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How Bitcoin is helping middle-class users survive the pandemic

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Regulators may still want to imply Bitcoin is merely a tool for criminals, but for many middle-class users, it’s proving to be a lifeline.

Even as politicians like European Central Bank President Christine Lagarde criticize cryptocurrency for providing “loopholes” used for “funny business,” people like Saeed, an Iranian immigrant to France, see cryptocurrency as a necessity, because of the difficulty using mainstream financial systems.

Until 2020, Saeed, who asked to be identified only by his first name, was a software engineer in Iran whose salary barely reached €300 due to rampant inflation. In 2017, he started freelancing for international clients that paid him in Bitcoin. By September 2020, he’d finally saved enough Bitcoin to go to graduate school in France. However, the pandemic made his immigration process much harder.

“I passed all that strange bureaucracy and to get to a course in France last September, with only €1,000 in my pocket,” Saeed said. “HSBC, Banque Nationale de Paris, La Banque Postale, all rejected me, declining to open a bank account. I finally found a bank after a month.”

In the meantime, Saeed used Bitcoin. He is exactly the type of person who benefits from “loopholes” in the traditional banking system.

“Many people in Iran are working with European tech companies,” Saeed said. “Maybe I can’t buy Bitcoin directly from the exchange because of my nationality.”

Saeed thinks Lagarde represents bankers’ and government interests, not average citizens, who are happy to work with him. He said stricter regulations would make his access to the financial system more time-consuming and expensive, because he’d have to pay friends and colleagues to transact on his behalf. However, Iranian migrants are hardly the sole user group relying on Bitcoin during the pandemic.

In the United Kingdom, a British expat named Paul found himself trapped in London when flights back to his Asian country of residence got canceled. Due to tight capital controls in his former country, and the challenges of repatriation during constant lockdowns, Paul was living in between regulatory systems.

“I closed down the business [in Asia] just before the pandemic started. My father passed away and it was difficult to continue my company,” Paul said. “I was in hotels and Airbnbs for weeks and didn’t have a residential address…without Bitcoin I would have been locked out of cash. I could only take money out of the ATM for a certain number of months because it’s limited to holidays.”

Luckily, Paul had a little Bitcoin from earlier that year. Unlike Saeed, he didn’t feel comfortable with the technical aspects, but he learned quickly. He used Bitcoin to buy gift cards for groceries, phone bills, hotels and Uber, plus paid a friend back in Asia to help wrap up his apartment and put things in storage.

“I think it was generally a bad idea but, at least with Brexit, thank god we won’t be subject to whatever Lagarde does,” Paul said, adding that regulation can be beneficial if it avoids restrictions for people who don’t have banking access.

Today, almost a year later, Paul still doesn’t have access to most of his financial accounts. Instead, he downloaded Monzo, a banking app that uses passports for identity verification instead of residential addresses. He pays friends in London to deposit to his Monzo account.

“It becomes really convoluted. I primarily use crypto because it’s easier,” Paul said. “One of my friends is a student from Nigeria and had a similar experience. He used Bitcoin to pay his school fees… I’ve been at my current residence for a couple of months, so I would be able to finally open a bank account. But now I don’t really see the need, especially with the news of negative interest rates.”

Meanwhile, the fiat-denominated price of Bitcoin surged over the past six months. This provided Saeed and Paul both with a little extra capital to spend time figuring out what they want to do next. For Saeed, does it make sense to do the graduate program online, with fewer networking benefits and hands-on experiences (the reason he came to France)? How does Paul move forward with his career now that his family business closed and his sector (music marketing) is in shambles? 

Buying Bitcoin could be considered a form of gambling. Indeed, many middle-class hobbyist traders accrued life-changing amounts of wealth over the past year, usually by experimenting with risky software. For people like Paul and Saeed, who generally avoid experimental trades and lack alternative investment options, Bitcoin’s price appreciation is helping them get through a period of abysmal job markets and intermittent lockdowns. People don’t need to live in a dictatorship or a country suffering from high inflation to benefit from Bitcoin. I would know; I’m one of them. 

Like many people during the pandemic, my living situation changed dramatically and I initially couldn’t work full-time from home. I was lucky to sell a few poems in exchange for cryptocurrency, usually via direct messages and Bitcoin wallets or as digital collectibles through collaborations with tech-savvy artists. Then the bull market surged again, sending those meager earnings high enough to cover some of my bills. A valet worker and student in Kansas named Hess had a similar experience. 

Quarantine helped kill his relationship of six years and he found himself needing to move out. He put his savings into Bitcoin during spring 2020, so that by December he was able to move out.

“COVID hit and I was out of steady work for four months,” Hess said. “Honestly, if it wasn’t for my decision to basically throw 70% of my net worth into Bitcoin, I don’t think I would be in as good of a place mentally and financially.”

To be clear, that is an extremely risky financial move and I would not advise it as a first resort. Yet, for many people experiencing unexpected change due to COVID-19, Bitcoin has become the lifeline it was for Hess.

Over the past year, Bitcoin donations may have gained popularity with several American communities, including some of the extremist groups involved with storming Capitol Hill. Incoming Treasury Secretary Janet Yellen echoed Lagarde’s concerns about Bitcoin being used for criminal activities.

However, so far, the analytics company Chainalysis estimates such donations add up to roughly $522,000. These numbers might also be compared to the cumulative totals managed by other subjects referenced in this article. For yet another lawful example, Lawrence Douglas, a former operations director at an event security company in California, lost his job as a result of the pandemic.

“Cash App pretty much changed my financial life,” Douglas said. “Bitcoin prices during the calendar year of 2020 provided me with lots of wiggle room, while I currently search for a new job.”

As an unemployed Black man, he was statistically less likely to have connections who could help him learn about stocks or precious metals, for example. He said Bitcoin, comparatively, has a “low barrier to entry.” In April 2020, he turned his stimulus check into a little Bitcoin nest egg. By November, he was utilizing a strategy called dollar-cost averaging, routinely buying small amounts of Bitcoin.

Douglas, like Paul, first bought cryptocurrency during the pandemic. On the other hand, when I interviewed more than a dozen Bitcoin users across Europe and North America for this article, most of them were crypto veterans who said Bitcoin gave them “peace” during the year-long crisis. Anesthesiologist Quentin Lobb, for example, said “bottom line, our net worth grew tremendously in 2020, thanks to Bitcoin. It has provided a pleasant and exciting sense of financial security.”

Yet another crypto veteran, Texas real estate agent broker Brandon Arnold, said the national political and economic situation was more “mentally taxing than ever before.” Against that backdrop, controlling a fraction of his own wealth gives him a sense of security. The price appreciation helps too, to be sure, though it’s not why Bitcoin is now so popular with middle-class users.

“If I factor in the risk of not having access to my capital, the price volatility doesn’t really matter,” Paul said. “As long as the price of Bitcoin doesn’t go to zero, it’s still more useful for me than the other options available.”

 

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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The one-shot vaccine from Johnson & Johnson now has FDA support in the US

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An advisory board to the US Food and Drug Administration voted unanimously in favor of the first single-shot covid-19 vaccine, clearing the path for the health agency to authorize its immediate use as soon as tomorrow.

The one-shot vaccine, developed by Johnson & Johnson, has the additional advantage of being easy to store, because it requires nothing colder than ordinary refrigerator temperatures. It stopped 66% of mild and serious covid-19 cases in a trial carried out on three continents.

It will join a US covid arsenal that already includes authorized vaccines from Moderna and Pfizer. Those vaccines, which use messenger RNA, were significantly more effective (they stopped about 95% of cases), but they require two shots, and the doses need to be stored at ultra-cold temperatures.

Globally, a growing list of injections developed in Russia, China, India, and the United Kingdom all are starting to see wide use.

While the new J&J vaccine isn’t as effective as those made using messenger RNA technology, health officials said that shouldn’t dissuade people from getting it, since it still sharply reduces the chance of illness and death.

“To have two is fine, and having three is absolutely better,” Anthony Fauci, the country’s chief virologist, said during an interview on NBC. “It’s more choices and increases the supply. It will certainly contribute to getting control.”

In the US, there have been approximately 28 million confirmed cases of covid-19 and 500,000 deaths.

The limited supplies of the Moderna and Pfizer shots mean most Americans are still waiting to be vaccinated. About 1.4 million doses of those two vaccines were given each day last week in the US. At that pace it would take about a year to vaccinate the whole nation.

In theory, an easily stored single-shot vaccine could kick up the pace. In practice, though, supply shortages of the J&J vaccine could limit the role it plays in the US vaccination campaign. In testimony before Congress this week, Johnson & Johnson said it had only 4 million shots ready to go, a third of the initial supply promised, and would deliver only 20 million doses by the end of March.

“I wonder if the J&J vaccine is going to be a significant part of the US landscape,” says Eric Topol, a doctor at the Scripps Research Institute, who called initial supplies “paltry” given that the company received extensive government support.

The vaccine also has what Topol called a “notable dropdown in efficacy overall” compared with messenger RNA shots, although many health experts this week rushed to defend the vaccine against any suggestion it was inferior.

“Everything we’ve seen so far says these are excellent vaccines,” Ashish Jha, a health policy researcher and doctor at Brown University, wrote on Twitter, where he argued that comparing “headline efficacy” among vaccines can be misleading since “they all are essentially 100% at preventing hospitalizations [and] deaths once they’ve kicked in.”

New shot

The new one-shot vaccine, called Ad26.COV2.S, was developed by Johnson & Johnson using work from Beth Israel Deaconess Medical Center in Boston. It employs a harmless viral carrier, adenovirus 26, which can enter cells but doesn’t multiply or grow. Instead, the carrier is used to drop off gene instructions that tell a person’s cells to make the distinctive coronavirus spike protein, which in turn trains the immune system to combat the pathogen.

The New York Times published a detailed graphical explanation of how the vaccine works.

Richard Nettles, vice president of US medical affairs at Janssen, a J&J subsidiary, told Congress during testimony on February 23 that production of the vaccine is “highly complex” and said the company was working to manufacture the shots at eight locations, including a US site in Maryland.

The manufacturing is complicated because the vaccine virus is grown in living cells before it is purified and bottled. Making a batch of virus takes two months, which is why there is no way to immediately increase supplies if timelines are missed.

Indeed, the biggest disappointment around the new vaccine is a supply shortfall caused by manufacturing problems. Jeffrey Zients, coordinator of President Biden’s covid-19 task force, said during a White House press conference on Wednesday, February 24, that the new administration had only “learned that J&J was behind on manufacturing” when it took office five week ago.

“It was disappointing when we arrived,” he said. “The initial production ramp … was slower than we’d like.”

Pretty effective

In late January, the company announced results from a 45,000-person study it carried out in the US, South Africa, and South America, in which people got either the vaccine or a placebo.

Overall, the vaccine was 66% effective in stopping covid-19, and somewhat better at stopping severe disease. In the trial, for instance, seven people died of covid-19, but all of these were in the placebo arm. Also, its effects increased with time—after a month, no one in the vaccine arm had to go to the hospital for covid-19.

Johnson & Johnson claims it will not be making a profit from the vaccine, which will also be sold outside the US. Instead, Nettles said, the vaccine will be sold at a single “not-for-profit” price to all countries “for emergency pandemic use.”

Nettles didn’t say what that price would be, but the US agreed last year to pay the company about $1 billion for a guarantee of 100 million doses and has given the company a similar amount of development funding, making it one of the major investments of Operation Warp Speed, as the vaccine effort was known during the Trump administration.

Shortage to surplus

At least for the moment, vaccine supply remains a limiting factor in the US inoculation campaign, which has seen 70 million doses administered since it began in December, according to Bloomberg. “I don’t see an excess of vaccine for a while,” says Peter Hotez, a virologist and vaccine developer at the Baylor College of Medicine.

All told, the US will have received enough shots to fully vaccinate 130 million Americans by the end of March, when projected supplies from Pfizer, Moderna, and J&J are tallied together.

Still, vaccine shortages could turn to excess before summer, creating a situation in which it’s no longer vaccines that are in short supply, but people willing or eligible to receive them.

That is because in the US, children under 18 make up about a quarter of the population but aren’t yet allowed to receive the shots. As well, about 30% of American adults claim they won’t get a covid-19 vaccine at all. Children and vaccine doubters together make up half the population.

By August, the three companies say, they will deliver the US enough vaccines for 400 million people, or more than the country’s population. That does not account for a fourth vaccine, manufactured by Novavax, that may also win US authorization.

“By the summer we will be in good shape. The question is how we navigate this space between now and June,” says Hotez.

Growing arsenal

The Johnson & Johnson shot joins a growing worldwide list of approved vaccines that includes the two messenger RNA vaccines, injections from AstraZeneca and Chinese manufacturers, and Russia’s “Sputnik” vaccine, all of which are in use outside the US.

People who get any of the vaccines will, on average, see their chance of dying from covid-19 plummet to near zero. That is down from an overall death rate of around 1.7% of diagnosed cases in the US—and a risk several times higher in elderly people.

The J&J shot has fewer side effects than the mRNA vaccines and has also proved effective against a highly transmissible South African variant of the virus that has accumulated numerous mutations.

The South Africa variant has alarmed researchers because it clearly decreases the effectiveness of some vaccines. A study in South Africa by AstraZeneca found its vaccine didn’t offer protection against the variant at all, causing officials to scrap a plan to distribute the shot there.

According to health minister Zweli Mkhize, South Africa is instead pivoting to the J&J vaccine, with a plan to vaccinate 80,000 health-care workers in the next two weeks.

This week, Moderna also said it would develop a shot tailored against the South African variant, and Pfizer indicated it was also preparing to counter new strains as they arise. Another strategy being contemplated to fend off variants is to give people extra booster doses of the current vaccines.

Some experts in the US continue to urge the government to adopt faster-paced vaccine schemes, like delaying second doses of the messenger RNA shots or using half doses, arguing that the more people who have “good enough” protection, the sooner the pandemic will end.

So far, though, it’s not clear what agency or official would be ready, or even legally authorized, to make that call.

“We are all scratching our heads about who could make that decision,” says Hotez. “And it all depends on how much urgency you feel. The big picture is if you know the numbers are going down, and feel they are going to stay down due to seasonality, then you have some breathing space. But if you are worried about variants, then you have a problem, and you want to vaccinate ahead of schedule.”

On NBC, Fauci said people shouldn’t wait for the best vaccine but take what’s offered. “Even one that may be somewhat less effective is still effective against severe disease, as we have seen with the J&J vaccine,” he said. “Get vaccinated when the vaccine is available to you.”

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Daily Crunch: Facebook launches rap app

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Facebook unveils another experimental app, Atlassian acquires a data visualization startup and Newsela becomes a unicorn. This is your Daily Crunch for February 26, 2021.

The big story: Facebook launches rap app

The new BARS app was created by NPE Team (Facebook’s internal R&D group), allowing rappers to select from professionally created beats, and then create and share their own raps and videos. It includes autotune and will even suggest rhymes as you’re writing the lyrics.

This marks NPE Team’s second musical effort — the first was the music video app Collab. (It could also be seen as another attempt by Facebook to launch a TikTok competitor.) BARS is available in the iOS App Store in the U.S., with Facebook gradually admitting users off a waitlist.

The tech giants

Atlassian is acquiring Chartio to bring data visualization to the platform — Atlassian sees Chartio as a way to really take advantage of the data locked inside its products.

Yelp puts trust and safety in the spotlight — Yelp released its very first trust and safety report this week, with the goal of explaining the work that it does to crack down on fraudulent and otherwise inaccurate or unhelpful content.

Startups, funding and venture capital

Newsela, the replacement for textbooks, raises $100M and becomes a unicorn —  If Newsela is doing its job right, its third-party content can replace textbooks within a classroom altogether, while helping teachers provide fresh, personalized material.

Tim Hortons marks two years in China with Tencent investment — The Canadian coffee and doughnut giant has raised a new round of funding for its Chinese venture.

Sources: Lightspeed is close to hiring a new London-based partner to put down further roots in Europe — According to multiple sources, Paul Murphy is being hired away from Northzone.

Advice and analysis from Extra Crunch

In freemium marketing, product analytics are the difference between conversion and confusion — Considering that most freemium providers see fewer than 5% of free users move to paid plans, even a slight improvement in conversion can translate to significant revenue gains.

As BNPL startups raise, a look at Klarna, Affirm and Afterpay earnings — With buy-now-pay-later options, consumers turn a one-time purchase into a limited string of regular payments.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

Jamaica’s JamCOVID pulled offline after third security lapse exposed travelers’ data — JamCOVID was set up last year to help the government process travelers arriving on the island.

AT&T is turning DirecTV into a standalone company — AT&T says it will own 70% of the new company, while private equity firm TPG will own 30%.

How to ace the 1-hour, and ever-elusive, pitch presentation at TC Early Stage — Norwest’s Lisa Wu has a message for founders: Think like a VC during your pitch presentation.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Salesforce delivers, Wall Street doubts as stock falls 6.3% post-earnings

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Wall Street investors can be fickle beasts. Take Salesforce as an example. The CRM giant announced a $5.82 billion quarter when it reported earnings yesterday. Revenue was up 20% year over year. The company also reported $21.25 billion in total revenue for the just closed FY2021, up 24% YoY. If that wasn’t enough, it raised its FY2022 guidance (its upcoming fiscal year) to over $25 billion. What’s not to like?

You want higher quarterly revenue, Salesforce gave you higher revenue. You want high growth and solid projected revenue — check and check. In fact, it’s hard to find anything to complain about in the report. The company is performing and growing at a rate that is remarkable for an organization of its size and maturity — and it is expected to continue to perform and grow.

How did Wall Street react to this stellar report? It punished the stock with the price down over 6%, a pretty dismal day considering the company brought home such a promising report card.

2/6/21 Salesforce stock report with stock down 6.31%

Image Credits: Google

So what is going on here? It could be that investors simply don’t believe the growth is sustainable or that the company overpaid when it bought Slack at the end of last year for over $27 billion. It could be it’s just people overreacting to a cooling market this week. But if investors are looking for a high growth company, Salesforce is delivering that

While Slack was expensive, it reported revenue over $250 million yesterday, pushing it over the $1 billion run rate with more than 100 customers paying over $1 million in ARR. Those numbers will eventually get added to Salesforce’s bottom line.

Canaccord Genuity analyst David Hynes Jr wrote that he was baffled by investor’s reaction to this report. Like me, he saw a lot of positives. Yet Wall Street decided to focus on the negative, and see “the glass half empty” as he put it in his note to investors.

“The stock is clearly in the show-me camp, which means it’s likely to take another couple of quarters for investors to buy into the idea that fundamentals are actually quite solid here, and that Slack was opportunistic (and yes, pricey), but not an attempt to mask suddenly deteriorating growth,” Hynes wrote.

During the call with analysts yesterday, Brad Zelnick from Credit Suisse asked how well the company could accelerate out of the pandemic-induced economic malaise, and Gavin Patterson, Salesforce’s president and chief revenue officers says the company is ready whenever the world moves past the pandemic.

“And let me reassure you, we are building the capability in terms of the sales force. You’d be delighted to hear that we’re investing significantly in terms of our direct sales force to take advantage of that demand. And I’m very confident we’ll be able to meet it. So I think you’re hearing today a message from us all that the business is strong, the pipeline is strong and we’ve got confidence going into the year,”Patterson said.

While Salesforce execs were clearly pumped up yesterday with good reason, there’s still doubt out in investor land that manifested itself in the stock starting down and staying down all day. It will be as Hynes suggested up to Salesforce to keep proving them wrong. As long as they keep producing quarters like the one they had this week, they should be just fine, regardless of what the naysayers on Wall Street may be thinking today.

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