Tag Archives: crypto

Coinbase Pro Increases Fees Updates Market Structure to Increase Liquidity’

Coinbase Pro Increases Fees, Updates Market Structure ‘to Increase Liquidity’

            

Major United States-based cryptocurrency exchange Coinbase

announced a new market structure for its professional trading platform, Coinbase Pro, in a blog post published on March 15. Per the announcement, the changes aim to increase liquidity, enhance price discovery and ensure smoother price movements. The changes include a new fee structure, reportedly designed to increase liquidity, updated order maximums, new order increment sizes, the turning off of stop market orders and added market order protection points.

According to the post, Coinbase Pro and Coinbase Prime — the firm’s institutional trading platform — will cease their support for stop market orders. The announcement further explains that all stop orders must now be submitted as limit orders and include a limit price. On the other hand, the market protection points that will be introduced both to Coinbase Prime and Coinbase Pro users will amount to 10 percent for all market orders. The statement explains that market orders that move the price more than 10 percent will stop executing and return a partial fill.

Lastly, the post warns the exchange’s user base that the platform will be offline on March 22 from 6:00 p.m. to 6:30 p.m. PDT. The changes were met with some skepticism and negativity from the crypto community on social media. Economist and trader Alex Krüger complained on Twitter about “Coinbase Pro raising fees for smaller clients by 33% while lowering fees for larger clients.” The same user also further commented that “in a rational world, most Coinbase users would now move to Binance.”

In the same Twitter thread, Krüger also questioned Coinbase’s decision to disable stop market orders, claiming that stop-limit orders sometimes fail to execute because of slippage, suggesting using far off limits on limit orders as a workaround. Still, Krüger also admitted that those changes should lead to increased liquidity and trading activity. Another crypto trader on Twitter suggested that the new fee structure is seemingly targeting new users entering the cryptocurrency space,

concluding:

“Pretty random day to hike all the fees up, Coinbase anticipating a new bull run perhaps?”

As Cointelegraph recently reported, Coinbase Pro announced support for altcoin Stellar Lumens (XLM). Just yesterday news broke that publicly traded U.S.-based company Riot Blockchain has filed with the Securities and Exchanges Commission to launch a new regulated cryptocurrency exchange, called RiotX, in the U.S. by the end of Q2 2019.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/coinbase-pro-increases-fees-updates-market-structure-to-increase-liquidity

Deb Williams (hodlthrive)

The Tipping Point: Kroger Starbucks May Ignite Retail Crypto

The Tipping Point: Kroger, Starbucks May Ignite Retail Crypto

            

It's no secret that cryptocurrencies don't receive many plaudits

in the mainstream media as reliable means of payment. Critics have even claimed that Bitcoin "sucks" as a payment mechanism. Yet, despite that blinkered skepticism, cryptocurrency payments actually grew last year. Payment processor BitPay reported a "record" $1 billion in transaction revenue in 2018, with its business-to-business (B2B) operations increasing by 255 percent compared to the previous year. Meanwhile, the use of cryptocurrencies in such economically unstable countries as Venezuela and India has surged, as people turn to the likes of Bitcoin and Dash to escape from increasingly worthless national currencies.

These are all encouraging developments, and they've become more encouraging in recent months, with growing interest in crypto payments from major retailers. From Kroger to Starbucks and Rakuten, big corporate names have begun flirting with Bitcoin and the Lightning Network as a payment channel, as well as with other cryptocurrencies. Their interest comes amid rising disenchantment with legacy payment systems, stoking hopes that a few more big converts to crypto payments could provide an all-important tipping point toward widespread adoption.

However, while events appear to be moving in the right direction for crypto payments, experts agree that it will take more than a few isolated use cases before the industry will see adoption on a larger scale. Added to this, payment interfaces need to be improved and made more consumer-friendly. It's only with the combination of technological effectiveness and corporate adoption that the global public will begin using crypto as money.

Kroger struck by lightning?

At the beginning of March, supermarkets giant Kroger — the 17th-largest company in the United States — revealed that it would stop accepting Visa credit cards at over 250 of its stores. "Visa has been misusing its position and charging retailers excessive fees for a long time," said Kroger executive VP Mike Schlotman in a statement, with the retailing giant also explaining that Visa’s fees were the highest of any of the credit cards it accepted.

What's interesting about this episode is that members of the crypto community quickly swooped in to make the case for Kroger to accept Lightning Network payments. On Twitter, Morgan Creek Digital founder Anthony “Pomp” Pompliano reached out on March 2 to the retailer's leadership team, stating that the "Morgan Creek Digital team will fly to meet them and get them hooked up with the Lightning Network nationwide." Even more interesting, Pomp followed this up on March 3 with a tweet announcing that he had just "finished up first call with someone on Kroger Digital team," and that his followers should "stay tuned" for more updates.

It's hard to say just how far Kroger will run with Pompliano's offer, yet industry figures are more or less unanimous in their views that adoption of Bitcoin payments by a giant like Kroger would be a watershed moment for the industry. "Adoption of Lightning Network by a major retailer would definitely be a big deal for the entire crypto space," says Vilius Semenas, the chief commercial officer at crypto-payment processor CoinGate. "For bitcoin, exposure to real consumers on such a scale could only do good and pave the way toward another level of adoption."

According to Semenas, there's certainly an appetite among major retailers for a new payment network to replace legacy systems. "The card payments industry is unique in that Visa and MasterCard control the lion’s share of the consumer base," he told Cointelegraph. "At the same time, innovation adoption in this space takes a long time because the market is two-sided and needs adoption from both consumers and retailers. Retailers are naturally frustrated, because they have little-to-no ability to affect card payments, and they would probably turn to alternative payment rails if they could."

CoinGate isn't the only crypto-payment processor who suspects that such retailers as Kroger would prefer to move to more efficient and cost-effective payment systems. BitPay's director of product, Sean Rolland, also told Cointelegraph much the same thing, even if he suspects that it will be a long time before existing systems are replaced by crypto-based alternatives. "No business enjoys high fees," he said. "Legacy payment systems are not going completely away anytime soon, but retailers should always be evaluating better solutions."

Starbucks, Rakuten, Birks Group dip their toes

Aside from Kroger, there are signs that other big players are entertaining the idea of moving to the Lightning Network and crypto payments. Most notably, Starbucks will begin accepting Bitcoin payments at its U.S. outlets by the end of 2019, according to industry rumors. This acceptance comes as part of an equity deal with Bakkt, a cryptocurrency exchange and payments platform being launched later this year by Intercontinental Exchange (ICE), the operator of the New York Stock Exchange (NYSE).

Back in August, the coffee giant was revealed as one of Bakkt's key partners, alongside Microsoft and consultancy BCG. According to the press release announcing Bakkt and its partnerships, Starbucks would not only be working with Bakkt to create its platform, but it would also be using the platform to accept crypto payments. In other words, even though the latest reports regarding Starbucks' imminent acceptance of Bitcoin payments are unconfirmed, the company itself had already confirmed that it will be doing this sooner or later, as explained in August by its VP of partnerships and payments, Maria Smith.

"As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks," Smith said on the occasion of Bakkt's announcement. “As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers."

            

This is precisely the arrangement that's now rumored to be launching

toward the end of the year. Reports indicate Starbucks will accept Bitcoin payments at its American outlets, but it will immediately convert these to fiat, as indicated by its initial press release from August. So even though the exact launch date hasn't been confirmed, this will prove a massive boost to Bitcoin and crypto payments, and it's hard to imagine that other big companies won't follow Starbucks' lead. Right now, there are no firm signs that other retailers as big as Starbucks or Kroger will begin accepting crypto payments anytime soon. However, there are a steady supply of slightly less high-profile companies (less high-profile in the U.S., at least) that have begun accepting such payments, or which will do so soon.

In November, Birks Group — one of Canada's largest and oldest jewellery retailers — announced that it had begun accepting Bitcoin at eight of its 30 stores in Canada. And in January and February, it became increasingly likely that Rakuten — Japan's largest e-commerce website — would begin accepting crypto, after it established a new payments subsidiary and announced an update to its Rakuten Pay app that would feature support for cryptocurrency payments. You can still count such companies on one or two hands. However, given their size and clout, their movements into crypto payments are likely to put greater pressure on their rivals to act similarly. As BitPay’s Rolland affirms, "The more retailers that accept bitcoin, the better."

The path has hurdles

Despite this early movement in the direction of crypto payments, there are still a number of significant obstacles in the way of widespread adoption. Perhaps most difficult of all, there's the chicken and the egg problem: How can big companies adopt crypto payments if not enough consumers hold and use crypto, and how can most consumers come to hold and use crypto if not enough big companies adopt crypto payments? Acknowledging that many retailers are looking for new payment channels, CoinGate's Vilius Semenas nonetheless warns they're not likely to adopt any channel that doesn't already boast a critical mass of users. "The problem is that there isn’t a payment system adopted widely enough by consumers," he said. "And it is virtually impossible to get consumers to effectively switch to another payment form other than cash."

This is arguably why there aren't more retailers like Kroger, Starbucks and Rakuten, since only around 5 percent of Americans own at least one kind of cryptocurrency. It's also why it might be unwise to get too excited about Kroger or Starbucks providing a “tipping point” for crypto payments, since without mass ownership of cryptocurrencies, other companies aren't likely to be swayed too much by the examples these pioneers set. Again, this is a point made by Semenas, who notes that other instances of adoption haven't resulted (at least, not yet) in waves of copycat behavior:

"Whether this could become a ‘tipping point’ leading to a cascade of other merchants starting to accept bitcoin is uncertain. A few months ago, Ohio adopted bitcoin payments for taxes, for example. But it didn’t lead to other states doing the same yet. It would likely depend on the results of the experiment." There's also the issue that systems like Lightning Network aren't quite ready yet for large-scale deployment. Lightning Network is currently in beta, so the idea that Kroger will drop such processors as Visa in favor of Bitcoin still remains a little fanciful. And as Vilius Semenas notes, many crypto-based payment channels like Lightning Network currently lack the kind of simple-to-use, streamlined interface that would lend them to massive consumer adoption:

"In an ideal world, for a retailer like Kroger, Lightning Network would be the perfect solution to accept consumer payments in a secure, cost-efficient way. Actually, it might be even the only solution that would enable worldwide payments on a scale that Visa and MasterCard currently provide. The major barriers to this would be consumer-friendly technology and convenient interfaces to transact money at the point of sale, rather than capacity constraints of the Lightning Network technology itself." These words of caution aside, Semenas nonetheless believes that "it is most probably just a matter of time for user-friendly applications to get developed." And given that Lightning Network was conceived as recently as 2016 and launched in beta only last March, it has already come a long way. There's no reason to think that it, Bitcoin and other cryptocurrencies won't go even further in the future.

Article Produced By
Simon Chandler

Simon Chandler is a journalist based in Hove, UK. He writes mostly about technology, with his specialties including cryptocurrencies, AI, VR, and social media. He also occasionally writes about politics, culture and music, and has contributed to the likes of Wired, the Daily Dot, the Verge, Computer Weekly, Techcrunch, Bandcamp Daily, the New Internationalist, the Kenyon Review, and Tiny Mix Tapes

https://cointelegraph.com/news/tipping-point-kroger-starbucks-may-ignite-retail-crypto

Deb Williams (hodlthrive)

Ledger Client Address Issue and Fake Deposits: Community Spots Two Vulnerabilities Related to Monero

Ledger Client Address Issue and Fake Deposits: Community Spots Two Vulnerabilities Related to Monero

             

This week, at least two seperate bugs related to Monero (XMR)

were reported by crypto community members. The first one allegedly lead to a Ledger hardware wallet user losing around 1,680 XMR (nearly $80,000, as of press time) of his funds after making a transaction. The other vulnerability allowed hackers to make fake XMR deposits to cryptocurrency exchanges.

Anonymity above all: What is Monero and how it works

Monero is a cryptocurrency with an additional focus on anonymity. It was launched in April 2014, when Bitcointalk.org user thankful_for_today forked the codebase of Bytecoin into the name BitMonero. To create the new coin, he relied on the ideas that were first outlined in a 2013 white paper dubbed “Cryptonote” written by anonymous personality Nicolas van Saberhagen. Ironically, BitMonero was soon forked itself by open-source developers and named “Monero” (which means “coin” in Esperanto). It has remained to be an open-source project ever since.

Indeed, Monero has considerably more privacy features compared to conventional cryptocurrencies like Bitcoin (BTC): On top of being a decentralized coin, Monero is designed to be fully anonymous and virtually untraceable. Specifically, it is based on the CryptoNight proof-of-work (PoW) hash algorithm, which allows it to use “ring signatures” (which mix the spender's address with a group of others, making it more difficult to trace transactions), “stealth addresses” (which are generated for each transaction and make it impossible to discover the actual destination of a transaction by anyone else other than the sender and the receiver), and “ring confidential transactions” (which hide the transferred amount). In 2016, XMR experienced more growth in market capitalization and transaction volume than any other cryptocurrency, undergoing almost a 2,800 percent increase, as per CoinMarketCap.

Notably, a lot of that gain could have come from the underground economy. Being an altcoin that is tailor-made for fully private transactions, Monero eventually became accepted as a form of currency on darknet markets like Alphabay and Oasis, according to Wired. Specifically, after being integrated on those trading platforms in the summer of 2016, Monero’s value “immediately increased around sixfold. "That uptick among people who really need to be private is interesting," Riccardo “Fluffypony” Spagni, one of the Monero core developers,

told Wired in January 2017.

"If it’s good enough for a drug dealer, it’s good enough for everyone else."

Currently, XMR is the 13th-biggest cryptocurrency by market cap, with equivalent of over $800 million, according to CoinMarketCap data. Monero’s alleged privacy remains to be a controversial topic, as some suggest that the coin is not, in fact, fully anonymous. In an interview with Bloomberg, United States Drug Enforcement Administration (DEA) Special Agent Lilita Infante noted that, although privacy-focused currencies are less liquid and more anonymous than BTC, the DEA “still has ways of tracking” altcoins such as Monero and Zcash.

Infante concluded:

“The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using them [cryptocurrencies].”

Moreover, as previously reported by Cointelegraph, Monero has been endorsed as “The Official Currency of the Alt Right” by white supremacists like Christopher Cantwell for its focus on anonymity. The privacy-focused nature of Monero has also driven compliance-oriented crypto exchanges to turn the coin down. For instance, in June 2018, Japan-based Coincheck delisted XMR and three other anonymity-focused altcoins to follow Counter-Terrorist Financing (CTF) and Anti-Money Laundering (AML) procedures issued by the local financial regulator.

Bug #1: change address bug with Ledger

Status: pending

On March 3, user MoneroDontCheeseMe started a Reddit thread, claiming that he or she believes to “have just lost ~1680 Monero [around $80,000] due to a bug” while using the Monero app with his or her Ledger hardware wallet. According to the post, the user transferred about 0.000001 XMR from his or her wallet to a view-only wallet, sent another 10, 200 and then 141.9 XMR. Allegedly, before sending the last transaction, MoneroDontCheeseMe had about 1,690 XMR in the wallet and 141.95 XMR in an unlocked balance, which is why he or she decided to send 141.9 XMR. However, after the transaction had been sent, the user’s wallet is reportedly showing a balance of 0 XMR.

Furthermore, according to the Reddit user, the amounts sent and the transactions recorded on the blockchain “don’t line up.” MoneroDontCheeseMe wrote that the 200 XMR transaction actually deducted 1691.001 XMR from the Ledger Wallet, and also that the amounts reported for the 10 XMR transaction are incongruous. Monero core developer nicknamed

binaryfate told Cointelegraph over email:

“My understanding is that the Ledger may have sent the ‘change’ amount to an erroneous one-time destination that the user did not control. For more details you should ask the Ledger team directly, they are working on it and already identified and fixed the bug as far as I know, so it should be pushed shortly.”

Initially, in the comments to the post, Nicolas Bacca, chief technical officer at Ledger, said that their app has been extensively tested, suggesting that could be a synchronization issue. However, several hours later, Ledger developers published a warning on the Monero subreddit, advising users not to use the Nano S Monero app because

“it seems there is a bug with the change address.”

“The change seems to not be correctly send. Do not use Ledger Nano S with client 0.14 until more information is provided.”

The official Monero Twitter account has since retweeted Ledger’s tweet containing a link to the warning. Thus, according to Monero’s binaryfate, the Ledger team has prepared a patch to fix the issue, and is expected to release it in the near future. Cointelegraph reached out to MoneroDontCheeseMe to ask him or her whether this issue is being fixed by Monero or Ledger developers, but he or she appeared hesitant to answer straight away and requested more time. Cointelegraph has also contacted Ledger developers for further comment, but they have not prepared any statement as of press time.

Bug #2: wallet bug enabling hackers to make fake deposits to crypto exchanges

Status: fixed

On March 3, the official account of the Ryo (RYO) cryptocurrency published a Medium post, highlighting a bug in the XMR wallet software that could allow for sending fake deposits to crypto exchanges. According to the post, an email reportedly sent to the Monero Announce mailing list warned platforms using the coin that the Monero Vulnerability Response team received a disclosure concerning a vulnerability. The bug was reportedly related to coinbase transactions (the first transaction in a block, created by miners).

“This essentially means that the attacker can make it appear as if he deposited any sum of his choosing to an exchange,” the post read. The mentioned email also contained the patch preventing the vulnerability from being exploitable. As binaryfate explained to Cointelegraph, first, somebody made a responsible disclosure following the Monero Vulnerability Response Process. Then, an email was sent to the Monero Announce mailing list “warning in advance that both a patch and details of the bug would be released together on the 6th of March.” After that, the Monero developer added that

Ryo published details “right away”:

“Due to this article, the details had been made public and delaying would have caused unnecessary risk. Hence a patch was publicly merged on github, and a new version of Monero tagged right away.”

Indeed, a few hours later, the official Monero account tweeted that the fix for the vulnerability had been written and was awaiting review. As per the GitHub page dedicated to the patch, it appears that the code has been already merged with the main branch, which means that the fix is ready and only needs the new release to be published. Ryo is a code fork of Monero, as per its website. According to the Medium entry, its team fixed the same vulnerability seven months ago. The post also notes that they avoided making a responsible disclosure to the Monero team earlier because of Monero’s “long history of toxic behaviour towards security researchers.”

Furthermore, the post also claims that when discussing the exploit in the Ryo public channel, the author of the post accidentally disclosed another vulnerability, concluding that “Monero might want to get that one patched too.” When asked whether they knew anything about such a bug, the Monero representative answered by saying “you would have to ask the author of the article.” Ryo has not returned Cointelegraph’s request for comment as of press time.

Previous Monero bugs and cryptojacking problems

Monero, being an open-source project, tends to collaborate with its community members to tackle security breaches. Thus, in September 2018, Monero developers successfully eliminated at least two bugs that were reported on its subreddit page. First, there was a burning bug, which Monero promptly fixed and notified “as many exchanges, services and merchants as possible,” to apply the new patch. Secondly, the XMR community reported that the Mega Chrome extension was compromised, leading to its quick removal from the Chrome webstore.

Further, Monero’s privacy features have made it popular among cryptojackers. Thus, last year, more than 526,000 computers were reportedly infected with a cryptocurrency botnet malware called Smominru, which allowed hackers to mine more than $2 million worth of XMR. In February 2019, tech corporation Microsoft removed eight Windows 10 applications from its official app store after cybersecurity firm Symantec identified the presence of hidden XMR coin mining code. The firm’s analysis identified the strain of mining malware enclosed in the apps as being the web browser-based Coinhive XMR mining code. Later that month, Coinhive announced it will stop all its operations on March 8, saying that the project is not “economically viable anymore.”

Article Produced By
Stephen O'Neal

Stephen O'Neal is a Sociology major from Leeds. He's passionate about crypto and all the stuff you can spend it on.

https://cointelegraph.com/news/ledger-client-address-issue-and-fake-deposits-community-spots-two-vulnerabilities-related-to-monero

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Deb Williams (hodlthrive)

Why Market Players Are Enthusiastic About Investing in New Economy’: Expert Blog

Why Market Players Are Enthusiastic About Investing in “New Economy’: Expert Blog

            

ICO fundraising is still strong despite increased attention

on the part of regulating bodies and saturation of the market. Still, compared to an average seed round venture investment (even considering bias we get due to our dataset’s nature), amount raised stands quite high. This could easily be explained. Not only a bulk of investors are coming from the crypto world, with their understanding of it (or self-confidence) deep enough to invest in Blockchain-related projects more eagerly, but with “it is new Ethereum/Bitcoin” being a recurring theme in projects’ pitches.

All of the market participants were more enthusiastic about investing into “new economy” projects rather than into projects we could label as “traditional,” often with no apparent need for cryptocurrencies/Blockchain technology at all. As for fintech projects, this area has become quite naturally the first field for testing of Blockchain capability for real-world problems. According to research by The BB Fund, based on the data tokendata.io, more than $5.3 bln was raised via ICO in 2017 with $5.1 bln attracted for the last nine months.  There were 1,331 analyzed and only projects raising over $1 mln were considered. According to the research, 60 percent of ICOs have been profitable so far: median return is 2x.

The categorization is quite subjective and is organized as follows:

“Blockchain” category represents all Blockchain infrastructure-related projects. “Cards & Payments” stands for a very broad category of projects, from merchant-serving payment processors to crypto wallets with built-in p2p transfers and other functions. “Decentralized Market” consists of projects, which usually relied in their description on familiar cliché “Decentralized XYZ” – ranging from services’ markets (shipment, logistics, taxi drives) to goods markets (real estate, electricity) and universal markets, aiming any type of good/service imaginable.

While the majority of these projects do not benefit from Blockchain, implement things already implemented and suffer from lack of resources, some of them seem interesting and could be able to survive and prosper. “Crypto Market” category includes any type of exchange or exchange-like vehicles dedicated to crypto. “ICO platform” may refer not only to such platforms but also to accelerators, startup clubs and any sort of a project, which claims it is developing an ecosystem of investors, teams and crypto enthusiasts.

“Identity Verification” and “Advertising” are broad categories, too, with the first one including projects with an emphasis on verification – from people’s identity to identity of food products and content. The second segment includes everything advertising-like – lead generation, promotion, brand influencers’ network. Among other categories we would like to specifically mention businesses referred to as being “commodity”-backed. This term, again, doesn’t always stand for a commodity in common sense (gold or zinc oxide), but also for any tangible real-world asset, which either used as a sort of collateral or may be handled as such.

This distribution not only reflects bigger interest toward Blockchain infrastructure/fintech projects but also higher costs of development of them due to bigger development workload (Blockchain), license and integration-attributed costs (fintech). While valuations and investment attracted are rarely substantiated, investors more willingly allocated larger amounts of money to projects with high capital costs. Also, we could observe sorrowful tendency of poorer-quality projects to originate in Decentralized Market/Betting segments, with seemingly no diversification and original ideas behind them in many cases.

ICO market may be hard to predict at times

A system of simultaneous linear equations describes price dynamics of crypto assets, whether they are more “traditional” coins or ICO-related newly issued tokens, pretty well. While overall demand for crypto assets is defined by endogenous factors (mostly news, investor sentiment and manipulation of “whales”), this being the main factor, defining the value of all crypto markets.

Even if you are not quite familiar with a concept of correlation, you could have already noted that most of the assets usually move in the same direction, every time with exception of a few. This is a phenomenon very familiar for stock market investors too, especially for those involved in trading assets on markets with a high level of political turbulence, for example. You could easily find dependency between the volume of ICO money raised in a given month and ETH price (which are assets mutually influencing each other)- for Bitcoin and Ethereum interdependence in prices is also very characteristic.

However, in the case of ICOs, it is difficult now to attract long-term investors by promising them return some moment in the future– there should be a plan on the startup side how to get to this future as fast as possible at a steady pace. While Blockchain, ICOs, tokenized economy brings completely new technologies and business models to the world, investment principles and basics remain the same: long-term play, serving the real market demand, addressing pains and wishes of people.

Recently Vitalik Buterin wrote:

“All crypto communities […] need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society.”

ICO market gives a lot of opportunities for speculations and quick profits, especially due to early-stage “pre-sale” discounts and premiums, and only a few players are ready to play in a long-run. Your investment philosophy should be based specifically on a long-term strategy. The strategy being the development of technologies on the emerging and unbanked markets (Asia, Africa, LatAm), infrastructural implementations to enable and/or disrupt the traditional systems (including bank-as-a-service models and open banking principles) and convergence of crypto and traditional financial worlds, including Blockchain implementation by government bodies.

ICO market as a way of fundraising- promising projects as well as scammers

So far, we could observe several moves on the side of the industry, its main players incentivized and welcomed. They could allow for Blockchain-related technologies and companies to make a breakthrough and for investors to profit. Not only commodity sector, but also some advertising, payments and lending companies make their way into respective industries with the leverage of an ICO. Such as ETHLend (lending), Ripio (micro-lending), UTRUST (crypto payment gateway), BitClave (smart advertising and promotion) and NVB (native video advertising via vlogs and content discovery platform), to name a few recent examples.

For many of these companies, smart contracts and tokens are the only nuisance and it is highly doubtful they would make any use of Blockchain technology (or would be happy with something absolutely decentralized). Venture fund investors, family funds, banks and investment companies start to invest in Blockchain-related projects or Bitcoin funds. Anyway, it doesn’t matter, actually, as liquidity flows blazingly fast in comparison with many other ecosystems. USV, Y Combinator, Foundation Capital, Lux Capital, Winklevoss Capital, Jefferson River Capital LLC and Forsters LLP, Citi, JP Morgan and Goldman Sachs, Wells Fargo, Thomson Reuters, BoA, HSBC, Temasek Holdings etc. – it is hard to name all the family offices, venture funds and banks, which invested in companies developing Blockchain technologies and crypto.

While for those, who raised small and easily convertible sums via ICO fraudulent behavior and negligence it may seem a viable (even punishable by law) way, big players are forced to look for new ways of monetization, products and models, which could pay for all this (rather expensive) story. The biggest ones could probably become investors themselves (which would be bad for current token holders, but not so bad for the ecosystem as a whole), looking for projects to outsource the task of profit-making. This may seem crazy, but with so much money at stake and their future earning often tied to the buying power of their own tokens, companies are forced to look for ways of wealth creation like never before.

Article Produced By
Vladislav Solodkiy

Vladislav Solodkiy is a managing partner at Life.SREDA, Singapore-based fintech-VC, author of The First Fintech Bank’s Arrival book.

https://cointelegraph.com/news/why-market-players-are-enthusiastic-about-investing-in-new-economy-expert-blog

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Deb Williams (hodlthrive)

Crypto Exchange Bittrex International to Host Its First Public Initial Exchange Offering’

Crypto Exchange Bittrex International to Host Its First Public ‘Initial Exchange Offering’

Crypto exchange Bittrex is hosting its first token sale

— dubbed an Initial Exchange Offering (IEO) — on Bittrex International, its Malta-based digital asset trading platform. The news was announced in an official press release published on March 11.

Bittrex International, which operates within an EU and Maltese crypto regulatory framework, will officially start the IEO on Friday, March 15, the press release announces. Bittrex users will be able to use Bitcoin (BTC) to purchase “XRD” tokens, developed by international gaming data blockchain project Raid. According to the press release, Raid is a project that rewards gamers for sharing data,as part of a tokenized ecosystem that aims to enhance marketing and business growth and foster other improvements for gaming companies.

Bittrex CEO and co-founder  Bill Shihara has said that IEOs on the platform will allow international token investors to back new blockchain projects “with the peace of mind that comes from Bittrex International regulated in Malta.” Bittrex has outlined the details of the IEO, which will end when a hard cap of 17 billion XRD (~$6 million) is reached. Bittrex is currently within the top 50 largest crypto exchanges globally by adjusted daily trade volume, seeing about $73 million in trades on the day to press time.

Bittrex International’s foray into token sales follows major crypto exchange Binance’s token sale platform Launchpad, which recently hosted the high-profile — and extremely swift — token sale for the Tron-based BitTorrent token (BTT) this January. The BTT sale netted $7.1 million dollars with the sale of 50 billion tokens within 15-18 minutes. In February, Launchpad hosted a similarly speedy public token sale for AI and smart contract project Fetch.AI.

Article Produced By
Marie Huillet

Marie Huillet is an independent filmmaker, with a background in journalism and publishing. Nomadic by nature, she’s lived in five different countries this decade. She’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives.

https://cointelegraph.com/news/crypto-exchange-bittrex-international-to-host-its-first-public-initial-exchange-offering

Deb Williams (hodlthrive)

Europe Leads the Way With Crypto Exchange-Traded Products

Europe Leads the Way With Crypto Exchange-Traded Products

              

Analysis

On Nov. 16, Switzerland’s primary stock exchange, SIX Swiss Exchange, announced that it will list the world’s first multi-crypto-based exchange-traded product (ETP). Exchange-traded products (ETP) are derivatively priced securities that are traded on a national securities exchange. Their pricing derives its value from other investment instruments, most commonly found in the form of commodities, stocks and indexes. The first global multi-crypto ETP has the backing of Swiss startup Amun AG and will be listed under the ticker symbol HOLD. According to the announcement, the ETP will track five of the sector's biggest cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).

The announcement also reveals that each of the five cryptocurrencies will obtain a degree of the market share within the ETP, although Bitcoin will reportedly make up roughly half of the ETP’s overall assets. XRP, the now second-biggest cryptocurrency, will make up 25.4 percent of the assets, followed by Ethereum with 16.7, Bitcoin Cash at 5.2 percent and Litecoin with 3 percent. In spite of many hopeful product launches across the crypto sector attempting to hasten mainstream adoption, regulation issues remain a serious and consistent barrier to progress. Hany Rashwan, co-founder and chief executive of Amun AG, has not overlooked this potential sticking point and maintains that the product will comply with the existing strict policies that apply to all other ETPs.

Amun’s official website states that SIX Swiss Exchange is Europe’s fourth-largest exchange and has a market capitalization of $1.6 trillion. The listing of the multi-crypto based exchange is not Europe’s first experiment with crypto ETPs. Swedish company XBT Provider has been running the lucrative CoinShares exchange-traded product since 2015. This listing is the latest crypto development in Sweden, a state well known for its open-minded approach to innovation in the fintech sector, as well as a country predicted to become the first “cashless economy.”

Coinshares has two Bitcoin trackers: XBT Bitcoin Tracker One (COINXBT) and XBT Bitcoin Tracker Euro (COINXBE). As previously reported by Cointelegraph, the two trackers trade in both euros and Swedish krona.The product ascribes 200 shares as equal to the price of one Bitcoin for trading in Swedish krona and 20 shares to one Bitcoin for the euro version. The product is accessible to investors from across Europe and has attracted over $1 billion since its 2015 listing on Nasdaq Stockholm, leading developers to launch additional versions in neighboring Denmark, Latvia, Finland and Estonia. Coinshares caught the eye of billionaire crypto investor Mark Cuban early on. Speaking at the Vanity Fair New Establishment Summit in Los Angeles, Cuban commented on the investing experience and

the ascription of asset value:

“It is interesting because there are a lot of assets which their value is just based on supply and demand. [With] most stocks, there is no intrinsic value, because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply-demand. I have bought some through an ETN based on a Swedish exchange.”

According to Bloomberg, COINXBE has total assets of 96.5 million euros and COINXBT has total assets of 986.3 million Swedish krona.

The ETF battle continues in the United States

Perhaps the most established exchange-trading method in the crypto world is that of exchange-traded funds (ETF). An ETF tracks a commodity, bonds, a stock index or one or several assets. Single-asset ETFs are now commonplace and can be used to trade a variety of assets, such as gold. As ETFs are already a major tool for passive investment in mainstream finance, many players in the crypto community hope that ETFs will pave the way toward widespread adoption.  

Part of the allure of ETFs that track a basket of assets is that, by their very nature, they are less prone to the risk of fluctuations that other investment instruments are vulnerable to. Because the value of the investment is spread across multiple assets, losses from underperforming assets are counterbalanced by those that more rapidly accrue value. As a result of this, ETFs enjoy popularity among low-risk investors.

            

A Bitcoin ETF tracks Bitcoin as the underlying asset.

This results in the investor only holding the security of the Bitcoin without actually owning the coins themselves. So far, Bitcoin ETF applications to the U.S. Securities and Exchange Commission (SEC) have not been successful. Billionaire twins and major crypto players Tyler and Cameron Winklevoss have had two high-profile applications denied by the SEC so far, the most recent being rejected in July. The rejection was accompanied by a 92-page report on the application that disagreed with the the Winklevoss Bitcoin Trust’s claim that Bitcoin markets are “inherently resistant to manipulation.” In the report, the SEC honed in on

this point in particular:

“The arguments submitted in support of this claim are incomplete and inconsistent, and are unsupported or contradicted by data.”

In spite of the repeated setbacks for the Winklevoss twins’ ill-fated applications, the seemingly hardline approach of the SEC has not prevented further applications from being made throughout the year.

SEC mulls over latest ETF application

Earlier this year, investment management firm VanEck and the blockchain technology company SolidX, applied for a physically-backed Bitcoin ETF to be listed on the Chicago Board Options Exchange’s BZX Equities Exchange. The proposal would see each share in the ETF valued at around $200,000, in an attempt to lure in institutional investors. This tactic could prove to pay off for the two companies, considering Morgan Stanley’s October report that documented Bitcoin’s new potential for mainstream institutional investment. Furthermore, the fact that the ETF is backed by derivatives means that the firms in question will actually hold BTC as opposed to their corresponding value, a factor which may well be important in influencing the way the regulatory decision will fall for the application.

As the SEC decided to postpone their decision in August, the two companies have yet to receive an official reply. Given that, as of Aug. 22, a total of nine Bitcoin ETF applications from three separate applicants have been rejected outright, the drawn out nature of the SEC’s decision making, along with the huge potential for crossing over into the financial mainstream that it brings, the outcome is eagerly awaited by the crypto community. The SEC did, however, publish a memorandum from a meeting about the proposal in October.

The memorandum outlines the past relationship between the two companies and the regulator, taking into account their most recent, ongoing project and the failed SolidX bid for an ETF to be listed on the New York Stock Exchange (NYSE) in March 2017. Also mentioned in the memorandum is the SEC’s reasoning behind the nine previously rejected applications. Two of the applications were made by ProShares, a further five were submitted by Direxion and two by GraniteShares. The SEC took umbrage at the notion that the Bitcoin futures market had “significant” demand and voiced concern at the possibility of “fraudulent and manipulative

acts and practices”:

“[…] the Exchange has offered no record evidence to demonstrate that Bitcoin futures markets are ‘markets of significant size.’ That failure is critical because […] the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to Bitcoin is necessary.”

The memorandum also documents how VanEck, SolidX and the representatives of the Chicago Board Options Exchange (CBOE), vehemently disagreed with the regulators on this issue, adding that their choice of the word “significant” was deliberately imprecise and enabled them to manipulate agreements between

the involved parties:

“As issuers, we are concerned the SEC staff have created a moving target in their use of the word ‘significant.’ The Staff have never provided guidance as to what ‘significant’ means, enabling them to move the goal post indefinitely.”

In spite of the tough stance the SEC has taken against the previous applications, Commissioner Hester M. Peirce announced that the regulator would once again review them in the future. In a publication that broke from the official standing of the SEC regarding Bitcoin and cryptocurrency in general, Commissioner Peirce claimed that the regulator had overstepped its “limited role” in focusing on the market itself as opposed to

the derivative in question:

“The Commission erroneously reads […] the [Securities Exchange] Act, which requires […] that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices…’ [It] focuses its decision not on the ETP shares to be listed […] but on the underlying Bitcoin spot market […] [instead of] the ability of BZX […] to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”

On Oct. 4, the SEC announced that, “by Nov. 5, 2018, any party or other person may file a statement in support of, or in opposition to, the action made pursuant to the delegated authority.” The latest proposal from SolidX, VanEck and the CBOE is reported to remain under review by the regulator until February 2019.

SolidX, VanEck and the CBOE are not the only ones who predict a more open-minded approach to Bitcoin ETFs. CNBC crypto analyst Brian Kelly believes that Chicago Mercantile Exchange statistics indicate a growing trend toward the derivatives marketplace and a rapidly evolving futures market. Kelly said that this is likely to improve the environment for SEC Bitcoin ETF approvals as early

as next year:

“Here’s CME Futures open interest of large holders. [As of] April, you’re starting to see a big increase […] about an 85 percent growth rate. If you extrapolate that out, by February 2019, you’re going to have a very robust market here.”

Not all crypto players, however, share the same bullish approach. Tech entrepreneur, Andreas Antonopoulous, said that, although he expects the SEC to approve Bitcoin ETFs, he does not expect them to benefit the crypto industry

in the long term:

"I’m going to burst your bubble. I know a lot of people really want to see an ETF happen because 'to the moon, and lambos,' but I think it is a terrible idea. I still think it is going to happen, I just think it is a terrible idea. I’m actually against ETFs. I think a Bitcoin ETF is going to be damaging to the ecosystem."

Skepticism spreads outside the U.S.

On Nov. 20, the U.K.’s financial regulator, the Financial Conduct Authority (FCA) announced in a speech that it is considering a ban on cryptocurrency derivatives. The regulator stated that this latest announcement was part of its intention to create its “most comprehensive” response to the industry.

           

Speaking at the “Regulation of Cryptocurrencies” event

in London, the FCA executive director of strategy and competition, Christopher Woolard, emphasized that the organization was looking into outlawing derivatives. The ban would also likely include options, futures and transferable securities. Woolard elaborated on how the FCA is concerned about consumer welfare, as well as other issues

across the market:

“We’re concerned that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”

Light at the end of the tunnel for ETPs

From the mixed bag of comments from crypto players, what appears to be gaining traction is the notion that crypto exchange-traded products are likely to make their entrance into the sector regardless of whether they will actually enrich the cryptocurrency sphere or not. In spite of the progress being made to implement these investment instruments in both Sweden and Switzerland, the real litmus test will be the regulatory decision from the SEC.

Commissioner Peirce’s harsh insider critique of the regulatory body’s past behavior — along with the announcement that the past nine rejections will be re-examined — could signal that fortunes are finally set to change for crypto exchange-traded products in the United States. As the U.K. works through its latest regulatory quandary, other players maintain that there is a market appetite for Bitcoin ETFs and it is only a matter of time before they are made available.

Article Produced By
Henry Linver

Henry Linver is a freelance journalist. He’s interested in how blockchain has the potential to radically change the world we live in and the transformative power of crypto.

https://cointelegraph.com/news/textbook-case-of-crypto-hype-how-iced-tea-company-went-blockchain-and-failed-despite-a-289-percent-stock-rise

Deb Williams (hodlthrive)

Startup Finturi Raises 22 Million for Its Blockchain-Based Invoice Finance Platform

Startup Finturi Raises $2.2 Million for Its Blockchain-Based Invoice Finance Platform

                                

Dutch blockchain startup Finturi has secured 2 million euro ($2.2 million)

to enable businesses to secure loans against invoices via blockchain tech, the company tweeted on March 12. Founded in September 2018, Finturi aims to help businesses finance invoices by linking them with financiers to borrow money against invoices, using blockchain and artificial intelligence (AI), according to a report by startup-focused publication EU-Startups.com on March 11. Finturi has reportedly raised its first investment via an angel round led by NetSam Participaties BV, which evidently participated in an investment round for the first time, according to Crunchbase. Finturi’s blockchain-based invoice finance platform is scheduled to launch in the third quarter of 2019. According to the report, the Finturi team plans to provide a completely peer-to-peer (P2P) platform in future that includes businesses’ clients.

Expressing concerns about many new businesses face difficulties with raising capital, Finturi CEO Johannes Brouwer stated that the firm aims to enable businesses to get loans against invoices within 24 hours. According to Finturi’s CEO, the upcoming platform will provide financiers with a “platform for investing in invoices with minimum hussle.” The lead investor from NetSam Participaties BV said that blockchain tech combined with AI has a massive potential in eliminating inefficiencies in existing financial processes by cutting costs, accelerating processing time and providing  better security.

Recently, five Japanese banks entered into a partnership to launch blockchain-based financial services infrastructure. Targeting a range of financial operations for efficiency improvements, the banks will leverage IBM’s expertise during the development phase. Last week, economist and notorious crypto critic Nouriel Roubini argued that blockchain has nothing to do with the future of financial services. Roubini excluded the term from the list of major technologies that he sees as leading to a manufacturing or fintech revolution, including AI, machine learning, big data and the Internet of Things.

Article Produced By
Helen Partz

Helen is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2017, she joined Cointelegraph as a writer.

https://cointelegraph.com/news/startup-finturi-raises-22-million-for-its-blockchain-based-invoice-finance-platform

Deb Williams (hodlthrive)

Major Crypto Exchanges Launch OTC Desks Despite the Crypto Winter

Major Crypto Exchanges Launch OTC Desks Despite the Crypto Winter

                               

Institutional investment is increasingly being seen as the future of crypto trading,

with both Binance and Bittrex launching their own dedicated over-the-counter (OTC) desks in January. The desk launches come after Morgan Stanley published a bullish report in November, showing a strong pattern of institutional investment for Bitcoin. The latest developments indicate that some of the world’s largest exchanges are receiving increased demand from institutional investors, for whom OTC represents a lucrative opportunity. Cointelegraph takes a look at the latest launches and OTC news.

Binance launches dedicated OTC desk

On Jan. 23, the number-one ranked cryptocurrency exchange Binance announced the launch of its over-the-counter (OTC) trading desk in a blog post on its website. This new service, known as Binance OTC, will allow service users to carry out transactions larger than the equivalent of 20 BTC ($69,552).

Officials explained the basic premise of the new service in a blog post:

“Our OTC desk allows Binance users to trade larger amounts of many cryptocurrencies listed on the exchange, with transactions being settled via their Binance accounts.”

As per the post, officials also hoped to draw potential customers to their service by promising trades of large quantities of different cryptocurrencies that will clear at the same price simultaneously. The blog post also sought to reassure prospective clients by adding that trades are private due to the fact that order books will not be touched. Service users will also be able to use direct settlements for OTC trades, without needing to use different wallet addresses. The product launch comes on the back of strong gains being made by Binance Coin (BNB), which now ranks as the 12th-largest coin by market capitalization. The company recently rebranded Trust Wallet as a multi-cryptocurrency wallet, adding an additional 14 blockchains.

Bittrex launches OTC desk after increased client demand

Another company to recently launch an OTC desk is United States-based cryptocurrency exchange Bittrex. The firm will offer investors seeking to conduct larger trades the opportunity to trade the same 200 crypto assets available to users on its standard platform. Unlike users of the standard service, OTC investors will have to be able to commit to minimum trades of $250,000 or more. According to Bittrex CEO Bill Shihara, the launch of the desk is a result of increasing demand for an OTC service from its

customer base:

“This offering will be another way for Bittrex to further advance adoption of blockchain technology worldwide, while also providing our customers with price certainty and a fast and easy way to trade large blocks of digital assets.”

Bittrex Chief Strategy Officer Kiran Raj told Cointelegraph that the OTC launch is part of Bittrex’s commitment to continually revise its services to suit

its customers:

“We continuously evaluate and expand our offerings to give our customers a wide range of opportunities for participating in the blockchain industry, and our customers were interested in an OTC service with an extensive selection of digital assets.”

Regarding the ongoing crypto bear market, Raj remained optimistic both about continued client demand and the possibility of staying afloat in an

increasingly competitive market:

“We continue to see interest from investors at all levels, and we’re expanding our offerings and services to meet the current and future demand. It really comes down to trust and our extensive selection of digital assets. Bittrex is known for our reliability, security and commitment to compliance, and by combining these core pillars, with our broad selection of innovative blockchain projects, we’re providing customers a unique service that’s tailored to their needs.”

Circle leads the way with OTC

Despite the abundance of recent over-the-counter desk launches and a vertiginous fall in crypto prices throughout 2018, cryptocurrency finance firm Circle announced that its OTC desk, Circle Trade, had a notional volume of $24 billion in 2018. According to the announcement made by the company in a Medium blog post, Circle completed 10,000 OTC trades, with around 600 distinct counterparties across 36 different crypto assets. As per the press release, the notional volume equated to roughly $24 billion in notional volume. In light of the group’s increased growth and influence across the crypto market, the firm claims to have “become a core liquidity provider to the entire crypto ecosystem.” According to the company, Circle is now partnered with more than 1,000 institutional clients, such as OTC desks, exchanges, asset managers, token projects and other global endowments. In the press release, Circle indicated that it expects positive growth for

institutional adoption:

“This year, we anticipate further incremental growth in institutional adoption catalyzed by stablecoin usage, advancements in institutional custody solutions, increasing regulatory clarity particularly in the [United States], and improvements and innovation in core crypto infrastructure.”

Circle Trade’s head of trading, Dan Matuszewski, told Cointelegraph that the so-called crypto winter is behind the current trend for new OTC desk

openings:

“The crypto winter is forcing companies to look for new opportunities and they’re now realizing what we’ve known for years: OTC trading desks already play an integral role in crypto.”

Despite the ongoing downward trend in the crypto markets, 2018 was a record year for Circle Trade. Matuszewski said that the company is building on

this momentum in 2019:

“Last year, Circle Trade traded about $24 billion in notional volume and worked with more than 600 distinct counterparties, so we start 2019 from a strong foundation and are seeing steady activity. We onboarded a record number of institutional investors in 2018 and haven’t seen interest dim much relative to the overall trend in crypto markets. Institutional counterparties tend to be more patient and work positions over larger time frames.”

Matuszewski told Cointelegraph that, although he expects more desk launches in the crypto community, Circle Trade will continue to stand out from

the crowd:

“We expect to see more desks come onboard as companies recognize the value of offering OTC. Additional desks are likely to be agency and bolted on top of existing crypto businesses, primarily exchanges. The essential difference between us and other OTC desks is we’re able to more quickly meet a customer’s need because we act in a principal capacity, meaning every counterparty faces Circle directly — we don’t merely act as middlemen waiting to find a buyer or seller on the other side.”

Coinbase Prime customers gain access to OTC

In late January, Coinbase announced that selected Prime customers will have access to U.S. and European over-the-counter trading desks and Coinbase custody, a service that focuses on institutional investors and the storage of large amounts of cryptocurrency. Launched in November, Coinbase’s OTC desk permits customers to “execute large volume trades with minimal price slippage.” According to Christine Sandler, head of sales at Coinbase, the decision to launch the desk stems from increasing demand for OTC trading from

institutional clients:

“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading.”

The origins of Coinbase’s OTC trading initiative began on June 6 when President and Chief Operating Officer Asiff Hirji commented that the acquisition of a regulatory license would help the company set off on “a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products.” In order to facilitate its transition into securities, Coinbase acquired the securities dealer Keystone Capital Corp., along with Venovate Marketplace Inc. and Digital Wealth LLC in June.

Poloniex adds OTC service for institutional clients

U.S.-based cryptocurrency exchange Poloniex also jumped on the institutional bandwagon in December. Similarly to Coinbase, Poloniex is actively increasing the number of services it offers to customers. Institutional customers using dedicated accounts on Poloniex’s OTC desk will be able to do so, although the threshold for minimum trades is set at $250,000. In a blog post, the company laid out its offer to

institutional clients:

“Institutions large and small can enjoy the benefits of our large curated selection of crypto asset trading pairs, dedicated support and robust API services. […] Poloniex is focused on meeting the advanced trading needs of institutions.”

Huobi’s OTC desk required to remove Alipay and WeChat payment methods

Major Chinese digital payment providers Alipay and WeChat have reportedly sent legal letters to the crypto exchange Huobi requesting that the use of both their services and logos on the exchange’s OTC trading desk is unauthorized. The payment methods were available until early February, however, Huobi still has an instructional article explaining how to link Alipay accounts published on its website. Huobi responded to the claims from the payment providers, claiming that the company has not received any cease-and-desist letters and stating that the logos represent a payment link. The firm also stressed that there is no official cooperation between the involved parties and confirmed that user transfers are peer-to-peer payments.

Both of the payment platforms have litigious pasts when it comes to cryptocurrency. Alipay began to tighten its regulations for OTC Bitcoin transactions in August 2018, restricting accounts that used the system to transact Bitcoin OTC and establishing a monitoring system for “key websites and accounts.” WeChat blocked several accounts suspected of publishing initial coin offerings (ICO), along with the official sales channel of the Bitcoin mining behemoth Bitmain due to an alleged licence violation. With an average daily trading volume of around $385 million, Huobi is ranked as the 11th largest global crypto exchange, according to data from CoinMarketCap.

Despite the OTC trend, some institutions remain wary

Although established OTC desks such as Circle Trade are reportedly not experiencing any significant tapering of client interest, a December report from investment bank JPMorgan Chase found that the crypto winter is scaring off institutional investors. Together with global market strategist Nikolaos Panigirtzoglou, analysts from JPMorgan reportedly found that the investment activity of institutional players in Bitcoin (BTC) “appears to be fading,” noting that “key flow metrics have downshifted dramatically.” In particular, the report noted the decreasing amount of open contracts on Bitcoin futures on the Chicago Board Options Exchange (CBOE) global markets. As per the report, the index reached its “lowest levels” since the launch of Bitcoin futures trading in December 2017.

The report also documented the ongoing decrease in mining profitability associated with the decline of crypto markets. As a result of the dropping hash rate, JPMorgan analysts reported that mining is no longer a profitable activity for many miners, resulting in a sell-off of equipment. The JPMorgan research also found that there has been a significant fall in average transaction size across the crypto market, dropping from $5,000 one year ago to below $160. Analysts also note that altcoins are prone to suffer disproportionately during the “correction phase.” The findings of the JPMorgan report echo the views of CoinShares Chief Strategy Officer Meltem Demirors, who postulated that the crypto crash has its roots in institutions “taking money off the table.”

Article Produced By
Henry Linver

Henry Linver is a freelance journalist. He’s interested in how blockchain has the potential to radically change the world we live in and the transformative power of crypto.

https://cointelegraph.com/news/major-crypto-exchanges-launch-otc-desks-despite-the-crypto-winter

Deb Williams (hodlthrive)

Tipping the Scales: Could Unit-e Finally Break Blockchain’s Scalability Impasse?

Tipping the Scales: Could Unit-e Finally Break Blockchain’s Scalability Impasse?

                                 

Amid a seemingly constant stream of new concepts

claiming to be key to crypto to breaking through to the financial mainstream, one immovable issue remains ever-present: scalability. The crypto community is abuzz with new projects relating to the issue, from the Bitcoin (BTC) Lightning Network to a brand new cryptocurrency designed by some of the top names in crypto and American academia. Cointelegraph takes a look at the latest scalability developments and what they can bring to blockchain and crypto. Some of the United States’ finest academic and technological have come together in a new project aiming to launch a globally scalable decentralized payment network, according to a press release published on Jan.17.

The brainchild of this group of tech professionals and leading American academics is called “Unit-e,” a new cryptocurrency that aims to end the scalability issues plaguing both blockchain and cryptocurrencies alike. Unit-e is receiving funding from Distributed Technologies Research (DTR), a nonprofit organization based in Zug, the central nexus of Switzerland’s so-called Crypto Valley. In addition to the newly launched DTR, Unit-e has also received an injection of funds from San Francisco-based Pantera Capital.

As per the press release, the core members of the team involved in developing Unit-e are based in Berlin, with the team largely consisting of “open-source and distributed systems engineers.” DTR Foundation Council Member and Co-Chief Investment Officer at Pantera Capital Joey Krug acknowledged that, although the current technology represents a stumbling block for the adoption of cryptocurrencies on a wider scale, Unit-e is aware of this and is incorporating that knowledge into its

research:

“A lack of scalability is holding back cryptocurrency adoption. The Unit-e developers are turning this research into real scalable performance that will benefit a huge swath of decentralized financial applications.”

Giulia Fanti, one of DTR’s lead researchers and assistant professor of electrical and computer engineering at Carnegie Mellon University, explained to Cointelegraph why scalability is important and what this project is doing to

tackle it:

“Scalability is difficult to tackle in part because there are so many moving parts in blockchain systems. The ideal design should have low storage, computation, and communication costs, all while guaranteeing security and decentralization. Any of these requirements alone can be challenging to optimize, and the combination of these requirements is legitimately a very difficult problem.

“I think two key factors make our project interesting: The first is that we are doing research at all levels of the stack, ranging from the network to consensus to economics, instead of focusing on just one area. This is important because the subsystems of blockchains are very interconnected. The second factor is that we didn't limit ourselves to people who already work on blockchains. Instead, we brought in experts from areas that are critical to blockchains – e.g., networking, economics, information theory, distributed systems – and asked them to approach these problems using the expertise of their respective fields."

                                   

Pramod Viswanath, a researcher for DTR

and professor of electrical and computer engineering at the University of Illinois Urbana-Champaign also spoke to Cointelegraph about how scalability has been an issue in the early stages of any technology:

“Global scalability is usually quite hard for any technology. As an example, consider cellular wireless systems. Every man, woman and child on Earth has one now. But wireless technology itself is not new at all. Marconi demonstrated a wireless communication link across the Atlantic Ocean in 1901 and it took 100+ years for the technology to really scale globally. It took huge innovations beyond Marconi's technology for wireless to scale globally. A big part of this innovation was system or full stack design, redesigning all aspects of the radio stacks.

Bitcoin is the equivalent of Marconi's historic wireless transmission: Bitcoin demonstrated that secure distributed trust is possible. But it came at the cost of poor performance (throughput, latency). We are redesigning the full stack of cryptocurrencies in our quest at the getting global scalability.”

During the interview, Viswanath said that he was aware of the tendency for projects that claim that they are a one-trick fix for the many issues bogging down the crypto and blockchain sectors. As a result, Viswanath stated that their project was kept quiet until solid research could be presented, in the hope that scientific output could form the basis of Unit-e as opposed

to mere fantasy:

“We are aware of the noise in the crypto community. This is why we took a very conservative approach. We have been in stealth mode for over a year, coming out in the open only when we found that we have already demonstrated a large bit of the claims/promises that Unit-e is making. Indeed, the standard ‘white paper’ in crypto projects is replaced in our case by a ‘150+ page research manifesto,’ which itself is a succinct summary of 10+ research papers by us in the past year, each written for a scientific audience in the appropriate level of engineering and mathematical formalization. These scientific outputs are really the basis behind the claims of Unit-e, not so much as wishful thinking.“

In spite of the myriad challenges the hitherto insurmountable issue of scalability has presented, Fanti is optimistic about the progress being made and believes that developers shouldn’t shy away from experimentation in

their research:

“I think scalability is a very important issue to solve if cryptocurrencies and blockchains more generally are going to gain (or even keep) traction. We're now at the point where there is demand for these technologies, but the growing pains are starting to be evident. So it's critical to explore scalability solutions. At the same time, it can be difficult to experiment with drastically new scalability solutions in already-existing systems due to technical and political inertia. Because of this, we felt there were some clear benefits to building a standalone system with the flexibility to try out different ideas. The hope is that these ideas can eventually benefit the whole community.”

Babak Dastmaltschi, chairman of the DTR Foundation Council is bullish on blockchain and cryptocurrencies. Much like Viswanath, Dastmaltschi expressed his belief that this transitional era for cryptocurrency is not unlike the birth of the telecommunications industry and the

dawn of the internet:

"The blockchain and digital currency markets are at an interesting crossroads, reminiscent of the inflection points reached when industries such as telecom and the internet were coming of age. These are transformative times. We are nearing the point where every person in the world is connected together. Advancements in distributed technologies will enable open networks, avoiding the need for centralized authorities. DTR was formed with the goal of enabling and supporting this revolution, and it is in this vein that we unveil Unit-e."

Fanti commented that one of the most encouraging things about the blockchain community is the readiness for cooperation among its members. In this way, those working on Unit-e have been able to learn from previous projects attempting to tackle scalability, such as the Bitcoin Lightning Network. Fanti outlined that, although both projects center around the same focal point, there are some key

differences between the two:

“Like the Lightning network, we are very focused on scalability. I think one key difference is that because we are starting from scratch, we have the freedom to completely rethink other parts of the blockchain (e.g., consensus mechanisms) that are difficult to change in more established systems. That being said, some of our research is quite related to scalability of the Lightning network, and payment channel networks in general.

“Some scalability challenges in payment channel networks haven't really come to a head yet, in part because adoption is still growing. But once these technologies become more widely used, it will become increasingly important to understand how to route and schedule packets – much like the internet. We hope that some of the research going on for Unit-e can also benefit the Lightning Network and other projects in the payment channel network space, just as we are learning from their prior work.”

What is the Scalability problem.?

Lightning Network

On Dec. 23, BTC statistics website Bitcoinvisuals.com announced that the capacity of the Bitcoin Lightning Network surpassed $2 million. Born from a white paper first published in 2015 by Joseph Poon and Thaddeus Dryja, the BTC Lightning Network is a second-layer payment protocol that functions on top of the BTC blockchain. Much like Unit-e, the network aims to tackle the scalability issues weighing down the crypto sector. However, as opposed to adapting the mechanics of the blockchain itself, the BTC Lightning Network seeks to increase transaction speed by using payment channels. The results of this approach help speed up transaction speeds between users because transactions are not recorded on the blockchain until the channel closes. The news of the increase in the network’s capacity comes against the backdrop of a dismal period of decreasing crypto prices, famously dubbed the “crypto winter.” In spite of the vertiginous drops witnessed across the crypto sector throughout the 2018, the network managed to maintain strong growth.

In spite of being lauded for its efforts to reduce the transaction time between users, the network has attracted criticism for one major aspect: Although the transactions take place on top of the blockchain, they don’t enjoy the same level of security. As a result, it’s unlikely that the method will result in the transfer of large transactions, as these would need the backup of decentralized security that can be guaranteed only through the original blockchain layer. As of Dec. 23, the capacity of node channels supporting the Lightning scaling protocol was 496.8 BTC, only just falling short of a landmark 500 BTC. December also witnessed an increase in channels connecting nodes, with 14,352 unique channels doing so by late December. The Lightning Network also drew praise from crypto trailblazer Nick Szabo who said that the current state of technical development in the sector would lead to an uptick in second-layer solutions in 2019.

Major central bank institution casts doubt on potential of blockchain in current state

A new report published on Jan. 21 by the Bank for International Settlement (BIS) has found that Bitcoin’s problems are only solvable by moving on from a proof-of-work (PoW) system. BIS is a Swiss-based organization comprised of 60 central banks that reportedly account for 95 percent of global GDP. According to the report, the nature of the blockchain infrastructure will result in a steady increase in transaction times as a result of only a limited number of new Bitcoin ever being created. This report also found that transaction fees would no longer be able to support mining expenses and that the transaction speeds would be so slow that the network could

become virtually unusable:

“Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality.”

The report comments favorably on solutions such as the BTC Lightning Network, stating that “The only fundamental remedy would be to depart from proof-of-work.” The report adds however, that a departure from the existing system would “probably require some form of social coordination or institutionalization, and concludes that “in the digital age too, good money is likely to remain a social construct rather than a purely technological one.”

MIT professor says blockchain must increase scalability

On Jan. 21, Massachusetts Institute of Technology (MIT) professor Silvio Micali became the latest U.S.-based academic to outline which major aspects of blockchain systems must be improved in order to maximize all the benefits that the technology entails. In an interview with Bloomberg, Micali stated his view that security, decentralization and scalability are three core aspects of blockchain systems that must function simultaneously in order to deliver an inclusive and borderless economy. With regard to scalability, Micali emphasized that a decentralized system requires a higher level of technology in order to ensure the same degree of participation that centralized systems currently enjoy. Micali outlined his optimism about future prospects for the technology once it is optimized to a degree to which the current issues regarding scalability and security can finally

be dispelled:

“Only a true decentralized system, where the power is really so spread that is going to be essentially practically impossible to attack them all and when you don’t need to trust this or that particular node, is going to bring actually the security we really need and deserve.”

In January, MIT Technology Review furthered its bullish stance in claiming that 2019 would be the year that blockchain systems would finally enjoy normalization and wider adoption.

Liquid sidechain

In September, Blocksteam’s Liquid Network sidechain for the Bitcoin blockchain was publicly announced. First discussed in 2015, the project has now been launched with the view of improving liquidity between Bitcoin exchanges and brokers. The blog post from Blockstream states that the Liquid sidechain would allow faster transactions between users as a result of a native Liquid Bitcoin (L-BTC) asset backed by a “two-way peg” to Bitcoin, Confidential Transaction Technology and Issued Assets that aim to bring “Bitcoin-like features to traditional assets.” The Liquid Network FAQ page explains that the Liquid Network differs from the Lightning Network in that its transactions are not “limited in amount of channel capacity.”

“Wall Street’s Bookkeeper” enters test phase of DLT replatforming

On Nov. 6, the Depository Trust & Clearing Corporation (DTCC) announced it had commenced the test phase of its attempt to replatform its Trade Information Warehouse (TIW) using distributed ledger technology (DLT). The project is the fruit of a collaboration between IBM, Axonia and R3. If successful, the project would represent a considerable leap forward in both scalability and the potential scope of major blockchain projects.

In light of the historic attempts to overcome scalability issues, the DTCC’s attempt to shift its TIW to the blockchain is especially ambitious due to the fact that it processes 98 percent of derivatives transactions worldwide. Furthermore, the statement adds that the DTCC’s subsidiaries “processed securities is valued at more the U.S. $1.61 quadrillion.” As per the release, the DTCC’s Global Trade Repository service processed around 40 million over the counter (OTC) positions weekly, along with 1 billion monthly communications via its licensed trade repositories group.

In a 19-week study headed by the DTCC in collaboration with both Accenture and R3, the trio found that DLT is scalable enough to support the high-trade volumes of the U.S. equities market. Findings in the report allegedly show that DLT is able to process an entire trading day’s volume at peak rates, amounting to 115,000,000 daily trades, which equates to roughly 6,300 trades per second for five hours on end. In order to accurately recreate the chaotic environment of exchanges, brokers-dealers and market participants, Accenture worked on a network of more than 170 nodes. The model subsequently captured matched equities trades from exchange DLT nodes. The DTCC also published information about the ongoing work to transform its TIW via DLT,

such as blockchain:

“Currently, public blockchains supporting cryptocurrencies operate at single or double digit per second performance, which, until now, was the only indication of the potential volume that a private DLT might be able to support. “To make sure that we really demonstrated robustness and completeness, we wanted a target high enough to measure the performance and allow it to maintain that for a continuous period of time.”

Jennifer Peve, managing director of business development and fintech strategy at DTCC, outlined that the scale of the project required an entirely new approach

to scalability:

“The reality is that for the private distributed ledger, there wasn’t a known performance or scalability figure, all we had to go on was public blockchains for Bitcoin performance, and that is not an apple-to-apple comparison. Private blockchains are fit for purpose for our industry. They have a very different architecture, different privacy and sharing models, data storage, smart contract functionality and governance model. There are a number of factors that go into performance and scalability of a distributed ledger."

Head of Clearing Agency Services at DTCC Murray Pozmanter was also optimistic about the results of the ambitious efforts to create adequate

scalability:

“We are excited to lead this important work to advance the performance capabilities of DLT and help create new possibilities for leveraging the technology more broadly across financial markets. As an early adopter of DLT, we are encouraged by the results of the study because they prove that the technology’s performance can scale to meet the needs of markets of different sizes and maturity.”

In spite of the successful testing so far, the group stresses that the study only tested basic functionality. The next phase of the replatforming is expected to take place in Q1 2019.

Article Produced By
Henry Linver

Henry Linver is a freelance journalist. He’s interested in how blockchain has the potential to radically change the world we live in and the transformative power of crypto.

https://cointelegraph.com/news/tipping-the-scales-could-unit-e-finally-break-blockchains-scalability-impasse

Deb Williams (hodlthrive)

Bitcoin Private Team Accuses Crypto Exchange HitBTC of Fraud After Delisting

Bitcoin Private Team Accuses Crypto Exchange HitBTC of Fraud After Delisting

                                 

Bitcoin Private (BTCP) developers have accused cryptocurrency exchange HitBTC

of acting in a fraudulent manner in regards to their delisting from the exchange following a planned coinburn. The accusations are portrayed in a letter written on Feb. 26 to the exchange by the Petros Law Group on behalf of the BTCP community, developers and contributors, and published by the Bitcoin Private Twitter profile on March 9. According to its authors, the letter — which was published the day BTCP was delisted from HitBTC — alleges that HitBTC attempted to extort BTCP following unresolved complications arising from the coinburn.

According to the document, at the beginning of March last year, BTCP was created in a fork from ZClassic (ZCL) and Bitcoin (BTC) with a notice of a future coinburn in its whitepaper: the scheduled event was meant to delete (or “burn”) all the coins which haven’t been claimed (or moved) since the fork. On March 3, 2018, the day after the launch, HitBTC reportedly charged the BTCP team a listing fee of half a million dollars in Bitcoin.

The document includes screenshots of apparently since-deleted tweets in mid-February from HitBTC, which explained to users that since the exchange’s BTCP addresses were created after the fork took place, users won’t be affected by the coinburn. On Feb. 15, one day before the coinburn was planned to happen, HitBTC reportedly contacted BTCP requesting assistance to protect its users’ funds in a series of emails, which then escalated into a request for compensation of 58,920 BTCP to be given after the coinburn due to expected losses.

However, as the document underlines that BTCP addresses created after the fork will not be affected, the exchange cannot have been concerned about users’ loss of funds, as that situation did not exist. Instead, the document alleges that HitBTC secretly held 58,920 BTCP in a BTCP Segwit wallet, and the concerns over the coinburn were related to the exchange’s personal funds. The document further claims that BTCP developers informed the exchange that they didn’t intend to accommodate the compensation demand, but did provide technical assistance — shown with email screenshots — meant to help protect the funds from the coinburn. On Feb. 17, the coinburn reportedly happened, one day after it was forecasted, and on Feb. 21, HitBTC allegedly threatened to pull BTCP support if the coin’s development team did not compensate 58,920 BTCP.

HitBTC has released a statement on its official blog on March 9 stating that the BTCP team was unable to provide a safe way to move the funds before the burn, but that the exchange has compensated all the custody losses. HitBTC has not responded to Cointelegraph’s request for comment by press time. As Cointelegraph reported in December last year, during the import of Bitcoin chain data, an additional 2.04 million units of altcoin Bitcoin Private were reportedly secretly coined. The discovery was later confirmed by the coin’s developers, who stated that the findings were mathematically accurate but “at this time, the source, purpose, and recipient of this exploit is currently unknown.”

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

https://cointelegraph.com/news/bitcoin-private-team-accuses-crypto-exchange-hitbtc-of-fraud-after-delisting

Deb Williams (hodlthrive)

The revolution from Deb Williams