LONDON — Cryptocurrency Dash is seeing a surge in new merchant sign-ups and wallet downloads in Venezuela as hyperinflation in the country runs wild.

Venezuela is forecast to see inflation of as much as 1,000,000% this year, with locals needing stacks and stacks of cash just to buy food. Socialist President Nicolas Maduro last weekend announced a series of measures aimed at stabilizing the economy, including devaluing the bolivar by 95% and pegging it to the state-backed cryptocurrency, the Petro.

However, another, non-state backed cryptocurrency is apparently catching on: Dash.

"We are seeing tens of thousands of wallet downloads from the country each month," Ryan Taylor, the CEO of the Dash Core Group, told Business Insider. "Earlier this year, Venezuela became our number two market even ahead of China and Russia, which are of course huge into cryptocurrency right now."

The BBC reported on Wednesday that Venezuela is "a paralyzed country" after the economic changes over the weekend. Cash withdrawals are being restricted and there is confusion over how exactly the new system works.

Venezuelans are turning to cryptocurrencies as a way to store value as the Venezuelan bolivar's exchange rate spirals out of control.

A Dash billboard in Venezuela. Ryan Taylor/Dash Core Group

Dash is an open source cryptocurrency created in 2014. It has low fees and near-instant transactions. Dash is currently the 14th largest cryptocurrency in the world, according to CoinMarketCap.com, with just over $1 billion-worth in circulation.

The Dash Core Group, which Taylor heads, is owned by the payment network that Dash runs on. The Core Group services the network and its funding comes from mining fees that are generated by the network.

As well as wallet downloads, which consumers need to hold and spend Dash, Taylor said the cryptocurrency is seeing strong adoption with merchants too.

"It took them a long time to get the first 50, first 100 [retailers]," Taylor, who is based in Arizona, told Business Insider on a call last week. "But at the beginning of July the number was around 400, and we're already at 800. We're at this point signing up more than 200 a month."

Brand names including Subway and Calvin Klein have signed up to accept Dash in Venezuela, Taylor said.

"Effectively, even if I accept a credit card, three days later when the funds hit my account, it's worth significantly less in Venezuela than when the authorization went through," he told BI. "This is a problem that cryptocurrency can solve. Our instant transactions can solve it and the relative stability of our cryptocurrency is better than their fiat currency."

Responding to questions over email this week, Taylor said adoption in Venezuela has accelerated even faster after Maduro's latest economic plans were announced.

He said: "We've seen 94 new Venezuelan merchants added to DiscoverDash.com since last week, which is about double the normal rate of about 50 merchants per week [over] the last couple of months.

"We have seen the number of Dash-accepting merchant sign-ups accelerate throughout the crisis. I believe that trend will continue."

DiscoverDash.com lists local businesses worldwide that accept Dash. 5 of the 6 newest merchant signups on the website were located in Venezuela when BI checked on Tuesday afternoon.

The characteristics of Dash make it suited to act as a cash or debit card replacement. Dash's transaction fees are in pennies, rather than running into dollars as bitcoin's fees have been known to do. Confirmation times are also in the seconds, versus slower payment processing times for other cryptocurrencies.

However, perhaps the most crucial reason why Dash has caught on in Venezuela is that the Core Group can finance projects on the ground.

Most cryptocurrencies are completely open source, with no central funding or body backing the network or the currency. Dash, on the other hand, has the Core Group which helps to run the network and looks after some new funds generated by the currency's underlying code.

Dash generates new cryptocurrency when transactions are confirmed on the network. Most of the new cryptocurrency is paid to the people who confirm transactions, incentivizing them to do this job of confirming them. But around 10% of this newly generated cryptocurrency goes into "treasury" — a pot of money that the Core Group gives to projects and ideas looking to support and encourage Dash adoption.

"A lot of community members came forward with proposals to do education, hold workshops, open an office where users can come in and sit in a small group setting and get help setting up a wallet," Taylor said.

The Dash Core Group has so far invested around $1 million in Venezuela, funding everything from billboards to sales reps.

Taylor added that Dash is also seeing strong adoption in other countries with similar dynamics to Venezuela.

"Venezuela is unique, it's the only country in the world with what can be called hyperinflation," he said. "But there are other high inflation countries. We're seeing this with Turkey right now. Ukraine, Argentina, these are countries with very high inflation rates with of 20-30% or something. 20-30% we think is enough to get people to try something new.

"We're going to try and be successful first in Venezuela before branching out to try this in other countries," he concluded.

Azealia Banks demanded that Elon Musk return her phone. Getty

Good morning! This is the tech news you need to know this Wednesday.

1. Facebook says Iran-backed accounts pretended to be news organizations to spread misinformation and to launch cyber attacks. Facebook says it removed 652 Pages and accounts on its services that it linked to Iran, as well as numerous Russia-linked accounts involved in inauthentic behavior.

2. Y Combinator, a startup program that's harder to get into than Harvard, accepted all 15,000 applicants into Startup School after a major screwup. After initially informing some startups that they had been mistakenly accepted, it then did a U-turn and said all applicants had been accepted to its online course for entrepreneurs.

3. Tim Cook donated nearly $5 million worth of Apple shares to charity. Cook has donated 23,215 Apple shares to an unspecified charity, according to an SEC filing on Tuesday.

4. Rapper Azealia Banks is demanding Elon Musk return her phone in an ongoing saga between the pair. Banks suggested in a now-deleted Instagram post that Musk's attorney had seized her phone.

5. Amazon removed one of the best features from Amazon Prime, and Twitch users are furious. Amazon's incredibly popular Prime service is losing a major benefit: ad-free Twitch viewing.

6. Slack raised a whopping $427 million to become a $7.1 billion company. Slack, the popular work chat app, has raised $427 million in venture capital at a valuation of more than $7 billion, according to a news release.

7. It looks as if Elon Musk has deleted his Instagram account. The Tesla CEO's Instagram account has vanished amid accusations from the rapper Azealia Banks.

8. Facebook apologized to right-wing group PragerU after being accused of censoring its videos. Facebook said the removal of the videos was a mistake, but PragerU seemed unconvinced, claiming the removal was an act of deliberate censorship.

9. Uber appointed a new chief financial officer as it inches towards an IPO. Uber announced on Tuesday that it had appointed Nelson J. Chai, formerly of Merrill Lynch and CIT Group.

10. Israel won't renew a $27 million contract with Microsoft because it says switching to the cloud subscription model will double the price. The Israeli government announced on Tuesday that it will not renew its desktop software contract with Microsoft.

Have an Amazon Alexa device? Now you can hear 10 Things in Tech each morning. Just search for "Business Insider" in your Alexa's flash briefing settings.

The dating app Toffee, which was widely criticised as eltist as it connects only those who went to private school, is expanding.

The app launched in the UK on Apple in April, and will be coming to Android in September. A Toffee press release stated that it now has 10,000 monthly active users in the UK.

Toffee is also coming to Australia in November, which offers a big market at 35% of Australians are privately educated, compared to 8% of Brits. It also stated that it plans a wider roll-out to other English-speaking countries over the next 12 months.

Many have criticised the app for what is seen as blatant classism and elitism, although Toffee argues it is simply filling a niche, comparing itself to the way that J-Swipe caters for the Jewish market.

"It's disgustingly elitist," said one of a number of millennials The Independent spoke to last year. "I feel like private school kids have their own closed social circle of private school friends and acquaintances in real life anyway (those who would be the type to use such an app that is) so what would they need an app for?"

It is part of a trend of self-consciously elite dating apps, such as The Inner Circle which limits its usership to "successful, attractive people," and is seen as the European equivalent to the US app The League.

The app itself a waiting list, and it is not yet clear how people are vetted on whether they attended private school. When we looked at the app there was nowhere to input any card details, so the fee which was touted when it launched in April seems yet to appear. Business Insider has contacted Toffee for clarification.

A big announcement by JPMorgan on Tuesday could precipitate the next chapter of a price-war that's long been underway on Wall Street.

JPMorgan unveiled a new stock trading application that would offer in some cases zero-commission stock trades in an interview with CNBC. Vanguard Group also said on Tuesday it would offer a platform of free ETF trading, following Fidelity which announced earlier in August that it was rolling out a zero-fee index fund.

And now market experts expect the news could bring the cost of trading sharply lower, accelerating a trend that's been in the works since discount brokers came online decades ago.

"It is another piece of evidence that we are going to zero," Devin Ryan, an analyst at JMP Securities, said in an interview with Business Insider.

Ryan said the news would force the hand of other brokerage firms to act soon to preserve their own market share.

"The question is how does the industry react," he added. "We are going to see them invest in pricing. They're going to act a little sooner than they might have."

JPMorgan is following a similar model to Amazon Prime. Free two-day shipping to customers may act as a loss leader to Amazon, but the company is betting this perk will encourage shoppers to buy more on the site. In the same vein, JPMorgan is offering free trading services to Chase users with the hopes that it'll incentivize them to do other, higher margin business with the bank.

Shares of online brokerages such as Charles Schwab and E-Trade dropped on Tuesday, showing the risk that JPMorgan's plan poses to the already cut-throat brokerage price war.

These firms are already bringing down their costs to fend off upstart firms such as Robinhood, which pioneered zero-commission stock trading for its 4 million users.

"Free is the new cheap," wrote Bernstein quant and macro specialist Ethan Brodie in a note to clients.

A TDAmeritrade spokesperson told Business Insider it is "very well positioned to compete and win in a low-cost environment. However, the competitive environment will likely continue to shift, and we will remain nimble."

A spokesman for Schwab did not specifically refer to price compression, saying in a statement that the firm would "continue to aggressively lead the way in improving how people invest and manage their wealth."

TDAmeritrade charges $6.95 per trade, whereas Schwab charges $4.95.

Ryan said it's a matter of when these firms charge zero for trading, not if. Ultimately, that will translate into a world in which brokerage firms and startups alike will have to adjust their business models to offer other high touch services to clients from which they can profit. Ryan specifically said they might venture into financial advice.

"The world is evolving and finance firms will have to offer more holistic services," he said.

Mike Sha, the CEO of digital wealth management firm SigFig, said that the end of the broker price-wars may end with only a few casualties. Sha's thesis is that there are enough under-invested Americans for startups and existing brokers to survive.

"I actually think what is going to happen in this industry is a rising tides lifts more ships situation," he said.

Bitcoin is the "digital gold" — at least, that's what its fervent advocates claim.

They argue that the buzzy digital currency is the 21st century's answer to precious metals, and may one day replace gold as a major store of value for investors.

But is bitcoin likely to actually replace real gold in mainstream investors' eyes any time soon? According to Morningstar Equity Research analyst Kristoffer Inton, the answer is a resounding no.

In a recent research note for investors, the analyst laid out five criteria that gold, as a "safe-haven investment," fulfills — and that bitcoin and other cryptocurrencies would also need to succeed at in order to be considered as an investment on a par with (or superior to) the shiny precious metal.

Notably, these criteria don't include volatility — something investors want to avoid at all costs for safe-haven investments. Bitcoin is, infamously, prone to extreme bouts of volatility. In the space of under a year, its price has skyrocketed from around $4,000 to almost $20,000, before falling back to around $6,500 today.

So what are they? The five areas are liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence.

Gold successfully ticks the box on every one of these criteria, while bitcoin only manages two (at a push), Inton argues.

Morningstar Equity Research

First up, liquidity. An investment vehicle needs to be traded regularly, and bitcoin is remarkably illiquid, as crypto investors hoard (or "hodl") their digital coins. "Current levels of trading see daily volume of roughly 0.5% of all existing bitcoins," Inton wrote. "Gold averages more than 5 times as much volume, with nearly 3% of all existing gold being regularly traded."

Next: As well as being a universally recognised store of value, gold actually has a functional purpose— from its utilization in computer circuit boards to ornamental jewellery and teeth replacements. Bitcoin's only purpose is as a currency and store of value — and right now, it's only rarely accepted for actual purchases (rather than speculative trades).

Bitcoin does, however, have scarcity of supply, a necessary component for retaining value. There will only ever be a maximum of 21 million bitcoins in existence, a rule written into its code from day one.

Is there future demand certainty for bitcoin? That's a very big unknown. The digital currency has been around for less than a decade, in a period of significant technological and political upheaval; even if cryptocurrencies catch on in the mainstream, there's no guarantee bitcoin will be one of the ultimate winners. In contrast, gold has been universally accepted as valuable for more than 5,000 years of human history — it's a pretty safe bet for investors that it won't have totally devalued a year from now.

Lastly, there's permanence— the question of whether the given investment resource itself degrades over time. Gold is a precious metal that doesn't tarnish; bitcoin, too, won't rot or deteriorate. (Though if people stop widely using bitcoin, the network will degrade in quality and could eventually disappear altogether; gold would continue to exist even if it ceased to be used as an investment vehicle tomorrow.)

United Airlines announced this week a plan to begin charging extra for passengers to reserve economy seats near the front of the plane, a reserve fee already practiced by others in the industry, notably American Airlines and Delta Air Lines.

According to USA Today, United announced the new policy which will allow passengers the option to pay more for basic seats that offer the convenience of being closer to the front of the plane. These seats, which will be just behind their Economy Plus row, will be available for purchase by the public, but certain United Corporate Preferred clients can reserve them for free and certain elite-level frequent fliers can reserve them without a fee.

These are not seats with any extra leg-room or perks like those economy seats in United's Economy Plus rows, Delta's Comfort+ rows, or American's Main Cabin Extra. They are simply closer to the front of the plane to offer passengers the convenience of boarding and exiting without having to wait in a longer line.

In a statement to Business Insider, United Airlines spokesperson Maddie King said, "If these seats are not filled, they will be opened for all customers to select at check-in, free of charge. These preferred seats will be available for purchase for all other customers at time of booking."

The USA Today reported United plans to incorporate the practice before the end of the year, but did not give an exact start date or what the cost for reserving a select economy seat would be.

This is not the first instance of airlines charging fees for optional passenger conveniences. In fact, this is actually standard industry practice and is known by a name: unbundling.

Unbundling first began in the late 2000s when airlines recognized the necessity of gaining extra revenue to counteract the higher price of crude oil, which had hit $132 a barrel in the summer of 2008. Unbundling is the practice of separating various costs of services like baggage check, security check, seat assignments, meals, wi-fi use, and early boarding into their own price points. In short, charging little fees for different elements of travel.

According to Bob Mann, President of RW Mann & Company, an airline analysis firm with over 40 years of experience in the industry, American Airlines was the first to charge $20 for a baggage check.

"With that out of the box pretty much everybody else did it," Mann said. "It was the first big gasp of how to get unbundling started."

Things took off. By 2011, unbundling was embraced by the entire airline industry. What's more, Mann said these ancillary fees are not subject to the 7.5% Federal Excise Tax, which applies only to domestic airline tickets sold in the U.S. This loophole gives the industry even more reason to charge these fees.

"It gives them a huge incentive to do it," Mann said, adding that this is not regulated by the Department of Transportation. "You can give away the airfare and then charge everybody for every other element."

Switch sales are going to surge as Nintendo rolls out its new Pocket Monsters Smash Brothers games ahead of the the holiday season, according to Morgan Stanley.

These first-party titles that are solely for Nintendo consoles give the Japanese game maker a key advantage — a strong pricing power — over its global competitors such as PlayStation4 and Xbox One, and will help lift Nintendo shares over the long term, Morgan Stanley analysts Masahiro Ono and Yui Yasumoto wrote in a note sent out to clients on Monday.

"Margins on 1st party software are high, as these margins are driven up further by digital downloads, we think the validity of valuation comparisons with powerful US publishers is stronger in the case of Nintendo than for a con- sole maker such as Sony," said the two analysts from Morgan Stanley.

They view the recent ¥37,232 share price as a near-term bottom and say shares could hit ¥51,000 — 38% above where shares were trading Tuesday.

Ono and Yasumoto stated that the Switch has a longer life cycle than the company's Wii generation but will match Wii's peak annual sales, because they see an effective "one person, one console" penetration strategy that brings 3DS user migration to Switch and Switch Online's popularity among younger users.

"The strategy for Switch is radically different from that of the Wii generation - which was sold bundled with Will Sports in Europe and the US, and tapped demand from adult users - making it tough to appeal to child users with a console price tag of $300 in the off season, and we expected Switch demand to be particularly heavily skewed towards the Oct-Dec holiday season," they said, reiterating that the current sluggishness in Switch sell-throughs won't have an extensive impact on Nintendo's share price.

Morgan Stanley is not the only Wall Street firm that's bullish on the Japanese video-game maker. Of the 23 analysts who show coverage on Bloomberg, 20 have a "buy" rating and just three have a "sell."

Atul Goyal at Jefferies, who has a ¥65,100 price target, believes shares could soar 80% even if Switch sales are flat.

Nintendo shares were down 14% this year through Monday.

Markets Insider

Stockton, California — which announced plans last year to start the first major basic income pilot in the United States — will kick off its 18-month trial period in February 2019, Mayor Michael Tubbs announced Monday.

The program, named the Stockton Economic Empowerment Demonstration (SEED), will provide 100 residents with $500 a month for the duration of the trial. Recipients do not need to be working during the trial, and there are no restrictions on how the money can be used.

Stockton residents can qualify for the trial if they are at least 18 years old and reside in a neighborhood with a median income of $46,033 or less. Individuals who earn more than $46,033 can still be eligible as long as their neighborhood fits the criteria.

SEED organizers will randomly select 1,000 initial residences across the eligible neighborhoods, and each one will receive a notice in the mail asking about interest in participating. From those who choose to fill out a form with demographic questions, organizers will select 100 people (also randomly) to begin receiving basic income.

Researchers will regularly check in with the recipients to determine how basic income affects their health, financial security, and civic engagement. The researchers will also monitor a control group.

The city's basic income pilot is fully funded by private donations, not tax dollars, according to a SEED report released Monday. Donors include Facebook co-founder Andrew McCollum and sociologist Gretchen Sisson, who is McCollum's wife. The Economic Security Project— co-chaired by Facebook co-founder Chris Hughes, Center for Community Change Action president Dorian Warren, and Peers.org co-founder Natalie Foster — is a major donor as well.

"We hope to challenge the entrenched stereotypes and assumptions about the poor, and the working poor, that paralyze our pursuit of more aggressive solutions," SEED wrote in its report. "We aim to illustrate how widespread and episodic poverty is."

While Tubbs' basic income initiative garnered national attention, some Stockton residents criticized the mayor for unrelated actions and launched a petition in January to remove him from office. The petition, which alleged wasteful spending and disregard for the community, failed to gather the necessary votes.

Stockton was the largest city before Detroit to declare bankruptcy, but its economy has improved in the past several years as the population grew and crime rates fell. However, the city's median household income of $46,033 remains below California's median of $61,818. The unemployment rate in Stockton is about 7%, which is significantly higher than the state average.

Tubbs previously told Business Insider that the basic income pilot could give people more opportunity to find fulfillment in their lives.

"In our economic structure, the people who work the hardest oftentimes make the least," Tubbs said. "I know migrant farm workers who do back-breaking labor every day, or Uber drivers and Lyft drivers who drive 10 to 12 hours a day in traffic. You can't be lazy doing that kind of work."

The Stockton experiment is starting shortly after other highly-publicized basic income pilots either ended abruptly or were not renewed.

Most recently, the provincial government in Ontario, Canada, killed a three-year pilot after only one year. About 4,000 people were receiving a monthly stipend through the program, and many recipients expressed shock and outrage after Premier Doug Ford broke his promise to continue the program.

Earlier this year, officials in Finland announced that a two-year pilot program giving basic income to 2,000 people will end in January 2019. Four months into the pilot, some of the people receiving $600 a month had reported lower stress levels.

Finland's program will run for the intended two years, but the government denied a request for additional funding from Kela, the country's social security agency, and said it is looking at different social welfare projects instead.

Elon Musk has offered an explanation via Twitter why he has quit Instagram.

"Instagram is so thirsty, yet gives you Death by Water," Musk tweeted in response to a question about what drove him to delete his account on the social media platform.

Musk also tweeted an alternative explanation: "Didn't 'like' it".

Musk's Instagram account, which had more than 8 million followers, disappeared in the early hours of Monday morning.

Musk's philosophical tweet seems to possibly be a reference to T.S. Eliot's 'Death by Water,' one of the section of 'The Waste Land.' Musk tweeted the link to the Wikipedia page of Eliot's poem earlier in the day.

The deactivation of the account came soon after rapper Azealia Banks posted a series of messages about Musk on her Instagram account, demanding in a series of updates that the billionaire returns her phone. She also threatened to call the police.

"It's a f---ing mess I want my phone and I want to go home," Banks told Business Insider when asked for further details via Instagram DM late Monday evening Pacific Time. According to Banks, her own lawyer took away her phone at Musks' lawyers' instruction.

"I'm like in tears right now," she added. "This has nothing to do with me."

A spokesman for Musk said: "Elon doesn't know Azealia Banks. He doesn't have her phone and neither do his lawyers."

Earlier in August, Banks made headlines when she stayed at one of Musk's Los Angeles properties soon after Tesla's CEO announced he had secured funding to take the company private. According to Banks, she overheard Musk "scrounging for investors to cover his ass" as he sought funding.

For years now, Apple and Google, in addition to their main businesses, have had a growing and profitable side gig going charging developers hefty commissions when the developers sell apps, subscriptions, and other items through their app stores.

But maybe not for much longer.

Apple and Google face regulatory threats and pushback from developers that could hamper their app store businesses and force them to reduce the cut they take from each sale, Ben Schachter, a financial analyst with Macquarie Research, said in a research note Monday. Even though the companies' app stores are just sideshows to both companies' main businesses, they could both take a significant hit to their financial results if they are forced to reduce rates, he said.

Apple, for example, could take a $16 billion hit to its adjusted earnings if its forced to take a major cut to its App Store commission rates, he said in the note.

"We believe that the traditional ... commission rates for app distribution may come under pressure," Schachter said in the note. He continued: "Changes in the commission rates would meaningfully impact profits."

Apple started taking a 30% cut when it launched the App Store

Both Apple and Google charge a 30% commission on purchases made through their app stores, including on buying apps, subscription sign-ups, and in-app purchases of digital goods. Both companies also now charge 15% on subscription charges after the first year; a reduction to entice developers to focus on subscription-based business models.

Tim Sweeney, CEO of Epic Games, which announced earlier this month that it won't distribute "Fortnite" Google Play. Epic Although the basic 30% commission has been the norm since Apple launched the iPhone App Store 10 years ago, it's starting to come under increasing scrutiny. Earlier this month, Epic Games announced that it would distribute the Android version of its megapopular game "Fortnite" through its website rather than through the Google Play app store. It opted out of Google Play specifically because it didn't want to pay the search giant a commission on in-app purchases, which is the main way it makes money off "Fortnite."

Epic's move drew widespread publicity, because it was so unusual for a developer to opt out of one of the two major global smartphone app stores. But it may soon be followed by others, Schachter said.

"We've had behind closed door discussions with game developers who claim that [Apple] and [Google's] commission structure is unfair, and that they may take a more public role in pushing back against the business model," he said.

Developers are starting to push back against those commissions

And it's not just game makers who are getting fed up. Spotify, in a recent regulatory filing with the Security and Exchange Commission called out Apple and Google for charging it commissions that aren't applied to their rival subscription music services. The statement was only the latest move by Spotify to bring the issue to the attention of consumers and regulators, noted Schachter.

Daniel Ek, CEO of Spotify, which has repeatedly criticized Apple and Google for the commissions they charge in their app stores. Greg Sandoval/Business Insider Like Epic Games, Spotify has essentially opted out of that model. Although iPhone users can download Spotify from the App Store, they can't sign up for its premium subscription service through it. Instead, they have to do that through its website.

Apple and Google could also see pushback from other developers, particular from streaming video providers such as Netflix, Schachter said. As that market starts to mature, and the players become less focused on signing up new users, they may start to become more concerned about the commissions they're paying to Google and Apple, he said. Those concerns might be heightened as the two giants rev up their respective video services, he said.

Already, Netflix is testing directing smartphone users to sign up for a subscription to its service via their web browsers, rather than through its app, Engadget reported Tuesday.

"As [Google] and [Apple] continue to add more services and directly compete with app developers, we suspect some of these voices from the music, video, game business, and others may become louder," he said.

Apple and Google also face increased regulatory and legal pressure

But the app store commissions are likely to come under pressure from other places besides developers, most notably from the legal and regulatory arena, Schachter said.

In the next year, the US Supreme Court is scheduled to hear an appeal of an antitrust lawsuit by consumers filed against Apple that targets its commission fees directly. The consumers charge that Apple's monopoly over the distribution of apps on the iPhone means that developers have no choice but to pay its commissions, which the developers then pass on to their customers in the form of inflated prices. Should the court allow the case to continue, it could eventually upset the whole business model of the App Store.

Margrethe Vestager, the European Commissioner for Competition, recently hit Google with a $5 billion fine for abusing its dominance of Android. Reuters Meanwhile, Google's business practices have been under scrutiny for years now by European competition regulators. Last month, they hit the company with a $5 billion euro fine for forcing smartphone makers to install its apps.

Such regulatory scrutiny may only increase, Schachter said. Developers such as Spotify are complaining directly to regulators, he noted. With the market big and growing rapidly — global app sales hit $86 billion last year — and with Apple and Google offering increasing numbers of services that compete with those of leading app makers — their commissions and app stores will also be increasingly likely to draw regulators' attention, he said, referring to the companies by their ticker symbols.

"We are concerned that given AAPL and GOOG's dominance of mobile [operating systems] combined with their growing efforts to add value and services to customers using those OSs, it will draw regulatory and legal attention," Schachter said. He continued: "We are particularly concerned that as AAPL and GOOG add more features and offerings such as voice assistants, Apple Music, YouTube Red, a potential video service from AAPL, and more, that competing developers will claim that AAPL and GOOG's position as owners of the platforms may give them 'unfair competitive advantages."

Apple and Google could take a big hit to sales and profits

Should all this pressure on the app store commissions lead to decreased prices, the two giants could take a big hit, Schachter said. Over the last year, 14% of Apple's total revenue came from its services business, much of which is derived from commissions on App Store sales.

If nothing changes with commission rates, Apple should see an average commission rate of about 27% on such sales in its 2020 fiscal year, he estimated, taking into account the 15% rate it charges on ongoing subscriptions. The company's App Store revenue would be about $20.1 billion that year, while its total company earnings before interest and taxes (EBIT) would be about $78.6 billion, he said.

Sundar Pichai, CEO of Google, which has generally followed Apple's lead in terms of app-store commission rates. Getty But if Apple is forced to slash its average commission rate to 15%, its App Store sales would fall to $11.2 billion in fiscal 2020, and its total company EBIT for the year would drop to $69.7 billion. If it has to cut commissions way down to 5% on average, its App Store revenue would be just $3.7 billion, and its company-wide EBIT — essentially its operating profit — would be $62.2 billion.

Those estimates "highlight just how levered operating profit is to the high-margin dollars of the App Store," Schachter said.

Google could see a similar hit if it is forced to slash Google Play commissions, he said. Assuming everything stays the same as it is now and the company continues to get an estimated average commission of 27% on app store sales, Google will pull in $10 billion in such revenue in 2020 and its company-wide EBIT will be about $40.2 billion.

But if its rates are cut to 15%, Google's app store revenue would be just $5.6 billion that year and its EBIT for the year would be $35.8 billion, he said. If rates plunge to just 5%, its app store revenue would be about $1.9 billion, and its total EBIT would be $32 billion.

Legal marijuana is one of the fastest-growing industries in the US. It generates hundreds of millions in tax revenue in states where selling the drug is legal, and it's expected to become a $32 billion global market in the next four years. It's also considered illegal by the federal government.

But for a few cannabis-specific funds, federal marijuana prohibition is the opportunity of a lifetime.

While many of the biggest Wall Street banks and institutional investors may want to do business in the cannabis industry, their limited partners — typically large pension funds or insurance companies — are spooked by federal prohibition.

Jon Trauben, a partner at the New York City-based Altitude Investment Management, which manages around $25 million, told Business Insider in a recent interview that the firm is taking advantage of that short "window of opportunity" to invest in marijuana before prohibition recedes and the big institutional players jump into the sector.

"It's unique, timely, and you can't ignore it," Trauben said.

Here's how it works: canny investors like Trauben hit up high-net-worth individuals or family offices for capital. These entities are willing to take on tons of risk putting their money to work in what amounts to a legal grey area.

Through dedicated funds — structured as venture capital, private equity, or hedge funds— that capital can be quickly deployed to finance growth in the booming cannabis sector, especially for US-based companies that are working under severe capital constraints.

Most of these funds invest in ancillary companies, like tech startups that provide software and payroll services to the booming marijuana industry but don't actually grow or sell the plant itself. That shields them from most of the risks involved with doing business in an industry the federal government considers illegal, but still allows them to reap profits.

Jenny Cheng/ Business Insider

The chaos theory of investing in cannabis

Many investors in the marijuana industry are taking a page straight out of the "Game of Thrones" playbook: Chaos, in this case, is a ladder to strong returns.

"When there's complexity, when there's chaos, when there's uncertainty, that's when the people who are really good at doing what they are doing stand to make really strong gains," Micah Tapman, a managing director at Colorado-based Canopy, which focuses on early-stage investments in the cannabis industry, previously told Business Insider.

"The lack of banking and lack of access to capital is creating a huge opportunity," Danny Moses, a hedge funder behind the famous "Big Short" trade chronicled by Michael Lewis said at the Cannabis World Congress and Business Expo in New York. "It's a gold mine, but it's also a minefield."

Moses, who has called investing in marijuana the "big long," has put some of his personal money into Merida Capital, a New York-city based private equity fund led by a former corporate attorney, Mitch Baruchowitz.

To Baruchowitz, who told Business Insider in June that his firm manages around $50 million, the best investments are those that build the "scaffolds" for the marijuana industry.

"So our investment thesis is one that is much more geared towards that scaffolding," Baruchowitz said. He pointed to Merida portfolio companies like Simplifya, a software service that helps cannabis dispensaries comply with byzantine operating regulations, which tend to differ state-by-state.

As with any cutting-edge industry, there's a learning curve for investors. But it's easier when they're not competing with multibillion-dollar funds.

"There's no truer way to learn something unless you spend your own money," Trauben, of Altitude, said. "And right now, we don't have to compete with the Goliaths."

Wall Street is banging at the door

The legal grey area the cannabis industry finds itself in is slowly shrinking, and the window of opportunity for investors will eventually close.

Big institutional firms are already pushing into marijuana as attitudes around the drug change, and a number of bills legitimizing the industry at the federal level work their way through Congress.

Karan Wadhera, the managing partner of Casa Verde, a Los Angeles-based venture capital fund focused on ancillary cannabis companies, told Business Insider in April that his fund is receiving a lot of inbound interest from large institutional investors.

"I think this is a testament to both the size and pace of growth in the cannabis industry," Wadhera said, adding that last year, "many top VCs would not be ready to entertain a conversation on cannabis."

Just last week, Constellation Brands — the beermaker behind Corona — sunk $4 billion in a stock deal into Canopy Growth, a publicly traded marijuana company. It's the largest corporate investment into a marijuana cultivator to date.

And guess who advised Constellation on the transaction? None other than the most institutional of institutional firms: Goldman Sachs. Bank of America, one of the largest banks in the world, provided the financing.

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This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Current subscribers can read the report here.

Business Insider Intelligence

The healthcare industry is undergoing a profound transformation. Costs are skyrocketing, consumer demand for more accessible care is growing rapidly, and healthcare companies are unable to keep up.

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