 The longest shutdown in history is over, alas no big beautiful wall, but there was a cave. Outside of the White House, the 2020 election is already heating up. Democrats are entering the race as well as some independence. So while it might not be possible to buy Starbucks with Bitcoin, it might be possible to use Starbucks to buy the presidency. Howard Schultz, former CEO of Starbucks, this week flirted with running for POTUS but might reconsider after this exchange. A considerably more popular proposition was BitTorrent this week, which sold out all of their tokens in under 15 minutes, raising over $7 million. Also this week, a $1 billion hack chain analysis report, Iran avoids sanctions with crypto, Hamas accepts crypto, and gold versus Bitcoin. Ladies and gentlemen, I'm Molly Jain, and this is your weekly Hodler's Digest. Let's take a look at the latest market updates. Two sophisticated criminal organizations are responsible for stealing over $1 billion in cryptocurrency hacks, says a report published by crypto analytics firm Chainalysis. This amount accounts for the majority of funds stolen in such hacks in the last few years. The two groups, dubbed Alpha and Beta, are still active and appear to have very recognizable patterns of behavior. The report provides a description of the techniques used by the two groups to hide their tracks, which is, by transferring stolen funds thousands of times before caching out for multiple exchanges. A method to stop the hackers, the study says, could be through a tighter collaboration among crypto exchanges. We talked to Philip Gradwell, chief economist at Chainalysis, to give us more details about the report. So we identified these two organizations by looking at their patterns by how they cashed the money out once they've committed a hack. So we weren't originally, we didn't know that there would be only two. Instead, we have these investigators who follow the money from the scene of the crime to the point where the hackers changed that for fear or for other cryptocurrencies, and what we did is we then took a systematic approach where we were able to analyze those flows of money over time. And when we did that, across a number of hacks, we saw that there were two very clear patterns, which suggest to us that there's two groups behind this. And given the scale of the number of hacks that they had done and the complexity by which they moved the money around, it suggests that both of these are large professional organizations. When alpha hacks an exchange, they then move that crypto around thousands and thousands of times in a very short period of time. And they cash out to lots of different places. And that means that they're actually paying quite a lot in fees. They risk losing some of their crypto. They perhaps might cost them more to try and cash out all these different areas. They've kind of got almost higher costs of business through the way that they cash out. So they're not as efficient as Group Beta, which doesn't move its funds around as much and then cashes out all at once, often through a single exchange. It really looks like Group Alpha is trying to create confusion. It looks like on purpose. They're making this really complex web that's hard to follow through. The hackers are always trying to cash out at the place where they can swap their crypto to be it. That's in other exchanges. So the cooperation really comes from one exchange saying, OK, we've had a hack. Can everyone else be on the lookout for funds that come from us? And if you get those funds deposited at your exchange, can you perhaps freeze them so we can investigate, ask some questions, and hopefully get some of those funds returned? Stepping up the challenge for hackers, New York-based crypto exchange Gemini completed an SOC2 Type 1 examination this week, giving proof of its high-level security standards. Gemini is reportedly the first crypto exchange to receive such a certification, released by AudicFirm Deloitte, and designed to meet the trust services requirements of the American Institute of Certified Public Accountants. Such requirements include security, availability, processing integrity, confidentiality, and privacy. We talked to Gemini head of risk, Yusuf Hussein, and asked him to explain how this represents a significant milestone for the company and for the crypto industry as a whole. The SOC2 examination took months of preparation for us to not only say that we're secure, but demonstrate to the independent party to Deloitte that we are indeed secure. I think that's important for the industry to move away from saying that we're secure and then conflicting reports when customers see that crypto exchanges have been hacked, there's been exit scams. So we as an industry need to move from saying that we are secure to demonstrating that we are secure, and that's exactly what the SOC2 does. So with this SOC2, because it is such a common place at the station in the traditional financial industry, the idea here is, look, the industry is trying to mature, the crypto industry is trying to mature itself. It's trying to show that we can hold ourselves to the same standard as traditional financial industry. We have the same security controls guarantees that can be provided. So a lot of those folks that are on the fence may consider dipping their toes in crypto. Major American investment firm Fidelity will launch its own custody service for digital assets in March as sources close to the matter told Bloomberg this week. The company's new services will be targeted at institutional investors such as head funds, family offices, and market intermediaries. But for now, they will not be available for retail investors. Bitcoin will be the first crypto to be stored by Fidelity, but Ethereum's storage is expected to follow soon. Fidelity reported in a statement, we are currently serving a select set of eligible clients as we continue to build our initial solutions. Over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction, and other factors. Fidelity manages trillions of dollars in client assets, and it has been in the business for over 70 years. The launch of its crypto custody service responds to an increasing demand for security in the crypto sphere and is likely to attract more and more institutional investors into the space. Iran has lifted the nationwide ban on Bitcoin, albeit with some restrictions. Iranians can trade the leading crypto, but are prohibited from having holdings above 10,000 euros or just over $11,000. In addition, Iranians are not allowed to accept payments in crypto within Iran. Despite the restrictions, the crypto community, which transacts up to $10 million in Bitcoin a day, cautiously welcomed the reversal of the ban. The restrictions are part of draft regulations, so could be subject to change. The reversal was announced by the central bank just before the Electronic Banking and Payment Systems conference earlier this week. The theme of the conference was blockchain revolution, likely the only revolution this country will see for some time to come. Another announcement that was expected at the conference was the launch date of the state-backed crypto real, but so far, radio sounds from the central bank on that particular topic. All of these crypto-related projects both at the state level and amongst ordinary Iranians are ostensibly efforts to circumvent crippling sanctions. The US Treasury has sought to aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies. However, ordinary Iranians are using crypto to accept foreign payments and conduct business in Bitcoin to get around restrictions imposed by US banks. Of course, not everything is above board. Recently, the US Justice Department indicted two Iranian men on charges related to Sam Sam ransomware, which compromised American hospitals and government agencies in Atlanta. On the state level, Iran is reportedly in talks with eight countries including Switzerland, South Africa, France and the UK to discuss the possibility of conducting financial transactions in crypto. At this point, it is still unclear whether the negotiations concern crypto in general or about the crypto real. Iran is not alone in its attempt to circumvent sanctions using a state-backed crypto. Russia is currently engaged in similar efforts and yet both countries should perhaps use Maduro's Petro as a cautionary tale or take Max Keiser's advice. Its great states, Iran, Venezuela, China, Russia are trying to state cryptocurrencies. It's an important step. All theirs will fail and they'll realize only Bitcoin gives them what they seek, escape from USD. We spoke to Gvorg Avedekin, an academic scholar of Iranian studies from the Yerevan State University, currently at the European University in St. Petersburg about how sanctions are affecting Iran. On February 11th, it will be exactly 42 years that they have done a revolution ever since there have been various kinds of sanctions imposed on Iran. The most effective ones that we now know of that are tied to the nuclear policy in Iran have started in mid-2000s. Nevertheless, in November 2018, the sanctions were basically, they resumed their action. And soon after that, Iran's central bank and most of its banking institutions were switched off from the SWIFT network, which means that Iran was really left with no realistic legal option of international money transactions, which means that they cannot pay for the imports and they cannot also get the money for their exports. Price of real does not really affect that much the local population. But there's very important things. And the first one that comes to my mind is medicine. Iran does have its own industry of pharmacies, et cetera, but they still depend on many medicaments which is imported to the country and the population at this moment is just unable to pay for it. Last year during the New Year, there were large protests all over the country, which started from actually a sparkle, the price of eggs had risen for several percents and that was the first sparkle to bring some people into the streets to protest against the growing prices, et cetera. Hamas is crowdfunding, but due to the fact that, amongst others, the US and the EU consider them to be a terrorist organization, they likely fall foul of the go fund me and Kickstarter terms of service. Thus, the de facto ruling party of the Gaza Strip has turned to Bitcoin in order to raise funds. The request for BTC was sent out on Abu Abedah's Telegram channel, a spokesman for Hamas. The funds would go to their militant faction, which is widely considered a terrorist organization with the exception of Russia, Turkey, and China, who do not take this position. The Telegram message reads, all lovers of the resistance and the supporters of our righteous cause to support the resistance financially using Bitcoin currency. The message goes on to accuse the so-called Zionist enemy, Israel, of trying to cut all means of financial support. The Gaza Strip is currently under land, air, and sea blockade imposed by Egypt and Israel. Furthermore, Benjamin Netanyahu recently froze several million dollars in Qatari aid, 15 million of which was intended to pay the salaries of Hamas civil servants. Spokesman Abu Abedah did not detail how exactly supporters could donate Bitcoin to the militant wing of Hamas, which is telling, because actually receiving funds in Bitcoin is most of the battle. Last year, the US Congress concluded that cash was still king when it came to terrorist financing and that crypto was a poor form of money in this regard. They reached this conclusion after setting Al Qaeda's efforts to raise illicit funds. In September of last year, the US House of Representatives passed the Financial Technology Protection Act in order to set up a task force to combat terrorism financing. Early in January, Gemini founders Cameron and Tyler Winklevoss confirmed their bullish view on Bitcoin, encouraging hopes that the main cryptocurrency will eventually replace gold as the most trusted store of value. I think investors who have gold in their portfolio and other precious metals are starting to look to Bitcoin as a better store of value. It's got better money characteristics than gold itself. So it's actually better at being gold than gold. Bitcoin is better at being gold than gold itself, said Tyler. It is clear, however, that we are not quite there yet. After briefly turning to Bitcoin as their preferred store of value during the 2017 bull run, many investors are now returning to gold. At least that's what Jan Venek, CEO of Investment Management from Venek Associates, pointed out in a recent interview. I do think that Bitcoin pulled a little bit of demand away from gold last year in 2017. Interestingly, we just pulled 4,000 Bitcoin investors and their number one investment for 2019 is actually gold. So, you know, gold lost to Bitcoin and now, you know, it's going the other way. Venek's analysis was supported by a recent report by Market Development Organization World Gold Council, which points out that while Bitcoin has behaved as a risky asset amidst the stock market crisis of 2018, losing much of its value, gold's price rallied and confirmed itself as the safest store of value in troubled times. According to the same study, Bitcoin's strong correlation to NASDAQ proved its close relation with technology stocks, thus not suitable for replacing gold as a safe haven. However, this doesn't need to be a throw the baby out with the bathwater sort of situation. Several stable coins backed by the precious metal are already available on the market. For instance, the Digix Gold Token, launched in September 2018, is based on the Ethereum blockchain and backed by physical gold. Sean D. He, CEO of Digix, said the gold pegged token is likely to gain popularity in a crypto winter, the end of which is still out of sight. We talked to Sean, asking him to comment on the advantages of gold backed cryptocurrency. Digix is a company that tokenized physical assets. In essence, we have tokenized physical gold and issued an ERC20 token called DGX, which represents one gram of gold on the Ethereum blockchain. Gold prices have been increasing over the last couple of months in the background of the whole economic uncertainty around markets. With Bitcoin and Ethereum as well, trending downwards, we do kind of see a lot of interest in the token. Firstly, we purchase physical gold and do note as well, like the entire system is always one-to-one in the sense that we are fully backed. So every token that is existing on the Ethereum blockchain right now, there is that one gram of gold in the vault. We currently do have about 106 kilograms of gold stored in the vaults here in Singapore as well as in Canada. Bitcoin has always been veiled as the digital goal on the whole cryptocurrency landscape. So what Digix provides essentially is an asset-backed token, token that actually represents physical gold. Whereas Bitcoin itself appeals to the cryptocurrency community more as a stable store of value at the moment. I do think these two assets would continue to live in a parallelity with each other. I don't see a future where both will displace one another. Rather, Bitcoin itself has its own merits and its own value in the sense of being an orderless organization and community. With Iran's circumventing sanctions and Russia de-dollarizing, do you think that more countries will and Max Keiser's words escape the USD? Or does that have as much chance of happening as a 43-7 RAM Super Bowl victory? Let us know in the comments. And as always, remember to like, subscribe, and huddle. Cointelegraph, like, subscribe, and huddle.