The real estate market of Hong Kong is said to be one of the most expensive in the world, alongside New York, London, and Sydney. Yet, crypto startups are moving into the most valuable skyscrapers in the city.
On August 22, BitMEX, a popular cryptocurrency exchange that facilitates Bitcoin and Ethereum margin trading, moved its headquarters to Cheung Kong Center’s 45th floor, renting out 20,000 square feet at $28.66 per square foot.
Its old headquarters were based in Victoria Harbor, a region within Hong Kong that is known for expensive residential properties. In Victoria Harbor, BitMEX paid around $3.18 per square foot and in Cheung Kong Center, BitMEX is paying $573,200 per month, at a rate of $28.66 per square foot.
BitMEX will operate its office in the most valuable skyscraper with Hong Kong alongside major financial institutions such as Bank of America Corp, Barclays Plc, Bloomberg LP, Goldman Sachs Group Inc and the Securities and Futures Commission of Hong Kong.
Banks are Moving Out of Skyscrapers
According to a report released by SCMP, a mainstream media outlet in Hong Kong, even major banks like Goldman Sachs and BNP Paribas have started to explore cheaper locations for their offices in Hong Kong due to rising rental fees.
Annual office rental costs in Hong Kong Central average around US$307 per square foot a year, a rate that easily surpasses London’s West End and Beijing’s Finance Street.
BitMEX and Diginex Global, two crypto startups based in Hong Kong, are renting out 72,000 square feet in total, paying around $1.3 million per month.
“Blockchain companies show no signs of slowing their expansion in Hong Kong. These firms are leasing space in top-tier office buildings to attract and retain talent.” Philip Pang, an associate director of office services at Colliers, told SCMP.
The local publication reported that Goldman Sachs is relocating from Hong Kong Central to Causeway Bay in the next few months to save 30 percent on rent. BNP Paribas has also relocated its office to Swire Properties’ Taikoo Place.
While JPMorgan has leased the Quayside in Kwun Tong near Victoria Harbor, the cost of rent comes nowhere close to the rent BitMEX will be paying throughout the years to come.
Landlords Not Confident in Crypto
Over the past nine months, despite the 80 percent drop in the valuation of the crypto market, cryptocurrency-related businesses have prospered. Specifically, exchanges have continued to generate large revenues.
However, local publications have reported that Cheung Kong Center demanded BitMEX to pay a year’s rent upfront, which is estimated to be around $6.8 million, demonstrating the lack of confidence in crypto-related businesses by major landlords in the Hong Kong real estate market.
“It’s pretty common for landlords to ask for larger deposits from tenants with weaker covenant strength. Landlords are always open to taking on new tenants, it’s just a matter of balancing rent against flight risk,” said Denis Ma, head of research at Jones Lang LaSalle.
With the one year’s rent at Cheung Kong Center, it is possible to purchase multiple story buildings in many major cities like Kuala Lumpur, Ho Chi Min, Tokyo, and Busan.
It has not been smooth sailing for the Port of San Diego’s IT department this week following a cyber security breach.
In a statement, the Port of San Diego has disclosed that its computer systems were hit by a ransomware attack with the attackers demanding to be paid in bitcoin before they can decrypt files. According to the chief executive officer of the port, Randa Coniglio, the breach which was initially reported on September has led to the disruption of the IT systems of the agency. While acknowledging that the cybercriminals demanded ransom Coniglio did not reveal how much they were asking for.
“As previously stated, the investigation has detected that ransomware was used in this attack,” said Coniglio in a statement. “The Port can also now confirm that the ransom note requested payment in Bitcoin, although the amount that was requested is not being disclosed.”
FBI and DHS Now Involved
Perhaps an indication of the seriousness of the incident, the port facility located in San Diego County, California has called in the U.S. Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI). The port is also closely communicating and coordinating with the U.S. Coast Guard.
While the IT systems of the port which handles nearly three million tons of cargo annually have been disrupted with some of them being proactively shut down out of caution, operations at the facility are going on normally with a few exceptions.
“The temporary impacts on service to the public are in the areas of park permits, public records requests, and business services,” added Coniglio.
Despite reports suggesting that cybercriminals are embracing cryptojacking malware at the expense of ransomware, incidents of the latter are still common though they have fallen by around 22.5% according to Kaspersky Labs,
“The total number of users who encountered ransomware fell by almost 30%, from 2,581,026 in 2016-2017 to 1,811,937 in 2017-2018.”
Earlier this month, for instance, Midland, a Canadian town in the province of Ontario disclosed that it had paid ransom in bitcoin in order to obtain encryption software from hackers who had infiltrated its computer network. While regretting that it had given in to cybercriminals, authorities in Midland argued that they had been left with no other option.
Additionally, the servers of Professional Golfers Association (PGA) of America were last month compromised by hackers who decrypted files consisting mostly of creative materials meant for use in print and digital marketing communications. At the time the golfing body indicated that it would not pay the ransom.
But while some ransomware creators, such as those who targeted the PGA, may fail to hit pay dirt, this has not been the case with the makers of the SamSam ransomware who are estimated to have obtained bitcoins worth more than US$6 million since late 2015 per Sophos, a cybersecurity firm.
Earlier this month, Danske Bank, the biggest bank in Denmark, faced its largest scandal to date for laundering more than $230 billion. Despite the billions of dollars banks launder on a daily basis, critics are still focused on crypto exchanges.
On Sept. 28, Erik Voorhees, the CEO of popular cryptocurrency exchange ShapeShift, responded to the coverage of WSJ which compared the amount of money laundered by banks and crypto exchanges over the past two years. In the last 24 months, banks have laundered $2.7 billion every day while crypto exchanges have allegedly processed $9 million in illicit funds.
$2.7 billion times 730 days (two years) is equivalent to $1.97 trillion, or $1,971,000,000,000. Banks are said to have laundered $1.97 trillion in the past two years by laundering $2.7 billion on a daily basis.
In contrast, crypto exchanges have laundered $9 million in the entire period of two years, meanwhile banks laundered $1.97 trillion.
Is it an Issue of Money Laundering or Establishing a Narrative?
Based on the numbers alone, it is fairly evident that the problem lies in the institutions that are laundering $1.971 trillion in every two years rather than organizations that allegedly launder $9 million in 48 months.
Hence, if the concern of money laundering in the crypto market was really about the problem of funneling illicit funds, then the focus of government agencies and the media has to be established on banks.
Last week, it was revealed that the biggest commercial bank in Denmark laundered $230 billion in Estonia.
Danske Bank former Chief Executive Thomas Borgen, who resigned immediately after the scandal, said:
“It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia. I deeply regret this.”
Karel Lannoo, the CEO of Center for European Policy Studies, a Brussels-based think tank, stated that the proportion of the scandal is so large that it may single-handedly harm the reputation of the country, which has been acknowledged as not of the cleanest in the world.
“This is a scandal of enormous proportions. We are talking about a country that has the reputation of being one of the cleanest in the world. And this is their largest bank.”
Yet, less than two weeks after the biggest scandal in the history of Denmark, the focus on money laundering has somehow shifted to crypto. A WSJ investigative report revealed that ShapeShift laundered a grand total of $9 million in the past two years, which has not been conclusively proven.
But, assuming that ShapeShift did process $9 million in illicit funds, it is nowhere close to the amount of money laundered by banks on a daily basis.
“A parade of suspected criminals has taken advantage of ShapeShift’s services since the exchange began in 2014, according to law-enforcement officials, independent researchers and the Journal’s investigation.”
Crypto is Criminal Money
The narrative of critics against cryptocurrencies since the beginning was that it is the go-to form of money for criminals. However, as Europol recently disclosed, cash remains as the dominant money laundering tool amongst criminal groups, because of its anonymity.
Chinese billionaire and co-CEO of technology company Ideanomics Bruno Wu believes the blockchain could be the solution that helps African countries trade their minerals and natural resources efficiently and profitably.
Wu made the comment while speaking to entrepreneurs and investors at the Africa House Collective event, held in New York recently.
Wu’s company Ideanomics, formerly called Seven Starts Cloud Group, has invested heavily in artificial intelligence and blockchain companies through companies they acquired and partnered with. The tech company uses the new technologies to disrupt new markets. The U.S. based company recently announced a joint venture that removes intermediaries in the port supply chain.
Speaking on how Africa can leverage blockchain, Wu said digitizing asset production and distribution would put the continent on the forefront of the commodities market, same way it leads the mobile money market.
“Having a better tomorrow for Africa is about having a more transparent future. And blockchain can help there.”
In an interview with Quartz, Wu said his company is currently studying the African market and is open to partnering with countries such as Nigeria and Kenya.
He believes the continent can profit from adopting the blockchain technology and use it to save millions of dollars earned from the sale of commodities, which is often lost to corruption and money laundering.
Wu’s desire to see Africa profit from the blockchain technology follows a similar assessment from the CEO of diversified financial company Alexander Forbes Andrew Darfoor.
Darfoor had told in an interview in Harare:
“Blockchain is something that we are investigating, and we are assessing it. I think blockchain has benefits, but I think it’s a broader digital strategy.”
Africa has a continent has been on the fence regarding the use of blockchain. It’s been a mixture of reticence and strong-handedness. So far, Kenya has been the focal point in the continent, where the government has set up a task force, hoping to study its benefits and challenges. This hasn’t stopped the adoption of the technology, as it’s being applied for elections and in the health sector. Other African countries like South Africa have taken it a step further by running a blockchain pilot for the banking sector to cut down processing time for settlement.
The chairman of the Distributed Ledgers and Artificial Intelligence taskforce, Bitange Ndemo has advised the Kenyan government to tokenize its economy in order to deal with the increasing issues of corruption and uncertainty.
Ndemo made known his opinion during a meeting between the Kenyan ICT ministry stakeholders and members of the private sector. He noted that the East African country needs a digital currency that would stand side-by-side with fiat.
“We must begin to tokenize the economy by giving incentives to young people to do things which they are paid through tokens that can be converted to Fiat currency,” Ndemo said
Kenya is Open to Innovation
Kenya is one of Africa’s leading countries in terms of blockchain and cryptocurrency development. Some of the region’s largest blockchain remittances originated from Kenya. Beyond remittances, the East African nation is notable for the friendly environment that it provides for not just blockchain, but technological innovations in general.
Active legislative discussions over blockchain and cryptocurrency related programs show the interest that the Kenyan government have in blockchain technology. This is evident in the government’s effort towards finding proper regulatory frameworks for the technology over time.
In August 2018, the country’s electoral commision even showed signs of adopting blockchain technology in voting processes.
According to Ndemo, Tokens are like bonga points given by mobile operators or loyalty points given at the supermarkets, it can be converted to coins and used to buy goods of any choice by the user.
More Education Needed
The Distributed Ledgers and Artificial Intelligence task force which was inaugurated in March has earlier recommended a Central Bank Digital Currency to operate in fixed nominal terms and as a valid legal tender. This is an idea that has been abolished, or rather sidelined for the time being.
ICT’s Jerome Ochieng, however, noted that there needs to be an increased level of awareness about tokens and how to use them before any major steps can be taken. He sees public enlightenment in this area as a very crucial factor that must be put in place before any advanced government action.
“We are not very enthusiastic at the moment, of course, it will come, but we first want people to understand use of tokens”, says Ochieng.
Ndemo’s task force continues in its assignment to determine the appropriate and implementable use cases of blockchain technology within the Kenyan technological and economic environment. This will further enhance the country’s position as a hub for innovation and a fast developing nation, especially when it comes to innovation.
In recent news pertaining to cryptocurrency exchanges, anonymous sources have stated that Ledgerx is preparing to launch ETH futures trading, Coinbase has announced a partnership with Caspian intended to target institutional investors, and the chief executive officer of Binance has shared his opinions regarding “trans-fee mining” and decentralized exchanges.
Ledgerx Reportedly Readying to Launch ETH Futures
According to an anonymous source, cryptocurrency derivatives trading platform, Ledgerx, is readying to launch ETH futures.
The source states that the company has an Ethereum options product ready for launch, however, is currently awaiting regulatory approval for such. The source added that Ledgerx currently has a meeting with the United States Commodities Futures Trading Commission scheduled for the 5th of October.
At the start of September, Business Insider cited anonymous sources in reporting that The Chicago Board Options Exchange (CBOE) was readying for the launch of ETH futures markets. The source predicted CBOE’s ETH futures may go live by 2019.
Coinbase Partners With Caspian to Target Institutional Investors
Major U.S.-based cryptocurrency exchange, Coinbase, has announced a partnership with Caspian to ”drive institutional participation in crypto.”
According to Caspian’s website, the company offers an “institutional grade […] asset management solution that covers the lifecycle of the trade,” with Caspian purporting to currently be providing services to 25 cryptocurrency exchanges including Binance, Bitfinex, Bitmex, and Gemini.
The chief executive officer of Caspian, Robert Dykes, stated: “We’re delighted to cement this important partnership with Coinbase, which will see one of the world’s leading digital currency trading venues join forces with one of the most exciting emerging crypto platforms.”
Kayvon Pirestani, director of institutional sales at Coinbase, stated: “By working together, Coinbase and Caspian will deliver institutional-grade order and risk management tools to the growing number of professional crypto trading firms around the world. Customers will be able to take advantage of the best elements of both platforms — accessing Coinbase’s extensive historical market data and deep pool of liquidity, and combined with Caspian’s suite of seamless trading tools. We see this partnership as not only a tremendous commercial opportunity, but as a chance to truly move forward the institutional adoption of crypto as a mature, tradable asset class.”
Binance CEO: Trans-fee Mining “Not a Threat,” Decentralized Exchanges “Are the Future”
During an interview conducted at the recent Consensus: Singapore 2018 conference, Changpeng Zhao (CZ), the chief executive officer and co-founder of Binance, dismissed the “trans-fee mining” model as posing no threat to Binance’s future, and shared his belief that “decentralized exchanges are the future.”
CZ described the trans-fee mining model as “damaging” to the cryptocurrency ecosystem, adding: “It’s not a threat. The exchanges will try to do that. The volume at the exchanges that have tried that have all come down. It’s a very complex way of raising money. The law of supply and demand tells us that since there’s always more platform tokens being issued, you can almost guarantee that the price will go down over time.”
CZ also expressed his bullish expectations for decentralized exchanges, stating: “I think decentralized exchanges are the future, but it’s going to take a few years to get there. For the foreseeable future, I think the volumes will not be as high. So, it’s more like an experiment. I think it’s more innovation; we’re still at the early stage of the industry.”
“Right now, most of the money is still in fiat. So, I think the sweet spot is actually to do the crypto-to-fiat exchanges,” he added.
A division of Chinese e-commerce giant JD.com, JD Finance, has established the Smart City Research Institute at its headquarters in Nanjing, reported People’s Daily September 28.
Jingdong Group (JD.com) is a Chinese e-commerce company that focuses on new technological implementation in e-commerce, logistics, and finance. With the new Institute, JD.com aims to facilitate the development of “smart city” construction with the use of artificial intelligence (AI), big data, and blockchain technologies.
The company’s first regional headquarters in Nanjing will influence “the entire East China region” and aims to reduce industry costs and increase efficiency. The report states that the company priorities are:
“Advanced Intelligent solutions in the areas of urban environment, transportation, planning, energy consumption, commerce, security, healthcare, credit cities and e-government.”
JD.com has applied blockchain technology in various aspects of its business, from its logistics and supply chain, to issuing blockchain asset-backed securities.
In August, JD.com revealed its new Blockchain-as-a-Service (BaaS) platform. The new tool, called JD Blockchain Open Platform, will purportedly enable businesses to build, host and implement blockchain solutions without having to develop the technology from scratch.
Last month, a Chinese conglomerate with operations in insurance, banking, and financial services and one of the world’s largest insurance company groups, Ping An Insurance, released a “White Paper on Smart Cities,” which aims to “help the government to create a new model of ‘city as a service’ governance.”
Mongolia has taken a significant step forward toward bolstering its fintech sector, with the East Asian country’s central bank authorizing a local telecom operator to issue a digital currency under the country’s recently-passed national payment system bill.
As first reported by state-owned news agency Montsame, the Bank of Mongolia on Friday issued its first-ever digital currency license to Mobifinance — the fintech arm of Mobicom, the largest mobile phone provider in Mongolia.
Зөвхөн Мобикомын хэрэглэгчид ашиглах боломжтой байсан Candy өдгөө Монгол орон даяар аль ч операторын хэрэглэгч ашиглах боломжтой болж Үндэсний төлбөрийн системд цоо шинэ төлбөрийн хэрэгсэл болон “мэндэлж” байна. https://t.co/fvKfeFze4s @CandyMGL @Mongolbank_mn pic.twitter.com/MAjrvn5Nwf
— MobiCom (@MobicomOfficial) September 28, 2018
Now licensed as a state-approved financial instrument, Mobicom’s virtual currency — dubbed “Candy” — is considered a “non-cash payment instrument” whose value is pegged to Mongolia’s fiat currency, the tugrik.
Previously, Mobicom had only been authorized to issue the token to its mobile customers through a wallet app called Candy Pay. Using the app, customers could send funds to or from their bank, pay bills, shop online at select retailers from within the app, and transfer funds to other users.
However, beginning on Oct. 1, businesses throughout Mongolia will be allowed to use Candy as an official payment system, and though it remains to be seen to what extent this specific currency will catch on, Mobicom CEO Tatsuya Hamada said that he expects digital currencies to reshape the financial services landscape.
“As digital currencies have begun to circulate, ATMs and cards will become a thing of the past as well,” Hamada said.
Bank of Mongolia executives issued the license to Mobicom at a ceremonial event held at the central bank’s headquarters earlier today, indicative of the fact that regulators believe the newly-passed legislation will encourage innovation in the country by allowing companies outside of traditional banking institutions to participate in the financial services business.
According to Montsame’s report, central bank officials said that at least one other company has submitted an application for a digital currency license under the new legislation.
Over 46 cryptocurrency exchanges around the globe assisted criminals in laundering more than $88 million over the past two years, a Wall Street Journal report alleges.
Money Laundering Pervasive in Crypto Trading Industry: Report
The Journal’s investigation traced funds from over 2,500 wallets that courts flagged for their involvement in criminal activities. The paper partnered with London-based blockchain forensic company Elliptic to trace funds from wallets to exchanges. Also, to identify intermediary portfolios, which could have belonged to crypto exchanges, the Journal downloaded and compared them to the wallet addresses of suspected exchanges.
ShapeShift AG, the report alleged, was one of the largest recipients of illicit funds to have offices in the U.S., processing over $9 million out of the suspected $88 million over a two-year period. The Switzerland-incorporated-but-U.S.-operated altcoin exchange service lets people trade bitcoins and other digital currencies anonymously. Recently, though, ShapeShift announced that it would oblige with KYC standards from Oct. 1 to “de-risk” itself.
However, the Journal didn’t cut ShapeShift any slack for this change of heart, indicting the exchange for facilitating tainted transactions. Notably, the paper highlighted ShapeShift CEO Eric Voorhees‘ liberal take on anonymity on many occasions — frequently citing his views against AML laws or laws that require exchanges to perform KYC on every customer to catch an occasional criminal — to prove the exchange’s alleged unapologetic involvement in laundering money.
The WSJ report also presented evidence from security researchers, supposedly proving that criminals used ShapeShift to exchange bitcoin for monero, an anonymity-centric cryptocurrency. Following the WannaCry ransomware attack, in which hackers from South Korea extorted millions of dollars from governments and businesses, the investigation traced the extorted BTC to ShapeShift. It went on to say that the exchange didn’t change its policy even one year after the attack, and continued to launder criminal funds that eventually became untraceable.
In another example, the Journal mentioned an ICO that raised $2.2 million worth of ethereum from investors and then went missing with the funds. Upon trailing the stolen money, the paper found that one part of the cryptocurrency ended up at Asian exchange KuCoin, and about $517,00 went straight to ShapeShift, where it was exchanged for monero.
“Even spoofers who robbed ShapeShift’s own would-be customers by setting up a copycat ShapeShift website that stole their money used the real ShapeShift to launder their funds,” the report’s authors wrote, citing publicly-visible online data.
ShapeShift CEO Criticizes ‘Misleading’ Report.
The Journal provided ShapeShift with all the suspected addresses and ShapeShift banned them from using the exchange. Veronica McGregor, the chief legal advisor to ShapeShift, further commented that they are preparing to comply with the existing AML and KYC regulations in the wake of future crypto regulations. She also separated their CEO’s “philosophy” from the way ShapeShift would or should govern, saying “he’s not pro-money laundering.”
On his part, Voorhees sharply criticized the WSJ report, stating its facts are cherry-picked and that the reported tainted trades amount to only 0.2 percent of ShapeShift’s overall volume.
“We are aware of the poorly-researched piece written against us by someone at WSJ. The implications are disingenuous and misleading,” he wrote on Twitter. “Author cherry-picked data, excluding facts contrary to vilification narrative. $9m figure is less than 0.2% of our volume over the time-period. Meanwhile global money laundering through banks is 2-5%.”
AT&T has introduced a suite of blockchain solutions to allow enterprises in various industries to track and manage information more efficiently, the telecom giant announced on its website. The solutions include technology from Microsoft and IBM and can benefit users in industries ranging from manufacturing to retail and healthcare.
The company noted it is combining its “edge to edge” capabilities with distributed ledger technology (DLT). AT&T’s Internet of Things (IoT) solutions provide monitoring and automation capabilities to various business processes.
Manufacturing, Retail And Healthcare
For manufacturing companies, AT&T’s blockchain solutions can track the movement of goods through factories and monitor product quality from its creation to its delivery to the end user.
For retailers, the firm’s DLT services can ensure product authenticity by tracking its movement from order to delivery, as well as by reducing waste and unneeded stock.
For healthcare organizations, AT&T’s new products can support secure sharing of up-to-date patient records and directories.
Tapping IBM And Microsoft
AT&T’s consulting team can design and manage solutions utilizing both IBM’s DLT platform and Microsoft Azure.
IBM Blockchain supports a wide range of industry use cases such as logistics, supply chain, and provenance. AT&T Solutions will integrate its AT&T Asset Management Operations Center with IBM’s Maximo Network on Blockchain and its Maximo Health Insights, providing reliable networks to manage infrastructure assets.
Microsoft Azure, built on an open, trusted cloud platform, supports a range of ledger protocols such as Corda, Chain, Quorum, HyperLedger Fabric and Ethereum. The platform also provides topologies for multi-member and single-member consortiums, as well as for testing and development.
“Blockchain is far more than just bitcoin or cryptocurrency. It’s transforming the way many companies conduct business,” Andy Daudelin, vice president of AT&T Business’s Alliances Business Development, said in the announcement. “Blockchain improves security and enables better management of transactions through complex processes. Utilizing our global network and IoT capabilities, AT&T enhances blockchain by providing edge-to-edge solutions that automate the tracking and that can even monitor the environmental conditions throughout the process.”
Opera, the fifth most widely utilized browser behind Chrome, Edge, Firefox, and Safari, has added built-in Ethereum support to its desktop app, enabling Web 3.0, an ecosystem that allows users can seamlessly interact with decentralized applications (dApps) and peer-to-peer systems on the blockchain.
To utilize Ethereum-based dApps, users are required to have non-custodial wallets like MetaMask to securely send transactions on the mainnet. But, for most casual users, relying on external applications as an additional step towards using dApps could restrict accessibility.
As mainstream browsers move towards adding support for Ethereum and various blockchain standards, the accessibility and user activity of dApps is expected to increase massively.
Importance of Opera Integration
Opera only accounts 3.7 percent of the market share of the browser industry. But, that is because Chrome and Safari have absolute dominance over the browser industry with a combined market share of 71 percent.
The integration of Ethereum and the ERC20 standard by Opera marks an important step towards mainstream acceptance of cryptocurrencies and dApps. While its market share and user base are relatively small in comparison to its comeptitors, Opera is a widely recognized browser with an active and loyal user base.
Currently, on Google Chrome, most Ethereum and dApp users rely on MetaMask, a non-custodial Ethereum wallet operated by ConsenSys, a blockchain software studio created and run by Ethereum co-creator Joseph Lubin.
To access MetaMask, users have to download and install the plugin on Google’s browser store, which requires users to undergo additional steps to install the wallet. On Opera, because the wallet is already integrated into the browser, users can seamlessly utilized its built-in infrastructure to access dApps.
Still, the Ethereum wallet of Opera needs significant improvement. It lacks the sophistication and execution of popular apps like MetaMask particularly in fee estimation and testnet support.
But, the cryptocurrency sector has already taken a major step towards gaining mainstream recognition by major browsers.
One Ethereum user who tested the ETH integration on Opera said:
“I tried it out today – its incredible to think that mainstream browsers are integrating Web 3.0. I love the split between mobile and desktop – security of mobile with convenience of desktop. and yes, mobile phones are still way more secure than desktops. They need some work on supporting ropsten – i ran into numerous issues that were not a problem on mainnet.”
In July, it was reported that Bitmain, the world’s largest crypto mining equipment manufacturer, is set to acquire 43 percent of stake in Opera. Although it remains unclear whether Bitmain has invested in the browser, the two corporations reportedly held discussions prior to the release of the reports in regarding a potential acquisition.
With the successful deployment of built-in cryptocurrency wallet and Ethereum integration, Opera is expected to move forward with its cryptocurrency-focused development roadmap.
Considering that Opera is more popular amongst mobile users than desktop users and the various security benefits of using mobile-based systems over desktop and web-based platforms, it is likely that Opera will continue to show improvements in its mobile cryptocurrency infrastructure.
More than a dozen members of Congress have signed a letter asking Securities and Exchange Commission (SEC) Chairman Jay Clayton to clarify the guidelines the agency uses to determine whether cryptocurrency assets are securities under federal law.
The letter, which according co-signer Rep. Ted Budd (R-NC) has already been signed by 15 lawmakers across the political spectrum, tells Chairman Clayton that members of Congress are concerned that the SEC’s failure to issue definitive guidance on what precisely makes an ICO token a security is causing startups to abandon the U.S. in favor of jurisdictions where the rules are more clear.
“Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”
Later in the letter, which Rep. Budd said is the “byproduct of months of work and conversations” with industry trade groups and other lawmakers from both the Republican and Democratic parties, the legislators question the SEC’s decision to use enforcement actions in lieu of formal guidance to clarify policy on cryptoassets.
“We believe that the SEC could do more to clarify its position. Additionally, we are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.”
The lawmakers further asked Clayton to answer three specific questions regarding the legal status of ICO tokens and other cryptocurrency assets, including whether he agreed with a statement by William Hinman, director of the SEC’s division of corporation finance, which indicated that a token that was originally sold as an investment contract — i.e., a security — could later shed that label. Hinman had specifically stated that he did not believe ether should be regulated as a security, despite the fact that it was originally funded through a token presale.
The publication of this letter comes just days after Rep. Warren Davidson (R-OH) — one of the letter’s co-signers — hosted an ICO summit on Capitol Hill in which representatives from the cryptocurrency and mainstream financial industries asked Congress to provide a clear regulatory framework for blockchain innovation.
A group of lawmakers recently sent a letter to the Internal Revenue Service (IRS) that criticized the agency for stepping up its enforcement of tax violations involving cryptocurrency without providing taxpayers with formal guidance on how to report income associated with complex situations such as cryptocurrency hard forks.
Read the full text of the letter below:
Congress SEC Letter by MCW on Scribd
Coinbase is unveiling a suite of new initiatives designed to expand its market share.
The latest update called “Coinbase Bundles,” refers to the pre-packaged collection of five cryptocurrencies available for purchase on Coinbase. The Bundle consists of Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ethereum Classic (ETC).
A bundle of five cryptocurrencies can be purchased for a meager sum of $25. With the current market cap employed in calculating a diversified portfolio of cryptocurrencies available for purchase with a couple of taps, Coinbase will save customers a lot of hassles.
The exchange hopes to introduce the new update to its U.S., E.U, and U.K markets in the coming weeks. At the moment, the digital asset platform has not set a maximum purchase size for a Bundle, but there are daily purchase limits on a per customer basis, at the moment. When a customer buys a bundle, it will be stored on their Coinbase wallet, where it can be purchased, sold, sent or received as an individual asset.
The digital asset platform will also host Information Asset Pages on the top 50 digital currencies on its platform, along with a new section, called “Coinbase Learn,” which will educate first time traders to cryptocurrency. The Vice President and General Manager of Coinbase Consumer Dan Romero stated that the ability of people to understand, explore and choose cryptocurrency would go a long way in determining the possibility of an open financial system coming to reality.
“We expect that millions of people will make their first cryptocurrency purchase in the coming years. But all too often, getting started can be overwhelming for people learning about crypto for the first time.”
The Information Asset Pages will provide customers with all information about the top 50 cryptocurrencies based on market cap. Customers can learn about cryptocurrencies that are neither available for purchase nor sale on Coinbase. The page also furnishes its users with information on historical trading data, current market cap and referral links to project websites.
Romero said the new Coinbase Learn section would be exclusively set aside to enlighten newbies on cryptocurrency. It also provides answers to frequently asked questions.
Taking time to acquaint others about cryptocurrency is no mean feat. It is fair to say there is no particular database containing all the fundamental principles responsible for the technology. This new section about to be launched by Coinbase will teach and educate newbies about cryptocurrency. Responses to the frequently asked questions stemmed from customer research and were cross-checked with individuals new to the virtual currency.
Coinbase recently announced an overhaul to their digital asset listing process to make it faster to list more assets that are compliant with local laws on a “jurisdiction-by-jurisdiction” basis. It also added support for ethereum classic and raised the daily buy limits for users to $25,000 and eliminated the sell limit.
DigitalX, an Australian blockchain and crypto advisory firm listed on the Australian Securities Exchange (ASX) has seen its shares slide nearly 12 percent on the day on revelations of a $1.8 million federal court claim.
In an obligatory disclosure under ASX guidelines, DigitalX today revealed it was served with an Originating Application and Statement of Claim in the Federal Court of Australia by a group of stakeholders involved in an initial coin offering (ICO) which DigitalX served in an advisory capacity.
The claim from the aggrieved group, who made an investment in the coin offering, stands at a total of USD $1,833,077 plus damages.
For its part, DigitalX denied any claim of wrongdoing and says it will – along with its legal advisors – continue to review and examine the claims made against it.
While few details are known about the ICO presently, Australian publication Business News is reporting that the “ICO was not local”. DigitalX is a Perth-based firm with offices in Sydney and New York.
Shares in the firm, one of the earliest publicly-listed cryptocurrency companies in the world, slid from AUD $0.09 to a low of AUD $0.081, a near 12% slide following the public disclosure.
The firm said it “has strong grounds to defend any claims bought forward by these applicants,” adding:
“As such, the Company intends to vigorously defend this matter and protect the reputation of the Company.”
Formerly Digital CC, a cryptocurrency mining firm with a specific focus on bitcoin, the company rebranded into Digital CC in late 2015 with a pivot from bitcoin mining to blockchain development and consultancy services. DigitalX launched a payments app for remittances to 14 countries, a majority of them in Latin America, using blockchain technology.
Austria will raise a total 1.15 billion euros in a federal bond auction on Oct. 2 using blockchain notarization, according to Oesterreichische Kontrollbank (OeKB), which oversees the auctions for issuing federal bonds as a neutral capital market participant for the Austrian Federal Financing Agency (OeBFA). The auction demonstrates Austria’s pioneering role in Europe for deploying blockchain technology for sovereign bond issues, according to the notice posted on the Finance Ministry website.
Two outstanding German government bonds, 0.75% Federal Bond 2018 – 2018 and 0.00% Federal Bond 20166 – 2023, will be auctioned, comprising 1.15 billion euros.
The OeKB IT department implemented the project using the Ethereum blockchain, according to Kleine Zeitung.
Digitization Of Finance Arrives
“The digitization of the financial sector, also known as fintech, has long arrived in Austria,” Finance Minister Hartwig Loger said in a prepared statement. “We need to use the positive effects intelligently for the financial services sector. Blockchain technology is an economic policy focus for us. With the establishment of the FinTech Advisory Council in the Ministry of Finance, we are developing strategies to help Austria make the best possible use of these developments.”
“Blockchain technology offers great potential for increasing efficiency and ensuring the quality of bank processes,” Angelika Sommer-Hemetsberger, a member of the OeKB management board, said in a prepared statement. “Therefore, we have been dealing with this topic intensively for some time now and have already tested several prototypes. Starting the real operation on behalf of OeBFA is a pleasing and logical next step.”
Notarization To Verify Data
The blockchain notarization service will verify the data’s authenticity. “This added security contributes to a high level of confidence in the auction process of Austrian government bonds and strengthens Austria’s good standing in the market, which can also indirectly contribute to favorable financing costs,” said Markus Stix, head of OeBFA.
Blockchain and similar solutions will be used as the main technology in many aspects of public administration, noted OeKB, which evaluated different blockchain technologies for the project.
Europe’s first dedicated blockchain research facility and the world’s first advanced blockchain identity laboratory has been launched in the Scottish capital of Edinburgh.
— Blockpass (@BlockpassOrg) September 26, 2018
Known as the Blockpass Identity Lab, the pioneering blockchain research facility will focus on exploring ways in which blockchain technology can be applied in protecting personal data online according to The Scotsman. Built at the Merchiston Campus of the Edinburgh Napier University, the laboratory is part of a £600,000 collaboration between the Hong Kong-based blockchain-based identity application firm, Blockpass IDN, and the Scottish university.
Under a three-year partnership, funding will be provided to support research staff, 5 PhD students and a virtualized blockchain environment. The facility will place emphasis on the key challenges revolving around identity as it seeks to build new data infrastructures that respect the privacy, rights and consent of netizens.
“This exciting work to explore how blockchain technology can protect personal data from online scammers and hackers carries on the tradition of innovation and excellence exemplified by John Napier [the Scottish mathematician that the Edinburgh Napier University is named after],” said Kate Forbes, the Scottish Minister for the Digital Economy.
Conferences and Hackathons
To mark the launch of the blockchain research facility there will be various activities held and this includes a conference on advanced cryptography, blockchain and digital identity. Additionally, there will be a hackathon where participants will be required to develop prototype applications that focus on blockchain, digital identity or other decentralized and distributed ledger technologies.
Plans for the research facility were initially announced in April this year. At the time the chief marketing officer of Blockpass, Hans Lombardo, cited various online data breach scandals which had served to make clear the risks that come with storage of sensitive personal data in a centralized location.
No Single Point of Failure
“We continue to see identity management at the forefront of blockchain and cryptography discussions as the price of consumer data abuses becomes clearer and more pertinent,” said Lombardo in a statement. “The creation of this lab in conjunction with Edinburgh Napier University will provide a space where further research and innovation can lead that discussion to newer and more advanced grounds.”
While much of the attention on data breaches has been focused on the United States and firms based there such as Equifax and Yahoo, Europe, where Blockpass Identity Lab will be based, is not alien to the problem as about 17% of the population is estimated to have fallen victim to identity theft, one way or the other. Last year, for instance, it was estimated that the cost of credit card fraud on the continent exceeded £1 billion leading to cancellations of the cards by more than 5 million people.
Zebpay, one of India’s biggest cryptocurrency exchanges, has announced the shuttering of all exchange services on Friday following the central bank’s banking ban on the crypto industry.
Launch in 2015, Zebpay started trading with an app-only service that quickly became one of India’s most-downloaded bitcoin wallet and exchange apps. With a know your customer (KYC) model, Zebpay struck half a million downloads on Android – the country’s most-popular smartphone platform – in mid-2017 and quickly doubled to hit a million app downloads during 2017’s bear run in October.
The company forecasted up to half a million new users joining the platform every month at the time, up from 200,000 new users already joining the platform.
On its website, Zebpay indicates it has 3 million users using its iOS and Android apps, with support for 20 cryptocurrencies and 22 trading pairs.
Rumored to be in talks to raise an additional $4 million in funding at one stage, Zebpay is now stopping all exchange services at 1600 local time on Friday. The move is a direct consequence of a crippling policy introduced by the Reserve Bank of India (RBI), India’s central bank, to force all regulated financial institutions – including banks – from offering services to the domestic cryptocurrency industry.
In an announcement, Zebpay said:
The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.
All unexecuted crypto-to-crypto orders will be canceled, Zebpay added, with all tokens to be credited back to customers’ wallets. The wallet service “will continue to work” for customers to deposit and withdraw their coins, the company said. However, it remains to be seen if wallet gains development support in the future.
We are stopping our exchange. At 4 PM today, we will cancel unexecuted orders & credit your coins to your Zebpay wallet. No new orders will be accepted. The Zebpay wallet will work even after the exchange stops.
— zebpay (@zebpay) September 28, 2018
In late June, Zebpay warned that fiat withdrawals could become impossible ahead of the looming banking ban that took effect on July 5, 2018. A day before the banking freeze, the company stopped all fiat deposits and withdrawals at the exchange. Other exchanges, meanwhile, are finding novel ways to circumvent the ban.
Calls to Zebpay’s representatives went unanswered at press time.
Over the past 24 hours, followed by the strong rally of Bitcoin price from $6,400 to $6,750, the crypto market rebounded strongly. Cardano and Litecoin, the two best performing major cryptocurrencies on September 28, recorded 10 percent gains.
Within 10 hours, the price of ADA, the native cryptocurrency of Cardano, increased from $0.078 to 0.0876, by more than 12.3 percent. While most cryptocurrencies have slightly retraced after achieving a weekly high, the market has started to rebound once again.
Ethereum (ETH), which was overtaken by Ripple (XRP) on two occasions within the past week, solidified its position as the second most valuable cryptocurrency in the market. The gap between ETH and XRP has increased to $2 billion, following a 7 percent increase in the price of ETH.
Bitcoin and Ethereum Finding Momentum
From August to late September, ETH has shown lack of momentum and increasing sell pressure, most likely due to the fear of investors that initial coin offering (ICO) projects will dump ETH on the cryptocurrency exchange market in the months to come.
As researchers at Diar previously reported, ICO projects still hold over 38 percent of their ETH holdings stored in treasury. Larry Cermak, head analyst at Diar, stated that sell pressure on Ethereum is unlikely to decrease in the months to come, given the large amount of ETH ICOs still control.
“There is a big misconception that ICO companies have liquidated most of their ETH holdings. On average, all of these projects have moved or liquidated 62 percent of the amount that they initially raised. In other words, they are still holding 38 percent of the initially raised amounts. This, in turn, creates ETH selling pressures, which are unlikely to go away any time soon. The price is affected not only by the ETH mining issuance but also by ICO companies liquidating to cover their expenses,” Diar report read.
It is always possible for ETH to experience an abrupt decline in value given the likelihood of ICOs liquidating their holdings in the future. But, it is also important to consider the large 45 percent correction ETH recorded in the past two months and the oversold conditions ETH has been demonstrating as a consequence.
Over the past 48 hours, Ethereum has made a strong attempt to break out of the $200 region, eyeing a potential rally to the $300 mark. Another strong short-term rally could allow ETH to recover from its current price range, which is likely considering the price trend of ETH since mid-August.
Bitcoin is also expected to break out of the $6,800 resistance mark in the next 12 to 24 hours, a move that would allow the dominant cryptocurrency to eye an entrance into the $7,000 region by the end of the week.
Market in a Good Position
The cryptocurrency market is currently in an ideal position to initiate a short-term rally. The volume of Bitcoin, Ethereum, and most major cryptocurrencies remained relatively low throughout the week. In the past 12 hours, the volume of Bitcoin picked up, showing decent momentum.
There’s something about a prolonged cryptocurrency market downturn that leaves bears jockeying to be the one to twist the final knife in bitcoin’s battle-scarred back. The latest jab comes from Marek Paciorkowski, a financial market analyst at Polish forex platform Aforti Exchange S.A.
Speaking in an interview with Romanian financial publication Business Review, Paciorkowski speculated that the bitcoin price could plunge as far as $100, a threshold it hasn’t touched in more than five years and a mark that would place it 99.5 percent below the all-time high it set in Dec. 2017.
“Considering the triangle pattern that the Bitcoin market has been tracing since March 2018 and most importantly the height of this pattern, if a breakout takes place in line with the prevailing downward trend of the descending triangle pattern, the technical target price for the Bitcoin implied by the range of the pattern will come at … USD 100,” he said.
“It may be hard to believe, but everything is possible in the financial markets and this scenario should be taken into consideration, especially if the subsequent attempts to resume the long term uptrend eventually fail and Bitcoin ends up breaching the USD 5,500 level.”
Paciorkowski based his historically-bearish forecast on proprietary technical analysis, alleging that the bitcoin price is caught in a severe downward trend out of which there is a significant chance that it may not emerge.
“Every recovery that we’ve seen so far, starting February 2018 to date, was each accompanied by lower volumes and interest from the buyers and under these circumstances we’ve concluded that ever since marking the USD 11,700 peak at the end of February/beginning of March, we’ve been clearly dealing with a downward trend within the triangle pattern,” he said. “In recent months, we have also been experiencing a contraction in the market’s volatility, as illustrated by the sideways movement in Bollinger Bands, which have acted for many times in a row as support and resistance levels.”
Nevertheless, he said that if bitcoin can manage to break above $7,715, he would take that as a reliable buy signal. Conversely, a move below $5,613 would be a “definite” sell signal. He explained, “Should the market continue to track the Bollinger Bands, then only breaking above the USD 7,715 level will count as a reliable buy signal, while dropping below USD 5,613 will be a definite sell signal. ”
According to the “Bitcoin Obituaries” index compiled by cryptocurrency resource site 99Bitcoins, bitcoin has died 312 times since the website began keeping track. You can chalk Paciorkowski’s eulogy up as number 313, but history seems to suggest that his apocalyptic prediction will not prove any more prescient than those that came before.
Veem, a cross-border payments platform that uses bitcoin to move funds among businesses without the need of banks, has raised $25 million in a round led by Goldman Sachs, according to Forbes.
The service, which does not require either counterparty to hold bitcoin directly, has quadrupled its revenue in the past year. Also participating in the funding round were GV (previously known as Google Ventures), Kleiner Perkins, Pantera Capital, Silicon Valley Bank, and Trend Forward Capital.
Founded by Marwan Forzely, who previously developed and sold a service to Western Union to allow the transfer provider to connect to customer bank accounts directly, Veem uses an algorithm to route transactions automatically among the most efficient payment rails.
The onboarding process will deploy increasing levels of automation that will include built-in KYC/AML compliance.
Service Gains Rapid Support
The San Francisco-based service has proven effective at turning Veem payment recipients into Veem users, a feature that has piqued investor interest. The service has expanded from 90 customers from its founding in May 2015 to more than 80,000.
Forzely said the new funding round acknowledges the size of the opportunity and the extent of the pain point the service is addressing.
The new investment follows a $24 million Series B round in March 2017, making a total of $69.3 million. Goldman Sachs, the lead investor, participated in the new round through its Principal Strategic Investment Group, which has been active in the blockchain industry.
Rana Yareed, a Goldman Sachs managing director, will become a nonvoting observer on the Veem board.
A Steep Growth Curve
Veem’s revenue has quadrupled in the last year, Forzely said, although he declined to specify the valuation. He also said a big portion of the revenue has been from integration with online accounting services such as Netsuite, QuickBooks, and Xero.
Principal Strategic Investment Group is looking to invest in blockchain companies that can boost service for its clients. It has invested in Digital Asset Holdings, Circle, and Axoni.
GV, which has invested in Storj, LedgerX, and Basis, believes Veem could become the first bitcoin startup to go public, according to Karim Faris, a GV general partner who also sits on Veem’s board of directors. Faris said GV is not a strategic investor but sees Veem as a way to build an independent company and deliver a financial return or an eventual IPO.
A Payments Pioneer
Forzely previously founded an online payments startup called eBillme, which Western Union purchased in Oct. 2011 for an undisclosed sum. Forzely joined Western Union as general manager for strategic partnerships.
There were 470,000 correspondents that used the SWIFT bank messaging platform according to a 2017 report from the Financial Stability Board. The number has fallen by 8% since 2011, possibly on account of correspondent mergers, SWIFT competitors, or lost licenses.
SWIFT has nonetheless experienced a growth in total transactions, the report noted. Startups like Veem and Nairobi-based BitPesa have replaced those middlemen using cryptocurrency and other alternatives.
As of Thursday, Sept. 25, the bitcoin price has climbed about 3 percent, briefly crossing the $6,700 level and extending toward $6,750 at one point in the early evening.
While this movement has made plenty of cryptocurrency traders and investors happy in the short-term, a recent analysis of spending patterns relating to some of the earliest blocks of bitcoin has revealed that a very early miner has been taking advantage of the last several years’ long-term upward trajectory to slowly cash out tens of thousands of coins since Dec. 2016.
A recent tweet from a cryptocurrency expert, Blockchain data analyst Antoine Le Calvez, has revealed that a mysterious bitcoin miner has managed to send approximately 30,000 BTC cryptocurrency exchanges between Dec. 2016, and Jan. 2018, potentially cashing them out for a mammoth payday.
Mystery Miner Cashes In
According to Le Calvez, the mysterious bitcoin miner has been smart enough to cash in on their youngest blocks of bitcoin to not reveal the full extent of their mining period.
An analysis of the spending patterns of the earliest blocks of Bitcoin seem to indicate that a very early miner sent around 30k BTC to exchanges from Dec 2016 to early Jan 2018. pic.twitter.com/8SB89o80h3
— Antoine Le Calvez (@khannib) September 26, 2018
t would seem that, at the latest, the mining started somewhere around Dec. 2009, back when the value of BTC wasn’t much above $0, still wasn’t anywhere near reaching dollar parity, and the flagship cryptocurrency could be profitably mined with a standard-issue CPU. The first Bitcoin Pizza Day, you will remember, did not occur until 2010.
Furthermore, the researcher believes that the mystery miner had mined for at least seven months. Through this time, he managed to acquire more than 30,000 BTC since block rewards were high and miners were few.
Before people ask, I don't think it's Satoshi.
— Antoine Le Calvez (@khannib) September 26, 2018
He speculates that the miner could have even commenced mining operations earlier than Dec. 2009 since, recognizing that spending older coins is more likely to attract attention, he desires to conceal his sell-off. For some, this may raise questions, such as whether the mystery wallet owner is not Satoshi Nakamoto himself, although the researcher seems to think otherwise.
Former UBS executives raised $104 million to operate Seba, a strictly regulated crypto bank, with a banking license from Finma, the Swiss financial regulator.
The infrastructure of the cryptocurrency exchange market is improving rapidly with Bakkt, Coinbase, and major US-based banks like Citigroup, Morgan Stanley, and Goldman Sachs that have recently released their plans to operate crypto custodian solutions.
Market Decline is Not an Issue
Seba CEO Guido Buehler, a former managing director of asset servicing at UBS, stated that the company has already initiated the process of filing a banking license with Finma and is planing to file the final application by the end of October.
Speaking to Bloomberg, Finma spokesperson said that the agency has seen an increase in license applications from cryptocurrency businesses over the past few months and will issue licenses solely based on the business models and technologies employed by the companies.
“We are looking at every application and pursue a neutral approach to business models and technology,” the spokesperson said.
The all-star team of Seba led by CEO Buehler and chairman Andreas Amschwand, the former UBS global head of foreign exchange, currently employs 17 individuals and by the end of 2019, the company intends to appoint 17 more employees to expand to Singapore and Europe.
Already, Seba has raised $104 million from private investors and venture capital firms including Black River Asset Management AG and Summer Capital. As soon as the license is approved by Finma, the company will seek additional funding from investors to capitalize the bank and ensure it can protect the funds of its customers.
Seba is an investment bank and cryptocurrency exchange hybrid, allowing customers to hold and trade fiat and cryptocurrencies by relying on the company’s investment and asset management services. Structurally, Seba will operate similarly as major banks like Goldman Sachs and UBS in that it will offer traditional investment and asset management services tailored to cryptocurrency investors.
“Our vision is when you log in into your online banking, you’d have access to crypto and fiat within one account,” Buehler said.
In regards to the period in which Seba decided to launch its services and file an application with Finma, Buehler emphasized that the cryptocurrency market correction of 2018 poses no concern for the company and for its investors, as the short-term price movement of cryptocurrencies do not affect the long-term validity of the asset class.
“Market decline isn’t impacting my view. Short-term volatility does not undermine long-term validity of digital assets,” he added.
One of a Kind
Coinbase, Bakkt, BitGo, Goldman Sachs, and many other major financial institutions are currently working to strengthen the infrastructure of the cryptocurrency market. But, Seba offers a unique range of products that were previously not available to the cryptocurrency market, which may increase the interest of investors in the traditional finance sector towards cryptocurrencies.
As SEC commissioner Hester Peirce said, investing in cryptocurrencies through exchanges requires a specific set of knowledge and know-how and the vast majority of investors do not have that information to readily invest in the asset class.
A U.S. district court on Wednesday gave leave to the U.S. Commodity Futures Trading Commission (CFTC) to proceed with the lawsuit against Nevada-based My Big Coin Pay Inc. who had allegedly been operating a $6 million fraud, per the court’s Memorandum of Decision. The federal judge who presided over the case affirmed that the cryptocurrency in question falls within the definition of a commodity, and as a result gave the regulator the authority to charge for fraud since it falls within its jurisdiction.
The Alleged My Big Coin Scam
As the crackdown on virtual currency scams gained momentum, the CFTC pursued a case against technology entrepreneur, Randall Crater, and his corporate entity — My Big Coin — in January. Crater had allegedly perpetrated a $6 million fraud on naive individuals who were keen on purchasing the shady virtual currency.
In the lawsuit filed against Mr. Crater and My Big Coin, the CFTC accused the defendants of misappropriating $6 million from 28 clients by selecting a name that sounds like bitcoin and also claiming the cryptocurrency was backed by gold. The plaintiff further alleged the defendants falsely indicated the cryptocurrency had trading representation on several currency exchanges. Mark Gillespie, an associate of Crater, was also accused to have conned investors of their funds and then redirected such funds to personal bank accounts in connivance with Crater.
The defence counsel, however, attempted to dismiss the case on the grounds of virtual currency not being a tangible good or service on which futures contracts are being traded — the agency’s clear jurisdiction.
In reaching his judgment on the definition of a commodity, U.S. Judge Rya Zobel in Boston put questions to the defendants and plaintiff about the operations of cryptocurrencies. Zobel did not unilaterally overrule Cater’s request for the case to be dismissed but maintained she would decide in the shortest possible time.
In her judgment, she noted that My Big Coin fell under the classification of a commodity in line with the definition of the Commodity Exchange Act which incorporates broad categories. Following her clarification on the commodity status of virtual currencies and bitcoin futures, the CFTC by extension can exercise its oversight function on other virtual currencies.
“That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act,” she wrote in Wednesday’s judgment.
Controversy Still Remains
The lacuna on the jurisdiction over cryptocurrency remains evident in the United States. Earlier this year, a judgment delivered by U.S. District Judge Jack Weinstein in Brooklyn stated that CFTC could regulate virtual currencies as commodities. This ruling was leveraged by Crater’s counsel, who disputed its application over bitcoin on which futures contracts are traded.
A blockchain payments trial jointly launched by a trio of banks led by JPMorgan has roped in 75 new banks globally for seamless and faster interbank settlements.
First deployed by JPMorgan in October 2017, the Interbank Information Network began as a blockchain experiment to minimize the participants and friction typically involved in a global payments transaction. The blockchain is developed using Quorum, an Ethereum-based private blockchain developed by JPMorgan in partnership with development studio EthLab.
JPMorgan’s blockchain foray took shape nearly to the day two years ago in 2016. The largest bank in the United States quit banking-centric blockchain consortium R3 the following year, presumably to build on the development of its own in-house blockchain.
Eleven months later, the endeavor – which includes the Royal Bank of Canada and the Australia and New Zealand Banking Group (ANZ) as a trio of members – is now rivaling R3 with the addition of ‘more than 75 of the world’s biggest banks,’ according to a Financial Times report.
Specifically, the trial is to assess the feasibility of a common ledger accessible by all participating banks in a process that reduces the number of participants in a simple cross-border payment chain. The use of bistro accounts and corresponding banking partnerships in different regions in the world means an international payment could be wired through three or four middlemen firms. The use of blockchain tech, in comparison, could mean instant communication and resolution of issues that could otherwise take up to a fortnight to resolve conflict.
Pointedly, the blockchain solution is specifically tasked to address the payments industry, a banking sector where traditional banks fear disruption the most from fintech startups.
JPMorgan banks analyst Jason Goldberg told FT:
“Payment is one of the segments banks worry about most about in terms of ceding to non-bank competition. Blockchain is a way to keep more of that [business] in-house.”
The FT report also notes that the Interbank Information Network enables peer-to-peer financial messaging, making it a rival to the likes of the most commonly-used global payments rail operated by SWIFT.
With nearly 80 banks, the network is expected to process about 14,500 USD-denominated payments a day. The IIN also intends to support payments in non-USD currencies in the future.
Bitmain subsidiary BTC.com has become the latest bitcoin wallet provider to adopt the BIP70 transaction framework, enabling the company’s 1 million customers to send payments to businesses in cryptocurrency payment processor BitPay’s $1 billion merchant market.
BTC.Com Adopts BIP70 for Commercial Bitcoin Payments
Originally proposed in 2013 by early Bitcoin developers Gavin Andresen and Mike Hearn, Bitcoin Improvement Proposal 70 (BIP70) was designed to improve the customer experience for commercial transactions involving cryptocurrency.
BIP70 seeks to accomplish this by allowing customers to make payments to human-readable payment addresses(e.g. “example.com), rather than standard bitcoin addresses, which are long and easy to misread. The payment standard also includes support for transaction received messages, as well as the automatic generation of refund addresses.
At the beginning of the year, BitPay adopted BIP70 as its invoicing standard, requiring all users sending BTC and BCH payments to BitPay merchants to use BIP70-compatible wallets. The firm said recently that, following this policy change, the rate of payment errors has plummeted to just 0.27 percent of all transactions, down from nearly 10 percent in June 2017.
That, according to BTC.com VP of business operations Alejandro de la Torre, is why BTC.com decided to adopt BIP70 for its 1 million bitcoin and bitcoin cash wallets.
Speaking exclusively to CCN, he said:
“When a merchant uses BitPay, in order for their customers to pay using bitcoin or bitcoin cash, they must use a BIP 70 compatible wallet to complete the transaction. BitPay is one of the biggest providers of crypto-merchant services, and we believe in offering the best payment experience for our users that also supports onboarding merchants.”
However, many wallet services have declined to upgrade to BIP70, instead sticking with the heretofore universally-supported BIP21. Critics, including privacy-centric wallet provider Samourai Wallet, allege that BIP70 could lead to increased risk of AML/KYC surveillance, as well as more effective user blacklists. They also warn that this payment standard could render bitcoin payments vulnerable to security bugs in OpenSSL.
In a blog post published earlier this year, Samourai Wallet accused BitPay of using its market-leading position in the cryptocurrency payment processor space to “bully wallet providers into supporting their business plans or bully users into a system that degrades their privacy and the fungibility of bitcoin as a whole.”
However, BTC.com does not share those concerns. Speaking to CCN, de la Torre said, “We have taken the time to carefully evaluate all security and privacy concerns, and we are certain that our users are completely safe with the BTC.com wallet.”
Looking forward, de la Torre said that taking steps to make cryptocurrency payments more user-friendly will help them “begin to compete with credit card and mobile transactions by capitalizing on current inefficiencies in traditional payment processing services,” sowing “the seeds for cultivating deep and sustainable growth from the whole bitcoin community.”
Iceland has long been a prominent hub of bitcoin mining due to 98% of its electricity coming from renewable geothermal energy and a cold climate favoring mining farms which must be kept cool can run massive air conditioning bills in warmer areas.
The power usage effectiveness (PUE) of the country is as low as 1.03, almost twice as cost-effective as many nearby countries in continental Europe where the average is 1.78. As such, Iceland is home to international mining firms like Genesis and BitFury which have set up in the nation to capitalize on the natural advantages and now dwarf many of the local mining enterprises. The establishment of these enterprises was motivated in some cases by the impact of the 2008 financial crisis on the Icelandic economy which wiped 60% of the value from the Iceland krone, the local fiat currency.
Bitcoin mining is so prevalent that the energy consumption of mining in Iceland is set to overtake that of the households of the 340,000 locals living on the small island. 600 mining rigs were famously stolen in a major heist earlier this year, making headlines across the world and drawing attention to the scale of some of the local mining farms.
However, bitcoin mining took a huge hit after the market crashed in December 2017, sending the price of one BTC from an ATH of $19,783 to $6,362 at the time of writing and causing many mining enterprises around the world to mine BTC at cost or even at a loss, leading to speculation that the days of the Icelandic mining boom were over.
Halldór Jörgensson, chairman of Borealis Data Center confirmed this in a recent interview with Red Herring, stating that the infrastructure has now been created in Iceland to pursue other blockchain-related business ventures:
“The demand is…shifting more towards the pure blockchain business. So you could say that the bitcoin wave, the big wave of bitcoin demand, has helped us to build out really fast, because there were really aggressive or interested parties who wanted to do things and we managed to do the build-out.
We strongly believe that when the whole bitcoin thing has settled down to some kind of a level that is not as crazy as it was a year ago […] another wave that crops up that will utilize these infrastructures that have been built up during the bitcoin mining phase.”
It may well be that bitcoin mining will suffer a permanent decline in the country, but instead of closing up shop completely, those already working in the cryptocurrency space are now exploring other options – blockchain enterprise, a growing industry that is set to reach a value of $2.3 billion by 2021.
Tech giant Dell EMC Technologies plans to remain a leader in the Indian server market by introducing products that have blockchain capabilities, local news outlet Economic Times India reports September 26.
Dell has identified blockchain, artificial intelligence (AI), data analytics, and cloud-compliance as key features that the firm will push forward with in order to retain its edge. According to the Economic Times India, Dell had the highest overall market share of the Indian server market in Q1 2018 at 28.3 percent, up from 19.4 percent in the previous quarter.
Manish Gupta, senior director and general manager at Infrastructure Solutions Group, Dell EMC India, is quoted by the Economic Times India as saying that:
“The clients that we work with are looking to tap these technologies, which is why we are bringing in servers that allows them to optimise on traditional workloads as well as invest into new age workloads such as cloud, artificial intelligence, analytics and blockchain.”
Dell’s servers and networking business reportedly drew a revenue of $5.1 billion in Q2 2018, a 34 percent increase from the same quarter the previous year.
Gupta told the Economic Times India that demand is particularly strong from “IT-enabled services, banking, financial services and insurance (BFSI) sector and government.” He added that interest in blockchain has been piqued in the country’s government in particular, alongside the BFSI sector.
As reported earlier this summer, the Indian state of Telangana has announced it would be signing several memoranda of understanding (MoUs) with blockchain firms as to eventually implement the technology across government services.
While receptive to blockchain, the country’s highest judiciary is currently in the midst of reviewing the Reserve Bank of India (RBI)’s contentious ban on banks’ dealings with crypto-related entities. Just yesterday, India’s Supreme Court listened to the final round of petitions on the ban, which has officially been in force since July 6.
A blockchain developed by CSIRO, Australia’s national science agency, in collaboration with the University of Sydney, has completed a global test on Amazon’s ubiquitous cloud computing network to process 30,000 transactions.
As reported yesterday, the ‘Red Belly Blockchain’ – developed jointly by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Concurrent System Research Group (CSRG) at the University of Sydney – was put to use in a successful trial on Amazon Web Services (AWS), a popular cloud infrastructure provider.
While the blockchain has previously been tested to scale substantially – up to 660,000 transactions per second – on a single localized network of 300 machines, the full scale of its trial on AWS has now been revealed.
Deployed across 1,000 virtual machines in 14 of 18 geographic regions serviced by AWS, “a benchmark was set by sending 30,000 transactions per second from different geographic regions, demonstrating an average transaction latency of three seconds with 1,000 replicas”, a CSIRO announcement confirmed.
The geographical locations of the nodes running the blockchain include North America, South America, Europe and the Asia Pacific (Sydney).
Fundamentally, the experiment was to showcase the Red Belly Blockchain’s scalability while retaining the technology’s core characteristics in security and speeds, the agency said. Their blockchain relies on a unique consensus mechanism that performs and scales without adhering to the ‘proof of work’ mechanism used by popular public blockchains like bitcoin and ethereum.
“Real-world applications of blockchain have been struggling to get off the ground due to issues with energy consumption and complexities induced by the proof of work,” Dr Vincent Gramoli, senior researcher at CSIRO’s Data61,” Dr Vincent Gramoli, senior researcher at Data61 and head of the university research group said.
“The deployment of Red Belly Blockchain on AWS shows the unique scalability and strength of the next generation ledger technology in a global context.”
Concurrently, the CSIRO is also part of a data consortium with technology giant IBM that is actively developing a large-scale, cross-industry blockchain platform dubbed the Australian National Blockchain (ANB). The nationwide blockchain platform will be powered by smart contracts.
The surge in the popularity of cryptocurrency mining malware that started in the last quarter of last year has continued unabated into the first half of 2018.
According to McAfee Labs, cryptocurrency mining malware attacks increased by 86% in the second quarter of this year. While the primary target of cryptocurrency mining malware has remained personal computers, cryptojackers have increasingly turned their attention to devices such as smartphones and other gadgets possessing an internet connection.
Per Christian Beek, the lead scientist at McAfee Advanced Threat Research, the interest in devices other than PCs for planting cryptomining malware has been brought about by the fact that they are greater in number and they tend to possess weaker security controls:
“A few years ago, we wouldn’t think of internet routers, video-recording devices, and other Internet of Things devices as platforms for cryptomining because their CPU speeds were too insufficient to support such productivity. Today, the tremendous volume of such devices online and their propensity for weak passwords present a very attractive platform for this activity.”
Ransomware Down, Cryptomining Malware Up
The cybersecurity firm also noted that the growth of cryptocurrency mining malware has enjoyed an inverse relationship with ransomware in the past few months. Ransomware attacks, for instance, declined by 32% in the first quarter of this year at a time when cryptomining malware grew at a rate of 629%. In June this year, Kaspersky Labs also came to a similar finding noting that there had been a drop in ransomware attacks of close to 30% between 2017/2017 and 2017/2018 while cryptojacking attacks increased. On mobile devices, the decline in ransomware attacks was around 22.5%.
In a report titled Blockchain Threat Report, McAfee Labs laid emphasis on ensuring software updates and patches are made since this known vulnerabilities were the most common to be exploited:
“It can be costly and time consuming for bad actors to write their own malware. Rather than research and write their own exploits, many malware authors choose publicly disclosed exploits and known vulnerabilities, assuming that a significant number of machines remain unpatched and open for attack.”
It Could Get Worse
McAfee Labs echoes a similar one by Malwarebytes Labs which found that illegal cryptocurrency mining growth in the second quarter of 2018 was lower than in the first quarter. The Malwarebytes Labs report concluded that while attacks on the scale of the NotPetya and WannaCry ransomware were yet to be matched this year, this could change in the run-up to the end of the year with the SamSam and VPNFilter malwares specifically mentioned.
Blockchain or Brickstring: Bitcoin Brainteaser Featured on Australia’s ‘Who Wants to be a Millionaire’
The Australian version of “Who Wants to be a Millionaire?” featured a bitcoin question that left the contestant. The contestant perhaps wanted to use a “phone a nerd” option to figure the answer out. Could bitcoin’s underlying technology actually be a brickstring?
A brickstring does make sense in a mental picture. I mean, c’mon? We’re kind of splitting hairs when we have to choose blockchain over brickstring. A brickstring makes decent sense, doesn’t it? When a house is built, the construction workers lay the bricks in an interlocking pattern. It could be argued that this is the same concept of blockchain. The mental metaphor isn’t that far off.
Alas, trivia shows don’t allow for debate, as fun as that would be. Crypto-twitter would surely be the best contestants for a game show based around winning a debate. At least a show like that could bring back the study of the finer points of traditional debate that started in ancient Greece.
If anyone doubts that bitcoin is not out of the “early adopters” phase, its cameo appearance in one of the oldest, most globally recognized game shows should help squash that doubt. Though bitcoin and cryptocurrencies are well recognized by a majority of people, many interested investors do not actually own any. However, this is rapidly changing as new avenues for newcomers are launched, such as a possible ETF, institutional custodial products, and other trading vehicles.
Bitcoin on My Mind
Bitcoin has arrived. It has become a global frontier that the journeyers know about and have an opinion on. Even if the opinion is negative, the fascination is alive and well, even if adoption isn’t yet.
Cryptocurrency and blockchain education could also help remove the fear and mystique that keep some on the sidelines, along with secure storage/custodial options. Bitcoin’s appearance on the most “normie” of TV shows highlights that the years of organic publicity has paid off.
Japanese banking giant SBI Holdings has unveiled plans to launch “S Coin”, a cryptocurrency token for mobile retail payments.
Announcing the news in a statement on Tuesday, SBI revealed that the proposed coin, which is the product of a partnership with DLT provider Orb and Glory Corporation, will begin a trial run from October 2018 as the company seeks to create a cashless system of transaction in Japan.
“S Coin” Operating Framework
According to the statement, S Coin will allow charging and settlement of transactions via smartphone. The trial will begin with an experiment with SBI Group employees testing a cashless settlement system using the token with restaurants in SBI’s Roppongi Izumi Garden Tower headquarters. Through this study, the company hopes to evaluate the possibilities and usefulness of blockchain and DLT technology in transaction settlement as part of its drive to promote a cashless society.
In the experiment, SBI will integrate Glory’s ATM network with the S-coin platform, which will also be linked to credit cards and S Coin wallets. Using this framework, it will be possible to pay for a wide variety of transactions using S Coin on smartphones by exchanging fiat for the token seamlessly. The experiment will evaluate exactly what user needs are, and how the S Coin framework can meet them.
A translated excerpt from the statement reads:
” ‘S Coin Platform’ is an issuing platform for digital currency etc. developed by SBIH. You can design and publish your own digital currency according to your application, such as electronic money of prepaid payment means. The base part utilizes Orb DLT, which is a distributed ledger technology provided by Orb, which has key expertise and foundation software related to the blockchain-aided payment field.”
Possible S Coin Endgame
If the trial is successful and S Coin achieves full implementation, this could be the beginning of a wider move in Japan and beyond to increase the use of blockchain technology in payment settlement. SBI has long been at the forefront of efforts to promote a cashless finance ecosystem in Japan with the help of mobile phones, and this could be a huge step to this end.
In addition, the S Coin platform doubles as an issuance platform for digital tokens, which makes it possible for users to develop their own bespoke tokens to suit their needs using Orb’s DLT technology. This could potentially make SBI the ‘Ethereum’ of the emerging Japanese mobile phone payments system, by giving other providers a platform to build their own tokens over existing infrastructure.
SBI’s repeated forays into the blockchain and crypto ecosystem, notably the launch of its own cryptocurrency trading platform VCTRADE in July 2018. In October 2017, SBI also launched its own tradeable digital currency for peer-to-peer payments.
German blockchain banking service Bitwala is set to launch the first-ever platform that will enable the management of both euro deposits and bitcoin funds within the same bank account.
This system is planned to kick off by November with an estimated 30,000 customers who have already signed up for the service. The biggest initial investor for the service is Earlybird Venture Capital, who is providing funds to the tune of €4 million.
Bitwala was founded in 2015 as a financial services company focused on enhancing value exchange between customers in an efficient and cost-effective system. By launching its regulated blockchain service, the company fulfills one of its original goals, which involves bringing a smooth transition between the cryptocurrency and legacy financial systems.
The crypto-fiat service available through Bitwala is designed to provide users with the benefit of accessing the services of a German bank account, provided with Bilabial’s banking partner, which offers SEPA debit and credit transactions, easy management of recurring payments, and a debit card.
Customers under this system will be able to use their Bitwala account for various settlement purposes, such as to receive salary payments and pay their rent. Beyond the fiat-related services, the “bitcoin bank accounts” will offer users the opportunity and instant access to liquidity in trading digital assets directly.
“The cryptocurrency community is eagerly awaiting the launch of our new service. I’m very proud that with our new product we will close the gap between crypto and traditional banking and solve one of the biggest hurdles on the road to mainstream adoption,” said Jörg von Minckwitz, president of Bitwala GmbH.
Prior to the suspension of its transaction services in late 2017 due the sudden licence removal of their card issuing partner, Bitwala processed almost €100 million in volume for its 80,000 customers. This was carried out in a robust system that positioned it as an effective global money transfer platform using blockchain technology.
This recent development will mark another milestone achievement for blockchain industry as a whole in terms of achieving mainstream recognition and adoption. Deposits in current accounts in this system will be protected up to €100,000 under the German deposit protection scheme and supervised by Germany’s banking supervisors BaFin and Bundesbank.
Coinbase has announced a new procedure for listing assets with the sole purpose of speeding up the process of listing digital assets that meet the exchange’s standards, per a company blog post. The San Francisco-based company, which currently supports bitcoin and popular altcoins such as bitcoin cash, ethereum classic, and litecoin, says it’s getting tougher to list all the asset types they want in a “secure and compliant way” for digital assets that meet the company’s current listing standards.
The solution, according to the post, is to list assets complaint with local law, in a “jurisdiction-by-jurisdiction manner” — which means some assets might be available in some regions and absent in others.
Issuers will go through a simple process for evaluation of their assets before they are listed on the cryptocurrency exchange. It starts with a signup form for issuers to complete, which contains details of the assets, which the company will then evaluate against its digital asset framework. The framework is, however, not set in stone. Coinbase says it will be updated regularly and the form will always convey the version of the framework that the company is using for evaluation at the time.
The new listing process is free for issuers, but things could change in the near future. Coinbase says the volume of submissions will determine whether it imposes an application fee in the future to “defray the legal and operational costs associated with evaluating and listing new assets.”
The firm continued:
“At our discretion, we may choose to list some assets on the basis of our own evaluation, even in the absence of an application. In other cases, we will attempt to give quick, specific reasons for the approval or rejection of particular assets.”
Coinbase expects to list more digital assets — faster — with the change in the listing process. The company has also altered how it will conduct listing announcements, and it says new assets will now be announced at or near the time of public launch across Coinbase’s products.
Earlier this year, Coinbase added support for ethereum classic. The digital asset platform also raised the daily buy limits for users to $25,000 and eliminated the sell limit. The exchange also began permitting users to begin trading on the platform immediately following a purchase. Previously, users had to wait for the bank transfer to settle before receiving their funds, a process that could take up to five business days.
Google, the $828 billion search engine behemoth, has unbanned crypto-related ads, allowing regulated companies to utilize its platform to advertise their products.
In March, Google executive Scott Spencer stated that cryptocurrency investments have potential to cause harm in financial markets, leading the search giant to ban crypto ads. He stated:
“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”
The reverse ban of crypto-related ads by Google has demonstrated the willingness of the conglomerate to work with legitimate projects and companies in the cryptocurrency sector.
Motivation Behind the Reverse Ban
Experts in the finance sector including Manchester-based investment firm Blackmore Group CEO Philip Nunn heavily criticized Google for banning the entire industry of crypto.
Nunn stated that both Facebook and Google showed interest toward crypto and blockchain technology and yet decided to prematurely ban the entire market on their platforms.
“I understand that Facebook and Google are under a lot of pressure to regulate what their users are reading, but they are still advertising gambling websites and other unethical practices,” he said.
At the time, multi-billion dollar fintech corporation Revolut Head of Mobile Ed Cooper expressed his concerns over the imposition of a blanket ban, which unfairly punished legitimate companies working to build robust platforms and services for investors in the market.
Although the intent of Google and Facebook was to ban out ponzi schemes and crypto-related scams, well-established companies like Coinbase and Binance were also prohibited from acquiring ads on the platform.
“Unfortunately, the fact that this ban is a blanket ban will mean that legitimate cryptocurrency businesses which provide valuable services to users will be unfairly caught in the crossfire.”
As Ethereum co-creator Vitalik Buterin previously explained, cryptocurrencies and blockchain technology have achieved a high level of awareness amongst consumers in the mainstream. But, as an industry in its early phase, development of robust infrastructure is necessary to allow cryptocurrencies and digital assets to evolve into a major asset class.
A blanket ban on the entire sector of crypto prevented recognized and prominent companies in the space from expanding their services, reach, and user base. The reverse ban of Google will allow institutions and individual investors in the market to build confidence in the market of crypto.
International Reverse Ban
Starting October, only verified companies in the crypto sector of US and Japan will be able to purchase ads on Google. But, companies will be permitted to file applications with Google to publish ads in other countries as well, which over time is expected to evolve into an international reverse ban on crypto ads.
For the sake of investor protection, the move of Google to manually approve ads from blockchain projects and cryptocurrency-related businesses is positive, as it will filter out illegitimate services and scams that could impact both Google and the cryptocurrency industry negatively.
˜XRP, the native currency of Ripple, has plunged by 15 percent as $13 billion was wiped out of the crypto market.
Yesterday, on September 25, MCW reported that the volume of Bitcoin has declined from $5.3 billion to $4.2 billion within a 24 hour period, while the volume of Ripple dropped by more than 60 percent from $2 billion to $800 million.
Even during a massive sell-off, when the volume of major cryptocurrencies often intensify due to sell volume, the volume of both XRP and Bitcoin remain just above September 24 levels.
Low Volume, Where to go Next?
A correction for XRP was expected by most investors, given its three-fold increase in price in the past seven days. It increased by more than 150 percent since September 20, which left XRP vulnerable to a rapid downward movement.
But, the 3 percent drop in the price of Bitcoin was larger than expected, particularly because the dominant cryptocurrency showed stability throughout August and September. The abrupt 3 percent drop in the price of Bitcoin led Ethereum, Stellar, and other cryptocurrencies to drop by 5 to 15 percent in the past 24 hours.
Throughout August and September, the price of BTC has been relatively stable in the $6,000 to $7,000 region. Hence, while tokens and some large market cap cryptocurrencies recorded large gains last week, it was difficult to consider the short-term trend of the market as nothing more than a corrective rally initiated by oversold conditions.
As ShapeShift CEO Erik Voorhees said in late August, the bear market of Bitcoin is not over yet, but it is is a viable period for investors to accumulate. Since late August, the crypto market has remained virtually the same, apart from some major rallies of tokens and several cryptocurrencies like Ripple, Cardano, and Stellar.
“I don’t expect it (bear market) to end soon, although I do think that the rate of collapse has slowed considerably. Generally in these bubbles, after you go through several months of a downtrend you hang out in a range for a while… But I think we are done with a majority of the collapse,” Voorhees said.
Trend of Ripple
Still, even after a 15 percent drop, XRP is still up 28 percent from $0.35, its level prior to its rally. The volume of XRP has not dropped substantially since September 24 and if XRP can hold its losses at the current level, it is possible for XRP to stabilize at the $0.45 mark.
WSJ reported that Ripple co-founder Jed McCaleb has started to sell large chunks of his multi-billion dollar holdings in XRP, which may have intensified the downside movement of XRP.
“Mr. McCaleb’s increased sales of XRP could be another factor that drags on the token, which Ripple has used to fund its growth and is intended to help run its payments-protocol software,” the report read.
Similar to the impact the Mt. Gox trustee had on the price of Bitcoin throughout early 2018, if McCaleb continues to sell large chunks of his holdings on exchanges, it is possible that the price of XRP continues its decline in the upcoming days.
Bitcoin investors who have dutifully monitored cryptocurrency wallets associated with defunct bitcoin exchange Mt. Gox for early warnings of a possible sell-off have been proven justified in their paranoia.
Mt. Gox Trustee Confirms $230 Million Bitcoin Sale
According to a document published on the Mt. Gox website, Nobuaki Kobayashi, the exchange operator’s trustee, sold approximately 24,658 BTC and 25,331 BCH between the last creditor’s meeting on March 7 and the June 22 court ruling allowing the estate to exit bankruptcy and enter civil rehabilitation.
Altogether, the estate garnered just under 26 billion JPY, worth more than $230 million, recouping an average of about $8,100 per bitcoin and $1,190 per bitcoin cash compared to their current values at $6,420 and $438, respectively.
Kobayashi said that the purpose of the sale was to secure the interests of all bankruptcy creditors, which was required before the estate could enter civil rehabilitation.
“Due to the Sale, the bankruptcy trustee has already secured a suitable amount of money to secure the interests that are expected to have obtained by BTC creditors under the Bankruptcy Proceedings in connection with BTC claims to be treated as non-monetary claims under the Civil Rehabilitation Proceedings. Accordingly, the bankruptcy trustee has determined that the interests expected to have already been obtained in the Bankruptcy Proceedings can be secured without taking the profit-securing measures under the Trust Agreement and Guarantee Entrustment and Guarantee Agreement for the BTC claims, and the BTC claims are not included in the subject protected claims under the Trust Agreement and the Guarantee Entrustment and Guarantee Agreement.”
Past Transfers Likely Connected to Sell-Off
Kobayashi had previously disclosed selling more than $400 million worth of bitcoin and bitcoin cash over a six month period that correlated with the cryptocurrency market’s descent from its all-time high.
He incurred significant criticism for the manner in which he conducted those sales. Rather than use an over-the-counter (OTC) broker like most large-scale buyers and sellers, he sold the funds on order-book exchanges, magnifying the impact that the sales would have on the spot bitcoin price.
Following those sales, several transfers out of Mt. Gox wallets, transactions collectively amounting to more than 24,000 BTC and BCH. Based on today’s disclosure, it is now safe to conclude that those transfers were likely made as part of the sale.
According to the MtGox Cold Wallet Monitor, estate-controlled wallets are currently holding 137,891 BTC and BCH, worth $945 million at the present exchange rate. These funds were recovered after the exchange went bust in 2014 following a ~$470 million theft that remained the largest such incident until the Coincheck hack earlier this year.
Traders who held funds on the exchange at the time of its demise must submit claims by Oct. 22 to be considered for compensation from the estate. Now that the estate has entered civil rehabilitation, most creditors are hopeful that they will be paid in cryptocurrency, rather than the fiat proceeds from another massive sell-off. However, compensation will ultimately depend on the rehabilitation plan approved by the court.
When Mt. Gox entered civil rehabilitation, Kobayashi said that there were not currently any more plans to liquidate the estate’s remaining cryptocurrency holdings.
Read the full document below:
The latest trial from the University of Sydney’s Red Belly Blockchain running on Amazon Web Services (AWS) has clocked 30,000 transactions per second with an average transaction delay of 3 secs.
Researchers at the University of Sydney in Australia have concluded new trials of a hybrid blockchain that sits between public blockchains like that of bitcoin and ethereal and consortium blockchains like R3.
Developed exclusively by the university’s School of Information Technology, the academic researchers claim the fork-free Red Belly Blockchain can rapidly scale transactions compared to the likes of the bitcoin blockchain.
“There’s public blockchains like bitcoin and Ethereum that don’t try to solve consensus ahead of time … but then later try to avoid forks … which means the latency is quite large,” University of Sydney’s Dr Vincent Gramoli, who heads up the development group, told the Australian Financial Review.
The bitcoin blockchain can scale seven transactions per second with an average confirmation time of 10 minutes (September 10 figures from blockchain.com. The ethereum network can scale up to 20 transactions per second amid ongoing chatter involving co-creator Vitalik Buterin for a plan to scale up to 500 txs/s
Dr Gramoli added:
“So far, blockchain had not shown that it could scale and we wanted to demonstrate that a blockchain technology could scale in the number of participating machines and have performance maintained or improved with an increasing number of participants.”
The Red Belly Blockchain is a “community’ ledger whose tech lies somewhere in between the public and the consortium blockchain models, according to the research lead.
“It doesn’t rely on a [consortium leader like R3] because having a leader was a bottleneck to scaling,” he explained…”we discovered that transaction verification was also causing a bottleneck, so we improved consensus and the verification process and we were able to scale the performance.”
While this particular trial ran on the Amazon Web Services (AWS) cloud computing platform, a previous test in a single physical data centre with 300 machines scaled 660,000 transactions per second, over 11 times that of the Visa network which has a maximum throughput of 56,000 transactions per second as one the world’s largest payment rails.
Developed over a span of several years and “hundreds of thousands of dollars” in production costs, the Red Belly Blockchain made headlines in July 2017 with its first publicly-known trial wherein the ledger processed 400,000 txs/second.
The Supreme Court of India is set to hear the final arguments on the petition against the Bitcoin banking ban on Tuesday, reported local media.
The ongoing battle between the Reserve Bank of India (RBI) and Internet and Mobile Association of India (IMAI) has entered its final phase before the country’s apex court. The original hearing was scheduled on September 11, but due to the court’s backlog hearings of other cases and RBI’s delay of filing its response, the session witnessed two consecutive reschedulings. The response from the central bank came finally around September 12. In its affidavit, RBI reserved its views on the cryptocurrency ban, telling the court that no legal system defines cryptocurrencies in its current format.
The RBI had also argued with the Supreme Court over the people’s constitutional rights to interfere with regulatory matters.
“The petitioner cannot seek to exercise the extraordinary jurisdiction of this Honorable Court to avail a right which they do not have,” the Indian central bank wrote in his affidavit. “The impugned circular and the impugned statement have been issued in a manner that is consistent with the powers conferred on the RBI by the law and the same are legal and valid.”
RBI believes IMAI, the petitioner in the ongoing case, didn’t provide any valid arguments against the crypto banking ban, which is why the honorable Supreme Court should reject their pleas. The bank, however, didn’t reveal the nature of those arguments, leaving crypto enthusiasts believing that the financial body fears that the court would reverse its ban.
The Indian apex bank should not interfere with petitioning, a democratic process that allows each individual to be heard before the country’s lawmakers. The existing legal framework doesn’t recognize Bitcoin mainly because it is a new asset class. Several forward-looking nations are already building a blockchain industry by introducing crypto-friendly laws, but India could lag behind as its very own entrepreneurs move abroad to set up their crypto businesses.
At the same time, the RBI ban does not look enforceable enough. Indian crypto markets are either moving underground or are relying on exchange-based p2p trade to circumvent the law. As a result, the Income Tax Department is losing thousands of dollars of taxes despite imposing a capital gain tax on the crypto-asset profits.
Even in blockchain-friendly jurisdictions, regulatory hurdles and old-fashioned mindsets are holding back innovation and growth for the industry.
At least, that’s the conclusion you might have drawn from some of the talks at the Concordia Summit in New York Monday. The event, taking place alongside the United Nations General Assembly, included a special track devoted to blockchain discussions.
For example, so-called sandboxes may help both regulators and startups to work out new practices and come to terms about specific issues. Yet even they seem too cumbersome to some industry leaders.
“One of the problems of the regulatory sandboxes: yes, they are the way to allow companies to innovate, but if I want to mitigate the risks, and if I see that it’s going to take me two times, three times longer because of the regulator, it’s limiting the innovation,” Sam Cassatt, chief strategy officer of the ethereum production ConsenSys, remarked.
Further, while Singapore was praised as a forward-thinking jurisdiction, its openness to blockchain businesses has apparently not trickled down to the Pacific city-state’s regulated financial institutions.
“There is no question about the innovation and forward thinking there, but the challenge is the banks,” said Michael Moro, CEO of Genesis Trading, a New York-based market maker in digital currencies, sharing impressions from a recent Singapore trip. “We can have not a single bank account in Singapore because we touch crypto.”
He described similar hurdles for young companies in the United States as well.
“Because we’re compliant with the SEC and FINRA, we spend $2 million to $3 million a year on compliance costs, but if you’re a startup you can’t afford it,” Moro said.
‘We gotta change the rules’
Yet the person who perhaps stole in the show in their advocacy for a more agile regulation was Eva Kaili, a member of the European Parliament representing Greece.
During Monday’s event, Kaili unapologetically supported a lighter approach to regulation that wouldn’t impair the growth of innovation, telling the audience:
“One thing that we have in the E.U. and the U.K. — we have too many regulations that can at least delay the innovation. In blockchain, we tend to move very fast.”
The current state of the European financial system is looking more and more insufficient to the continent’s governments, she went on to say, especially the number of transaction fees accumulating across the banking system. Next week, the European Commission is expected to adopt a resolution on blockchain and distributed ledger technology, initally passed by the European Parliament in May.
The resolution seeks to define the future regulatory framework for the businesses related to distributed ledger technology (DLT) and suggests the allocation of approximately 340 million euros to support pilot public projects in the E.U. between 2018 and 2020.
Kaili recalled the time when European regulators were discussing what they should do with so-called sharing economy startups like Uber and AirBnB.
“Uber does not follow the rules — we just have to ban it,” was one of the ways to think about it, she said, but such a stance makes the pursuit of innovative business models impossible.
“If it’s a fraud, it’s a fraud. If it’s not a fraud but it’s not following the rules, we gotta change the rules,” she said, adding that “we don’t have an excuse not to explore the opportunities this technology gives us to solve global problems.”
And regulators themselves may find that blockchain helps them do their own jobs better, according Blythe Masters, founder of enterprise DLT startup Digital Asset.
“The notion of a regulator being able to have a wide real-time visibility into the transactional status of the market without having to subpoena 18 different broker-dealers in order to aggregate, after the fact, the activity on one beneficial owner — it’s extremely attractive,” said Masters, a former JPMorgan Chase executive who pioneered credit derivatives in the 1990s.”
“There are a lot of real benefits for regulators.”
After displaying a supernormal rally that amounted to more than 60 percent gains within a week, XRP is now doing a complete reversal.
Ripple has lost more than $9.5 billion in market cap since establishing its highest peak since April. The coin reached its high on Friday last week, at around $27.5 billion, but witnesses the execution of massive long positions around the said level. The weekend and the beginning of the week that followed later saw XRP wiping almost 22 percent of its market cap, so as the per unit value. The bearish momentum intensified further during the Tuesday’s Asian trading session, amounting to a 40 percent intraweek loss.
XRP is trading at $0.46 at the time of this writing.
XRP is backed by a Ripple Labs, a blockchain-based payment provider, that over the course of the previous week, signed impressive partnerships with leading banks and promising crypto-services. It also announced the launch of its xRapid, an XRP-denominated payment service, in October.
The fundamentals looked strong at that time, which influenced speculators to go long on their XRP positions against the US Dollar and Bitcoin. As the value picked up violently, without a hint of a pullback, the FOMO sentiment took over and traders started buying at new highs in a lookout for an extended bull run. Eventually, the XRP value against the USD ended up establishing a new peak near $0.79, just marginally below its April high.
The bearish cracks began appearing thereon, as XRP found stability within a range defined by $0.596-resistance and $0.52-support. The absence of bulls intensified the bearish sentiment and traders started executing their long positions on decent weekly profits. Hence, the drop.
XRP/USD Forming Bull Flag?
The Ripple technicalities are left with two possible outcomes: either XRP/USD is heading to form a head and should pattern as it extends its bearish momentum, or it is looking for a pullback from the rising trendline, confirming a bull flag formation. We are already looking at the pair attempting a reversal from the ascending trendline, but we could not tell its validity purely because its too soon. That said, we should divide our predictions between the two scenarios: a breakdown and a pullback.
So, a reversal from ascending trendline creates a decent long-opportunity towards 0.52-fiat in near-term. Putting a stop loss somewhere 2 pips below the entry point will minimize our losses. (1 pip ~ $0.00100)
In the event of a breakdown, the next short target that is there is around 0.424-fiat, which proved to a reliable support during the July price action.
>Japanese financial authorities are ramping up their scrutiny into the domestic crypto exchange sector after last week’s ¥6.7 billion ($60 million) hack of Tech Bureau’s exchange Zaif.
In an announcement today, Japan’s Ministry of Finance struck Osaka-based Tech Bureau, operator of the licensed cryptocurrency exchange Zaif, with “administrative penalties” wherein the latter sees a number of enforced mandates in the aftermath of last week’s hack.
Specifically, the company is now required to determine the facts and the cause behind the theft, as well as formulate and execute measures to prevent another hack. Pointedly, the company is also tasked to determine the attackers behind the hack.
Further, the exchange operator will also need to respond to customers to assess damages in an adequate manner.
This is Tech Bureau’s second business improvement order in the space of three months.
Tech Bureau disclosed details of a sizeable hack involving the theft of ¥6.7 billion (just under $60 million) in bitcoin, bitcoin cash and monacoin from the exchange’s ‘hot wallets’ (online wallets that are more vulnerable to theft than offline, cold-storage wallets).
The hack initially occurred between 1700 and 1900 local time on September 14. Tech Bureau reported the breach to the Financial Services Agency (FSA), Japan’s financial regulator, prompting an investigation into the breach that ultimately led to today’s action.
As reported previously, Tech Bureau revealed plans to sell a majority of its shares to a publicly-listed financial firm in an agreement that will see the operator gain a cash injection of ¥5 billion (approx 45 million). These funds will directly help reimburse an estimated ¥4.5 billion ($40 million) stolen from customer accounts.
The exchange operator also sees a deadline to submit written reports revealing its own investigation into the theft and its progress on implementing improved measures after its first business improvement order, issued by the FSA, in June.
The incident draws parallels to the $530 million theft of Coincheck in January, the biggest crypto exchange hack in history. By April, the Tokyo-based exchange was wholly acquired by Japanese financial brokerage giant Money for ¥3.6 billion ($33.5 million).
While the thefts have unquestionably raised concerns – Japan’s National Police claim crypto theft has tripled in the first half of 2018 – about the security and reputation of Japan’s domestic cryptocurrency exchange industry, it has scarcely dampened the ever-growing appetite for crypto adoption in Japan. Earlier this month, the FSA revealed it is expecting in excess of 160 applications from companies seeking licenses to launch cryptocurrency exchanges in Japan’s regulated market which already sees the likes of Yahoo, LINE and Rakuten operating exchanges.
Circle has announced the addition of four new digital assets to the Circle Invest platform, bringing the total number of listed cryptocurrencies on the platform to 11.
Announcing the news in a blog post, Circle revealed the new additions to be EOS, Stellar, 0x and Qtum. Circle further revealed that the four assets can be purchased through the Circle Invest platform either individually or as part of a basket using the “Buy the Market” retail portfolio investment feature.
New Feature and Listing Rationale
According to Circle’s blog post, the four crypto assets were chosen for listing based on their suitability, which was determined by the Circle Asset Framework. Under the Circle Asset Framework, each asset to be evaluated on its own strengths, and under no circumstances are any fees paid to aid listing. This helps to ensure the integrity of the process and gives customers the confidence that only the best assets are listed on Circle platforms.
In order to help customers fully appreciate the value of every asset on Circle Invest, the company also announced the introduction of a new feature called “Explore.” This feature will help users gain insight into crypto investment with contextual and relevant information on the various aspects of crypto. Circle hopes that this simplification tool alongside the user-friendly interface of Circle Invest will help it in its mission to take crypto trading tot he mass market.
On the subject of why the four currencies specifically were chosen for listing, the blog post mentions that EOS promises to improve upon the Ethereum framework, especially regarding the number of transactions per second that can be held. Where the Ethereum blockchain can handle only 15 transactions per second, EOS has a proven capacity of several thousand transactions per second.
Stellar on its part, offers a low cost, high-speed cross-border payments solution, disrupting the current paradigm of international fiat payments which sometimes take weeks and charge up to 10 percent commissions. A typical Stellar cross-border transaction is completed in five seconds and costs less than a penny.
0x creates a framework for peer-to-peer crypto trading directly over the Ethereum blockchain through the use of “Relayers” that serve as exchanges built atop the 0x protocol. Finally, Qtum offers users the best of both bitcoin and ethereum, having been built as a hybrid of both assets.
Since releasing Circle Invest in March, the platform has aggressively courted increased market share, listing Zcash and Monero in May.
The Malaysian government is seeking to explore blockchain solutions in the nation’s three largest industries: renewable energy, palm oil, and Islamic finance.
A task force named the Malaysian Industry-Government Group for High Technology (MIGHT) will be spearheading the move to adopt blockchain in each industry in order to increase transparency, sustainability, and logistical efficiency according to a report published last week.
MIGHT holds talks with energy companies in Malaysia to evaluate the ways they could be using blockchain to increase renewable energy adoption. When sellers put energy on the blockchain, the transparent nature of the system means that they must declare exactly how the electricity was generated for buyers to scrutinize. Through blockchain adoption, buyers can now choose to buy green or renewable energy only, whether from energy companies or even private owners of solar panels with excess energy, a process which is often far more efficient than sending energy over longer distances from non-local power stations.
Tenaga Nasional Berhad (TNB), Malaysia’s sole provider of utilities, has already looked into blockchain solutions and the General Manager of Innovations stated that the company has been holding workshops to identify use cases and discuss adoption with business owners.
Palm oil is a controversial product at the moment due to unsavory reports of bad practices and child labor being used in the industry around the world. Blockchain adoption can help identify certified palm oil operations with ethical practices and allow buyers to identify the source of their palm oil before making a purchase.
Around 8% of Malaysia’s GDP comes from agriculture, and 43% of agricultural revenue comes from palm oil sales, making this a major area to undergo blockchain adoption. As well as having benefits for buyers, blockchain adoption would help the government identify and monitor palm oil operations with sustainable practices and regulate accordingly.
Islam forbids usury (the collection of interest on a loan) under the principle that money has to be based on a real commodity and cannot simply be generated from more money. Debt creation must be backed by something like gold as opposed to futures as is common practice in Western fractional reserve banking, the system that is to blame for the 2008 world financial recession.
The strict ethical regulations in Islamic banking create higher overhead costs in the industry, and Malaysia is looking into how blockchain could help offset these costs while remaining compliant with Sharia law. Already in the Middle East banks have begun pegging debts to units of gold and representing the debt as a smart contract on the blockchain.
Crypto firms in Dubai and Malaysia have also pegged sums of gold to cryptocurrency units to allow debt creation compliant with Sharia law.
ETH price is under a downside correction since it broke the $245 support against the US Dollar.
Yesterday’s discussed contracting triangle with support near $242 was breached on the hourly chart of ETH/USD (data feed via Kraken).
The pair is likely to extend losses towards the next support at $214 and $212.
Ethereum price is facing an increased selling pressure against the US Dollar and bitcoin. ETH/USD may continue to slide towards the $212 support in the near term.
Ethereum Price Analysis
It seems like there was a failure to hold gains above the $240 level in ETH price against the US Dollar. The ETH/USD pair started a downside correction and broke the $242 and $235 support levels. There was also a break below the 50% Fib retracement level of the last wave from the $205 low to $256 high. It opened the doors for more losses and the price settled below $240 plus the 100 hourly simple moving average.
Moreover, yesterday’s discussed contracting triangle with support near $242 was breached on the hourly chart of ETH/USD. The pair is now placed in a bearish zone below the $235 level. It could even settle below the 61.8% Fib retracement level of the last wave from the $205 low to $256 high. Below $220, the next major support is near the $212-214 zone, which was a resistance earlier. On the other hand, if the price moves higher, the $235 level could act as a resistance. Additionally, the 100 hourly SMA at $234 may also act as a resistance.
Looking at the chart, ETH price is likely to revisit the $212-214 support zone. To recover, the price has to move back above the $235 and $240 levels in the near term. More importantly, below $212, the price could turn bearish towards $200 and $190.
New research has found that, despite the popular idea that cryptocurrencies operate generally outside the reach of national regulators, regulatory actions still have a huge impact on crypto markets. The research is presented in a report by the Bank for International Settlements (BIS), an organisation owned by 60 of the world’s central banks from countries cumulatively making up 95 percent of global GDP.
In the report, the data presented shows that while markets do not generally respond to news about central banks creating their own digital currencies or issuing general non-specific warnings about cryptocurrencies, they show a significant response to regulatory announcements regarding the legal status of cryptocurrencies and initial coin offering (ICO) tokens, as well as possible expansion and enforcement of AML, KYC, and CFT regulations.
According to the report, four major findings were established about the response of crypto markets to regulatory actions and announcements.
First of all, crypto markets were found to respond most significantly to news reports and events concerning bans, restrictions, or legal battles on cryptocurrencies and ICOs. Where the news in question directly concerns regulatory decisions or actions regarding the legal status of crypto assets, markets respond very strongly.
This also includes issues surrounding securities regulation, such as the ongoing ambiguity regarding the United States SEC’s pending decision on whether to permit a bitcoin exchange-traded fund (ETF). This does not only work negatively, as according to the report, markets also react positively to news about possible new legal frameworks designed to accommodate cryptocurrencies and ICOs.
Second, regulatory news about AML/CFT measures and restrictions on crypto’s ability to integrate with traditional financial systems due to regulatory action or non-action was also found to have a noticeable effect on crypto markets. For example, news that a crypto exchange is denied access to banking services within a regulated financial system has a noticeably negative effect on the local market. Conversely, news about regulatory green lights for crypto startups to engage with regulated financial organisations, such as a successful New York BitLicense application, has a markedly positive effect on markets.
Third, non-specific general warnings about the dangers of cryptocurrency investment and trading have a negligible effect on the market. The same also holds true of announcements by financial regulators and central banks announcing their own plans to issue central bank digital currency (CBDC). Markets generally ignore such pronouncements for good or for bad, which was seen earlier this year when the EU slapped down Estonia’s bid to issue a national cryptocurrency. The news had no noticeable negative effect on crypto markets, as did news of Venezuela’s plan to launch a state sanctioned cryptocurrency backed by its crude oil reserves.
The report’s final finding is that, despite crypto’s trans-border accessibility and functionality, significant price differences are still noticeable across jurisdictions, indicating that there is a significant level of market segmentation.
Explaining this phenomenon, an excerpt form the report reads:
“These results suggest that cryptocurrency markets rely on regulated financial institutions to operate and that these markets are segmented across jurisdictions, bringing cryptocurrencies within reach of national regulation. […] Because they rely on regulated financial institutions to operate and markets are (still) segmented across jurisdictions, cryptocurrencies are within the reach of national regulation.”
The full BIS report can be downloaded here.
Andreessen Horowitz has made a major investment in a cryptocurrency project that algorithmically adjusts the supply of coins to keep their value stable.
The American venture capital firm, which has invested in crypto startups like CryptoKitties and OpenBazaar in the past, purchased 6 percent of the total supply of MKR tokens through its $300 million crypto fund, a16z. The fund committed a total of $15 million to the MakerDAO project and marked their investment as a “strategic purchase.” Holding MKR tokens will offer a16z the rights to govern MakerDAO and the Dai Credit System as it becomes the first decentralized autonomous stablecoin organization.
The Dai Credit System proposes to handle a decentralized stablecoin called Dai using smart contracts on the Ethereum blockchain. The self-governing ecosystem creates the durable token when people collateralize their assets to secure a loan. Dai becomes the central cryptocurrency to denote the loan amount that is equivalent to the USD value of the collateral deposit.
“A set of autonomous smart contracts coordinates and runs the Maker system, which means that anyone with an internet connection and collateral can create Dai without the need for trusted intermediaries,” a16z stated. “To ensure the system remains solvent, a network of market makers is incentivized to liquidate loans that risk becoming undercollateralized, thereby removing excess Dai from circulation and keeping the balance of Dai to collateral in check.”
Katie Haun, general partner at Andreessen Horowitz, said in a press statement that the future economy would belong to decentralized stablecoins. The former federal prosecutor, known to have led a probe into Mt. Gox and Silk Road, two of the most high profile criminal cases in the crypto industry’s history, recognized MakerDAO for being a “first mover and innovator” in the burgeoning stablecoin industry.
Haun’s confidence in the MakerDAO project could be attributed to the general inefficiencies of traditional cryptocurrencies, mainly price instability. In a16z’s recently-published blog post, Haun argued that crypto volatility had been to blame for their dismissive adoption rate. By particularly mentioning lending, one of the critical working areas of MakerDAO, Haun, along with co-author, Jesse Walden, said that making a long-term loan in bitcoin would not be practical because of two underlying risks such loans pose.
“First that the loan would be repaid, and second, whether the bitcoin would be worth more or less at the time the loan came due,” they wrote.
However, the Dai token is itself backed by ether (ETH), a cryptocurrency that has lost 80 percent of its value against the U.S. dollar this year. To ensure the pegging does not rely on only one cryptocurrency, MakerDAO plans to introduce a diverse basket of collateral types, which would include tokenized equities and fiat-backed stablecoins.
Canada has set the pace as the first government to ever approve an exclusive bitcoin mutual fund. This builds upon its reputation as a friendly environment for emerging technologies.
The atmosphere in Canada seems to be freer and more conducive to innovation in this field, based on the numerous developments that the industry has experienced even prior to this time. This is in comparison to its prominent neighbour, the United States, whose Securities and Exchange Commission (SEC) upholds strict measures while trying to figure out appropriate regulatory systems for the blockchain and cryptocurrency ecosystem.
Sean Clark, CEO of First Block Capital Inc. — the operator of FBC Bitcoin Trust, the first bitcoin mutual fund to trade in Canada — discussed the underlying factors that make Canada a country that is friendly to new technologies such as cryptocurrency. According to Clark, unrelenting education, political will, and open-mindedness, among other factors make the North American nation an ideal hub for technological innovation.
He told :
“I think in general, the Canadian regulatory bodies understand the potential benefits of blockchain and cryptocurrency, and traditionally Canadian regulators have been open to technological innovation. That is different from what you get in places like the US.”
Canadian Regulators are More Open to Dialogue
Clark noted that his company, in collaboration with other experts, worked directly with the Canadian securities regulators and educated them for a period of six months while also using the discussions as an opportunity to build relationships. Comparing this to what is obtained in the United States, especially with the SEC, he believes that the Canadian regulators appear to be more open to dialogue with regards to technological innovations.
The elected leadership of Canada is also identified by Clark as a key factor that is enabling the openness of government to cryptocurrency and other emerging technologies. He noted that Canadian Prime Minister Justin Trudeau is embracing blockchain technology. Also, the Canadian leadership sees the United States’ increased isolation of these technologies as an opportunity to get skilled labour migrated into Canada to help contribute to the economy.
“This is what we’re seeing trickling down to the regulatory environment, he said, “as they are not stone-walling but rather embracing and wanting to understand the implications of blockchain technology and working with local companies to be able to understand and have the asset class flourish.”
Another important factor that Clark noted is that the Toronto Stock Exchange (TSX) is one of very few capital markets globally where you can see blockchain and cryptocurrency companies publicly listed.
[Editor’s Note: Several blockchain ETFs have been publicly listed in the U.S., but regulators asked them not to include the word “blockchain” in their names.]
Investors’ Safety is Paramount
While the the government of Canada offers a relatively conducive environment to blockchain technology and digital currency, Clark noted that they are also ensuring that both institutions and investors are protected against the risks involved. While funds such as First Block Capital are given access into the markets, more critical attention is paid towards them, especially in terms of auditing. So the government and regulatory bodies keep a very close eye on these funds, which facilitates a more cooperative relationship between the companies and the regulators.
Elaborating on the product offered by First Block, Clark described it as a true bitcoin trust, claiming that there is nothing like it currently existing in the industry, even on a global level. The only comparable product as at the time of the interview, he said, was the Bitcoin Investment Trust (OTC: GBTC) from Grayscale in the states. However, while GBTC offers its clients fractional ownership of bitcoin pools, First Block’s services are entirely different in the sense that subscribers’ actual fiat values are exclusively used to purchase the equivalent worth of bitcoin for the period of investment and kept in cold storage to be redeemable in the future. It is like an ETF for qualified investors.
Looking Into the Future
Looking into the future, Clark said that he believes that the digital asset market class will grow into a multi-trillion dollar asset class over the next 5 to 10 years. However, he identified the prevailing bear market cycle in the near-term, so he expects bitcoin and altcoin prices to trade sideways or even down for at least the next four months, ahead of another significant bull run in the next one-and-a-half to two years. This would be powered by the entrance of institutions into the space and the likely approval of ETFs.
Clark concluded by elaborating on his company’s commitment towards creating financial products and providing legitimacy and transparency to the cryptocurrency asset class through traditional equities. This he expects to improve the confidence of investors, who will no longer need to go through unregulated exchanges to participate in the cryptocurrency marketplace. According to him, this will eliminate a lot of risks and at the same time give institutional investors access into the crypto space just like they have access to equities.
Italian football Serie A champions Juventus FC have become the latest top level European football club to announce a partnership with a blockchain company, with the launch of the ‘Juventus Official Fan Token’. The token, which is being launched as part of a multi-year strategic partnership with blockchain platform Socios.com is designed to tap into the club’s 340 million-strong global fanbase and evolve its fan engagement strategy with particular focus on embracing millions of Juventus fans based outside of Europe and creating an intimate fan experience for them.
Juventus Fan Token Framework
According to an announcement released by the club, the fan token will be offered for sale to Juventus fans through a groundbreaking scheme known as a Fan Token Offering (FTO), with Q1 2019 tentatively fixed for the general release of the tokens. Holders of Fan Tokens will gain access to an exclusive mobile voting and polling platform that the club will use to ballot its fans and allow their voices to be heard, which improves the connection between club and fans.
Speaking ahead of the planned FTO Giorgio Ricci, Co-Chief Revenue Officer, Head of Global Partnerships and Corporate Revenues of Juventus said:
“Juventus is glad to welcome Socios.com to our partners. At the Club we are always very careful and pro-active towards innovation and new technologies. Together with Socios.com we believe we can offer new opportunities to our worldwide fan base to engage in cutting-edge way with their favorite club.”
The Juventus Official Fan Token will only be available through Socios.com, and will be tradeable against the platform’s native token, $CHZ.
On his part, Alexandre Dreyfus, CEO & Founder of Socios.com noted that the Juventus Official Fan Token project is the starting point for a planned rollout of similar offerings across the world’s top football clubs as the company aims to significantly improve the fan experience in football.
“Our long-term aim is to onboard more than 50 football clubs and we hope to inject an additional $300 million into the sports economy over the next few years. We have started at the very top, with some of the biggest names in football, and our ambition is to build the world’s biggest global football community and marketplace for football fans alongside demonstrating that blockchain and cryptocurrency is the trusted technology of the mainstream.”
English Premier League table toppers Liverpool FC announced a partnership with TigerWit, a blockchain-based trading app. Several other top flight European football clubs including Newcastle United, Wolverhampton Wanderers, Paris Saint Germain, Cardiff City and Tottenham Hostpur have also either indicated interest in creating their own tokens or signed partnerships with cryptocurrency and blockchain platforms.
European football governing body UEFA successfully trialled a blockchain-based ticketing system for the UEFA Super Cup match between Real Madrid and Atletico Madrid.
The biggest bank by market capitalization in Thailand, Kasikornbank, has become the first financial institution in the Southeast Asian country to get on board the Visa B2B Connect platform. Designed to enable fast and secure cross-border payments between businesses using blockchain technology, the platform relies on a permissioned private blockchain architecture which is operated by global financial services firm, Visa Inc.
According to Visa Thailand’s country manager, Suripong Tantiyanon, the B2B Connect platform makes extensive use of the core capabilities of the global financial services company in governance, security and distributed ledger technology, per The Nation.
“Building on the enterprise blockchain technology, Visa B2B Connect is a new transaction platform designed for the exchange of high-value international payments between participating banks on behalf of their corporate clients,” said Suripong.
Besides speed and security, Visa B2B Connect platform will also offer increased visibility in the transaction process for Thailand’s fourth-largest bank in terms of assets, loans and deposits.
“With our technological capability and network, we are pleased to partner with Kasikornbank to create a more efficient, transparent way for business-to-business payments to be made across the world,” added Suripong.
Announced in October 2016, the Visa B2B Connect platform was developed in partnership with Chain Inc, a cryptographic ledger company based in San Francisco, California, using an enterprise blockchain infrastructure known as Chain Core. As revealed by Visa and Chain at the time, the predictability and transparency of the platform is aided by the fact that banks, as well as their corporate clients, are provided with near real-time notification on the status of transactions.
The first bank-to-bank test transactions on the Visa B2B Connect platform were conducted last year in November with some of the earliest banks to join the program being United States’ Commerce Bank, South Korea’s Shinhan Bank, Singapore’s United Overseas Bank and the Philippines’ Union Bank.
.@Visa launches first phase of Blockchain-based business-to-business payments service, B2B Connect, designed to give financial institutions a secure, yet transparent way to process payments between enterprises. https://t.co/WvI6fbwCtp #API pic.twitter.com/jWTZ6ak0lL
— VisaNews (@VisaNews) November 17, 2017
No need for USD
This is not the first time that Kasikornbank is piloting a blockchain platform for making cross-border payments. In late 2016, for instance, Kasikornbank partnered with International Business Settlement, a Chinese fintech firm, to develop a blockchain platform focused on making cross-country payments between China and Thailand in the native fiat currencies of the two countries. This blockchain platform obviated the need for the conversion of the Chinese yuan or Thai baht to the dollar at any point in the transactions.
“IBS has the technology and network to facilitate international settlements that is not based just on the U.S. dollar, at a time when the yuan’s international presence is increasing,” the chairman of Kasikornbank, Banthoon Lamsam, said at the time.
The Reserve Bank of India (RBI), the central bank of the country, has told the supreme court that the institution’s decision to prohibit crypto trading should not be challenged by local businesses.
In an affidavit filed with the supreme court of India, RBI stated:
“The impugned circular and the impugned statement neither violate the right to equality guaranteed under Article 14 or the right to trade and business guaranteed under Article 19 of the Constitution…The petitioner cannot seek to exercise the extraordinary jurisdiction of this Honorable Court to avail a right which they do not have. The impugned circular and the impugned statement have been issued in a manner that is consistent with the powers conferred on the RBI by the law and the same are legal and valid.”
Timing of the Central Bank’s Statement
According to the affidavit, the RBI claimed that it has prohibited crypto trading in a lawful way that does not violate any of the country’s existing regulations. Hence, the supreme court should not even consider evaluating the petitions submitted by crypto-related businesses and investors in the market of India.
The RBI emphasized that petitions against the imposition of a ban on crypto trading are not maintainable and that they should be dismissed, due to the lack of reasonable arguments made by associations including the Internet and Mobile Association of India, a non-profit organization that expands and enhances the online and mobile value added services sectors.
While the RBI’s statement is accurate in that it has imposed a ban on a new asset class within its power in a legal and lawful manner, it is also legal for businesses and associations to file petitions with the supreme court to challenge decisions made by government bodies and agencies.
If the RBI remains confident in its decision to impose a ban on crypto trading and is able to clearly justify it, then it should not feel the need to interfere with the country’s petition system. Even at a supreme court level, parties can file a review petition to challenge the decision of the supreme court.
As such, it is legal and valid, based on the laws of India, for associations to file petitions to challenge the decisions of authorities and the RBI’s affidavit has dismissed the right of businesses and associations to file petitions against the country’s central bank.
The aggressive approach of the RBI towards maintaining its ban on crypto trading comes in a time in which the Securities and Exchange Board of India (SEBI) has sent authorities to Japan, UK and Switzerland to study their regulatory frameworks around cryptocurrency exchanges and trading.
In early September, the RBI already told the supreme court that the current legal system cannot acknowledge and recognize Bitcoin as a currency. Yet, without providing the supreme court sufficient time to digest and evaluate the situation, the RBI has come out with another affidavit to protect its decision.
RBI is Concerned
In a span of one month, the RBI has asked the supreme court to dismiss petitions without a proper review process and emphasized that Bitcoin as a currency cannot be recognized in the country, which suggests that the RBI is concerned regarding the relatively high probability of the supreme court to reverse the decision of the RBI to ban crypto trading.
The Smart Dubai office, a government initiative led by the Crown Prince of Dubai, is integrating blockchain technology into its retail payments smartphone app DubaiPay, enabling reconciliation and settlement transactions in real-time.
Developed in collaboration with Dubai’s Department of Finance (DoF), the Smart Dubai Office (SDO) launched the system on Sunday with a press release labeling it a “blockchain-powered upgrade to its financial system’(Dubaipay)’.
Current DoF procedures are dependant on staff members physically checking payments collected from different portals to manually reconcile the transactions before settling them. This extensive process includes a fee deduction before the remaining sum is transferred to the relevant overseeing authority, altogether taking up to 45 days.
#SmartDubai continues to grow through the horizon of success as they launch the “Payment Reconciliation and Settlement” System today, developed in collaboration with #Dubai Department of Finance as a #Blockchain-powered upgrade to its financial system. pic.twitter.com/fESbFBuKpj
— Smart Dubai (@SmartDubai) September 23, 2018
Speaking to Gulf news, Mira Sultan Obaid Abdul Rahman, Smart Dubai Government’s director of smart services-enablement department said the notable pivot was to increase the government’s efficiency ‘by transferring all transactions to the blockchain network’ wherein the DoF will be tasked to keep an eye on reconciliations, settlements, disputes, refunds and other payment-related matters.
The DubaiPay portal has over 40 entities, including 27 government and 14 non-government agencies, connected to the platform. The portal also collected Dh13 billion ($35 million) from 9.4 million transactions, a 17 percent increase in 2017.
The ‘Payment Reconciliation and Settlement System’ has already been tested by the Dubai Electricity and Water Authority (DEWA) and the Knowledge and Human Development Authority (KHDA). The two government agencies – first to join the blockchain platform – have processed in excess of 5 million transactions over a decentralized led.
“Blockchain is one of the most promising of these [new smart] technologies, attracting more investments every year,” Smart Dubai’s director-general Dr. Aisha Bint Butti Bin Bishr said.
Smart Dubai Government Establishment (SDG) chief executive Wesam Lootah added of the “game-changing technology”:
“We, at Smart Dubai, consider technology to be a means for us to help improve people’s quality of life and spread happiness among them. Correctly applied across various key sectors, we believe Blockchain has massive potential to achieve our emirate’s ambitions for a fully-fledged smart transformation.”
A number of government agencies including Dubai Police, the Roads and Transport Authority, Dubai Airpots, Dubai Customs, Dubai Municipality and other local government bodies will join the blockchain platform in the near future, the announcement added.
The Smart Dubai Office has already gained recognition for its sizeable blockchain endeavor that includes a roadmap to transfer all government documents on a blockchain.
The Dubai Government has already greenlit a citywide payments system powered by blockchain technology.
Ethereum developers are planning to launch Ethereum hard fork Constantinople in the next month. The date is still not decided but everyone is eagerly waiting for the new hard fork with features like reward reduction and difficulty bomb. Hardfork will increase the efficiencies and lower the transaction fees. It is yet to see that how the Ethereum hard fork Constantinople will affect the price of Ethereum.
Constantinople is the second phase of the Ethereum project upgradation. The first phase is known as Byzantium which took place in the October of last year. The second phase of Ethereum upgradation is scheduled to be finished in the October this year. In a meeting, ETH developers said it is most likely that the upgradation will finish before October’s Devcon4 Ethereum conference. Till now Ethereum developers have implemented four Ethereum Improvement Proposals (EIPs). According to the lead developer of Geth and the most popular ETH client, Peter Szilagyi most of the changes are already implemented. The main reason behind implementing these software upgradations is to make the ETH network faster, more efficient, and less expensive. After the upgradation, the scalability of the Ethereum project will also increase. According to the ETH developers, they are “ushering in a new age of Blockchain technology”.
When a cryptocurrency hard forks some people continue to support or mine the old cryptocurrency or blockchain. That is what happened with Bitcoin, during the Bitcoin hard fork, the cryptocurrency splitted into two, Bitcoin and Bitcoin Cash. Still, people are supporting the Bitcoin, the same thing can happen with Ethereum. Because of the hardfork, the new cryptocurrency Ethereum Classic will be born. Most hard forks are positive and they are good for the investors.
In a meeting, core developers of Ethereum discussed the testing of EIPs for Constantinople hard fork. There was confusion that it is good to have so many changes in the one fork or fewer changes in many hard forks. According to the ETH developers if we delay the upgradation we would want more features to the hard fork Constantinople. But now it is confirmed that the Constantinople will go into testnet next month. It is expected that the four-stage development plan will activate on a cross-client testnet called Ropsten in the second week of October. The development plan can go live in November or it could be in the next year. According to Vitalik Buterin, “it is totally not urgent. We could probably have three months of safety and likely even more.”
The launch of Constantinople can be a bullish signal for the investors when the market is already experiencing the Bull Run.
Since September 18, within six days, the crypto market added $34 billion to its valuation. After a massive short-term rally, Bitcoin has retraced slightly, leading other major cryptocurrencies to fall by 3 to 5 percent.
While Bitcoin recorded a slight loss of less than 1 percent, Ethereum, Bitcoin Cash, EOS, Stellar, and Litecoin demonstrated losses in the range of 3 to 5 percent, with IOTA recording the steepest decline amongst major cryptocurrencies.
The volume of Bitcoin, which remained above $5.3 billion up until September 22, fell back down to the lower end of $4 billion. The volume of XRP, the native cryptocurrency of Ripple, also fell below $1 billion mark to $800 million, after surpassing $2 billion at its weekly peak.
Bitcoin has shown stability throughout September, even during corrections. While Ripple and Ethereum recorded 30 to 110 percent increase in price over the past seven days, the two cryptocurrencies suffered massive losses throughout August, during a period in which Bitcoin remained stable in the low $6,000 region.
As such, when most cryptocurrencies dropped by more than three percent in the past 24 hours, Bitcoin recorded a mere 0.75 percent losses in value. A slight retrace in the valuation of the crypto market was expected by many traders, considering the sheer magnitude of the gains recorded by both major and small market cap cryptocurrencies throughout last week.
XRP demonstrated a three-fold increase in price, with Stellar and Cardano mimicking the short-term trend of XRP. Considering the large gains of cryptocurrencies throughout September, it is positive that the market has obtained a minor breathing room to strengthen momentum.
But, one concern in regards to the short-term price trend of cryptocurrencies is the low volume of Bitcoin. Within the past 24 hours, the volume of the dominant cryptocurrencies has dropped by more than 20 percent.
The substantial decline in the volume of XRP was expected because of its 130 percent increase in value. Still, the volume of XRP has dropped from nearly $2 billion to $800 million, by nearly 60 percent in a 48-hour period.
Due to the wild volatility of the crypto market in recent weeks, it is entirely possible for the volume of major cryptocurrencies to pick up and recover in the next 24 hours. It is also possible that the decline in volume is merely a minor retracement the market needed to stabilize after a major corrective rally.
Bitcoin to $6,800
Billionaire investor Mike Novogratz outlined $6,800, $8,800, and $10,000 as important resistance levels for Bitcoin. On September 23, Bitcoin came close to breaking out of the $6,800 resistance level but struggled in the higher end of $6,700.
In the next 12 to 24 hours, if the volume of Bitcoin can recover to mid-$4 billion and show some resilience above the $6,700 mark, it is likely that BTC tests $6,800 in the short-term. Although the daily chart of BTC shows a lack of momentum in the short-term, the weekly and monthly charts of BTC demonstrate optimistic mid-term price development.
Forex trading platform TigerWit has announced a new partnership with Liverpool Football Club and the launch of a new blockchain-based trading app that gives clients access to access to key global markets and trade FX, indices, commodities and metals.
Under the terms of the partnership, TigerWit becomes the ‘Official Foreign Exchange Trading Partner of Liverpool FC’ in an arrangement that gives the company a unique opportunity to increase its brand recognition and drive adoption of its new trading app which comes with a DLT-based settlement system.
Football Clubs Embrace Blockchain Partnerships
The partnership becomes the latest in a growing pattern of European football clubs embracing partnership opportunities with organisations in the blockchain space, as the world of sports and the world of cryptocurrency increasingly see the possibility of a symbiotic relationship.
Global online investment platform eToro signed a partnership paid for in bitcoin with seven Premier League clubs namely Tottenham Hotspur, Newcastle United, 2015-16 champions Leicester City, Crystal Palace, Southampton, Cardiff City and Brighton & Hove Albion. It was also reported that French football giant PSG is planning to launch its own cryptocurrency with a token offering aimed at incentivizing its supporters over a blockchain.
At the start of the 2018/19 season, newly promoted Premier League side Wolverhampton Wanderers inked a sleeve sponsorship deal with crypto platform CoinDeal to run for the duration of the season. More recently, CCN reported that Newcastle United and Cardiff City are in talks with SportyCo, a decentralized sports investment & funding platform, to launch their Initial Coin Offering (ICO) round.
Expressing his satisfaction over the partnership with Liverpool, TigerWit CEO, Tim Hughes, said:
“Today is a proud day for TigerWit, we are launching our innovative blockchain-based trading app and partnering with Liverpool FC. TigerWit believes in a market that does not discriminate or play favourites. We have developed a pioneering blockchain-based settlement system that instills trust by delivering greater security and process efficiency. Trading should be, and can be, more transparent and fair for all traders, regardless of experience or the size of their account.”
In his reaction, Billy Hogan, Managing Director and Chief Commercial Officer, Liverpool FC, said:
“We are very happy to add TigerWit as our newest club partner and our official Online Foreign Exchange Trading Partner. Our worldwide following will generate global exposure for TigerWit, whilst their core markets of the UK, Europe and Asia each have tremendous numbers of Liverpool FC supporters. Through this new partnership with TigerWit, we look forward to marketing activations, which help offer our fans activities and experiences to bring them even closer to the Club.”
Founded in 1892, Liverpool FC is one of the world’s most legendary football clubs having won eighteen League Titles, seven FA Cups, eight League Cups, five European Cups, three UEFA Cups, three European Super Cups and fifteen Charity Shields.
Longhash, a crypto and blockchain media and analysis site, recently launched its own Bitcoin Tracker. In an effort to “offer more peace of mind to investors, regulators and the general public,” users can basically find the origin of BTC, tracking it through the many places it has traveled.
Longhash Launches Bitcoin Tracker
“Compared to the traditional financial system,” Longhash explains, “cryptocurrency can seem murky. Bitcoin transactions are pseudonymous, which makes them attractive to criminals.” And while that statement can for sure trigger a great many Bitcoiners to outrage, and probably should, the site believes mainstreaming crypto adoption will come with the advent of tools for transparency.
It’s also a interesting juxtaposition on where many in the ecosystem seem to be, philosophically. Privacy-based coins, regardless of their actual efficacy, are all the rage as developers look to thwart minders, official and otherwise, to bring about a more cash-like experience.
For Longhash, attracting institutional money seems to outweigh such a trend. “When you send money to a Bitcoin address, who exactly are you dealing with?,” they ask. With that in mind, they’ve created a BTC address search to their homepage.
“To be clear,” Longhash stresses, “we are not revealing the identities of Bitcoin holders. We just hope to offer more peace of mind to investors, regulators and the general public. The mainstream perception that cryptocurrency is associated with crime is not good for the industry as a whole.”
Fuzzy, Precise, Address Ratings, and Dirty Money
To discover the site’s version of transparency, users can dial up the Longhash homepage and click on an Address link to enable two types of bitcoin address searches, Fuzzy and Precise. A fuzzy search on the Longhash page asks only for a “few characters of an address.” Users can examine “10,000 richest bitcoin addresses” from richest first on down. Precise searches appear to live up to the title. The curious enter a BTC address, and available to them are balances, BTC sent and received amounts, and transaction history generally.
An interesting quirk of these searches is the Address Rate. “We rate addresses by analyzing their transactions as well as the addresses that it sends money to and receives money from. If we find, for example, that an address is transacting with another address that is affiliated with crime, the first address will get a lower rating. The higher the address rate, the more trustworthy the address,” the company notes.
Like dollars, bitcoin can pass through various routes to wind up in your wallet. Should you want to know more about the address sending them your way, Longhash believes they can provide insight. “We classified four main address types,” they argue. “The light blue refers to a mixing service, which purposely disguises the source of a Bitcoin transaction. The darker blue refers to a cryptocurrency exchange. The magenta refers to a mining pool, and the orange refers to a gambling site. The light purple refers to an old address that is no longer in use.”
Probably the most interesting part of the experience is how classifications are charted in colored rings. The inner-inner ring is a BTC’s origin. If that ring was blue, this would mean its first 30 moves came by way of formal crypto exchanges. If the next most inner ring is purple and a mix of orange, this means the BTC had both exchange and gambling site origins. The outer ring then, shows how, in this example, BTC “came from a combination of cryptocurrency exchanges, mixing services and mining pools, gambling sites,” they claim. “So by using this chart, you can see if a Bitcoin has any relationship to dirty money.”
Cryptocurrency exchange ShapeShift’s controversial decision to require user identities wasn’t forced upon it but signified a “proactive” step to reduce legal risks, according to CEO and founder Erik Voorhees.
Voorhees offered some hitherto unshared rationale behind a move that prompted criticism from some in the cryptocurrency community who’d seen the site’s prior policy of not requiring formally identified accounts as a way to protect privacy.
Some had speculated that ShapeShift’s new, soon-to-be mandatory “membership” model – announced in early September – was the result of direct or indirect threats from regulators. (This speculation may have been fueled in part by Voorhees’ own tweet in which he described the new customer ID system as “something we’re building under duress.”)
But Voorhees, a vocal libertarian advocate of privacy rights and a critic of know-your-customer (KYC) regulations,
“KYC was not added as a result of any enforcement action, but rather as a proactive step we took to de-risk the company amid uncertain and changing global regulations.”
“It was a strategic decision as we believe the risk of not doing so had gotten too great. It was not made lightly.”
Voorhees said the firm had spent “months of legal work and over a million dollars of legal expenses on this topic alone. That is money and time that would’ve been better spent building things to protect and serve customers.”
While his comments confirm that regulatory considerations were a driving factor in the decision to make account identities mandatory, Voorhees framed it as a later addition to a program originally developed as an optional feature.
“KYC was thus stuck on to the Membership platform, and while optional membership and account-based features are certainly desired by many of our customers, there is nobody (including us) who desires forced KYC,” he said.
‘We remain committed’
In a Twitter exchange that occurred after Voorhees published a blog post a few weeks ago detailing the “tokenized” membership model as a way to provide special perks for loyal users, critics said he should have just shut the company down rather than compromise his pro-privacy principles.
The ShapeShift CEO reiterated that he made the change with the utmost reluctance as a steadfast opponent of government surveillance in monetary affairs.
“We remain committed to the struggle for financial privacy and sovereignty for all humans, and will continue to be tactical about how we further that cause,” he said.
“The status quo is to invade the privacy of millions of innocent people in order to potentially decrease the risk of a few bad actors. We think this is both unjust and ineffective,” Voorhees went on to say, citing an estimate by the United Nations Office of Drugs and Crime that 2 percent to 5 percent of global GDP is laundered each year. “The current system is a failure by any measure.”
In a closing remark, however, Voorhees conceded:
“Ultimately, ShapeShift is a corporate entity, and we have to abide by laws around the world.”
The Directorate of Enforcement (ED) attached $60 million worth of assets in connection with its probe against Amit Bhardwaj in the alleged Bitcoin Ponzi fraud of $5.26 billion.
The Indian law enforcement agency has attached immovable properties of the owner of GainBitcoin.com, including six offices in Dubai and the residential apartments and bank balances of two of his associates Hemant Bhope and Pankaj Adlakha, under the provision of Anti Money Laundering (AML) act.
It is the first attachment in the case where Bhardwaj, under the guise of Variabletech Pvt Ltd, Singapore, duped 8,000 people into investing in his fraudulent Bitcoin trading Ponzi scheme, www.gainbitcoin.com. The alleged conspirator would hold marketing events at expensive hotels across India, where his associates attracted attendees towards their Bitcoin mining investment schemes. In an event held in Noida city in 2016, which the author attended in person, the marketers claimed that GainBitcoin owns mining facilities in China. As proof, they showed attendees video clips that formerly belonged to one of the Motherboard coverages of a Chinese mining facility.
Tricks such as these were used to lure people that had no prior knowledge of Bitcoin. The digital currency’s potential as an investable asset would fuel investors’ interest, with most of them often mistaking GainBitcoin as the “Bitcoin company.” One of the Indian parliamentarians even went ahead calling Bitcoin a Ponzi scheme while referring to GainBitcoin.
Under these shady schemes, Bhardwaj and his associated embezzled around 8,000 Bitcoins. When the time to pay back investors arrived, Bhardwaj issued them a privately created, and worthless, cryptocurrency called MCAP. He even purchased sponsored stories across the leading news channels in the Bitcoin industry to fake a positive sentiment about his coin.
“There are large numbers of investors who got cheated in this way,” the ED stated.
For a more significant time, readers in India with access to basic knowledge of Bitcoin saw the digital currency as a tool to scam people. GainBitcoin unknowingly initiated a mistrust between the regulators and digital currency companies that continues to haunt the crypto-regulatory climate in the country even today.
Bhardwaj even roped in Bollywood celebrities, including Bipasha Basu, Shilpa Shetty, and Nargis Fakhri, to promote his ebook called Cryptocurrency for Beginners. Shilpa Shetty’s husband and celebrated Indian businessman Raj Kundra also faced ED over his monetary involvement in Bhardwaj’s company.
— SHILPA SHETTY KUNDRA (@TheShilpaShetty) July 7, 2017
The Pune police arrested Bhardwaj in April at New Delhi airport when he was returning from Dubai. Since then, Bhardwaj has offered to repay his investors in Indian Rupees. The price of Bitcoin has increased ever since which is why investors have rejected Bhardwaj’s proposal in fears of losing out on profits they could make had they held onto their crypto-assets.
Grupo XP, the largest independent brokerage in Brazil, has publicly released its plans to launch a Bitcoin and Ethereum trading platform by the end of 2018.
Guilherme Benchimol, the chief executive officer of Grupo XP and XP Investimentos SA, stated that the business will integrate Bitcoin and Ethereum into the existing infrastructure of the brokerage, allowing more than three million investors in the country to invest in the asset class.
The government of Brazil and its antitrust watchdog have launched a formal investigation into banks and major financial institutions in the country after receiving complaints that crypto exchanges received subpar financial services from local banks.
Officials at the Administrative Council for Economic Defense (CADE) said:
“However, it does not seem reasonable for banks to apply such restrictive measures a priority on a straight-line basis to all cryptocurrency companies, without examining the level of compliance and the anti-fraud measures adopted by individual brokerage firms conferring unlawful treatment per se on businesses brokering cryptocurrencies.”
In an official announcement, Grupo XP CEO Benchimol emphasized that he personally is not a fan of cryptocurrencies as a store of value and consensus currency. But, he stated that the company feels obligated to start advancing in the market because ultimately, similar to banks, investment firms are required to meet the demands and needs of their clients.
“I must confess, this is a theme I’d rather didn’t exist, but it does. We felt obligated to start advancing in this market,” Benchimol said.
The surprising decision of Grupo XP is particularly monumental for the South American cryptocurrency market because it comes at a time in which the government of Brazil has taken its first approach towards legitimizing the market with stable financial services and banking partners.
With support from the government and the country’s largest investment firm involved, in the next few months the cryptocurrency market of Brazil will likely see an emergence of exchanges that are capable of providing services that were not available to the population less than nine months ago.
It is entirely possible that the encouragement of the government to banks to provide financial services to local cryptocurrency exchanges could leave the market open to established exchanges that are eying international expansion.
Already, in the past week, Binance and Upbit, the crypto market’s two largest exchanges alongside OKEx and Huobi, have expanded to Singapore.
Since mid-2017, the US, Japan, and South Korea have seen the stabilization of their respective cryptocurrency exchange markets equipped with robust infrastructure and practical regulatory frameworks designed to protect investors and facilitate the growth of crypto-related businesses.
For many years, South America and Europe have lagged behind Asia and the US due to regulatory uncertainty, but the forward-thinking approach of the Brazilian government and the encouraging trend of major financial institutions entering the crypto market could potentially lead to exponential growth of the crypto market of Brazil, Argentina, and Venezuela.
To many, cryptocurrency is a way of securing financial independence from banks and governments. Those interested in going off-grid, distancing themselves from authority, and even “preppers” who believe that major catastrophe is coming any day share many of the values of hardcore crypto advocates.
One point of contention is blockchain’s reliance on the power grid — how can something truly grant freedom from government if it can’t operate outside of government infrastructure? How can crypto replace cash if it can’t be even used when the lights go out?
The developers of Burst believe they have the solution: a solar-powered blockchain that operates completely off-grid. They claim to have already completed a solar-powered cryptocurrency transaction using short burst radio waves. While other projects have incorporated radio waves into their transaction process, Burst may be the first project to have performed a fully off-grid transaction, opening a use case for cryptocurrency in instances of natural disaster or areas with poor infrastructure.
— "Daniel Jones" (@nixops) September 16, 2018
The project was designed as part of the Call For Code challenge, which brings developers together to design tech that is used for good — humanitarian relief being one of the areas of focus. Developer Daniel Jones described the project:
“Radio is used in natural disasters and is an infrastructure we often overlook. Burst is mined with hard drives, it requires far less power. And as far as developing the radio piece, it’s done. It’s not hard to send a packet over radio, just got to use right tools and understand the myriad of regulations.”
Burst would allow people suffering from natural or man-made disasters to preserve value and have something worth trading even in the event of banks and on-grid blockchains being blockaded or destroyed. The trope of money being useless in an apocalypse scenario applies to fiat, certainly, but less so to Burst. Theoretically, the disruption of infrastructure and centralized government should not affect the value of the currency or the ability of people to transact with it in a secure, immutable way around the world.
Beyond that, the project enables users to confirm that they are alive and send messages without revealing their location, which also has a use case in war-torn or disaster-stricken areas. Jones explained that this was the purpose of the first transaction, a demonstration to show “Proof of Life.”
“[The] transaction…was a multi factor verification of Proof of Life…. [D]uring a disaster…there could be cases where you may need to verify [that] someone is who they claim to be but without being able to see them …. [T]he wallet was assigned to someone who sent a transaction with the fee to show the target wallet they were ‘alive.’ This gives us some levels of certainty, wallet seed, target wallet known, and amount + fee or message content.”
It’s worth noting that shortwave radio operators are legally required to be trained and licensed — licensed amateur HAM radio operators can and do communicate with the International Space Station, space shuttles, and other vehicles and radio operators around the world, and the licensing is required to prevent interference with air traffic and other activity. You can learn more about becoming a licensed radio operator here.
In a supernormal rally that almost lost ethereum its silver spot, ripple (XRP) gained about 100 percent in a week.
The maximum difference in XRP’s market cap between the week’s lowest and highest level turned out to be almost $19.8 billion. That’s nearly a 184 percent jump. True, the valuation dropped after establishing the weekly peak, but the extent of the drop was low. During the uptrend, the market cap of ripple once even went above the market cap of ethereum. For a short period, XRP was the new silver to bitcoin’s gold. However, an imminent sell-off near peak reversed the XRP trend and brought it back to the third position.
But, what were the reasons behind the XRP’s bullish behavior? So far, no technical aspects could explain it.
Fundamental Factor 1: Launch of xRapid Solution
Ripple Labs’ long-anticipated cryptocurrency service, dubbed xRapid, is heading for a commercial launch as soon as next month. The commercial payment service allows financial institutions to use XRP tokens for conducting cross-border transactions. So far, xRapid has not bagged many major partnerships from mainstream financial institutions, in contrast to RippleNet, Ripple Labs’ XRP-negated blockchain project for enterprises, that has a top-ten US bank lined up for integration.
The news of the xRapid launch when XRP was trending sideways against USD. The value began trending upwards just at the beginning of the next day’s session, establishing a new intraday high towards $0.33990-fiat from the low of 0.26627-fiat.
Fundamental Factor 2: Coil and PNC Announcement
An announcement linking XRP with the web’s biggest names, including Wikipedia, Twitch, and YouTube, came on Sept. 20 from Coil. The San Francisco company, headed by former Ripple Labs CTO Stefan Thomas revealed details about their web monetization app that would allow content creators to earn tips via XRP tokens. Overall, the news brought a likely user-adoption case for XRP in limelight, while it was already riding high on previous bullish sentiment.
On Sept. 20, another Ripple-centric news that surfaced on the web was PNC-related. The $380 billion US banking giant joined RippleNet to enable near-instant money transfers with on-demand liquidity and end-to-end tracking on a blockchain. The partnership, however, does not guarantee a boost in XRP adoption. Nevertheless, it positioned XRP’s largest holder, Ripple Labs, as a company with a big future ahead — something that could have excited the traders speculating on XRP.
The Concluding Fundamental Factor: FOMO
When an asset keeps breaking its crucial resistance levels one after another, day traders mainly go long on their positions in “fear of missing out” on profits. XRP traders seem to have undergone a bullish transformation after witnessing an impressive rally after weeks of a downward trend. Ripple has brought back the buying sentiment in the market, and all the top coins went green as it mooned.
XRP/USD formed higher highs towards 0.79162-fiat. Since then, the pair has corrected almost 27 percent. Those who entered long anywhere below the current value could attempt to exit their positions on a decent profit, causing a minor sell-off towards 0.54490-fiat, the support level from late May. A breakdown from there could push XRP/USD further down towards 0.45627-fiat, the support from early April that influenced a sharp rally towards 0.96635.
While returning to its bearish sentiment, the pair would need to invalidate the two support levels mentioned above. The launch of xRapid next month, meanwhile, would promise a positive buying scenario overall.
Coin Capital Investment Management Inc. (Coincapital), the portfolio management division of the Coinsquare digital asset trading platform, has listed a blockchain exchange traded fund (ETF), the STOXX Blockchain Patents Innovation Index Fund (LDGR), among two new ETFs the company has listed on the Toronto Stock Exchange. Coincapital, which is registered with the Ontario Securities Commission, has become Canada’s newest ETF provider following the introduction of the LDGR and the STOXX B.R.AI.N. Index Fund (THNK), the company’s first ETFs.
The LDGR and THNK ETFs were scheduled to commence trading on the Toronto Stock Exchange this morning.
ETF Taps Artificial Intelligence
LDGR, Coincapital’s first ETF, invests in global equity securities of companies that are investing in blockchain technologies. Coincapital uses a proprietary artificial intelligence (AI) algorithm to identify companies for the fund.
The selection is based primarily on blockchain intellectual property patent filings, which enables the fund to identify blockchain adopters and innovators. The selections also make use of the iSTOXX Yewno Developed Markets Blockchain Index.
THNK, the second ETF, invests in equity securities of companies focused on AI, nanotechnology, robotics and biotechnology. The main consideration is the company must generate half of its revenues from the aggregate of the B.R.A.I.N sectors. The fund also makes use of the iSTOXX Developed Markets B.R.A.I.N Index.
Canadians Technology Savvy
“Canadians know technologies like artificial intelligence and the blockchain are going to change the way we live and work, but it can be difficult to access high quality investments in these sectors without deep domain expertise,” Lewis Bateman, Coincapital CEO, said in a prepared statement. “We’re doing the work for investors, using our in-depth industry knowledge to provide Canadians with an innovative suite of investment options that help them invest in new technology even if they’re not an expert.”
The LDGR is not the first blockchain ETF to be listed in Canada.
Horizons ETFs Management Canada Inc introduced the Horizons Blockchain Technology and Hardware Index ETF earlier this year. The ETF backs companies such as Hive Blockchain Technologies Ltd, Nvidia Corp, Digital Realty Trust Inc. which develop blockchain hardware and services.
The Stellar price has been rising steadily over the last two days. On Friday, Sept. 21, it is trading at 0.2514, adding 8.60% to its value. This rally is based on both tech signals and the overall market trends, says Dmitriy Gurkovskiy, chief analyst at RoboForex.
On H3, Stellar is rising after the MACD convergence and the descending channel resistance breakout. The local target is at the long term channel resistance, i.e. 0.2750. The support is now the ex-resistance, which was previously broken out. The rally is also supported by the Stochastic forming the golden cross and the MACD moving into the positive territory.
On H1, the rally has stopped near the projection channel resistance, which, with the Stochastic moving into the oversold territory, may signal a pullback to the support at 0.2300.
There has not been much news for Stellar recently, but still, there’s been some. For instance, OKCoin has added 5 new instruments to its portfolio, which includes Stellar. This may boost the interest towards the crypto, as it’s now available for trading.
Previously, Stellar obtained the Shariyah Review Bureau (SRB) certificate, as the authority licensed by the Bahrain Central Bank allowed Stellar to establish presence in the country once the recommendations are fulfilled. The SRB was especially interested in the crypto itself, while the authority is absolutely fine with the blockchain itself.
Conquering the Gulf of Persia was a very daring goal, but it looks like nothing is impossible for Stellar. As the management says, the Shariah certificate will help look at the platform and its technologies at another angle. Meanwhile, what Stellar is interested in is overseas payments and asset digitization. As the Islamic financial market is huge and Bahrain is striving to become its center, it looks like Stellar is going the right way.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.
One of the world’s largest cryptocurrency and bitcoin mining companies, Bitman’s Antpool, has entered into a sponsorship agreement with popular NBA team Houston Rockets.
A Step Towards Expansion
The partnership signed by both outfits is for the 2018-2019 professional season and will stand out as one of the significant moves by the China-based company towards achieving its expansion goals into the Houston area. At the same time, this joins in the increasing number of similar awareness and publicity programs being experienced by cryptocurrency in recent times, especially in associating with the sporting industry.
According to AntPool overseas operations manager Haijiao Li, there is no better way for his company to continue with its momentum in expanding to the U.S. than partnering with the Houston Rockets. He describes the NBA outfit as most popular team in China — Chinese Hall of Famer Yao Ming played for the Rockets — and a legendary basketball club with global recognition.
“We’re excited to work with AntPool as a conduit in the U.S. for their ever-growing business,” added Rockets vice president of corporate development John Croley. “The Rockets are always looking to stay ahead ofthe curve with technology both on and off the court and AntPool’s prowess with crypto currency makes for agreat partnership.
It is obvious knowledge that the crypto industry is still trying to find its way into the mainstream. This phenomenon requires a lot of awareness and proper education in order to encourage reasonable adoption. Efforts such as these are becoming more popular in the industry and also seem to be delivering expected results.
Li acknowledges the increasing number of mainstream cryptocurrency partnerships as an important step towards the conversion of consumers to adopt and understand bitcoin and other digital assets.
“As the cryptocurrency industry around the globe continues to evolve and develop, it is going to be more and more important for companies like AntPool to lead the conversation and conversion of consumers to adopt and understand digital currencies. It is an exciting time, and we welcome Rockets fans and those traveling to Houston to visit our showcase at Toyota Center and learn more about the technology that will change the world.”
Prior to this time, CCN reported similar partnerships by other cryptocurrency companies with a number of sporting outfits both in the field of baseball and football, among other sports. The reason for such partnerships is easy to understand based on the volume of audience that professional sports teams attract. This same philosophy is being applied by companies that partner with celebrities in the entertainment industry.
If there is one thing that the cryptocurrency industry needs now, it is awareness and proper education. Therefore, while individual companies make efforts for their own publicity and expansion, the overall positive impact that they have on the industry at large cannot be overemphasized.
A newly-patched vulnerability in Bitcoin Core was far more severe than initially revealed, developers disclosed in an updated statement on Thursday.
Bitcoin Vulnerability More Serious Than Earlier Announced
The statement, posted on the website for the open source project, revealed that Bitcoin Core versions 0.16.3 and 0.170rc4 not only patch a denial-of-service (DoS) bug but also address a serious vulnerability that would have allowed malicious miners to artificially inflate the supply of bitcoin through a specific type of double spend transaction.
The developers explain:
“Thus, in Bitcoin Core 0.15.X, 0.16.0, 0.16.1, and 0.16.2, any attempts to double-spend a transaction output within a single transaction inside of a block where the output being spent was created in the same block, the same assertion failure will occur (as exists in the test case which was included in the 0.16.3 patch). However, if the output being double-spent was created in a previous block, an entry will still remain in the CCoin map with the DIRTY flag set and having been marked as spent, resulting in no such assertion. This could allow a miner to inflate the supply of Bitcoin as they would be then able to claim the value being spent twice.”
Initially, developers had disclosed a lesser but still serious DoS bug that would have allowed miners to crash nodes and disrupt the Bitcoin network. However, doing so would cause them to forfeit their block reward, which is currently 12.5 BTC (~$83,500 as of Friday).
According to the statement, this bug had been present in the Bitcoin Core software since version 0.14, though it had not been discovered until this week. Version 0.15 introduced the inflation vulnerability.
Core Waited for Upgrade to Reach Critical Mass
Developers said that they waited to disclose the full extent of the bug to prevent malicious miners from exploiting it prior to the upgraded client reaching critical mass.
From the statement:
“In order to encourage rapid upgrades, the decision was made to immediately patch and disclose the less serious Denial of Service vulnerability, concurrently with reaching out to miners, businesses, and other affected systems while delaying publication of the full issue to give times for systems to upgrade.”
However, Core developers decided to disclose the full extent of the vulnerability — which they do not believe was ever exploited — after a majority of the BTC hashrate upgraded to the patched software. Nevertheless, full node operators who have not yet upgraded to the latest version of Core should do so as soon as possible.
“At this time we believe over half of the Bitcoin hashrate has upgraded to patched nodes. We are unaware of any attempts to exploit this vulnerability,” the statement said. “However, it still remains critical that affected users upgrade and apply the latest patches to ensure no possibility of large reorganizations, mining of invalid blocks, or acceptance of invalid transactions occurs.”
On Friday, Sept. a U.S. member of Congress announced that he will introduce three new bills aimed at supporting the development of blockchain technologies, as well as the use of cryptocurrency, within the United States.
Rep. Emmer: U.S. Must Support Blockchain Development
According to Rep. Tom Emmer (R-MN), the initiator of this bold move, the U.S. needs to pass favorable legislation to the burgeoning blockchain industry if it hopes to remain a leader in this space.
“The United States should prioritize accelerating the development of blockchain technology, and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”
Overall, the new legislation will support the rapidly growing blockchain industry within the U.S. by providing clear and concise guidelines for investors companies, and businesses, as well as a safe harbor for taxpayers using cryptocurrency assets.
Rep. Emmer, who has just been named co-chair of the Congressional Blockchain Caucus, also added that, “Legislators should be embracing emerging technologies and providing a clear regulatory system that allows them to flourish in the United States.”
Emmer’s Three Pro-Crypto Bills
Emmer’s first piece of legislation is a House resolution to express support for cryptocurrency and blockchain technology. As mentioned, this and the other two bills are aimed at supporting the use and development of blockchain technology in the United States. According to the Emmer, and many other industry experts, the U.S. government cannot do anything to stop their development. Therefore, legislators should be stepping in to provide a clear, concise, and legal framework for their use within the country.
The second bill, the Blockchain Regulatory Certainty Act, confirms that certain entities such as cryptocurrency miners and multi-signature providers, who never fully take control of consumer funds, will not need to be registered as money transmitters. This is because they are only there to help validate the network’s integrity, by providing more security for those who use digital assets.
The final bill, the Safe Harbor for Taxpayers with Forked Assets Act of 2018, aims to address confusion surrounding how to report gains made as a result of cryptocurrency forks to the Internal Revenue Service (IRS). Previously, there was little IRS guidance on this matter, so the bill will be used to give taxpayers tight regulation about the use of forked funds. Furthermore, it will also protect individuals from facing fines until the IRS establishes some guidelines on how taxpayers are to report their digital assets.
When trading on a cryptocurrency exchange, investors have little-to-no information about the person trading against them, that is, the person on the other side of their buy and sell orders.
Subject to the geographic restrictions of the exchange, that could be someone who lives in your neighborhood, or it could be someone who lives on the other side of the world.
However, depending on which cryptocurrency exchanges you frequent, there’s a significant chance that, at least occasionally, you are trading against someone that works for the exchange itself.
Proprietary Trading Common on Cryptocurrency Exchanges
That’s one takeaway from the “Virtual Markets Integrity Initiative Report,” published by the Office of the New York State Attorney General (OAG) on Sept. 18. The OAG, sent a detailed questionnaire to 13 cryptocurrency exchanges, including quite a few that purport to have no business presence in the state, probing them on their policies and internal operations.
While some exchanges, most visibly Kraken, refused to comply with the probe, most did, and of those, half admitted that they engage in proprietary trading on their platforms.
In proprietary trading, exchange employees fill buy and sell orders on behalf of the company, rather than simply matching buyers and sellers. This places the exchange operator in the position of trading against its customers.
Proprietary trading is common in traditional securities markets, and, as the OAG notes in its report, there are multiple reasons why an exchange may participate in this practice. On a basic level, an exchange’s trading desk may be seeking to turn a profit for the company. This is especially plausible on retail-focused exchanges where professional traders can match themselves up against competition with much less experience.
Additionally, exchanges use proprietary trading to increase liquidity on the platform, particularly in markets that are thinly-traded. Toward this end, the trading desk will place both buy and sell orders to make it easier for customers to execute trades. This not only helps the venue serve existing customers but also helps it attract new ones into the market, ultimately building organic, customer-driven volume.
Coinbase, bitFlyer USA are Active Platform Traders
According to self-reported statistics, the level of proprietary trading varied greatly among exchanges. The OAG report found that Coinbase engaged in the most proprietary trading, with these activities accounting for nearly 20 percent of the platform’s trading volume. BitFlyer USA also reported high levels of proprietary trades, which make up approximately 10 percent of its volume.
Circle claimed that proprietary trades accounted for less than one percent of volume on Poloniex, the U.S.-based exchange it acquired earlier this year. Bitfinex and Tidex also acknowledged that they engage in platform trading.
Bitstamp, Bittrex, Gemini, and HBUS, on the other hand, said that they do not engage in proprietary trading, while itBit declined to respond to the question.
Crucially, the cryptocurrency exchanges that engage in proprietary trading said that their traders do not have any advantages over customers. The report said, “Trading platforms that engage in proprietary trading on their own venues uniformly told the OAG that their trading desks had no informational or other trading advantage over customers.”
Report Raises ‘Serious Questions’: OAG
However, the report said that the high levels of proprietary trading on some exchanges raise “serious questions” about the hidden risks that customers face when using those platforms.
Commenting on these findings, the OAG said:
“Such high levels of proprietary trading raise serious questions about the risks customers face on those platforms. As a general principle, when a significant percentage of the volume in one or more assets on a venue is attributable to one source, customers face the risk that the availability of liquidity in those assets could change, without notice and at any time, including when liquidity is needed most – namely, in times of market volatility or rapid price movement.”
“That certain platforms themselves account for such high levels of activity on their own venues also calls into question whether the natural market for virtual currencies on those platforms is as robust as customers might believe it to be,” the report added.
Dunamu, the parent company of South Korea’s largest crypto exchange Upbit, has officially announced the launch of Upbit Singapore, which will be fully operational by October.
Upbit Singapore CEO Alex Kim explained in an official statement that local users in Singapore will be able to trade all of the cryptocurrencies integrated by partner exchange Bittrex with 24/7 real-time security monitoring and firewall system for enhanced security.
Kim emphasized that Dunamu’s decision to expand to Singapore was encouraged by the positive approach of the Monetary Authority of Singapore (MAS) towards cryptocurrency regulation and the vision of the country’s government to establish a strong crypto and blockchain sector.
Fiat Exchange in Singapore
For many years, despite favorable regulations for cryptocurrency-related businesses, Singapore has fallen behind Malta, Switzerland, South Korea, and Japan in terms of market growth. Specifically, the cryptocurrency exchange market of Singapore has struggled to see an exponential increase in trading volume.
According to Kim, Singapore has openly embraced blockchain technology and cryptocurrency-related businesses, which will allow cryptocurrency exchanges based in Singapore to pursue various opportunities and projects in the blockchain sector.
Binance, the world’s largest cryptocurrency exchange, has also announced the launch of Binance Singapore earlier this week, integrating fiat pairings against the Singaporean dollar for the first time in the company’s history.
Upbit has supported fiat pairings against the Korean won in the local cryptocurrency exchange market of South Korea since mid-2017. The confidence of Upbit in integrating the Singaporean dollar demonstrates the availability of strong banking partners in the country that will be able to support the demand and interest towards cryptocurrencies.
“We are confident Upbit’s secure and convenient exchange service, combined with the ability to trade in Singapore dollars, as well Bitcoin, Ethereum, and USDT via Bittrex support will allow us to attract users and establish Upbit’s presence in the global market,” Kim said.
Why Upbit Chose Singapore as the First International Market
In an official statement, Dunamu CEO Sigroo Lee explained that the company believes Singapore to be a bridge between Korea and the global cryptocurrency exchange market.
There are various regulatory uncertainties in South Korea surrounding the crypto market and until the first crypto and blockchain legislation of the country is passed, which analysts expect to be late 2018, the uncertainties in the local market will not be clarified.
Still, Lee emphasized that the company is confident blockchain regulatory guidelines will be established in South Korea and in the open-minded stance towards cryptocurrencies by the government of Singapore.
“We felt the timing was right to expand globally despite various uncertainties surrounding the Korean market. One of the key functions of a crypto-asset exchange is to connect the real economy to cryptocurrencies, and we believe we can provide this bridge between Korea and the global market. We hope the blockchain regulatory guidelines will be established soon in Korea so that companies here can continue to grow their competitiveness.”
The regulatory chief of Abu Dhabi’s international financial center and free zone has called for tighter regulations for cryptocurrency trading and ICOs while recognizing the growing global industry.
Nearly a year after issuing its guidelines for cryptocurrencies and initial coin offerings (ICOs), effectively regulating the industry, the Financial Services Regulatory Authority (FSRA) is sharing its framework with its regulatory counterparts around the world.
“This space needs to be properly regulated, otherwise there is the risk of financial crime,” FSRA chief executive Richard Teng was quoted as saying by The National. “Every time a coin gets stolen or lost, it affects the confidence in this asset class.”
Notably, FSRA chief executive Richard Teng insists that “a lot has changed” over the past few months in a changing landscape that forgoes fears associated to cryptocurrencies to the recognition of a growing industry that requires guidelines to responsibly develop and encourage the sector.
“We are confident that our comprehensive regime – which we have shared with global regulators like the [U.S.] SEC, the UK Treasury, Financial Conduct Authority and Bank of England, and regulators in Singapore, Hong Kong and Japan – can address these risks and bring greater confidence into this asset class.”
The Abu Dhabi regulator’s comments come at a time when lawmakers in the U.K. urged the government to prioritize regulation of the cryptocurrency and ICO space in a Treasury Committee report published today.
One of the first financial centers and trade zones to outline guidance for cryptocurrency firms in October 2017, the Abu Dhabi Global Market (ADGM) enforced the regulatory framework by the FSRA for cryptocurrency firms operating in the zone in June. The regulations, which includes stipulations for exchange operators and crypto custody firms (wallet providers) alike, deems cryptocurrencies as commodities akin to precious metals.
“[W]e do a lot of challenges in regulating something which was designed not to be regulated,” FSRA capital markets director Wai Lum Qwok said of regulating cryptocurrencies like bitcoin last year, whilst insisting the authority is open to the idea in the future.
A member of the R3-led banking-centric blockchain consortium, the ADGM acknowledged the advent of cryptocurrencies as a method of payment earlier this year, despite the likes of Saudi Arabia’s central bank outlawing bitcoin trading in the neighboring country.
The Abu Dhabi regulator said earlier this year:
“The FSRA notes that virtual currencies, although not legal tender, are gaining interest globally as a medium of exchange for goods and services.”
Cardano (ADA) and Ripple (XRP) have surged by more than 10 percent in the past 24 hours while Bitcoin maintained stability, leading the recovery of the crypto market.
Earlier this week, the valuation of the crypto market dropped to $190 billion, which led investors to worry about a potential fall to the market’s yearly low point at $185 billion.
Bitcoin has remained relatively stable in the $6,300 region as it has been throughout the past few weeks.
On September 16, when the Bitcoin price was hovering at around $6,500, The low volume of the dominant cryptocurrency can be considered as a short-term weakness of the market that could leave major cryptocurrencies vulnerable to a drop in price.
“Generally, after a slight decline in price, a minor corrective rally occurs and major cryptocurrencies increase by small margins. But, the low volume of Bitcoin, which is currently at $3.3 billion, can be considered as a concern for traders,” the report read.
On September 17, the price of Bitcoin dropped below $6,300 as ETH, the native cryptocurrency of Ethereum, fell back down to the $190 region.
After recording a minor corrective rally on September 18, the crypto market has shown decent gains throughout the past 48 hours. Crucially, the volume of Bitcoin, which remained below $3.4 billion in the past several days, has recovered to $4 billion.
Within a period of three days, Bitcoin has experienced an increase in volume of more than 26 percent, from $3.4 billion to $4.3 billion.
Such a rapid increase in the volume of Bitcoin supported by strong performance of major cryptocurrencies like Cardano and Ripple are expected to fuel a short-term rally, which may see Bitcoin testing resistance levels at $6,500, $6,600 and $6,800.
For nearly two months, since early August, Bitcoin has struggled to properly breach out of the $6,000 region. BTC has remained volatile in the $6,300 to $6,600 range, unable to find momentum in the high $6,000 region.
If the volume of BTC at around mid-$4 billion can be maintained in the weeks to come, a potential rally towards $7,000 is a possibility, given that the market has shown weakness despite massively oversold conditions.
Analysts state that the continuous drop in the prices of major cryptocurrencies will likely lead to a strong corrective rally, especially if investors in the global crypto market recognize the oversold conditions and refuse to sell in the low price range.
This week, UPbit and Binance, two of the largest cryptocurrency exchanges in the global market, have expanded to Singapore, a region that has been known for its friendly crypto and blockchain regulations but has struggled to see large-scale exchanges thrive.
Government officials in the UK have emphasized the necessity to grow the local cryptocurrency and blockchain sector to ensure that it can remain competitive with other major regions.
In terms of regulation and institutionalization of cryptocurrencies, the market has seem more developments in the past month than it has seen in the past eight years.
Veteran Bitcoin analyst Willy Woo insists that bitcoin is still in the middle of a bearish trend. This contradicts the opinions of some experts who believe that the sell-off period has already come to an end, therefore expecting a bull ride to kick in.
Market Behaviour and Speculators
Since January 2018, bitcoin and the cryptocurrency market in general have been in a significant downtrend. This trend has seen the largest cryptocurrency lose over 65% of its value, and the market capitalization dropping from over $297 Billion to about $112 Billion as at the time of writing.
Before embarking on the downtrend, bitcoin experienced an unprecedented bullish ride. It’s price rose from around $3,500 to an all time high of just above $20,000 in a space of 4 months. This market behaviour attracted a lot of new monies into the cryptocurrency market, a phenomenon that was largely responsible to the growth in market capitalization.
Many speculators who invested in the cryptocurrency market in the course of the bull run have counted their losses and pulled out based on declining value. Others however have continued to hold onto their positions in anticipation of an eventual recovery. Whether the wait is a normal trend of occurrence or not in the bitcoin market cycle remains a subject of individual interpretation based on available information.
Billionaire Galaxy Digital founder Mike Novogratz predicted an exhaustion of the current downtrend, noting a retest of the breakout region that triggered the bullish run of late 2017. Novogratz explained that markets like to retrace breakouts, and at the point of his submission, bitcoin had retraced the entire “bubble” of the preceding upward run.
Novogratz isn’t the only one to have called an end to the prevailing downtrend, as CNN has reported a couple more predictions by renowned industry characters and analysts of an imminent reversal of trend. These calls have been repeatedly violated by declining prices that have seen the world’s number one cryptocurrency achieve lower lows for the season repeatedly.
The recent submission by Woo which emphasizes the sustained bearish or at least sideways momentum of bitcoin is based on the historical behaviour of the cryptocurrency.
“Bitcoin has seen only 3 bear markets in its history**. We are in the third one now. One signal we can use to determine the end of the bear is for the price to cross above its 200 day moving average.”
More Technical Analysis
Woo continued by supporting his claim using the Bitcoin NVT Ratio, which he terms as his favorite indicator. He explained that the NVT peaks during bear markets, although it has been criticised for being laggy in detecting bears, it is a leading indicator to signal the end of the bear. According to him, NVT returns to it’s normal range before the next accumulation phase, a condition that is yet to be fulfilled.
The bitcoin and altcoin market is one of the most closely watched in the global marketplace right now. Several factors are seen to be behind the prevailing market behaviour, most of which are fundamental in nature. While there are varying opinions on what would become of bitcoin and cryptocurrencies, the loudest among them insist on an eventual sustained uptrend. The main uncertainty in this case is about when this uptrend shall kick in.
Iran to Legalize the Import of Mining Equipment, Considers Exchange
Just two weeks after Iranian authorities announced a decision to recognise cryptocurrency mining as an economic activity, the government in Tehran is preparing to officially endorse the import of hardware equipment used to mint digital coins.
The move is aimed at supporting the new industry in times when the country’s economy is under heavy pressure exacerbated by reintroduced US sanctions. It also comes after in August Iran stepped up plans to issue a national cryptocurrency.
This week, the Secretary of the Islamic Republic’s Supreme Council of Cyberspace, Abolhassan Firouzabadi, was quoted by Iranian media saying:
“Necessary coordination has been done with related entities to allow the flow of hardware needed to mine bitcoin and other cryptocurrencies.” The high-ranking official also noted that besides legalising crypto mining, the Council is also considering the establishment of an online digital assets exchange.
Cryptocurrencies Must Be Understood, Says Chair of Major Spanish Bank
Cryptocurrencies are “perfect” but are used for “bad purposes” today, so we have to be careful, according to Francisco Gonzalez, Group Executive Chairman of Banco Bilbao Vizcaya Argentaria, Spain’s second largest bank.
In an interview with CNBC, BBVA’s representative also noted that blockchain, the distributed ledger technology underpinning digital currencies, is a “big, big tool”, but warned about the insufficient understanding of it too. Gonzalez, whose bank is actively investing in the fintech space, also pointed out:
We are in the middle of an incredible digital revolution. And in fact, a new world order is in the making, both social and economic…Something must be done in order to spread the wealth of this revolution to everybody…There are some ripple effects which must be understood in the case of cryptocurrencies.
Cyprus Creates Fintech Hub to Catch Up With Competition in the Crypto Space
Probably as part of its efforts to better understand cryptocurrencies and the underlying technology, the Cyprus Securities and Exchange Commission (CySEC) has established a Fintech Innovation Hub on the island. The Mediterranean nation, where financial services are a significant contributor to the gross domestic product (GDP), has to catch up with countries like Estonia, Malta and Lichtenstein which are definitely ahead in the race to attract businesses from the crypto space.
CySEC Chair Demetra Kalogerou believes regulation has to ensure the transfer of financial goods and services in a fair way. However, she also says that it’s not just about supervision of persons but the very technology that’s being used.
“We don’t want our regulatory framework to be static. We want it to progress in line with the demands of today’s and tomorrow’s investor,” Kalogerou stressed in an interview with Finance Magnates. That’s why, she pointed out, a dedicated hub would allow the Cypriots to experiment with the new technology in a safe environment and understand the risks and benefits before potential investors are exposed to new investment products.
New Finance Minister in Harare Pushing for a Crypto Unit at RBZ
Mthuli Ncube, Zimbabwe’s newly appointed finance minister, revealed he is trying to convince the Reserve Bank of Zimbabwe (RBZ), the central bank of the economically hurting country, to establish a “cryptocurrency unit”, African media reported. The push is part of his plans to mitigate the nation’s ongoing cash shortage and position it better for new investments.
“Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank, they are investing in and understanding bitcoin,” Ncube said, quoted by IT Web Africa. The minister believes that if countries like Switzerland see value in cryptocurrencies, Zimbabwe should also pay attention.
“We have innovative youngsters, so the idea shouldn’t be to stop it and say don’t do this, but rather the regulators should invest in catching up with them and find ways to understand it. Then you regulate it because you now understand it,” added the representative of the current executive power in Harare.
British lawmakers called for the regulation of the domestic cryptocurrency market which they claimed to be the “Wild West”, whilst insisting rules could help the UK become a “global centre for crypto-assets”.
In a report published by the British Parliament’s Treasury Committee on Wednesday, lawmakers claimed investors are “afforded very little protection” from a number of risks including no formal recourse for consumer compensation. It was no longer sustainable for the government nor regulators to continue issuing “feeble warnings” with no action, the committee added, insisting that regulation addressing consumer protection and anti-money laundering norms was the minimum measure required.
Volatile prices, hacking concerns among exchanges vulnerable to attacks, minimal consumer protection and money laundering concerns are all underlined as ‘problems’ by the report’s findings. The UK government and regulators’ “ambiguity” was no longer sustainable, it added.
“Bitcoin and other crypto-assets exist in the Wild West industry of crypto-assets. This unregulated industry leaves investors facing numerous risks,” said Treasury Committee chair Nicky Morgan. “Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury Committee strongly believes that regulation should be introduced.”
“It’s unsustainable for the Government and regulators to bumble along issuing feeble warnings to potential investors, yet refrain from acting…At a minimum, regulation should address consumer protection and anti-money laundering.”
In the same report, the Treasury Committee urged the government to evaluate the risks in the cryptocurrency sector to then assess whether the industry’s growth should be encouraged.
Regulation could lead to positive outcomes including increased liquidity for the cryptocurrency market, the Treasury Committee notably said.
Member of Parliament Nicky Morgan insisted:
“If the government decides that crypto-asset growth should be e1ncouraged, appropriate and proportionate regulation could see the UK become a global centre for this activity.”
Today’s report follows a formal inquiry launched by the UK’s Treasury Select Committee, a powerful group of cross-party MPs, into cryptocurrencies earlier this year.
U.K. authorities have, ironically, been urged to revisit their hands-off, wait and see approach by fintech firm Ripple, commonly associated with the cryptocurrency XRP. Earlier this year, Ripple’s head of regulatory relations Ryan Zagone called on British regulators to end the ‘Wild West’ era of cryptocurrencies, urging Britain to take a cue from Japan where exchanges are regulated and under supervision while cryptocurrencies like bitcoin are legal as a method of payment.
The British government has since launched a cryptocurrency task force comprising of Her Majesty’s Treasury, the Bank of England and the Financial Conduct Authority (the treasury, the central bank and the primary regulator respectively) to understand the sector’s risks and benefits. The working group agreed on a handful of key objectives during its first meeting earlier in May.
“The introduction of regulation should be treated as a matter of urgency,” the Treasury Committee said in its concluding summary of recommendations unveiled today.
The Monetary Authority of Singapore (MAS), the country’s central bank, has issued a statement warning people about a website soliciting bitcoin investments that is using comments falsely attributed to Tharman Shanmugaratnam, the MAS chairman and Deputy Prime Minister.
The statements attributed to Tharman on the website are misleading and false, MAS noted, except for his statement that the country’s cryptocurrency trading is low.
The authority urges people to refrain from providing personal or financial information on the website, which encourages people to create a bitcoin account using a bank account or credit card.
Authority Takes Consistent Stance
MAS has noted previously that investing in cryptocurrencies is risky. On Dec. 19, 2017, the authority issued a notice about the risks associated with cryptocurrency. In response to a Parliamentary question on Feb. 5, 2018, Tharman said citizens could “lose their shirts” investing in cryptocurrencies.
The MAS urges people who are suspicious about an investment to contact law enforcement.
Singapore officials have stepped up their regulatory activity since last year, when the country became seen as a haven for cryptocurrency exchanges and ICOs following China’s crackdown.
ICOs Draw Concern
In May, the MAS notified eight cryptocurrency trading platforms that it declined to name to become authorized before offering digital token trades for tokens constituting securities or digital tokens. The notice was issued at a time when the number of exchanges and token offerings both have been increasing in the country.
The MAS also halted an ICO at the time, claiming the issuer violated securities law after the central bank found the tokens represented equity ownership in a company and the offering did not have the required MAS registered prospectus.
Last November, the MAS issued a guide to digital token offerings while the central bank was reviewing if more regulations are needed to protect investors from the risk posed by cryptocurrencies.
Gary Davis, charged with assisting Ross Ulbricht in running a drug trade worth more than $200 million on the Silk Road drug marketplace, has pleaded not guilty in a New York court to charges of conspiracy to distribute narcotics, computer hacking, and money laundering, according to The Times.
Davis, who was extradited from Ireland stand trial in the U.S., denied all charges on July 19, according to documents released in August.
`Davis is one of three individuals alleged to have worked in an admin capacity for Ulbricht in operating Silk Road Market, and the only one of the three who has not yet pleaded guilty or accepted a plea agreement. If convicted, Davis, faces a life sentence, according to The Times. The FBI filed the charges in 2013 following an investigation of Silk Road.
Australian Peter Nash entered a guilty plea and was sentenced after being deported in 2015. Andrew Michael Jones of Virginia pleaded guilty in 2014 as part of a plea agreement and is awaiting sentencing.
Proceedings To Continue
Denying all charges, Davis claimed to be a victim of mistaken identity and that he was unaware that his scanned ID was found on Ulbricht’s computer.
Davis’ case is scheduled to proceed on Sept. 20 when prosecutors and defense attorneys make pre-trial submissions. Proceedings will also continue at that time against another individual connected to Ulbricth, a Roger Thomas Clark, who was extradited from Thailand in June.
Authorities claim Davis, extradited to the U.S. after the Irish Supreme Court in June approved his extradition, allegedly received weekly $1,500 payments from Ulbricht and served as a customer care agent and listed drugs on the website.
Authorities found messages Davis sent using the pseudonym “Libertas,” which they claim demonstrates he was cognizant of the crimes being conducted on the website.
Severe Sentence If Convicted
Andrew Frisch, the lawyer who defended Nash, indicated in 2016 that Davis, if convicted, will likely receive a severe sentence since he is the last of the three men facing charges and has no new information for law enforcement.
Ulbricht has received a life sentence without parole.
Fidelity Investments CEO Abigail Johnson has revealed that the company is working on a number of cryptocurrency and blockchain-related products and offerings, with their release tentatively fixed for sometime before the end of the year.
Speaking on Friday at the Boston Fintech Week conference, Johnson declined to go into any specifics regarding what exactly Fidelity is working on in the crypto space, but investors and other market participants are likely to pay close attention to subsequent Fidelity announcements as it continues to build a reputation as one of the most crypto-positive large financial service firms in the world.
‘A Few Things Underway’
Speaking about Fidelity’s plans for moving into the cryptocurrency space, Johnson said:
“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time. We hope to have some things to announce by the end of the year.”
The announcement will come as welcome news to crypto markets, which continue to anticipate the entry of large institutional investment that by and large has not yet taken place. In a market with a total capitalisation still below $300 billion despite a surfeit of publicity and investment sentiment, Fidelity has consistently been one of the few large firms that has repeatedly and openly signaled its interest.
the company was rumored to be at work on a crypto exchange. In the same month, the company is said to have expressed interest in a hiring a fund manager to run a new cryptocurrency fund. Neither of these rumors have been confirmed by the company.
After launching in 2015, the company’s public charity organisation Fidelity Charitable also raised nearly $6 million in crypto donations in only the first six months of 2017. According to Johnson, the success of Fidelity Charitable lay in the fact that it gave a new class of wealthy crypto entrepreneurs an easy way to become philanthropists.
Fidelity isn’t Working on the Crypto Products it Thought it Would be
Johnson also stated that while the company is still exploring uses for crypto and blockchain technology and modifying many ideas along the way, its goal is to place the needs of the market before the technology.
In her words:
“What we started with was building a long list of use cases for either Bitcoin, Ethereum, other cryptocurrencies, or potentially just raw blockchain technology. Most of them have been scrapped by now or at least put on the shelf. The things that actually survived were not the things I think necessarily we expected. We were trying to listen to the marketplace and anticipate what would make sense.”
Despite the growth of cryptocurrencies and digital currency, the Fidelity CEO still maintained that the company does not expect financial services to be completely taken over by electronic offerings in the future, and that this will inform Fidelity’s decisions going forward.
According to Erik Voorhees, the CEO of popular cryptocurrency trading platform ShapeShift, the bear market of Bitcoin is crucial for building market foundation and infrastructure.
“Bear markets are for builders. The calm, the quiet, the disillusionment. While the fickle and fair-weather peer around with nervous insecurity, the builders become the market’s foundation, preparing the mortar and stone of tomorrow’s towers.”
Why Corrections Were Historically Important For Crypto
Over the past eight years, in 2010, 2012, 2014, 2016, and 2018, Bitcoin recorded five major corrections, with the latest 67 percent drop this year being the smallest correction in terms of percentage loss since 2010.
Last year, throughout November and December, the cryptocurrency market saw unprecedented levels of speculation and interest, as national television networks and mainstream media outlets continued to fuel hype around the emerging asset class.
In some regions like South Korea, the price of Bitcoin surpassed the $20,000 mark, even reaching $24,000 at one point as a result of the so-called “Kimchi Premium.”
Investors that have been involved in the market since the early days of Bitcoin were understandably unfazed by the correction, given the four previous 80 percent corrections the dominant cryptocurrency experienced.
But, new investors including many in South Korea that invested large sums of capital into the cryptocurrency market with their savings and loans experienced substantial losses.
While the bear market of cryptocurrencies in 2018 was devastating for every investor in the market, Voorhees and other experts like Coinbase chief technical officer (CTO) Balaji Srinivasan emphasized that the correction was needed to ensure that developers and companies within the sector can build proper infrastructure to handle the next wave of interest and demand.
In late 2017, blockchain networks like Bitcoin and Ethereum struggled to handle increasing demand which pushed transaction fees to the $5 to $30 range. The market experienced wild volatility as it saw an influx of new capital at a rate that was previously unseen.
If the market had continued to see similar demand and momentum throughout 2018, blockchain networks would have had failed to support rising user activity and demand.
As Srinivasan said:
“The reason this thing [cryptocurrencies] really had legs was after 2011 when there was a bubble and it went up, and it came down, and it didn’t go to zero. It kind of stabilized and kept coming back up. Around that time was basically when I said ‘okay, this is going to stick around, it’s got legs, it’s not going to zero.’ That was kind of a buidl year. We have this kind of bubble-crash-build phases in crypto.”
Progress in 2018
The bull market of cryptocurrencies in late 2017 was primarily initiated by individual investors and retail traders, as institutions were not involved in the market.
This year, with the efforts, of Bakkt, Coinbase, BitGo, Starbucks, Microsoft, Goldman Sachs, Morgan Stanley, and Citigroup, institutions are expected to enter the cryptocurrency market.
Public blockchain networks including major cryptocurrencies like Bitcoin and Ethereum have demonstrated rapid progress in scaling, which will allow the market to support the next wave of hype, demand, and interest towards the cryptocurrency sector.
New York State Attorney General Barbara Underwood has referred three major cryptocurrency exchanges to the state’s Department of Financial Services (NYDFS) for potential violation of New York’s virtual currency regulations. The exchanges referred are Binance, Gate.io and Kraken. This was revealed in the Virtual Markets Integrity Initiative Report released earlier today by the Office of the New York State Attorney General (OAG).
The report details the concerns initially raised by the OAG about the operations of cryptocurrency exchange platforms, especially regarding security, internal controls, market surveillance protocols, and other relevant consumer and investor protections.
Cat and Mouse Game
The OAG sent out a letter with a 34-point questionnaire to 13 crypto exchanges, including some without active operations in New York, asking them to take part in its Virtual Markets Integrity Initiative aimed at fostering greater transparency into their operations. The 13 exchanges addressed were GDAX, Gemini, bitFlyer USA, Bitfinex, Bitstamp USA, Kraken, Bittrex, Poloniex, Binance, Tidex, Gate.io, itBit Trust Company, and Huobi.Pro.
Following the letter, Kraken CEO Jeff Powell responded with strong words, stating that the OAG’s demands showed “disrespect” and “entitlement,” and that the letter showed Kraken made the right call to “get the hell out of New York three years ago.” According to the OAG report, Binance, Huobi, and Gate.io also declined to participate in the initiative, stating that they do not allow trading from New York.
Per the report, the OAG then investigated whether in actual fact these platforms accept no trades from New York State, and based on the results of the investigation, it made the recommendation to forward Kraken, Binance, and Gate.io to the Department of Financial Services for a thorough investigation on possible flouting of the state’s virtual currency laws.
In the document, the OAG bemoans the lack of regulation and supervision within the crypto exchange ecosystem, singling out Kraken for its “alarming” response to the initial letter.
An excerpt from the report reads:
“The OAG could not review the practices and procedures of non-participating platforms (Binance, Gate.io, Huobi, and Kraken) concerning manipulative or abusive trading. However, the Kraken platform’s public response is alarming. In announcing the company’s decision not to participate in the Initiative, Kraken declared that market manipulation “doesn’t matter to most crypto traders,” even while admitting that “scams are rampant” in the industry.”
In another significant move, the report also issued a direct warning to customers trading on the four non-participating exchanges, stating that the platforms may have received payment in exchange for listing digital assets, which should inform customers’ decisions to interact with them in any way.
The prices of Ethereum (ETH) and Ripple (XRP) have surged by more than 10 percent in the past five minutes, despite the lack of momentum of major cryptocurrencies like Bitcoin.
A spike in the volume of both XRP and ETH was triggered at around the same time on Bitfinex, affecting other major cryptocurrency exchanges.
No major announcements or developments were made in the past 12 hours, which led investors to be skeptical towards the abrupt increase in the prices of the two digital assets.
Possible Factors of XRP Rise
Earlier today, on September 18, some members of the Ripple community have suggested that a massive development by Ripple is set to be announced in the near future, building hype on a product or an event which has not been disclosed to the public yet.
The short-term hype around Ripple resonates the false anticipation towards a potential Coinbase integration in early 2018. No credible sources or respected figures in the cryptocurrency market have reported major partnerships or events for Ripple, which suggests that the movement of XRP was solely initiated by the market, unaffected by recent events.
Ripple announced that a new cryptocurrency product will go live next month, but the coverage of Ripple’s announcement was focused on the regulatory side of the cryptocurrency market, rather than the actual product himself.
“A couple of years ago the narrative was: blockchain good, crypto bad. What we’re now seeing is more and more regulators, policymakers taking the whole space in one conjunction. So, I think that narrative thankfully is now changing because policymakers, regulators are seeing that there is a strong benefit that digital assets, cryptocurrencies bring in,” said Sagar Sarbhai, Ripple’s regulatory relations in the Asia-Pacific and Middle East regions.
Given the fact that XRP started to surge in value less than an hour ago, it is far-fetching to claim that the recent announcement made by Ripple led the price of XRP to increase.
Apart from ETH, XRP is one of the few assets to have experienced extremely intensified movements on the downside in the past few months, performing poorly against Bitcoin and the US dollar. Oversold conditions demonstrated by XRP could have triggered the market to initiate a sudden corrective rally.
Suspicious Volatility in ETH
Generally, Ethereum is not affected by developments in the industry, as the second biggest cryptocurrency in the market represents a large ecosystem of decentralized applications (dApps).
It is rare for a single development or event in the market to affect the price of ETH. Hence, the abrupt increase in the price of ETH was more likely caused by a group of investors pushing for a corrective rally, after ETH recorded a steep decline from $220 to $190.
The abnormal market movements demonstrated on September 19 suggest that the market is still bottoming out and that a mid-term rally is still not ready to be initiated, at least until the market starts to become more stable.
The founders of a $1.45 billion investment firm and a dedicated blockchain fund are teaming up to launch a new cryptocurrency whose value would be pegged to the yen.
South China Morning Post reports that Grandshores Technology Group, a Hong Kong-based blockchain investment firm, is raising HK$100 million (US$12.7 million) to bootstrap the project, which aims to provide traders and other cryptocurrency users with a yen “stablecoin,” whose value would be immune to price volatility in the wider cryptocurrency markets.
Grandshores Technology’s founding partner, Yongjie Yao, is also a founder of $1.45 billion investment firm Hangzhou Grandshores Fund, which has received backing from the Hangzhou government. He said that the fund’s partners are working with a Japanese bank to create the as-yet-unnamed stablecoin, which should launch in late 2018 or early 2019.
“We believe cryptocurrency traders and exchanges will be potential takers of these stablecoin,” he said, adding that Grandshores aims to develop an entire suite of fiat-pegged stablecoins, beginning next with the Hong Kong dollar and Australian dollar.
Notably, Grandshores Technology said that yen-pegged token’s financing round will be denominated in tether (USDT), the controversial USD-backed stablecoin that serves as a proxy for physical greenbacks on many cryptocurrency exchanges.
Speaking more broadly about developments in the blockchain space, Yao told SCMP that he expects blockchain to go mainstream within the next half-decade.
“Blockchain will become the mainstream technology in the next three to five years,” he said. “We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating system was transiting from MS-DOS [disk operating system] to MS-Windows.”
The proliferation of trustworthy stablecoins is viewed by many as an important step in that process, as it would provide users with exposure to some of the chief benefits of cryptocurrency technology (e.g. rapid cross-border settlement) without the price volatility. There are some trade-offs, including the need for stablecoin issuers to adhere to KYC/AML policies and — in some cases — transaction censorability, but institutions and other highly-regulated firms may be willing to make this exchange.
Earlier this month, two New York-based charter companies, Gemini and Paxos, launched USD-pegged stablecoins, which both firms touted as the first “regulated” stablecoins.
For a small but growing community of users in the occupied Palestinian territories of the Gaza Strip and the West Bank, bitcoin has become a lifeline.
Ahmed Ismail, a financial analyst in Gaza, estimated there are at least 20 unofficial “exchange” offices there dealing cryptocurrency to local users. Ismail himself helps 30 clients use bitcoin to purchase investments abroad, such as stocks, since there aren’t any local alternatives for putting money to work.
One such currency dealer in Gaza, Mohammed, over the past four years he helped up to 50 families a month purchase an average of $500 worth of bitcoin each to send money abroad or shop online.
“Bitcoin, in their opinion, is cheaper, safer, and quicker,” he said. “Nothing works with Palestinian banks. Bitcoin wallets are alternative banks.”
While Palestine is not the only politically and economically isolated part of the world where cryptocurrency is making inroads, it’s somewhat unique among these markets in terms of the drivers – and limitations – to adoption.
For example, Palestinians do not face the kind of hyperinflation that drives Venezuelans, Iraniansand Turks to hodl a digital currency with a limited supply, since they don’t have a national currency at all, instead using stable foreign currencies.
But another core property of public blockchain networks is particularly appealing in the Palestinian territories: censorship-resistance.
Anyone can conduct a peer-to-peer bitcoin transaction. Once the transaction is paid for, it can’t be vetoed by an intermediary. This would appear to solve a real problem for a population with restricted access to the global economy amid the ongoing conflict with Israel. Even supporters in the West have had their bank accounts shut down for sending money to Palestinians.
“There is no payment gateway, like PayPal, for entrepreneurs to receive payments internationally,” Laith Kassis, CEO of the nonprofit Palestine Techno Park in the West Bank, told CoinDesk. “So here comes solutions on blockchain with private nodes.”
Facts on the ground
While sending or receiving bitcoin may be frictionless, on- and off-ramps just don’t exist in the Palestinian territories.
There’s no way for Palestinians to get their Israeli shekels, U.S. dollars or Jordanian dinars to online crypto exchanges since none of them work with local banks. Hence, they must rely on dealers as liquidity gateways, and that adds friction back in.
One Palestinian tech worker told CoinDesk that when she tried to cash out a bitcoin payment from a remote employer, she couldn’t get a fair fiat price from dealers in Gaza because crypto prices were soaring at the time.
As such, Saifdean Ammous, the Palestinian-born author of “The Bitcoin Standard,” is skeptical about any claims that the cryptocurrency currently offers a solution to his homeland’s economic straits.
“If the people who want to do the transaction don’t both have balances in bitcoin then you’re just adding extra layers of conversion from their home currency to bitcoin and back to the home currency,” said Ammous, who is a professor of economics at the Lebanese American University. “That’s never going to be a sustainable solution.”
Another non-starter, in his view, is the Palestinian Monetary Authority’s publicly touted plans to create a national cryptocurrency. Ammous said it “completely misses the point to think of bitcoin as a payment solution that can be added onto existing monetary systems.”
“Rather, it [bitcoin] is its own monetary system and it will have its own payment solutions.”
Plus, Palestinian communities revolve around local trust networks and physical assets like cash, because high unemployment and poverty rates create urgent daily needs. According to World Bankestimates, 21 percent of Palestinians live below the poverty line on less than $5.50 a day.
In that context, volatile and illiquid assets are predominately useful for cross-border transactions, but not everyday ones.
On the other hand, tech industry optimists like Kassis take a different approach than Ammous or Ismail by engaging with the PMA.
Kassis’s Techno Park hosted its first blockchain boot camp the first week of September, with 29 participants ranging from students to entrepreneurs and government officials. By the end of the five-day technical boot camp, several developers were working on new applications. Representatives of the PMA have participated in the center’s educational programming.
“The whole ethos of decentralized ledgers plays into the [Palestinian] community’s need to talk peer-to-peer, that will enable Palestinian entrepreneurs to do business internationally,” Kassis said, adding:
“I think blockchain and fintech has a huge potential to change the dynamics of our economy and solve many of the financial constraints [by] leveraging the decentralization of the network.”
Kassis said he hopes upcoming programs like the Techno Park crypto hackathon later this year will leverage Diaspora connections to foster local expertise for institutional payment solutions.
So far, the Techno Park’s blockchain seminars at four universities across the West Bank have discussed government-sponsored pilots, enterprise crypto services provided by companies like Ripple, and initial coin offerings, in addition to bitcoin.
“It’s all about bringing awareness and creating new markets,” Kassis said. “The younger generation is more knowledgeable about crypto, more than the IT departments at banks.”
And even if it’s too soon for bitcoin to make much difference now, Ammous said he believes that in the long term it has great potential to spark societal change.
Ammous argues that governments, including those in the Middle East, have been able to fund destructive ideas, such as wars, precisely because of their ability to issue unbacked fiat via central banks.
“The key thing is that the more it [bitcoin] grows, the more it will deprive governments of the ability to print more money,” Ammous said, concluding:
“I think, in the long run, this is going to be a very good thing for everywhere in the world, particularly places in the Middle East.”
Over the past 24 hours, the crypto market has experienced a large sell off as Bitcoin demonstrated a 3 percent drop in price, leading the market to drop $10 billion.
Ethereum and EOS recorded the largest drop amongst major cryptocurrencies at 9 percent, while Bitcoin Cash, Litecoin, Monero, Cardano, and Dash demonstrated steep 7 percent losses.
What Caused the Steep Decline?
On September 16, a wallet containing $720 million in Bitcoin, which was dormant for many years, started to move funds to Bitfinex.
A Reddit user with an online alias u/Sick_Silk claimed that the wallet is owned by a Silk Road-related figure, who was most likely involved in the operation of the dark web marketplace. The user said:
“It seems that the owner of a huge SilkRoad related wallet is moving funds actively since 3 days, dividing it in chunks of 100 coins by subwallets. The original wallet owned 111,114.62 BTC / BCH , which is currently valuated ~ $844M (without taking in account other #Bitcoin forks). Last movements on these subwallets are 4 years and 5 months old (March 9th, 2014).”
WizSec, a Japan-based security agency which discovered the money launderer behind the stolen funds of the now-defunct cryptocurrency exchange Mt. Gox, stated that the wallet is completely unrelated to Silk Road but rather to Mt. Gox. Analysts at the agency explained that a whale investor who purchased a massive batch of Bitcoin a few years back have started moving the funds.
It is possible that the sell-off of hundreds of millions of dollars in Bitcoin initiated by one whale investor caused a domino effect across all major cryptocurrency exchanges, causing the market to drop substantially.
Prior to September 18, major digital assets like Bitcoin and Ethereum demonstrated stability in the low price range, showing signs of a short-term bottom. Hence, it required a large sell-off and an unforeseen event in the cryptocurrency exchange market to trigger a drop of this magnitude.
Where Does the Market go Next?
Two days ago, Edward Morra, a respected technical analyst in the crypto space, stated that a drop below the $6,000 support level is not likely for Bitcoin.
“Market cap might close as a nice green hammer today on weekly close, last 2 times we did that – we went for little rally for couple of weeks Can’t be very bearish here to be honest,” Morra said.
For a few weeks, the market has shown extremely oversold conditions, which most likely led BTC to cap its drop at 3 percent. While other cryptocurrencies fell by larger margins, BTC successfully avoided a drop below the $6,000 support level, remaining above $6,200.
Given the trend of the market throughout September, it is likely that the temporary decline in the market will be recovered in the next few days, allowing the market to rebound to $200 billion.
The market has still avoided reaching its yearly low at $186 billion, which is one optimistic outcome of the drop.
The National Commercial Bank, Saudi Arabia’s first established bank, has become the latest financial institution to join RippleNet, Ripple’s enterprise blockchain network.
A massive market for international remittances due to its sizable migrant worker population, the Kingdom of Saudi Arabia (KSA) has already seen its central bank pilot Ripple’s technology for instant international payments. With over 5 million customers worldwide, the National Commercial Bank (NCB) has followed the central bank in joining RippleNet to enable near-instant international payments with partner banks internationally.
RippleNet is Ripple’s enterprise blockchain network with over 100 financial institutions including banks, payment providers, remittance operators and other financial institutions using the SWIFT-replacement platform for near real-time clearing and settlement of international transactions.
The bank will initially connect to financial institutions in North America and Asia, starting in Singapore, Ripple said in an announcement.
Ripple sees the KSA as one of the world’s largest sources for remittances over the last ten years. Citing World Bank statistics, 37 billion dollars in outward remittances were sent from the country in 2016, largely from a foreign worker population that remained over 10 million in 2018 despite a slowdown in the biggest Arab economy.
“For SMEs and corporations that depend on NCB, more efficient and transparent remittances will provide stability and help them grow their business faster,” Ripple added.
The Saudi Arabian Monetary Authority (SAMA) – the kingdom’s defacto central bank – became the first central monetary institution in the world to join RippleNet. The central bank initiated a pilot among regional banks using xCurrent, Ripple’s end-to-end tracking enterprise blockchain software.
Meanwhile, the central banks of Saudi Arabia and the UAE are concurrently working on a cross-border cryptocurrency for instant transactions between the two countries.
A 2-wallet Samourai Stowaway offers to make transactions private by masking user identity while keeping funds safe.
BITCOIN TRANSACTIONS ARE PSEUDO-ANONYMOUS
Bitcoin (BTC) transactions are often described as anonymous because users can exchange the cryptocurrency without providing any personally identifying information.
However, Bitcoin transactions are pseudo-anonymous. The history of each Bitcoin transaction is permanently stored on the blockchain. And, anyone can track and view this information.
The abstract of BIP0069 describes the issue of the leak of private information, as follows,
Currently there is no standard for Bitcoin wallet clients when ordering transaction inputs and outputs. As a result, wallet clients often have a discernible blockchain fingerprint, and can leak private information about their users.
Now, the 2-wallet Samourai Stowaway promises to protect user privacy with a mechanism which is based on the trusted cooperation established between two wallets.
Here is a 2-wallet Samourai Stowaway spend. Neither output displays the true spend amount which is, in effect, "stowed away" via a trusted cooperation between 2 wallets.https://t.co/3VgGvnelgE Based on an idea from G Maxwell w/algo guidelines from @LaurentMT
— TDevD aka "Crud", [No BC.i][No KYC] (@SamouraiDev) September 15, 2018
We will err on the side of caution and privacy. Only two (or more) wallets that have engaged in a ‘trusted’ relationship will be permitted to collaborate in a cahoots spend.
WALLET USERS CAN ESTABLISH PRIVATE TRANSACTION CHANNELS
Currently, each time users perform a payment transaction, they must exchange the Bitcoin address. This handicap impedes Bitcoin from becoming a mainstream currency. For some experts, the implementation of Reusable Payment Codes might help to solve this issue.
BIP47, “Reusable Payment Codes for Hierarchical Deterministic Wallets,” proposes a technique that can help to simplify the payment process while enhancing the user’s level of privacy.
BIP47 allows for the establishment of an invisible channel between two users. As defined by Justus Ranvier, the BIP’s author:
This BIP defines a technique for creating a payment code which can be publicly advertised and associated with a real-life identity without creating the loss of security or privacy inherent to P2PKH address reuse.
The 2-wallet Samourai Stowaway can allow users to establish private payment channels with each other, without revealing their Bitcoin addresses.
In this regard, SamouraiDev indicates that they have taken “an undefined byte in the BIP47 payload and are using it as a ‘feature’ byte so other wallets can detect functionality.”
San Francisco-based distributed ledger technology company Chain has been acquired by Lightyear, an entity powered by the Stellar network in an undisclosed agreement.
Announced last week, Lightyear will be re-named to Interstellar concurrent with the merger, a company release states. Chain, that builds enterprise-grade blockchain products backed by financial giants Visa, Nasdaq, and Citigroup, will offer its cloud product, Sequence, to Interstellar’s portfolio, allowing organizations to track assets while moving between private ledgers and the Stellar network, it added.
Jed McCaleb, co-founded of the Stellar Development Foundation and Lightyear, will be CTO of Interstellar. According to him, the merger will “help organizations build on Stellar.” He further said:
“Chain’s team has led the market for enterprise adoption of blockchain technology, which is a critical component of building a future where money and digital assets move over open protocols.”
At present, Stellar (XLM) ranks as the world’s sixth-largest cryptocurrency with a market cap of $3.6 billion. With the acquisition, Interstellar will receive Chain’s enterprise products and customer base, enabling organizations to issue, exchange, and manage assets on a public network.
Chain had previously raised more than $43 million from a variety of financial institutions including Capital One, Citigroup, as well as tech-focused funds such as Khosla Ventures, Blockchain Capital, and Pantera Capital.
Interstellar will ease enterprises to create financial services and products with the help of the Stellar open network. Chain’s CEO Adam Ludwin will serve as the CEO of new Interstellar. He stated,
“Chain has worked from inside the enterprise while Stellar has focused on the network between organizations. As a single team we will have a complete view and set of capabilities to make value-over-IP a reality.”
With the launch, Interstellar will have its headquarters in San Francisco, with office operations from New York City and Singapore. Initially, the startup aims to employ 60 employees, the report concluded.
The People’s Bank of China (PBoC), the country’s central bank, has issued a public notice urging investors of risks in cryptocurrency trading and initial coin offerings (ICOs).
The Shanghai branch of the PBoC issued a public notice on Tuesday to “remind” consumers and investors to increase their risk awareness of ICOs – a radical form of fundraising powered by cryptocurrencies, urging investors to avoid speculative trading in cryptocurrencies and steer away from overseas operators issuing ICOs.
It’s been a year since the PBoC issued a blanket ban on all ICOs, outlawing it as an illegal practice of fundraising.
In its notice today, the central bank heralded the ban as a success, stating:
“[T]he global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%, effectively avoiding the virtual currency bubble caused by skyrocketing global virtual currency prices in the second half of last year in China’s financial market. The impact has been highly recognized by the community.”
Still, by the PBoC’s own admission, cryptocurrency trading activity among domestic investors continued to thrive in offshore exchanges despite the mainland ban. In August, an internet authority run by central bank officials is targeting up to 124 offshore cryptocurrency trading platforms serving China’s citizens by blocking their IP addresses.
The central bank, in its notice today, said it will continue to monitor the offshore servers of these 124 platforms in a continuing clampdown against the sector that still finds ways to evade the blockade.
In response, the PBoC said it will “closely monitor ICOs and its multiple variants, strengthen research and judgement, proactively fight and prevent concerns.”
“In addition, it [the internet authority] has also strengthened the disposal of domestic ICO and virtual currency transaction related websites, public numbers, social media etc., and permanently blocked some public numbers suspected of releasing ICO and virtual currency trading hype information.”
Tech giants behind messaging platforms and online public forums like Baidu, Tencent and Alibaba have all censored, banned and/or blocked cryptocurrency transactions on their platforms.
The central bank also stressed that domestic residents should report operators behind ICOs, or any variant of ICOs for any “suspected illegal activity or illegal crimes.”
Once among the world’s largest trading markets for bitcoin and other cryptocurrencies, China’s comprehensive curbs on the cryptocurrency sector – led by the Shanghai PBoC with “on-site checks” of the country’s biggest bitcoin exchanges in early 2017 – has seen China’s influence on crypto trading markets and global prices wane considerably.
Disclaimer: All translations from Chinese are unofficial.
Dubai Police currently investigating a Dh 300 million ($81.7 million) international fraud case have issued a warning about the potential role of digital assets in terms of facilitating crime in the UAE.
Speaking at a forum on Sunday September 16, Major-General Khalil Ibrahim Al Mansouri, assistant-commander of criminal investigation department (CID) at the Dubai Police warned that a lack of awareness in the UAE about the risks inherent in digital currency aids cybercriminals in carrying out fraud, money laundering and piracy in the country.
According to police officials at the event, unmonitored large scale electronic financial transactions inevitably pose a substantial amount of risk, and the UAE government needs to develop a legal and law enforcement framework to deal with this threat.
Predicting the Rise of Electronic Money and a Possible UAE Cryptocurrency
At the event, Lt-Gen Dhahi Khalfan Tamim, deputy chairman of the Dubai Police and head of general security in Dubai noted that the nature and price of digital currencies makes it such that it is impossible to offers protection guarantees to investors. In the light of this he said, the only possible course of action on the part of the government is to warn investors about the risks they potentially face.
According to him, electronic money will eventually replace cash, but that in itself does not mean that all digital currencies will achieve the trust levels of fiat as long as their source and tracking system remains unknown.
A number of experts also spoke on the need for the UAE to proactively engage with cryptocurrencies so as to preempt their possible deployment as a tool of criminality. Dubai SmartWorld chairman Dr Saeed Al Dhaheri stated that rather than wait, Dubai should take the initiative and create a regulatory system to monitor electronic currency and stop it from becoming an enabler for crime. According to him, the high level of crypto startup failure within four months of establishment – 56 percent – is proof that a large portion of such businesses are “fake”.
In his words:
“For every one successful digital transaction, there are five failed currencies.”
Experts recommended the formation of a comprehensive legal system for regulating crypto in keeping with the Emirates Blockchain Strategy. To this end, they suggested the launch of a state-backed UAE cryptocurrency, as well as amendments to existing AML and CFT laws to state that they also apply to the use of digital currencies.
Authorities in the UAE have a well documented ambivalence about the issue of cryptocurrencies and digital assets, often issuing conflicting messages within weeks of each other. The UAE’s Securities and Commodities Agency (SCA) issued an investment warning to ICO investors in the country. Previously, the UAE Central Bank governor Mubarak Rashed Al Mansouri also stated that cryptocurrencies are “often abused for illicit financing purposes”.
However in December 2017, the UAE and Saudi Arabia began a collaboration on a proposed cross-border cryptocurrency. In February 2017, the UAE government also announced a partnership with IBM for a blockchain trade finance project.
Hackers stole the processing power of several Indian government websites to mine cryptocurrencies, researchers found.
They seem to have done the same to many of these government websites mainly because they have high traffic volume, found Indrajeet Bhuyan, one of the security researchers behind the revelation.
“Hackers target government websites for mining cryptocurrency because those websites get high traffic and most people trust them,” he stated. “Earlier, we saw a lot of government websites getting defaced. Now, injecting crypto-jackers is more fashionable as the hacker can make money.”
An effort from Indian media to speak to JA Chowdary, the IT advisor to AP’s Chief Minister, yielded a one-liner response from him.
“Thanks for notifying us about the AP website hacking,” it said.
However, nothing concrete has been done to fix the issue. The malware code continues to run on AP’s public portals.
Cryptojacking on the Rise
Hackers are inclined to use cryptojacking as their prime tool to earn money illegally, for it doesn’t require significant technical skills. The darknet sells cryptojacking kits for a mere $30, finds a Digital Shadows report. It is a cheaper alternative to a much more complex ransomware attack, meaning more money for less risk.
Nevertheless, cryptojacking continues to be a poor man’s choice for its inability to bring in any substantial earning.
“With a hash rate of 80 H/s and CoinHive’s payout ratio, a miner earns about 5.8 USD per day and website on average, which supports our observation that web-based cryptojacking currently provides limited profits only,” states a report by the Braunschweig University of Technology.
Less risk also means less money!
At World AI Conference 2018, Jack Ma, the co-founder and chairman of $414 billion e-commerce conglomerate Alibaba, stated that artificial intelligence (AI), blockchain, and Internet of Things (IoT) can all become meaningless if they fail to target the manufacturing industry.
“AI, Blockchain and IoT will be meaningless tech unless they can promote the transformation of the manufacturing industry, and the evolution of the society towards a greener and more inclusive direction,” Ma said.
The speech Ma provided at World AI Conference was not exclusive to blockchain technology but rather three technologies which most major conglomerates and governments consider to be the building blocks of the fourth industrial revolution.
The manufacturing industry of China alone is valued at around $3.1 trillion, with the US and other major economies operating multi-trillion dollar manufacturing sectors as well.
Over the past decade, especially in the past three years, the industry of smart manufacturing has grown exponentially, as conglomerates have begun to explore various innovative ways to cut back costs and improve the efficiency of the manufacturing process with emerging technologies.
As such, the manufacturing process of most hardware and machineries have drastically changed in recent years, with companies moving towards automation and the usage of robotics to eliminate manual errors and speed up existing operations.
Since the emergence of the concept of applying decentralized systems to a variety of industries in early 2016, many blockchain consortia and development firms have established their focus on utilizing the blockchain to rebuild supply chains.
Specifically, conglomerates and consortia such as Hyperledger and Ethereum Enterprise Alliance (EEA) have developed both private and public blockchain-based systems to deploy supply chains of large-scale corporations on top of an immutable network.
In terms of scalability and adoption, blockchain technology is still at its infancy, with public peer-to-peer networks currently being able to handle around 10 to 50 transactions per second. With second-layer scaling solutions and innovative consensus algorithms, the scalability issue of blockchain technology can be addressed, which will allow developers to create systems to target some of the largest industries in the world like manufacturing with decentralized protocols.
Apart from finance, manufacturing remains as the biggest market which emerging technologies can target. AI, IoT, and blockchain have been used to a certain extent in the manufacturing sector but not have not demonstrated their full potential.
According to Ma, if the blockchain can be used at a large-scale as the primary data processing technology and decentralized database by companies in the manufacturing industry, then decentralized systems will see true mainstream adoption outside of the realm of finance.
Can it Happen?
Currently, there are Ethereum-based projects like VeChain, WaltonChain, and proof-of-stake networks like Cardano and EOS that would allow developers and companies to build applications on top of the blockchain to promote the transformation of the manufacturing industry.
The difficult aspect of implementing decentralized systems in the manufacturing sector is that both developers and conglomerates have to acknowledge the fact that the blockchain, at least in its early phase, will be more inefficient and impractical than centralized platforms.
MyCrypto, a non-custodial Ethereum and ERC20 token wallet created by the co-founder of MyEtherWallet, has integrated a feature that enables Ethereum users to schedule ETH transactions ahead of time.
On MyCrypto, an open-source wallet that is structurally similar to MyEtherWallet, users can connect hardware wallets like Trezor and other non-custodial wallets such as MetaMask to use their existing wallets on a better interface.
As such, the ETH transaction scheduling feature on MyCrypto can be used by any Ethereum wallet user by simply connecting their existing wallets with MyCrypto.
MyCrypto is the first wallet platform to implement native cryptocurrency transaction scheduling by utilizing Chrono Logic’s debt smart contracts and temporal Ethereum-based innovation.
With it, Ethereum users can now send transactions ahead of time on the Ethereum mainnet, which opens up the possibility of the types of payments that simply did not exist before.
For instance, with the feature, Ethereum users can send funds to an ICO in advance to refrain from being left out of the token sale, send payments to subscriptions ahead of time, and schedule transactions to business partners or suppliers.
“Maybe you want to get into that latest hot ICO but you’ll be away from your computer. Maybe you want an ENS domain name and don’t want to miss the reveal period Maybe you need to pay at a certain time for a subscription. Maybe you want to send yourself a reminder in the future (though there are probably better options for this),” the MyCrypto team said.
In an interview with the Chrono Logic team, Ethereum co-creator Vitalik Buterin stated that scheduling transactions is a feature that is very valuable, as he explained:
“I know there were a lot of interest in it [Ethereum alarm clock] way back when Piper created the alarm clock. It seems like something that would be very valuable.”
Taylor Monahan, the founder and CEO of MyCrypto echoed a similar sentiment as Buterin, stating:
“I think it just opens up the possibility for a lot of things. One of them is multi-step transaction. When you have to complete a step and then you wait for something to happen, whether that is something in the real world or just like with the ENS for example.”
More Wallets Interested
MetaMask software developer Frankie Pangilinan said that alarm clocks are good for subscriptions, while Ledger co-founder Nicolas Bacca said that the team is exploring ways to implement alarm clock into hardware wallets to add the transaction scheduling feature.
“I see how we can collaborate with a hardware wallet to make sure your transaction is scheduled properly, I mean has been scheduled at the right time,” Bacca noted.
Because scheduling and execution of transactions are completed with smart contracts, and the code of the smart contracts utilized by the Ethereum Alarm Clock and Chrono Logic are audited, there exists no risk of transactions failing or being sent out at the wrong time.
The University System of Georgia (USG) announced the launch of a state-wide fintech academy on on Sept. 11. It is the largest education effort of its kind in the United States.
While individual universities have offered blockchain courses, such as Stanford and NYU, Georgia is opening the program to all current students across all colleges in the state’s public university system. Additionally, professionals and degree-holders who desire to enter the fintech sector can enroll in the academy.
GA Fintech Curriculum Heavy in Blockchain Tech
Called the Georgia FinTech Academy, the program will have two in-person locations in the downtown Atlanta area for on-campus classes. Courses will also be conducted online and in departments within Georgia colleges. Completion of these programs will result in accredited credentials or degrees.
The scale is large. The mission is to make fintech education accessible to everyone in Georgia, with a focus on experiential learning through apprenticeships.
Though the large effort could be seen as risky and too early, Jim Senn, founding director of the program, makes a clear separation between core technologies and individual cryptocurrencies.
“Cryptocurrencies, such as bitcoin and ethereum, should be considered separately from blockchain or distributed ledger. Bitcoin is an application. Blockchain is a new base technology featuring a distributed ledger.”
He admits that core blockchain technologies are still new, but USG seems to have already placed its bet on growing adoption.
Reflecting on the industry, Senn said:
“The industry around blockchain and distributed ledger is in its infancy. In many ways it feels like the very early days of the Internet, prior to the introduction of the worldwide web. The technology community is only now beginning to develop the tools and practices to make blockchain a viable technology for business and government.”
As a hub for fintech innovation already, Atlanta is drawing on experts from private companies to teach targeted curricula for blockchain applications, including commercial banking, software development, and supply chain logistics.
Crypto — a New Arms Race in Education?
Since blockchain has the potential to bring regions large investments and economic innovations, countries are stepping up their efforts to teach the technology and gain a competitive edge with intellectual property.
China has poured money into luring blockchain innovators and investments, though the country still, ironically, has an overall ban on large components of the cryptocurrency ecosystem.
Malta, meanwhile, has a running start, with government and residents accepting cryptocurrency investors wholeheartedly. The University of Malta created a €300,000 blockchain scholarship fund.
Georgia’s new fintech program could be a major step in a growing push for the U.S. to step up efforts nationally in distributed ledger technology, with an eye toward remaining competitive globally.
Binance is set to unveil a fiat currency exchange that will be based in Singapore. This was revealed by CEO Changpeng Zhao over the weekend while speaking at the Cumberland Summit, a blockchain event in Singapore. Zhao further revealed that the new exchange is currently under an invitation-only beta testing phase.
After making the announcement during his speech on September 15, Zhao also posted it on his twitter account where he also revealed that it will begin beta testing on September 18, 2018.
Day 2: @JamesRadecki32 starting off breakout #2 with @tylerwinklevoss and @cz_binance on crypto exchanges. @GeminiDotCom @tylerwinklevoss @ApoloOhno @arrington @TusharJain_ @MatthewRoszak @missbitcoin_mai #cumberlandsummit #crypto #bitcoin pic.twitter.com/Sk2XuU1Bhc
— Justin Chow (@Justinchow08) September 15, 2018
Fiat Exchanges and Singapore
Thus far, very few details have been provided about the operational framework of the new fiat exchange, but there is speculation that it will likely offer Singapore dollar trading pairs. Fiat to fiat exchanges are still a relative novelty in the crypto world, and they remain largely untested in the “wild”. From a Binance point of view, opening a fiat exchange improves its users’ experience by enabling them to seamlessly convert across several fiat currencies and then make transactions directly from the exchange account using the new currency. Even more significantly, fiat to fiat exchanges generally offer users interbank exchange rates as against retail exchange rates, which means that users get more for their money.
Binance’s choice of Singapore for this experiment is not without precedent, as over the past few years Singapore has become one of the global crypto industry’s major hubs alongside South Korea, Hong Kong, Malta and the USA. The island state has moved toward the epicentre of global crypto innovation in part because of its relatively relaxed regulatory environment and its booming economy, often described as one of the “Asian Tigers”.
Singaporean authorities do not regulate crypto exchanges because crypto is not recognised as legal tender in the country, but exchanges are nonetheless required to abide by AML and CFT regulations.
Binance Continues Expanding
Often described as the world’s largest crypto exchange by volume, Binance has enjoyed a red letter year despite prevailing crypto market conditions. Following a blanket ban on crypto trading in China, the company has embarked on an aggressive global expansion drive, opening up in Malta, Jersey, South Korea, Uganda and Liechtenstein.
The company recently outlined its strategy for expanding across Africa, which some see as the crypto world’s last frontier with potential for unparalleled adoption due to its relatively underdeveloped financial systems. With a daily trading volume that regularly approaches $1 billion, the exchange boasts of market-leading liquidity for a large number of trading pairs.
LG Uplus, the cellular carrier subsidiary of South Korean conglomerate LG Corp., is set to trial a cross-carrier blockchain payments service for overseas travelers.
Dubbed the ‘Cross-Carrier Payment System’ (CCPS), the project sees the LG mobile carrier arm collaborate with partners in Japan, Taiwan and the United States to enable global mobile payment services among global telecommunication carriers, LG Uplus said on Sunday.
LG Uplus has inked a memorandum of understanding (MoU) with Taiwan-based Far EasTone Telecom and Japanese giant Softbank to partner for the trial scheduled to begin in early 2019, the Korea Timesreports.
The blockchain platform, specifically, will be developed by U.S.-based Silicon Valley startup TBCASoft.
In essence, the rollout of the service will enable Korean subscribers of LG Uplus to make purchases at partner retailers in Taiwan and Japan using their mobile phones. The payments service is based on the Rich Communications Service (RCS) global messaging standard.
“A mobile customer based in Japan, for example, can travel to the USA and make a purchase in dollars via RCS,” SoftBank explained in announcing the prototype of the service last week.
“The RCS global messaging standard can also be conveniently used to send a payment. The flexibility of the CCPS blockchain API enables the recipient to use an RCS-based messaging app or legacy messaging service like SMS or mobile email, to receive person-to-person (P2P) money transfers through the RCS wallet app either in the same country or overseas,” the Japanese telecom carrier added.
With transactions billed and paid through their carrier in their home currency, the ‘direct carrier billing service’ will similarly allow EasTone and Softbank subscribers to use the service for payments when travelling to Japan, Korea and Taiwan. This will help save on overseas credit card markups that include foreign exchange fees, the trio said.
LG Uplus’ mobile service unit director Joo Young-joon said:
“Customers will have the benefit of an overseas payment system based on convenient, economical and secure blockchain technology.”
TBCASoft, SoftBank and Far EasTone are also founding members of the Carrier Blockchain Study Group (CBSG) consortium, a global working group of telecom carriers launched in September 2017. Their namesake product, the CBSG blockchain, is also looking at scaling beyond payments to identity and authentication for subscribers.
“And in addition to the overseas payment solution, LG Uplus will continue to develop new business opportunities with CBSG blockchain and global telecom leaders,” LG Uplus’ Joo Young-joon added.
Two cash-strapped football clubs are trying to circumvent financial issues by planning a tokenized crowdfunding round, reports the Times.
Newcastle United and Cardiff City, the English Premier League teams, are reportedly in talks with SportyCo, a decentralized sports investment & funding platform, to launch their Initial Coin Offering (ICO) round. SportCo has earlier partnered with Avaí Futebol Clube to raise them about $20 million via a public sale of AVAI tokens. The company is also a principal sponsor of Espanyol, the world’s top football team.
The partnership would enable the clubs to begin the sale of their private digitized tokens as securities/utilities. As interested participants purchase these tokens, they would either gain a particular stake in the clubs’ revenue or receive additional benefits for using the token on game-related purchases.
The Mag highlights the poor financial health of both Newcastle United and Cardiff City. While Newcastle United earlier has been named for losing profits off to bad managerial decisions – those taken by the club owner Mike Ashley – Cardiff City is facing a debt burden of over $150 million, bulk of which they owe to Vincent Tan, a Malaysian investment tycoon.
Cardiff even cut the wage bill to £20.6m, 18% lower than the previous year.
Both Newcastle United and Cardiff City have admitted that they are fighting for survival with lower budgets.
Sir John Madejski, a prominent figure in the Premier League once said that running a football club is not for faint-hearted; that one has to have deep pockets to run them smoothly especially when most clubs run at a loss.
Some common issues prevent football clubs from governing their finances properly. The wages of footballers are considered too high and paying unnecessarily hefty commissions to their agents adds up to the overall profit-deficit. Whatsoever, football continues to be a key part of a state’s – or even nation’s – economic strategies.
Understanding that running a football club cannot always be a one-rich-man show, football clubs are waking up to the possibility of going public. ICOs somewhat simplifies the process by allowing organizations to raise funds by selling digitized tokens that could either be used as proof-of-ownership or tools to avail discounts and offers from the issuers. The digitized crowdfunding method, so far, has appealed to startups that look to raise funds to build blockchain-enabled applications.
“Money raised from the crowd sale goes straight into club infrastructure which will stay with the club forever,” Marko Filej, SportyCo’s co-founder, stated. “With this initial money offer, we are opening a new chapter in football and the sports industry in general.”
Less than a fortnight since his appointment as Zimbabwe’s finance minister, the new treasury boss is potentially placing himself on a collision path with the country’s central bank with his pro-cryptocurrency stance.
According to Mthuli Ncube, Zimbabwe’s newly minted Minister of Finance, cryptocurrencies could assist the southern Africa country to solve the cash crunch that has been ongoing for the last two years. Towards the realization of this, Ncube has promised to nudge the Reserve Bank of Zimbabwe (RBZ) into establishing a cryptocurrency division that will be tasked with assisting the country’s apex bank to develop a better understanding of digital assets, IT Web Africa reported.
Ncube cited the example of Switzerland where the European country’s central bank has adopted a more progressive stance on bitcoin and other cryptocurrencies saying Zimbabwe should copy this example.
“One can pay for travel using bitcoin in Switzerland. So, if these countries can see value in this and where it’s headed, we should also pay attention,” Ncube said. “We have innovative youngsters so the idea shouldn’t be to stop it and say don’t do this, but rather the regulators should invest in catching up with them and find ways to understand it, then you regulate it because you now understand it.”
With banks imposing a cap on amounts that depositors can withdraw, the severe cash shortage in Zimbabwe has been worsened by the fact that savers tend to hold on to their money rather than entrust it with the financial institutions. And as the economy gets more dollarized, the cash shortages have been further exacerbated with the result being that foreign currency reserves are also dwindling.
If Ncube is able to convince the RBZ to set up the cryptocurrency unit it will be a 180-degree turn for Zimbabwe’s central bank which has taken an anti-crypto stance. For instance, banks in the country were prohibited from processing cryptocurrency transactions for both investors and traders of the nascent asset class citing risks and dangers associated with them include their use in money laundering and other illegal activities.
“Further, cryptocurrencies can be used to facilitate tax evasion as well as externalization of funds in violation of a country’s laws,” the RBZ wrote in a circular to financial institutions at the time.
Though a High Court in the country’s capital later reversed the ban, the regulatory uncertainty has forced some of the cryptocurrency exchanges such as Golix to explore other markets in Africa to avoid overreliance on the Zimbabwean market.
Japanese financial services group SBI Holdings will launch its consumer payments application MoneyTap, on both Android and iOS, using Ripple’s blockchain technology.
SBI Ripple Asia, a joint venture established by SBI Holdings and San Francisco-based FinTech giant Ripple in early 2016, will soon launch ‘MoneyTap’, CEO Takashi Okita revealed on his own Twitter handle.
MoneyTap is the first real noteworthy application of Ripple’s blockchain tech for consumer-ended retail payments in Japan, enabling domestic bank customers to transact instantly 24 hours a day and seven days a week using a QR code, a phone number or a bank account number.
There is no indication – it’s also unlikely – that the technology uses XRP, Ripple’s native crypto token.
‘Zengin’, Japan’s decades-old national payments clearing platform, only allows domestic money transfers between users of different banks between 8:30 AM and 3:30 PM in Japan, with the added pitfalls of banking fees.
MoneyTap was initially announced by the SBI Ripple-led banking consortium that comprises of over 80% of Japan’s banking assets. The Japan Bank consortium was first launched in November 2016.
MoneyTap’s website does not provide a specific launch date for the mobile app but does reveal the user interface (UI) while confirming the proposed launch, in fall this year (September-December).
At launch, customers belonging to three members of the consortium will be able to use the service before its eventual rollout to the remaining 59 banks of the consortium. Thee three banks supported at launch are Suruga Bank, SBI Net Sumishin Bank and Resona Bank.
Still, MoneyTap isn’t the first consumer-based retail payments application using Ripple’s blockchain technology.
In April, Spanish banking giant Banco Santander launched a personal payments app for retail customers in Spain, the United Kingdom, Brazil and Poland. The smartphone app enables near-instant transfers, end-to-end tracking of payments with complete transparency of foreign exchange fees, all in “3 clicks and 40 seconds” according to Santander. This particular solution uses Ripple’s enterprise blockchain software xCurrent, a product that does not use XRP.
The Korea Customs Service (KCS) has entered an agreement with Samsung SDS to implement the latter’s blockchain technology for an export customs clearance system.
Samsung SDS, the IT subsidiary and technology provider of Korea’s largest conglomerate Samsung, will develop the world’s first blockchain-based export customs logistics service for the Korea Customs Service to enable efficiency and curb fraud in the industry.
A memorandum of understanding between the two entities also sees 48 other organizations and companies including relevant government authorities, shipping operators, logistics firms and insurance providers join the agreement, a press release said.
Samsung SDS will use Nexledger, its enterprise blockchain platform, for the customs platform to fundamentally share export-related documents seamlessly between stakeholders in every step of the export trading process from manufacturing, storage, customs declaration to final delivery of the shipment.
Launched in April 2017, Nexledger acts as a cloud computing solution for corporations and government authorities like the KCS to build their own services as an added layer. The core platform enables real-time transaction processing in scale, smart contracts as well as a management monitoring system developed for various industries including finance, manufacturing and the public sector.
For instance, the Seoul metropolitan government chose Samsung SDS to apply Nexledger tech for the capital city’s entire municipal administration by 2022 to enable transparency and improve citizen convenience.
Since its launch, Nexledger’s biggest impact remains in Korea’s logistics industry. In May 2017, Samsung SDS launched a blockchain consortium with government authorities including the KCS, Korea’s Ministry of Oceans and Fisheries, logistics giant Hyundai Merchant Marine and tech giant IBM Korea.
The endeavor saw Nexledger’s tech successfully power a Korea-China shipment trial a year ago. The 7-month pilot to record and track shipping logistics and documents related to both exports/imports concluded in December 2017.
The KCS and Samsung SDS began developing the customs clearance platform to issue Certificates of Origin, a crucial international trade document that certifies that goods in a particular export shipment are wholly obtained, produced, manufactured or processed in a particular country, on a blockchain.
The KCS confirmed a full pilot of the dedicated blockchain platform in June.
Nexledger is also being adopted by Korea’s commercial banking industry to power a new customer ID verification platform that improves on a decades-old public certification system.
Google Security Expert Cautions Traders Against Boasting Online
In a recent interview with CNBC, Google security lead, Mark Risher, cautioned crypto traders against boasting of their cryptocurrency portfolio on the internet.
Mr. Risher warned that gloating of one’s virtual riches risks attracting malicious actors such as cyber attackers, citing an uptick in attacks targeting the owners of cryptocurrency wallets. Mr. Risher asserted that many of said attacks can be traced back to a post made by the victim on a public message board – attracting the attention of scammers.
“It could just be a case of mistaken identity or guilt by association. They could be using someone who seems to be low value to pivot toward somebody considered a higher value target, like somebody political in nature. Or maybe they saw that you were discussing Bitcoin on a public message board,” he said.
Increasing Sophistication of Online Scammers
Mr. Risher also warned that social media has increased the sophistication with which many attackers target their victims through allowing scammers to conduct detailed research into the individuals that they target. “You might think of this generic ‘Dear Sir or Madam, I am contacting you to ask you for a favor,’ but the truth is many of these attackers have done some serious research on their victims,” Mr. Risher said.
Earlier this year, it was reported that cryptocurrency Youtubers were increasingly becoming targeted by malicious actors. Peter Saddington, the host of the Youtube channel ‘Decentralized TV’, recounted being hacked in late 2017, stating: “You have to be very careful about that stuff as a Youtuber. In my early days of Youtube, I used to show my trades. I learned that was not a good idea.”
Mr. Saddington asserts that many Youtubers have “learn[t] the hard way,” stating “We no longer have a bank that we can whine to and say, ‘bank, my mohackney was stolen, give it back to me.’ No. We’re not in that economy anymore. If you lost your Bitcoin that is 100 percent your fault.”
It seems that every other day there’s a new botnet out there, and they’re mostly copies of one another. However, researchers at Chinese cybersecurity company Qihoo 360’s Netlab found a new type of botnet that takes things up a notch by using a reverse proxy service called ngrok for its payload server.
“This botnet hides its downloader and reporter server by using the ngrok reverse proxy service to periodically generate a large number of random subdomain names. The botnet master does not have control over what the subdomains will be, as the subdomains are generated randomly by the ngrok service, which in this case is actually a blessing for the botnet,” the researchers said.
Basically, ngrok creates a subdomain for the hacker, the hacker communicates the subdomain to all infected nodes, they connect to the server through the domain, and then proceed to mine coins. Using this method, it’s more difficult to track down exactly where the payload server is located.
When people cannot find the location of a server, they cannot determine what authorities they should contact or what service provider to submit complaints to.
“This miner campaign and its domain switching activity started from June this year. The C2 domain names are replaced in groups periodically and each group’s lifetime is less than 12 hours,” the researchers added.
Though this is a clever way to run a botnet, it isn’t the first time that hackers used reverse proxies to mine cryptocurrencies.
Another, cleverer, group of hackers hijacked Tesla’s Amazon Web Services account, turning its entire infrastructure into one big mining rig. This wasn’t the only trick they had up their sleeves, however.
In addition to compromising Tesla’s hosting infrastructure, they also managed to make their own mining pool and conceal its IP address using reverse proxy service CloudFlare. This particular move helped them avoid using public pools, which would have swiftly shut down any of their mining activities.
Looking through how sophisticated attacks have become in the cryptocurrency world, we shouldn’t be surprised if we soon see hackers take advantage of onion routing and I2P for reverse proxies, which would be far more difficult to take down than attacks using public services like ngrok and CloudFlare.
The virtuous circle that saw buyers of ethereum-based ERC-20 tokens drive ether’s price above $1,400 mid-January has morphed into its diametric opposite.
The initial coin offering boom has fizzled and the price has sunk to just above $200.
This new phase, a vicious cycle downturn that has exposed the ether market’s intrinsic connection to the ICO boom and bust, is of course painful for anyone who bought ether in the last 12 months.
But in the spirit of encouraging the crypto community to embrace failure as a real-world source of learning and growth, the experience is also incredibly informative for understanding how value is formed and lost in crypto assets attached to blockchain platforms.
This dynamic is still being figured out. However, a strong hypothesis is emerging that the correlation between the price of a token such as ether and its actual or expected network utility —that’s is, its value as the “fuel” in a blockchain ecosystem — might not be very strong.
This is challenging for anyone who, like me, was initially enthusiastic about the “fat protocol thesis.” As a recap, that idea, convincingly made by Union Square Ventures partner Albert Wenger, held that the prospect of rising prices for utility tokens allows developers of open-access software platforms to extract value for their work even when the underlying protocol is open and free.
It argued that crypto assets and blockchains would overhaul the prevailing Internet paradigm in which value could only be extracted by application developers who could charge users for their services whereas the developers of open-access protocols such as SMTP an HTTP were condemned by the requirement that they be free of charge.
But now we’re left wondering whether tokens, these units of value/mediums of exchange – call them what you will – might have their upside fiat-currency monetization power capped because price could be antithetical to utility (which we might define as “transactability.”)
In Money, Bad Trumps Good
In essence, the problem has to do with Gresham’s Law that “bad money drives out good” – the idea being that if you want a currency, or any token used for economic exchange, to function as a fluid enabler of transactions within your community, you don’t want it to be overly attractive as an investment or store of value.
If a currency has that “good” quality – i.e. is durable, fungible, scarce, and can’t be debased by some centralized issuer – it will appeal more as something to hold rather than use.
This has fueled the idea among mainstream economists that there’s a sweet spot in which the interests of a community – but not necessarily those of the individual – are best served by their money being just a bit “bad.” There needs to be some modest expectation of depreciation or inflation if a currency is to be trading. Communities need people to be willing to offload their currency rather than hoard it.
Milton Friedman, the father of monetarist economics, said as much, arguing that a very modest amount of expected, inflationary monetary expansion is desirable. It’s by no means an argument for currency debasement and rampant abuse of fiat power. It’s about optimizing exchangeability versus investment prospects.
I’ve argued elsewhere that this might be a problem for bitcoin, not for HODLing investors per se but in whether it can ever challenge the dominant fiat currencies as a medium of exchange. Bitcoin is a very “good” currency in terms of its scarcity and incorruptibility, which means its store of value qualities trump its transactional utility.
Many bitcoin enthusiasts dispute this view, arguing that after establishing itself as a solid store of value, a currency can then become useful as a transactional unit. Time will tell whether they are right, but for now I think the store of value treatment of bitcoin is winning out.
Notwithstanding its massive price drop since December, anyone who bought into bitcoin in the eight years before its runup last fall will quite satisfied with the returns they’ve had by just holding it. By contrast, real-world, non-capital transactions are few and far between. Layer Two solutions such as Lightning will make transactions easier, but I’m not convinced that this scarce “good” currency will become widely transacted.
Can Ether Have Reservation Demand?
What does all this have to with ether?
Well, as Vijay Boyapati laid out in a provocative tweetstorm, ethereum’s smart contract functionality depends on people using and transacting in ether. That’s what ether’s metaphorical identity as the “gas” of ethereum is all about. But Boyapati said that’s antithetical to the concept of “reservation demand,” a measure of how long people hold a currency and the core driver of the price of a monetary unit.
For the brief period of ICO mania last year, Boyaparti argued, ether suddenly attracted reservation demand because investors needed to acquire and hold a store of ether to participate in the ongoing flow of ERC-20 token offerings.
But now that flow has stopped. The issuers of those tokens who really just wanted dollars to fund their operations — not a store of ether with which to conduct smart contracts — are now faced with an existential threat if they don’t dump the rapidly falling ethereum tokens they hold. Hence the conversion of a virtuous circle into a vicious circle.
Jeremy Rubin, a Stellar developer and former MIT colleague of mine, argued in a TechCrunch piece that these and other aspects of the ethereum ecosystem could drive the price of ether to zero.
A key point of Rubin’s was that issuers of tokens that trade on top of ethereum can and will be incentivized to build models in which their smart contract network is managed not by transactions in the underlying “gas” of ether but by the incentives baked into trading in their own token.
The piece stirred up a lot of emotion, including a rebuttal of this “economic abstraction” argument from ethereum founder Vitalik Buterin.
Where Does Value Meet Price?
I’m not convinced of Rubin’s argument that the price is destined for zero even if, as he assumes, ethereum ends up succeeding as a ubiquitous smart contracts platform that enables world-changing dapps.
In essence, I think there is some natural base level of reservation demand that will always be there for a unit of exchange that makes a powerful blockchain tick. And it’s hard not to imagine that this level of demand increases if and when ethereum moves to a proof-of-stake consensus mechanism. At some point, utility value does correlate with price, just not with nearly the same direct relationship that people have assumed.
This debate is very important. If a disconnect is established between utility value and price, it will greatly affect how participants in token markets generally treat the assets they are trading. Note, however, that might actually encourage the development of dapps that are all about functionality and not just fronts for quick money-grabbing efforts by crypto startup founders.
The jury is also still out on the whether etheruem, or any blockchain platform, is even successful at all. But I look at the incredibly inventive community of ethereum developers toying around with wonderful new ideas for a better world and find it very difficult not to conclude that, in some as yet undefined way, they are creating a great deal of value.
It’s just that, sadly for those who thought otherwise, that concept of value might be inherently at odds with the concept of price — at least as it is defined in fiat currencies. And that’s a topic for another day…
The debate on whether the central authorities can ever regulate the cryptocurrency industry intensates further with the launch of a Chinese crypto-startup.
In a right-in-your-face stunt, InVault begins offering its cryptocurrency custody services last week in China despite the mainland ban. The Shanghai startup proposes to attract cryptocurrency exchanges as its primary clients, believing they should avoid the moral hazard of holding clients’ assets.
A custodian, in a traditional sense, holds clients’ securities or cash for safekeeping – in both electronics and physical form. China’s implicit ban on keeping and trading cryptocurrencies could arguably disallow an organization to hold assets that 1) are virtual currencies, and 2) belongs to companies with no legal status in the mainland.
But InVault seems to have found a way to circumvent the ongoing crackdown. The startup offers a decentralized corporate cryptocurrency wallet service, meaning that there would not be a central control over the safeguarded funds. InVault will instead be the custodian of users’ private keys. Local media reports hint that the startup will keep the users’ private keys secured in several Physical Vaults. Only authorized personnel will have access to these safes.
Kenneth Xu, chief executive and founder of InVault, said the only way by which cryptocurrencies can be secured is with the absence of human oversight.
“Today, the vast majority of cryptocurrency exchanges globally still involve their senior management in managing the transfer of digital tokens ordered by clients. Putting the private keys to your cryptocurrency assets in the hands of senior management is akin to putting all your money in their control,” said Xu, speaking to the South China Morning Post.
China’s Crackdown Insufficient to Enforce Crypto-ban
The launch of InVault occurs during tensed times. China’s financial and market regulators had recently stepped up its crackdown against the local crypto operations. During the chase, they blocked access to 124 offshore crypto-exchanges that were providing trading services to Chinese investors, banned events that were to discuss cryptocurrencies and enforced local companies, including WeChat and Alibaba, to monitor and report their users involved in crypto activities.
Chinese crypto companies continue to offer services to Chinese investors from offshore despite the ban. KYC-enabled money exchanges have been replaced by peer-to-peer commerce, which could dampen the regulators’ efforts towards enforcing the crypto-ban overall. Furthermore, fugitive exchanges have started to work under the different domain names, making it difficult for regulators to improve their mouse-chase.
Terence Tsang, the chief operating officer of TideBit, which offers centralized crypto-exchange services in Hong Kong and Taiwan, said in a statement to the local press:
“The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company.”
Meanwhile, InVault has already scored its first major deal from an undisclosed cryptocurrency exchange for the custodianship of one million Ethereum tokens.