pool, patent pending technology and its intended uses and outcomes, to increase petahash (PH) by self-mining, price of bitcoin, plans and intentions, other potential transactions, acquisition of customers, product development, events, courses of action, and the potential of the Company’s technology and operations, among others, are all forward-looking information. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, business, economic and capital market conditions; the ability to manage operating expenses, which may adversely affect the Company’s financial condition; the ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; access to equipment; market conditions and the demand and pricing for products; the demand and pricing of bitcoins; security threats, including a loss/theft of DMG’s bitcoins; DMG’s relationships with its customers, distributors and business partners; the inability to add more power to DMG’s facilities; DMG’s ability to successfully define, design and release new products in a timely manner that meet customers’ needs; the ability to attract, retain and motivate qualified personnel; competition in the industry; the impact of technology changes on the products and industry; failure to develop new and innovative products; the ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect the business; the ability to manage working capital; and the dependence on key personnel. DMG may not actually achieve its plans, projections, or expectations. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, the ability to successfully develop software, that there will be no regulation or law that will prevent the Company from operating its business, anticipated costs, the ability to secure sufficient capital to complete its business plans, the ability to achieve goals and the price of bitcoin. Given these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements.
The securities of DMG are considered highly speculative due to the nature of DMG’s business.
Factors that could cause actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, lack of supply of equipment, power and infrastructure, failure to obtain any permits required to operate the business, the impact of technology changes on the industry, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, secure equipment, and hire personnel, competition, decrease in the price of Bitcoin and other cryptocurrencies, security threats including stolen bitcoins from DMG or its customers, consumer sentiment towards DMG’s products, services and blockchain technology generally, failure to develop new and innovative products, litigation, increase in operating costs, increase in equipment and labor costs, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on the expectations of, or statements made by third parties in respect of the matters discussed above.
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Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45
Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 70 countries.
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Supreme Socialist Leader Joe Bidens sends FBI with army of troops to arrest Iraq War hero Joshua James (top photo with young daughter), but does nothing against Antifa and BLM terrorists firing bombing US Federal Courthouse in Portland-Oregon on exact same day (bottom photo).
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President Donald Trump will always remains loyal to those who love and support him, like Brittney Spears (above) and the American people.
These numbers only reflect the current situation and will increase as the Fed continues its monthly $120bn of QE, and the US Treasury continues its funding programme. Even an extension of the SLR suspension for Treasury holdings and reserve assets at the Fed does not resolve the problem. Unless the extension is explicitly declared by the Fed to be permanent, banks will have to manage their balance sheets on the basis that the SLR will eventually be reinstated.
The balance sheet capacity problem is not going away, which means that banks will have to sell down riskier assets to make way for an increase in their holdings of US Treasuries and increases in their balances at the Fed arising not just from their own activities, but those of their investing institutional customers. This comes at a time when the non-financial economy will face enormous challenges.
Economic outlook for March to September
Pandemic lockdowns will continue after March, not just in the US but in other major jurisdictions as well. The global economy will not be free of covid this year, with the likelihood of a further resurgence with new variants next winter. At this distance, all one can suggest is that at the margin a Democrat administration is likely to favour control over personal freedom at the expense of economic activity.
Time will tell as to whether this concern is justified. Meanwhile, the damage done to leisure, air travel and tourism is substantial. Lockdowns have bankrupted shopping malls and their tenants. Whole industrial sectors have lost bankruptcy-threatening levels of sales due to the retail sector effectively closing in many parts. There have been beneficiaries, particularly online sales. But taken over the whole economy, it has been tantamount to a full-blown depression.
During this crisis, the large majority of salaried employees, who normally live paycheck to paycheck, will have suffered badly. Who can forget the food queues comprised of expensive SUVs, Mercedes and BMWs — all obviously bought on credit — as their spendthrift owners faced the reality of paycheck disruption?
The disbursement of funds by check from the government to these individuals will have helped enormously. But their indiscriminate distribution has led to a significant population minority with more money in their bank accounts than they are accustomed to hold and have been unable to spend. This is reflected in the increase in bank deposits shown in Figure 2 above. Consequently, production has been worse than decimated while inflated money is in the hands of consumers, itching to spend. And those who are unemployed have seen increased unemployment allowances.
The imbalance between hampered production and impatient consumer demand will drive prices higher. And because the effect is at the margin, prices are likely to rise faster than generally expected. To this we can add a further element, and that is the disruption to supply chains which is still causing logistical chaos. And we can also add the effects of a weakening dollar on commodity prices.
As producers try to respond to the unwinding of consumer cash balances, they will find that the constituents vital for production in the forms of raw materials and semi-processed goods will simply be unavailable or promised so at a distant future. The insufficient quantities that are available will reflect these shortages in their prices. And if they are lucky enough to find a way round these difficulties, producers ramping up production will find that the banks will be more intent on calling in loans than providing circulating capital.
Given the way it is constructed, CPI measures of inflation will fail to fully reflect the rises in prices. Food and utilities could even come under price controls — the predictable and last refuge of an inflating government. And it must be understood that a combination of the non-financial economy being flooded with consumption money will jack up nominal GDP, taken by statist planners as evidence of success. Just imagine if modern statistical method had defined the economic conditions in Germany, Austria, Hungary and Poland in the early 1920s. Suppressed evidence of price rises by CPI methods combined with money-pumping would evidence the most dramatic economic recovery. To begin with, they would be hailed as an extraordinary policy success, before an emerging realisation of the true economic condition brought about by monetary inflation. It appears that the US and other nations are embarking on this track of discovery.
But with Keynesian stimulus being seen as the only means for governments to fund their deficits, there is no escape — only escalation. It only takes a basic knowledge of arithmetic to understand that the more you inflate, the more you dilute and the more you have to inflate. Incorporate the wealth destruction factor and the process becomes hyper. The US is already on this monetary course, though very few observers yet realise it.
Pre-covid economic conditions are ignored
Even assuming an unrealistic and rapid return to pre-covid economic conditions, we still have the devastating effects of a collapse in outstanding bank credit, the collapse of banks around the world with insufficient capital to absorb the resulting losses (almost all of them), and the legacy of today’s version of Smoot-Hawley — President Trump’s efforts to close down the Chinese trade.
Supply chains are still in chaos. This is from the New York Times earlier this week:
“Off the coast of Los Angeles, more than two dozen container ships filled with exercise bikes, electronics and other highly sought imports have been idling for as long as two weeks.
In Kansas City, farmers are struggling to ship soybeans to buyers in Asia. In China, furniture destined for North America piles up on factory floors.
Around the planet, the pandemic has disrupted trade to an extraordinary degree, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.” Chaos strikes global shipping, New York Times, 7 March
The article goes on to say containers are in the wrong place, in African and South American ports, empty and uncollected. The disruption to America’s supply chains is on a scale related to the economy’s gross output, estimated at $37 trillion, with an additional amount for offshore imports and exports. The threat to trade finance is considerable, this week driving Greensill into insolvency – a relatively small player funded by Credit Suisse and investing institutional clients of London-based banks.
The now certain disruption in trade finance is on few commentators’ radar, yet. But with US and other banks lacking balance sheet accommodation and a desire to de-risk their exposure, it is another factor that threatens to grind the global economy to a halt. And what will be the authorities’ response? Inflate or die, or should we now say inflate and die.
Markets have an inconvenient habit of demanding recompense for anticipated inflation and the effect on a currency’s purchasing power. Whatever methods a central bank deploys for denying a currency holder’s recompense, it only succeeds in undermining its ownership; first on the foreign exchanges and then by its own people. Interest rates then rise. In the last few weeks, we have seen the heavily supressed yields on government bonds begin to rise alarmingly. But that is only the start of it. Tt will be increasingly expensive for the government to pursue its inflationary funding by having the Fed buy Treasuries at arm’s length for cash. Coupled with the lack of balance sheet space in the banking system, new avenues will have to be devised.
Perhaps the planned digital currency, which bypasses the banks, is an intended solution. Perhaps the Fed will abandon the charade of QE. Perhaps the concept of a trillion-dollar platinum coin will be resuscitated. But they are all variations on the fiat theme and will cut no ice. Pesky foreigners will still want higher interest rates, and the more the Fed lags their expectations, the weaker the currency will be.
Besides exposing the bankruptcy of government finances, rising bond yields will burst the financial bubble inflated by monetary means. When that goes, so will the dollar and all other fiat currencies that fail to take avoiding action. But markets anticipate events, so it will not require events to actually happen. The question as to when a market crisis kills off the Fed’s monetary policies and with them the financing of inflationary spending is the most important consideration facing us today.
For now, the investment establishment believes in three untruths; that the Fed will continue to control markets, that the CPI statistics are a fair reflection of the dollar’s declining purchasing power, and that economic growth is not just a money total. In the foreign exchanges a tipping point will occur when government statistics become questioned and rejected. The fall in the dollar measured against commodities and raw materials will than take on a new dimension.
Yesterday, after seeing his $1.9 trillion stimulus package passed into law, President Biden promised to announce his plans for the future. After digesting these numbers, will markets begin to make a more realistic estimate of effects on the dollar?
Postscript
Soothsayer: Caesar!
Caesar: Ha! Who calls?
Casca: Bid every noise be still: peace yet again! (music stops)
Caesar: Who is it in this press who calls on me? I hear a tongue, shriller than all the
music, cry Caesar! Speak! Caesar is turned to hear.
Soothsayer: Beware the ides of March.
Caesar: What man is that?
Brutus: A soothsayer bids you beware the ides of March.
Caesar: Set him before me; let me see his face.
Cassius: Fellow, come from the throng; look upon Caesar.
Caesar: What sayest thou to me now? Speak once again.
Soothsayer: Beware the ides of March
Caesar: He is a dreamer; let us leave him: Pass
[i] As reported by Zerohedge: https://www.zerohedge.com/markets/go...illion-problem
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