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Citibank Executive Says Bitcoin Could Pass $300K by December 2021

5 years 10 months ago

A senior executive at U.S.-based financial giant Citibank has penned a report drawing on similarities between the 1970s gold market and bitcoin.

The whole of bitcoin‘s existence has been characterized by major price swings, “exactly the kind of thing that sustains a long-term trend,” said Thomas Fitzpatrick, a managing director at Citibank, in his report solely intended for the bank’s institutional clients.

The report was first leaked to the cryptocurrency community by Twitter user “ClassicMacro” in a tweet on Saturday, noting Fitzpatrick is “a big fan of moon targets.”

Related: Fidelity’s Crypto Arm Responds to 6 Common Bitcoin Criticisms

Fitzpatrick pointed to bitcoin’s weekly chart and used technical analysis (TA) of prior highs and lows to determine a target of $318,000 by December 2021.

“This kind of technical analysis is of little value,” ClassicMacro commented in his tweet. “There is no edge in guessing targets so far in time with TA. All we know is that price is likely to continue going up.”

The Citibank executive drew on bitcoin’s 2010-2011 “exponential move” as being “very reminiscent” of the 1970 gold market. Gold had experienced 50 years of a constricted $20–$35 price range before a breakout occurred after a change in fiscal policy by the Nixon administration in 1971.

A decoupling of gold from fiat currencies, the COVID-19 pandemic and the desire for central banks to pursue aggressive quantitative easing policies could lead to future explosive price growth in bitcoin, according to Fitzpatrick.

Related: Crypto Long & Short: What We’re Getting Wrong About Druckenmiller and Bitcoin

“Readers loves this,” commented ClassicMacro. “What matters here is Citi’s clients being exposed to the bitcoin moon.”

See also: Bank of England Official Balks at Shielding Banks Against Digital Currencies: Report

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CoinDesk

New MIT Paper Roundly Rejects Blockchain Voting as Solution to Election Woes

5 years 10 months ago

As media outlets waited to announce a winner until the Saturday following the election day, calls for how blockchains would have made this process easier emerged, most prominently perhaps by  Changpeng Zhao, CEO of Binance, as well as Vitalik Buterin, who added that, though there are technical challenges, the call for a blockchain-based, mobile voting app “is directionally 100% correct.”

A new report from MIT, however, strongly argues against the idea of blockchain-based e-voting, largely on the basis that it will increase cybersecurity vulnerabilities that already exist, it fails meet the unique needs of voting in political elections and it adds more issues than it fixes. 

The report’s authors are Ron Rivest, MIT Computer Science and Artificial Intelligence Laboratory (CSAIL) professor and one of the creators of RSA encryption; Michael Specter; Sunoo Park; and Director of MIT’s Digital Currency Initiative (DCI) Neha Narula. The paper will be published in the Journal of Cybersecurity later this month. 

Related: Digital Voting Is Coming. Let’s Do It Right.

“I haven’t yet seen a blockchain system that I would trust with a county-fair jellybean count, much less a presidential election,” said Rivest in a blog post accompanying the report. 

Why online voting isn’t like digital banking

The report recognizes the desire for people to want the voting process to be faster and more efficient, but pushes back on the idea that just because we do things like shop or bank online, that means elections should be done in the same way. 

One reason is that those systems have “higher tolerances for failure.” For example, if an issue were to occur, such as credit card fraud, you could block your card and a bank might even reimburse you. But when it comes to election, there is little remedy if a vote is altered or not delivered, particularly given that online voting systems might not always recognize when one of these actions occurred. 

Read more: Overstock Touts Voatz ReBlockchain Voting App as Solution to US Election Fracas

Related: The 2020 Elections Are Boosting Crypto Prediction Markets

Another is that anonymity, or at least detaching the way you voted from your identity, is an important part of any electoral process. While a bank or shop can offer you a receipt, proving you did something to detect or prevent fraud, with voting, it’s important no such receipt exists so votes can’t be coerced or sold. 

“For elections there is no insurance or recourse against a failure of democracy,” Rivest says. “There is no means to ‘make voters whole again’ after a compromised election.”

And the cybersecurity issues are numerous. 

Issues with cybersecurity in online voting

One issue with online voting is that it opens itself up to attacks that are both scalable and undetectable. 

In terms of scale, according to the report, a zero-day Android vulnerability only cost $60,000 to acquire in 2012. A zero-day vulnerability is a security flaw that is known about but for which a patch isn’t yet available. 

The authors estimate that testing and weaponizing such a vulnerability would increase the associated costs by two orders of magnitude, meaning an election exploit could cost $6 million. While that may seem like a large sum, it’s little for a nation-state adversary, especially in comparison with the roughly $768 million that was spent on the 2016 U.S. Presidential election. This makes a scalable attack on an election system attractive, in terms of getting a bang for your buck. 

Such an attack could also be undetectable, resulting in large numbers of votes being exploited. This is, in part, due to the number of vendors and devices that would have to be involved. 

“Voting system flaws might be introduced by the voting software vendor, the hardware vendor, the manufacturer, or any third party that maintains or supplies code for these organizations,” reads the report. 

“A voter using a phone to vote depends not only on the phone vendor, but on the hardware companies providing drivers for the device, the baseband processor, the authors of third-party code in the voting software, the manufacturer of the physical device, and the network or any other systems that the device relies upon to cast the vote.”

No concrete solutions to non-hypothetical problems

Even important tools like encryption don’t offer a concrete solution. While encryption does offer some protections, it doesn’t prevent system bugs. Plus, implementing it is difficult, not to mention there are numerous examples of flaws in a system allowing cryptographic protocols to become compromised. 

These concerns aren’t just hypotheticals. The report notes that  electronic-only voting devices at polling stations used in Georgia and Maryland, for example, have previously been shown to be vulnerable, and internet voting systems in cities like Washington, DC, and countries like Estonia and Switzerland were found to be vulnerable to serious failures. 

Read more: Downvoted: Security Researchers Slam Voatz Over Stance on White-Hat Hackers

For comparison, tried-and-true methods like mail-in ballots make a large-scale attack on them incredibly difficult to conduct with any ease because of substantial friction points, like needing physical access to the ballots.. 

When asked whether there were lessons that the U.S. could take from other countries when it comes to voting online, a MIT CSAIL spokesperson said, “None that are positive. Online voting systems will suffer from major vulnerabilities for the foreseeable future, given the state of computer security and the high stakes in political elections.”

The arguments for blockchain-based voting – and why they don’t hold up

The report lays out a number of arguments that have been held up by blockchain proponents. These include using coins as votes, using a permissioned blockchain, and employing zero-knowledge proofs for secret ballots. 

Voting with coins

Coins as votes is one model the report identifies as problematic. In it, a registered voter has a public/private key pair created by the voting authority, with each voter sending their public key to the voting registry. 

“Then, the voter registry spends one coin to each public key. To vote, each user spends their coin to the candidate of their choice. After a period, everyone can look at the blockchain, total up each candidate’s coins, and select the one with the most coins as the winner,” reads the report. 

Read more: Trump’s Post-Election Purge Reaches US Cybersecurity Agency

The issue here is that it doesn’t provide a secret ballot – all the votes are on a public blockchain. It also relies on users being able to get their votes on the blockchain in a certain amount of time, something that could be compromised through distributed denial-of-service attack, making the network unavailable to users. 

An adversary could drive up transaction fees on a public blockchain, further hampering the “vote.” Or the blockchain could be compromised if a majority of the miners or validators collude, creating multiple versions of the blockchain. 

Finally, it relies on private key management, something that is user-dependent and, as cryptocurrencies have shown, something people are often bad at implementing. 

Permissioned blockchains

Another proposal the report challenges is using a permissioned blockchain. A permissioned blockchain is one in which a central actor approves who can be a part of it. There is also usually a control layer that governs what actions participants have permission to perform.

Like voting with coins, use of this strategy would still suffer from key management vulnerabilities. Furthermore, permission parameters would also keep users from reading the blockchain to verify their votes were counted in order to preserve the secrecy of people’s votes. 

A permissioned blockchain would also likely run on a smaller number of servers, with most of them running the same operating system, meaning it would be easier to compromise. 

Zero-knowledge proofs

A final proposal that MIT examines is the use of zero-knowledge proofs (ZKPs). ZKPs are a cryptographic technique that allows two parties on the internet, such as an app and a user, to verify information with each other without sharing the underlying data related to this information. This would seemingly help ease the tension between secrecy and making a vote publicly verifiable. 

But the report notes that, aside from the potential bugs in ZKPs and challenging cryptographic processes, it also doesn’t prevent physical monitoring by “coercers or vote buyers.” 

Additionally, the report argues that “zero-knowledge proofs are designed for a setting where the party with secret information wants to keep it secret (that’s why they’re using zero-knowledge proofs) – they generally do not prevent that party from revealing information voluntarily.”

Read more: ‘Snake Oil and Overpriced Junk’: Why Blockchain Doesn’t Fix Online Voting

A final and fundamental concern about any digital processes such as these, however, is that they rely on various vendors, hardware and software, all of which add additional complexities and likely vulnerabilities to the voting process. 

“The biggest issue is that blockchain-based approaches require that voters use software in which a single bug could undetectably change what they see – for example, showing them that their vote was cast for a certain candidate when it actually wasn’t,” said a MIT CSAIL spokesperson.  “Blockchain is ripe for situations where election results could be changed in ways that are undetectable, or, even if detected, would be irreparable without running an entire new election.”

The report also plays up that elections have stakes beyond just losing money, as would be the case if these online voting tools were compromised in regards to cryptocurrencies. 

Blockchain has lots of potential, just not for actual voting

The report notes that they aren’t addressing voting within a blockchain, such as EOS holders voting for validators in consensus networks, or Augur users using REP to vote on contract outcomes. These may fulfill some aspects of voting, but don’t map onto the system of political elections well, and leave many vulnerabilities that can’t be accounted for. 

The report also recognizes it’s focusing on voting, not areas such as voter registration management or auditing. 

In conclusion, the report notes that blockchain and online voting don’t address fundamental security concerns; instead, they introduce more vulnerabilities than are present in current in-person and mail-in ballot systems. 

“If vote-casting is entirely software-based, a malicious system could fool the voter about how the vote was actually recorded,” said Rivest in an accompanying blog. “Democracy – and the consent of the governed – cannot be made contingent on whether some software correctly recorded voters’ choices.”

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CoinDesk

Bitcoin Cash Has Split Into Two New Blockchains, Again

5 years 10 months ago

The Bitcoin Cash network, a result of a hard fork from Bitcoin, has split into two new blockchains, again. At press time, Bitcoin Cash ABC (BCH ABC) has received no hashpower, meaning that it is possible Bitcoin Cash Node (BCHN) will become the dominant software of the Bitcoin Cash network, according to data from Coin.Dance.

The last “common block” among bitcoin cash miners was #661647, mined by Binance. The first block that split the Bitcoin Cash blockchain was mined by AntPool. Since then, hashpower has been in BCHN’s favor, as miners have mined multiple consecutive blocks on the network.

Before the fork, 80% of miners were signaling support for BCHN.

Related: Roger Ver: Bitcoin Cash Hard Forks Could Have Thwarted PayPal Support

To recap, a group of Bitcoin Cash developers led by Amaury Sechet, known as BCH ABC, proposed an update on the Bitcoin Cash network, which has included a controversial new “Coinbase Rule,” which requires 8% of mined bitcoin cash to be redistributed to BCH ABC as a means of financing protocol development.

The upgrade is opposed by another group from the Bitcoin Cash community, known as Bitcoin Cash Node, who removed this so-called “miner tax” from their source code. When some nodes on a network adopt a hard fork and others don’t, then the blockchain will split into two different versions: one with the old software and one with the new software.

Prior to the hard fork, prices of bitcoin cash plummeted to as low as $237.54, down by 7.5% from an earlier high at $256.82, according to data from CoinDesk 20.

If BCH ABC does not attract enough hashpower to produce a viable blockchain, the ABC blockchain would in theory “disappear.”

Related: Market Wrap: Bitcoin Fails to Reach $16.5K; Wrapped BTC Hits $2 Billion

Most major crypto exchanges have announced that they are likely to support BCHN and it will inherit the “BCH” ticker.

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Value DeFi Suffers $6M Flash Loan Attack

5 years 10 months ago

Decentralized Finance (DeFi) protocol Value DeFi was exploited for approximately $6 million earlier Saturday, possibly due to a flash loan attack, a scheme often seen in the fast-growing DeFi sector.

  • “A complex attack” on Value DeFi’s MultiStables vault has caused a net loss of $6 million, according to a tweet by Value DeFi on Saturday.
  • The exploit appears to be a flash loan attack, according to data from Etherscan, after an attacker or attackers borrowed 80,000 ether from the DeFi lending platform Aave.
  • Flash loans allow users to borrow funds without collateralization because the lender expects the funds would be returned instantly.
  • By taking advantage of the uncollateralized loans, the attackers arbitraged the funds between stablecoins dai and USDC after depositing funds in the Value DeFi’s MultiStables vault.
  • At press time, the price of the protocol’s native token value liquidity plummeted to $1.99, down 27.9% from around $2.76 before the attack, according to data from CoinGecko.
  • Flash loan attacks are common in the DeFi sector: Value DeFi’s loss came just two days after another DeFi platform Akropolis suffered a similar hack and lost about $2 million in total.
  • The team behind Value DeFi did not return CoinDesk’s questions by press time.

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Roger Ver: Bitcoin Cash Hard Forks Could Have Thwarted PayPal Support

5 years 10 months ago

There are still a lot of uncertainties around the scheduled Bitcoin Cash fork event on Nov. 15, but one thing is for sure: The cryptocurrency’s biggest advocate, Roger Ver, executive chairman of Bitcoin.com, is not a fan of the scheduled upgrades on the network, which take place every six months.

“If PayPal knew that this sort of contentious hard fork was likely to happen, maybe they wouldn’t have added bitcoin cash at all to their roadmap,” Ver told CoinDesk in an interview, referring to PayPal’s recent announcement to add cryptocurrencies – bitcoin cash included – to its system. “So it is really a big problem to have these contentious hard forks. I’d like to see that come to an end.”

As of press time, PayPal hasn’t responded to CoinDesk’s request for comment on the upcoming fork event. Paxos, the company that provides crypto service for PayPal, rejected CoinDesk’s request to comment on the topic.

Related: Market Wrap: Bitcoin Fails to Reach $16.5K; Wrapped BTC Hits $2 Billion

A Bitcoin fork known for forks

Unlike a “soft fork” that allows non-upgraded and upgraded nodes to still transact with each other, a hard fork is a software upgrade that implements a new rule to the blockchain that is not compatible with the older software. Thus, developers tend to be extremely conservative about introducing hard forks and usually try to ensure there will be community consensus around these sorts of changes to the code. However, some hard forks have been contentious. In these instances, if some nodes on a network adopt a hard fork and others don’t, then the blockchain will split into two different versions: one with the old software and one with the new software.

Bitcoin Cash itself is a result of a hard fork from Bitcoin, after a group from the Bitcoin community, advocating the literal interpretation of Satoshi Nakamoto’s Bitcoin white paper, insisted on increasing block sizes. They pushed for a hard fork of the original Bitcoin blockchain, as they view low-cost, peer-to-peer transactions as the blockchain’s core value.

Read more: OKEx, Still Paralyzed by Founder’s Arrest, Details Plans for Bitcoin Cash Hard Fork

Related: Developers Debate Disclosure Protocols After ‘Accidental’ Ethereum Hard Fork

Today, as the most well-known fork of Bitcoin, the Bitcoin Cash network undergoes an upgrade every six months, and a chain split can occur when the community is unable to meet consensus requirements. An example is when Bitcoin Satoshi Vision (BSV) forked away from Bitcoin Cash on Nov. 15, 2018.

The Bitcoin Cash hard fork expected this coming Nov. 15 is the result of a blockchain update proposal from a group known as Bitcoin Cash ABC (BCH ABC), led by developer Amaury Sechet. The update has included a controversial new “Coinbase Rule,” which requires 8% of mined bitcoin cash to be redistributed to Bitcoin ABC as a means of financing protocol development. 

Developers with ‘too much money’

This funding approach has triggered a debate within the BCH community regarding the governance and the development of the software that runs the Bitcoin Cash blockchain. 

The group led by developers from BCH ABC holds there should be an organized and consistent effort in order for bitcoin cash to become a universal digital payment. Therefore, developers should be funded by the Bitcoin Cash network, according to Chris Troutner, a developer who formerly worked at Ver’s bitcoin.com and is close to Sechet’s BCH ABC group. 

However, an opposing group against this funding mechanism, Ver included, said that because the software is an open-source protocol, developers should help improve the protocol on a voluntary basis and look for financial resources elsewhere.

Ver went a step further by saying the Bitcoin Cash network’s problem is developers have “too much money.”

“I think the way [Bitcoin] went off the rails from Bitcoin Cash is developers had too much money and then they started developing and tinkering with too many different things, which caused a problem in the network.”

Troutner, who told CoinDesk that he will support both chains after the fork, said the real issue behind the dispute is a collective hatred toward Sechet. Sechet’s BCH ABC has been leading the scheduled Bitcoin Cash updates for the past few years, Troutner said. And Sechet’s team has always wanted to implement this funding mechanism.

“[BCH ABC’s opponents] want Amaury Sechet to leave the ecosystem,” he said.

Read more: Ethereum’s ‘Unannounced Hard Fork’ Was Trying to Prevent the Very Disruption It Caused

Ver said he didn’t think the fork will take place as planned, saying only about 0.2% of the blocks mined on Bitcoin Cash have signaled support for Bitcoin ABC.

As of press time, of the last 1,000 blocks mined on Bitcoin Cash, about 80% have signaled support for the Bitcoin Cash Node (BCHN) and only 0.3% for Bitcoin ABC, according to data from Coin Dance.

What the data may indicate is that a fork will take place because the software upgrade by BCH ABC is not supported by the majority of the miners, as more blocks are signaling support to BCHN. That will force BCH ABC to fork away from the old chain, said Aidan Mott, analyst at Messari.

On the other hand, Troutner posits that the data may have hindered the actual support of BCH ABC.

“If you think about it in terms of a game theory, some miners are probably legitimately signaling for BCH but other miners who are planning to mine on ABC probably are also signaling for BCHN because they want their competitors to mine on that chain,” Troutner explained. “That makes it easier for them to mine blocks on the ABC chain.”

Exchanges and ‘fork fatigue’

Ver’s early argument is service providers like PayPal can be frustrated by a cryptocurrency blockchain that’s constantly going through forking events. This sort of frustration is already happening at crypto exchanges. Even though it is unclear which chain will become the dominant chain after the fork, a few major crypto exchanges have already announced their support for BCHN, which will inherit the Bitcoin Cash name, assuming the BCH ABC would get the minority of nodes.

In a Nov. 6 post by Kraken, the exchange said it will support BCHN, “regardless of the outcome of the fork.”

“Bitcoin Cash Node tokens will be called ‘Bitcoin Cash’ on our platform and represented by the ticker symbol ‘BCH,’” Kraken said in the post. “We will support Bitcoin Cash ABC ONLY IF the hash power on the ABC network is at least 10% of the hash power on the Bitcoin Cash Node network.”

“Exchanges have to put themselves in a position where they can know what their customers want, which means they understand the kind of the consensus of the miners but also they understand the positions of the development teams,” said Mott. “In this sense, it would be a pretty easy decision to just keep their support and only run Bitcoin Cash Node network software.”

Since prices of the two newly split cryptocurrencies will be decided by market supply and demand, exchanges play a significant role because they are the ones that allocate the new tokens to their customers.

Another important implication from Kraken’s post is that exchanges also get to decide which new chain will take the Bitcoin Cash name.

Read more: Roger Ver’s Mining Pool Pulls Support for Bitcoin Cash Dev Fund Over Chain Split Threat

Ver claimed the reason Bitcoin Cash is less popular than Bitcoin is because the latter took the “Bitcoin” name after the hard fork. Ever since then, marketing has been one of the biggest obstacles for the mass adoption of Bitcoin Cash, according to Ver.

The market capitalization of bitcoin cash is approximately $4.88 billion at the time of writing, yet bitcoin has a market capitalization of $283.28 billion, according to data on CoinDesk 20.

“When the split happened, the Bitcoin Cash version had all the characteristics that made Bitcoin popular to begin with, but the other version that didn’t have those characteristics got the Bitcoin name and the infrastructure to go with it,” Ver said. “Bitcoin Cash has been rebuilding all of that infrastructure and its brand recognition basically from scratch.”

If that’s the case, BCHN will find itself ahead of BCH ABC, as evidenced by exchanges’ support, if it takes the name of Bitcoin Cash.

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Galaxy Digital Makes Twin Acquisitions in Bid to Strengthen Institutional Appeal

5 years 10 months ago

Cryptocurrency merchant bank Galaxy Digital has purchased two firms as it seeks to become the “go to” platform for institutional access to digital assets, the firm said Friday.

  • Announced in a press release, the newly acquired firms are DrawBridge Lending, a “white glove” service for borrowing and investing in digital assets, and Blue Fire Capital, which focuses on providing two-sided liquidity for futures markets and digital assets.
  • The terms of the deals were not disclosed, but Galaxy did say the move would bring DrawBridge’s over $150 million in third-party assets to the firm.
  • “Galaxy Digital’s mission is to bring cryptocurrency to traditional finance and vice versa,” according to said Christopher Ferraro, president of Galaxy Digital.
  • The acquisitions “will enable us to further amplify our strong position as a go-to trading desk in digital assets and more rapidly grow our innovative portfolio of trading products and services,” he said.
  • The news came hours after Galaxy, which was founded by Mike Novogratz, announced net income of $44.3 million for Q3 2020 – well up from a loss of $68.2 million in the same quarter last year.
  • Volume at subsidiary Galaxy Digital Trading (GDT) was up 75% compared with Q3 2019 to a record $1.4 billion, which the firm put down to the soaring bitcoin market.
  • Novogratz said the acquisitions would help the firm “further meet what we believe will be an even bigger wave of institutional demand.”

Also read: Galaxy Digital, IOSG Lead $1.2M Raise for Startup Creating Automated Ethereum Services

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Bitcoin Rally Falters as Price Drops Below $16K

5 years 10 months ago

Bitcoin’s price quickly dropped below $16,000 Saturday morning, putting the rapid rally seen in recent weeks on pause.

  • Around 10:00 UTC, the cryptocurrency dropped as low as $15,750, having hit highs over $16,300 in the Asian trading hours.
  • As reported earlier this week, analysts had been expecting bitcoin to move into consolidation for a time, and possible to see a pullback.
  • That’s because the rally from $9,800 to over $16,000 over the past two months looked overstretched on the technical charts.
  • They anticipated, however, that the run toward bitcoin’s record high of around $20,000 would pick up the pace again, likely in December.
  • The bitcoin options market is also extremely bullish longer term, as data showed Thursday that net demand for call options (bullish bets) was outstripping net demand for puts (bearish bets) by the highest level on record.
  • At press time, bitcoin prices had risen slightly to $15,860, down 2.87% over 24 hours.

Also read: $300M in Bitcoin Flow to Binance From Huobi as China Gets Tougher on Exchanges

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Market Wrap: Bitcoin Fails to Reach $16.5K; Wrapped BTC Hits $2 Billion

5 years 10 months ago

Analysts are bullish on bitcoin’s price but the options market is decidedly bearish on the remaining weeks of 2020. Ethereum’s wrapped bitcoin token crosses $2 billion locked.

  • Bitcoin (BTC) trading around $16,240 as of 21:00 UTC (4 p.m. ET). Gaining 0.30% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $15,971-$16,487
  • BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price trended up for the third straight day, hitting as high as $16,487, according to data from CoinDesk 20. It dipped somewhat since hitting that level and traded at $16,240 as of press time. 

“Bitcoin rose significantly above the $16,100 mark. Buyers pushed the price due to the large volume,” noted Constantin Kogan, managing partner at investment firm Wave Financial. 

Related: First Mover: Why the Fed Cares About Remote Working – And What It Means for Bitcoin

Major exchange daily spot volumes on Friday were at $668 million as of press time, but not close to Thursday’s $1.1 billion in volume.

George McDonaugh, managing director at investment firm KR1, highlighted a key difference between the price run-up in 2020 versus the mooning that occurred back in 2017. “Bitcoin has spent 0.32% of its life at $16,000 and above, which means there were relatively very few buyers at that level back in 2017,” he told CoinDesk. “This correlates to there being very few sellers at this level now, meaning there isn’t a strong resistance band for the bulls to push the price higher.”

“I’m seeing an increasing demand from more traditional family offices making their first investments into bitcoin as a long-term hedge or as insurance for their existing portfolio of investments,” Michael Gord, chief executive officer of Global Digital Assets, told CoinDesk. “I expect this trend to continue as bitcoin keeps maintaining its value and being uncorrelated to most other asset classes.” 

Read More: $300M BTC Flow to Binance From Huobi as China Toughens on Exchanges

Related: Market Wrap: Bitcoin Hits $16.2K; Uniswap Crosses $3B Locked

Bitcoin isn’t entirely uncorrelated from other asset classes like equities, but lately the correlation between the world’s oldest cryptocurrency and the S&P 500 has dropped a little bit.

KR1’s McDonaugh is expecting bitcoin’s price to reach $20,000, but it might take some time to get there as some profit-taking is likely to ensue. “$20,000 is a far more psychological barrier, so it is likely to be ‘HODLers’ – people holding bitcoin forever – that may de-risk at that level and produce some selling pressure,” he said. 

Bitcoin options traders aren’t fully convinced that it will trade at $20,000 in 2020. The probabilities calculated using December expiration have pegged only a 16% chance of $20,000 bitcoin, a 29% for $18,000 and a 39% of $17,000 according to data aggregator Skew.

Nevertheless, analysts project that bitcoin can soon surpass at least $16,500 consistently. “Given market sentiment and current trends, I am still bullish on BTC,” said Andrew Tu, an executive at trading firm Efficient Frontier. “Though we may range between $16,000 and $16,500 for a bit before breaking resistance.”

Wrapped bitcoin hits $2 billion locked

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Friday, trading around $470 and climbing 2.6% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Read More: Payments Provider BitPay Rolls Out Cryptocurrency Payroll Service

The amount of bitcoin “locked” in the Ethereum-based wrapped bitcoin contract passed $2 billion Thursday, and is staying at that level Friday. In order to use bitcoin on Ethereum, it must be “wrapped” and used as a token on the network using a standard called ERC-20.

Brian Mosoff, chief executive officer of investment firm Ether Capital, says the parking of bitcoin on Ethereum is giving the network a huge leg up over its up-and-coming smart contract competitors, including Polkadot, Cardano and Cosmos, among others. 

“It’s proving that Ethereum is the thing everyone is plugging into and (networks like) Polkadot may not have its day in the sun,” Mosoff told CoinDesk.

Other markets

Digital assets on the CoinDesk 20 are mostly green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

Notable loser:

Read More: Mike Novogratz’s Galaxy Digital Nets $44.3M in Q3

Equities:

Commodities:

  • Oil was down 1.7%. Price per barrel of West Texas Intermediate crude: $40.21.
  • Gold was in the green 0.60% and at $1,888 as of press time.

Treasurys:

  • The 10-year U.S. Treasury bond yield climbed Friday jumping to 0.896 and in the green 2%.
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Token Projects Are Not Happy With KuCoin’s Handling of $280M Hack

5 years 10 months ago

The latest face-saving communique from Seychelles-domiciled crypto exchange KuCoin – hacked almost two months ago for over $280 million – is that 84% of the affected assets have been recovered. Some victims will be glad the situation seems to be moving towards resolution. Others, not so much.

Leaving aside the conspiracy theories, death threats and alleged lack of communication on the part of the exchange, the KuCoin debacle raises troubling issues around blockchain decentralization and how token projects often rely on fallible intermediaries.

Following the hack, many projects whose tokens were stolen from the exchange were urged to react quickly and change their smart contracts – effectively replacing stolen tokens with new versions, known as a token swap. (A list of projects that speedily updated their tokens following the Sept. 26 hack can be found here.)

Related: Hackers, Scammers Have Stolen $7.6B in Crypto Since 2011

The majority of ERC-20 projects affected by the KuCoin hack (around 60%) have bowed to pressure and upgraded their tokens. While it goes against the principles of those projects to essentially cover KuCoin’s back by updating their smart contracts or replacing their tokens, they chose the easiest solution available to them. But in some cases, it’s not a straightforward process and would lead to a very messy fix.

Read more: KuCoin CEO Says Suspects in $281M Hack Identified; Authorities on the Case

“We consciously built our smart contract in a way that’s truly decentralized and we, as a team, can’t just halt transactions, blacklist, whitelist people and so on,” said Paul Claudius, co-founder of DIA, a crowd-driven Wikipedia for financial data and information. “As a team, we obviously trust ourselves, but we don’t think the world should have to trust us. And that’s the reason we build our smart contracts that way.”

KuCoin calls all remediating efforts “token swaps,” said Claudius, but the exchange is confusing two different things. 

Related: Audius Has Big Numbers by Crypto Standards but Can It Take On SoundCloud?

In some cases, it’s possible to upgrade the contract, reissue the token and create a blockchain state similar to that prior to the hack. That’s very different from a situation where reissuing the token would create two tokens.

“Then it’s like a fork,” said Claudius. “Which is the real token at the end? People would be trading the old token, not knowing this. It’s just not an option.”

In the case of DIA, some 3 million tokens were taken by the hacker, at a value of around $4 million; while this amount was not “life-threatening,” the team members had to watch powerless as the hacker sold their tokens. 

“I can see why projects who had, say, 50% of their tokens affected by the hack, would choose the option to basically just pull the plug,” Claudius said. “Their backs were against the wall.”

Read more: Decentralized Governance in the Wild – Lessons From the KuCoin Hack

The DMM Foundation, the organization behind Decentralized Money Market, said KuCoin’s strategy has been to switch the onus onto the decentralized governance communities behind these projects, pressuring them to swap tokens, effectively crediting KuCoin’s balance.

“This leaves the community in an uproar, asking why we are not upgrading our token, when in fact it shouldn’t be our responsibility; it’s actually KuCoin’s problem,” a member of DMM, who wanted to remain nameless, told CoinDesk, adding:

“We are a DeFi protocol. We can’t do that so easily without completely disrupting our user base and potentially exposing areas of weakness for our community.” 

Token quandary 

It’s one of the paradoxes at the heart of crypto, that decentralized projects list on centralized exchanges and must rely on centralized custody as a potential point of failure. 

Of course, that’s why decentralized exchanges (DEXs) are becoming increasingly popular as technological advances bring speed (and, in turn, attract liquidity for prominent tokens). For some smaller projects, though, listing on KuCoin is a big deal. Perhaps it is their only trading venue with significant liquidity. So what are they going to do?

Read more: Ocean Protocol Forks to Retrieve Tokens Stolen From KuCoin Exchange

There are a number of projects that are holding out from doing a token swap, and KuCoin’s strategy seems to be to wait until they all eventually fold. During this waiting game, the exchange has employed some egregious tactics, said Jag Singh, CEO of Vid, a project that delisted from KuCoin before the hack took place. 

“We delisted from KuCoin because we noticed a lot of suspicious stuff going on with our token price – pumps and dumps – that we concluded could only be [caused by] the exchange itself,” said Singh. “This [delisting] meant they had less leverage over us.”

Like many others affected by the hack, Singh claims KuCoin is selling phantom tokens. If the entire balance of a token was stolen by the hacker and that project has not done a token swap, KuCoin is “trading on thin air,” Singh said. He claims this is a deliberate tactic to induce token swaps and reduce the amount the exchange has to reimburse.

CoinDesk asked KuCoin for comment, to which the exchange asked for questions to be emailed. There has been no response to the questions but a KuCoin representative did share some comments from KuCoin CEO Johnny Lyu comparing the hack to events like the Ethereum DAO compromise of 2016.

“Actually, in the history of crypto, token swap or hard fork situations emerged several times among Bitcoin and Ethereum communities at critical timings,” Lyu said in a live-streamed update on Sept. 30. “With that, communities survived from serious crises, and everyone felt thankful to those teams that made contributions.”

The irony and hypocrisy of such comparisons is stunning, said Richard Sanders, founder of blockchain analytics company CipherBlade.

“The important thing is that we’re dealing with decentralized tech,” said Sanders. “So setting a precedent every single time an exchange is hacked or somebody is negligent for some centralized action goes against the very foundation of what this technology is supposed to be about. Everything KuCoin is doing really boils down to them trying to save face.”

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Payza Founders Sentenced in $250M Money Laundering Case

5 years 10 months ago

The founders of digital payments processor Payza will serve year-plus prison terms and forfeit $4.5 million in seized assets for breaking federal money transmission laws, the U.S. Department of Justice said.

Brothers Firoz and Ferhan Patel, both Canadian, had pleaded guilty in July to a lineup of financial crimes stemming from Payza, their international payments startup. Prosecutors said the unlicensed firm processed more than $250 million, including funds known to be associated with crime, an allegation to which the brothers ultimately admitted.

On Tuesday, Firoz received a 36-month sentence and Ferhan an 18-month sentence from U.S. District Court in Washington, D.C. Their company Payza (aka MH Pillars) will be in corporate probation for the next three years.

Related: US Charges 6 With Laundering Mexican Drug Cartel Cash Using Crypto and Casinos

Read more: US Hits Crypto Buying Service Payza With Money Laundering Lawsuit

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CoinDesk

Blockchain Bites: Bankrupted Cred’s Missing Millions, Bitcoin Miners’ Quarterly Losses and More

5 years 10 months ago

Crypto lender Cred’s bankruptcy is more than it appears. Two publicly traded bitcoin mining firms reported this week: Neither are profitable. ECB President Christine Lagarde has a “hunch” about the digital euro. 

Top shelf

Chapter…12?
Cred’s Chapter 11 bankruptcy filing doesn’t tell the whole story. With $67.8 million in assets and $136 million in liabilities, the crypto lender called it quits last weekend, leaving hundreds of depositors worrying about their collected $100 million loaned to the company. Cred has officially blamed malfeasance on the part of an outside investor entrusted with 800 BTC, although corporate insiders also say a $39 million line of credit to a Chinese lender went south. “There’s a lot else going on,” Daniyal Inamullah, former head of capital markets at Cred, said. CoinDesk’s Nathan DiCamillo investigates.

Bleeding BTC?
Two publicly traded bitcoin mining companies are nearing profitability. Marathon and Hut 8, prominent within the sector, both narrowed quarterly losses, according to quarterly financial statements. Marathon bumped revenues to $835,184 in Q3, a 160% increase from the same period last year, while also recording a net loss of nearly $2 million. The company’s loss per share, however, dropped from 12 cents to 6 cents a share year over year. Meanwhile, Hut 8 saw C$5.3 million (about US$4 million) in Q3 mining revenue, down 43% from the previous quarter, but also managed to trim its losses of C$0.07 a share in Q3 2019 to C$0.01 this quarter.

Related: Money Reimagined: The US’ Kodak Moment

CBDC ‘hunch’
European Central Bank President Christine Lagarde has a “hunch” there will be a digital euro in two to four years. At a virtual panel yesterday, Lagarde said an European Union-wide central bank digital currency should be explored, “If it is going to facilitate cross-border payments.” The ECB previously said it is researching a CBDC. The latest statements are another indicator of what to expect and when: “A digital euro will not be a substitute for cash,” Lagarde said. “It will be a complement.” Separately, Benoit Coeure, head of the Innovation Hub at the Bank for International Settlements (BIS), said any potential CBDC for the supranational bank could involve blockchain. “Everything is possible,” he said.

Audited and attacked
Decentralized finance (DeFi) platform Akropolis suffered a $2 million loss following a sophisticated “flash loan” attack. According to the platform’s founder Ana Andrianova, the attacker pulled out tranches of $50,000 in DAI from the project’s yCurve and sUSD pools, leveraging derivatives platform dYdX. While much is said about the audit trails of novel DeFi protocols, especially after hacks, Akropolis’ code was in fact audited twice: once by CertiK and also by firms SmartDec and Pessimistic.

Exchange flows
Bitcoin flows to Binance from Huobi have reached an all-time high. According to data provided by CryptoQuant, some 18,652 bitcoins, worth nearly $300 million, were transferred from Huobi to Binance from Nov. 2 to Nov. 11. The bustling trade spiked ever since the Huobi chief operating officer, Robin Zhu, went missing at the beginning of the month. For months, Chinese regulators have been clamping down on crypto trading platforms, as part of a broader sweep of the fintech industry.

Quick bites
  • Ant Group’s suspended IPO was the work of slighted CCP officials – but it also links back to China’s digital yuan experiments. (CoinDesk)
  • Uniswap farming ends in four days, potentially freeing up $1.1 billion in ETH (Cointelegraph)
  • Sythentix now has a Brent Crude oil future trading pool. (CoinDesk)
  • “Severe” bug found in core library for Ethereum and Ethereum Classic has been fixed. (Decrypt)
At stake

Dignity and bitcoin
“The systems don’t always work,” Robby Gutmann, co-founder of Stone Ridge Holdings Group, told NLW in his first podcast interview since the company made waves by investing heavily in bitcoin. That’s why the $10 billion alternative asset manager has placed its “primary treasury reserve” in bitcoin.

Related: First Mover: Why the Fed Cares About Remote Working – And What It Means for Bitcoin

In short, bitcoin is an exit from an inflating monetary base that has failed to serve the public. Last month, Stone announced it would stash more than 10,000 BTC with its crypto subsidiary NYDIG. This follows other corporate firms like MicroStrategy and Square moving some of their cash treasuries into bitcoin, also citing monetary debasement.

“The expansion of the money supply in the U.S. hasn’t shown up in growth of CPI in a measurable way, but in other measurements of inflation,” Gutmann said. Notably, Gutmann considers the prospect of living a “dignified” retirement as an ideal marker for inflation.

“The idea of financial security is much broader in bitcoin,” he said, when claiming that only a “single-digit number” of fiat monetary systems are functional or scale. “Can I save my day’s labor in something I can spend tomorrow next week,” isn’t a question most U.S. workers are confronted with, but it may be a legitimate concern elsewhere.

That’s why a bitcoin-based world economy could better serve nations that weren’t part of the industrializing processes of the 19th and 20th centuries.

Gutmann further explained NYDIG’s thesis is in fostering the “long-term development of an open source monetary system.” This includes opening some of its in-house bitcoin infrastructure up to other companies – “we won’t be the last people that have this challenge” – and applying for New York State’s “BitLicense ” and a limited trust charter.

“To the extent we can move the bitcoin project forward, it feels like we can do something measurable in society today around this idea of financial security for people outside the first world,” he said.

The full, hour-long interview can be found here.

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CoinDesk

Developers Debate Disclosure Protocols After ‘Accidental’ Ethereum Hard Fork

5 years 10 months ago

Ethereum developers are weighing changes to publicly disclosing critical bugs following the Nov. 11 “accidental hard fork.” 

According to a technical write-up published by Geth – the largest Ethereum client written in the Go language – a denial-of-service (DoS) attack vector was intentionally triggered by a downstream user as a test, resulting in a 30-block sidechain.

Geth had fixed the bug in early October following a disclosure, but it still existed in prior versions of Geth. The bug temporarily caused 80% of the network that runs on Geth to go down a different path than other clients.

Related: First Mover: Bitcoin Breaches $16K as (Committed) Holders Diss Dalio’s Diss

Now, developers are reordering the disclosure process for security vulnerabilities in the aftermath of what some developers have called the biggest threat against Ethereum since 2016’s attack on The DAO. 

Read more: ‘Unannounced Hard Fork’ Was Trying to Prevent the Very Disruption It Caused

That question comes with baggage. A common ethos in open-source software (OSS) such as Ethereum is that vendors are tasked “to notify those affected by vulnerabilities in a timely manner,” Summa founder James Prestwich told CoinDesk in a message. In other words, Geth has a responsibility to give dependent users a heads-up on possible complications.

‘Disclosure is a complex topic’

Yet, blockchains, at their very core, are financial settlement mechanisms. The traditional methods of disclosing bugs in OSS can lead to undesirable outcomes for other players with money on the line.

Related: Israeli Firm Unveils Tech Allowing Users to ‘Undo’ Erroneous Ether Transactions

In Friday’s All Core Developers’ call, Ethereum developer Micah Zoltu and Geth team leader Peter Szilágyi both disagreed with the issuance of a notification list for critical vulnerabilities. Zoltu claimed such a list would create an uneven playing field for projects, while Szilágyi said that every bug disclosure creates a weak point in Ethereum’s infrastructure. 

For example, disclosing the bug early to service provider Infura – which most of decentralized finance (DeFi) uses to connect to the Ethereum blockchain – would be an unfair advantage against its competitors. Moreover, the consequences for the larger ecosystem could be severe if privileged information from the list leaked to adversarial parties.

Given the option again, Szilágyi said he would go about the recent disclosure in the same manner – meaning, keeping the consensus bug under wraps (although he said at one point during the call they should have let users know a past version of Geth held a vulnerability). Geth has done so for other consensus vulnerabilities, he said.

“Disclosure is a complex topic and user safety is paramount,” Prestwich concluded.

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CoinDesk

Mike Novogratz’s Galaxy Digital Nets $44.3M in Q3

5 years 10 months ago

Galaxy Digital, the crypto merchant bank headed by noted crypto evangelist Mike Novogratz, reported net income of $44.3 million in the third quarter of 2020, up from a loss of $68.2 million in the year-ago period.

  • Galaxy Digital’s total assets eclipsed $536 million, nearly $225 million of which was in cryptocurrencies.
  • Volume at subsidiary Galaxy Digital Trading (GDT) was up 75% year over year to a record $1.4 billion.
  • Galaxy attributed the soaring trading volume to momentum in bitcoin markets.
  • GDT on Friday acquired crypto trading firms DrawBridge Lending and Blue Fire Capital for an undisclosed sum.
  • GLXY was trading up 30 basis points around $5.37 CAD (US$4.08) on the Toronto Stock Exchange at press time.
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CoinDesk

This Crypto Custody Breakthrough Will Bring Banks Closer to Digital Assets

5 years 10 months ago

Stealth-mode crypto custody specialist Shard X has claimed a breakthrough, being the first company to successfully run math-heavy, multi-party computation (MPC) on hardware security modules (HSMs).

So why does this alphabet soup of security tech matter? 

In summary, HSMs are a battle-tested way to store private keys, particularly popular in consumer products like Ledger and Trezor. MPC, which breaks up cryptographic keys into shards and distributes them, is growing in popularity with custody tech providers like Fireblocks and Curv. But one challenge with MPC has been where to store key shards: The whole process was thought to be too computationally heavy to run on hardware.

Related: US Representatives Rip OCC, Brooks for ‘Excessive Focus’ on Crypto

Solving this problem is important because banks, which are gradually edging towards crypto custody, generally like and trust HSMs. So a combination of battle-tested, bank-grade HSMs, combined with cutting-edge MPC is probably the type of tech those institutions will be looking for, says Yaniv Neu-Ner, co-founder and CEO of Shard X. 

Read more: MPC Explained: The Bold New Vision for Securing Crypto Money

Shard X has successfully run MPC tests with Entrust, a provider of nShield HSMs to major custodians, said Neu-Ner, and is now working on running MPC with a number of firms offering HSMs, such as Utimaco.

“Our big breakthrough is that we’ve managed to compress and optimize the MPC code so that it can run on bank-grade HSMs, something people in this space never thought was possible,” said Neu-Ner. “Now, you can take an MPC key fragment and store it on an HSM to make sure you don’t get breached.”

Related: Crypto Custodian Anchorage Gets SOC 1 Security Certification With Big 4 Auditor EY

There are a lot of smart people working on MPC, so how did nobody else solve this problem? 

Neu-Ner said the credit goes to his team, which managed to combine equally strong math and engineering backgrounds, in particular his CTO Nikita Lesnikov.

“[Lesnikov] is just an exceptional mind,” said Neu-Ner. “He was the one who figured it out. I imagine now that we are announcing it, the competition will start working on the same challenge, and I think they will get there. But it’s a big breakthrough to be first.”

Read more: Coinbase Ventures Joins $23M Funding Round for Crypto Custody Firm

Shard X likes to take a back seat, licensing its software to custodians. In terms of how this breakthrough is being peer-reviewed, MPC code auditor Trail of Bits has been selected to continually audit the work. 

For Neu-Ner, a combination of the best of both worlds is an essential step in the evolution of crypto custody. 

“As this industry grows, there’s going to be more and more value at stake, and right now we are seeing exchanges getting hacked fairly regularly,” he said. “So I don’t think one technology will be enough. The future I see is that you combine multiple technologies to create the most secure custody solutions.”

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CoinDesk

Bank of England Official Balks at Shielding Banks Against Digital Currencies: Report

5 years 10 months ago

Bank of England Deputy Governor Jon Cunliffe said it was not his central bank’s responsibility to protect banks from whatever impacts digital currency projects may bring.

  • “Our job is not to protect bank business models,” Cunliffe said, according to Reuters.
  • Politicians must fast-track their analysis of central bank digital currencies to stay ahead of the private sector, he said.
  • The Bank of England is one of the many central banks currently studying digital currencies.

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CoinDesk

From PayPal to Libra: Big Tech Has Forced Central Banks to Wake Up to CBDCs, Says Benoit Coeure

5 years 10 months ago

Libra was the final wake-up call for central banks that prompted serious consideration of digital currency issuances, according to Benoit Coeure, head of the Innovation Hub at the Bank for International Settlements (BIS).

In an interview with French newspaper L’Express published on the BIS website Friday, Coeure acknowledged central banks had been resting on their laurels when it came to advances in payments. Thirty years ago, he said, “the banking world was innovative.”

But increasing digitization and the advent of tech such as PayPal, Apple Pay and smartphones payments brought a “revolution” to the sector. Even so, he continued, these advances were restricted to the user interface and didn’t offer a fundamental disruption to payment channels.

Related: US Company Now Lets Travelers Pay for Passports With Bitcoin

According to Coeure, the “real trigger” for the move toward central bank digital currencies (CBDCs) was the unveiling of the Facebook-initiated Libra project, which offered more than just an advance in the user interface.

“[Libra] is a global, closed and self-sufficient project since there is at the same time a means of payment, a storage mechanism with a wallet and a global network which makes it possible to ensure transfers from one place to another without going through the central bank settlement systems,” he said.

Acknowledging the project offers benefits to users, Coeure also cautioned that “the emergence of closed payment channels dominated by tech giants poses risks for both competition and data protection.”

Even so, as the public increasingly moves away from cash and online transactions soar (“especially with the COVID” pandemic), “we can see the figures, it is impressive.”

Related: Ripple Files Trademark for Possible New Payments Service

“Central banks must rethink their software and review their role in this new environment,” he said.

Citing a recent report published by the BIS along with seven central banks, Coeure said, “We must move forward on digital currencies, which are part of the solution” although individual nations should proceed at “their own pace.”

Also read: ECB’s Lagarde Has ‘Hunch’ Digital Euro Will Launch in 2-4 Years

As to whether such a launch would be on a blockchain, the technology is “not mandatory,” he said, raising the prospect of hybrid solutions in which “relations” between central banks and the commercial banks would use a blockchain but a digital currency would be available to the public “through more traditional channels.” 

“Everything is possible,” he said.

In a recent op-ed for CoinDesk, Coeure revealed the BIS Innovation Hub would launch its first wholesale CBDC proof-of-concept in collaboration with the Swiss National Bank. “This will pave the way for experiments on the building blocks of a retail CBDC, which might include interlinkages with existing payment systems, application programming interfaces for distribution, digital identity rails,” and more, he said.

In his interview with L’Express, Coeure said one day a CBDC will be “the safest currency there is, issued by a public institution,” but there will be other options, too. “If you want to pay in bitcoin, why not? If you and the trader understand and assume the risks associated with this active crypto.”

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First Mover: Why the Fed Cares About Remote Working – And What It Means for Bitcoin

5 years 10 months ago

Bitcoin was lower after surging nearly $600 on Thursday to climb above $16,000 for the first time in almost three years.  

“Investors should plan for volatility as well as price appreciation,” the blockchain analysis firm Chainalysis wrote in a newsletter. 

In traditional markets, European shares fluctuated and U.S. stock futures pointed toward a higher open as investors weighed prospects for a new stimulus package against record coronavirus cases. Gold strengthened 0.1% to $1,879 an ounce. 

Market moves

Related: Market Wrap: Bitcoin Hits $16.2K; Uniswap Crosses $3B Locked

Federal Reserve Chair Jerome Powell has been sticking with his talking points lately. It goes something like this:

They’re all key themes cryptocurrency traders are following because a growing number of investors say extensive money printing could bolster bitcoin’s use as a hedge against inflation.  

But what was perhaps more interesting and new among Powell’s comments at a virtual forum Thursday hosted by the ECB was his acknowledgement that life as we know it – and by extension the economy – is probably never going back to anything like it once was. 

“You’ll see more telework,” Powell said at the virtual forum. “We’re not going back to the same economy. We’re recovering to a different economy.” 

Related: ECB’s Lagarde Has ‘Hunch’ Digital Euro Will Launch in 2-4 Years

It was more than just a talking point. It might have offered a glimpse into a key issue that Powell hasn’t said much about. The coronavirus will have a lasting and scarring impact on the economy, but remote working might be another massive factor to consider for monetary policy. 

The economy is in upheaval, and not just because people aren’t eating out or going to movies or traveling for leisure, or because so many businesses and households would be ailing right now without all the emergency aid. 

A secular transition to commuting-by-Internet might be taking place, perhaps one of the biggest labor force transformations since the industrial revolution, which lured people to cities.

If workers genuinely enjoy the remote setup, and many do, and employers are genuinely seeing just how productive their employees can be working remotely, and it costs a lot of time and money to commute, and it’s easier on many working parents to set up base at home, why would there ever be a return to the old office-based civilization? 

What would this mean for the airlines? Commercial real estate? Oil companies? Automakers? Theme parks? Cities?

Governments and central banks are probably going to have to provide a lot of aid and stimulus to assure the transition goes smoothly, that society holds together, that people can manage. And that widespread debt defaults don’t overwhelm the banking system. Even many people who think bankers take advantage of their enshrined role in the economy will acknowledge that banks play an essential role in the existing financial infrastructure. 

Dave Hendler, principal and founder at the bank analysis firm Viola Risk Advisors, says one implication is that the hand of governments and central banks could be heavy in the economy for a long time. 

He said in a phone interview he recently trekked from the New York suburbs into Manhattan for the first time since February for a wine-tasting event. While he was in town he visited his old barber. The barber, who has “one kid and another on the way,” told Hendler he’s down to one customer a day from a pre-pandemic level of about 20 a day. 

Imagine if many of the office workers never really come back. It’s an extreme but entirely plausible scenario.   

“It’s going to be a longer readjustment, and it’s going to be more harsh,” Hendler says. “There’s going to have to be assistance for the transition to the new world.”

Central bankers like Powell are only just now getting around to thinking about this, much less talking about it. As soon as more investors start to focus on it, the remote-working economy will probably demand a lot more attention – and possibly a lot more money.  

– Bradley Keoun

Bitcoin watch

Bitcoin appears to be holding above $16,000, and cryptocurrency traders are pondering the next move. 

The big market debate now is if and when bitcoin returns to the record high price of around $20,000 reached in December 2017. 

George McDonaugh, managing director and co-founder of the publicly traded cryptocurrency investment firm KR1, wrote Friday in emailed comments that he doesn’t expect bitcoin holders to sell until prices reach a new record, “given the comparatively small delta between $16,000 and $20,000.” 

Bitcoin has been known to surprise in the past with pullbacks that punish overly bullish bets. Alternative.me’s Crypto Fear & Greed Index has pushed into the “extreme greed” zone, from a reading of “neutral” just last month. 

“I expect we don’t reach $20,000 in this current move,” though it’s likely to happen in 2021, McDonough wrote. 

As noted last week by First Mover, bitcoin has spent so little time above $16,000 in its 11-year history that analysts eyeing price-chart patterns for clues have little to work with.   

Matt Blom, head of sales and trading for the digital-asset financial firm Diginex, wrote Thursday that the next key level of price resistance looks to be at $17,130, with downside support at $15,420.  

“New multi-year highs are fast becoming a dull headline,” Blom wrote. “The bias to the market is still firmly bullish.”

Bitcoin is now up an astounding 127% in 2020, versus 9.5% for the Standard & Poor’s 500 Index of large U.S. stocks and 24% for gold. 

What’s hot

Blockchain data show $300B of bitcoin moving to Binance from Huobi as the Chinese government cracks down on cryptocurrency exchanges (CoinDesk)  

PayPal removes waitlist for new crypto service, boosts weekly purchase limit to $20K (CoinDesk) 

Ant’s $35B IPO has roots in goals for digital yuan (CoinDesk) 

Uniswap farming ends in 4 days, potentially freeing up $1.1B in ether (Cointelegraph) 

ECB’s Lagarde has ‘hunch’ digital euro will launch in 2-4 years (CoinDesk) 

Hut 8 Mining Revenue Drops 43% in Q3 mining revenue from Q4 level (CoinDesk) 

Brent crude-oil futures now tradable on DeFi exchange Synthetix (CoinDesk) 

Chainalysis wants to help governmental clients sell millions of dollars in forfeited bitcoin (CoinDesk)  

Analogs The latest on the economy and traditional finance

Former Chinese finance minister Lou Jiwei said Friday that U.S.-China trade tensions may not necessarily ease under a Biden administration (Reuters)

Brazilian President Bolsonaro handing out $10B a month to poor as public debt heads toward 100% of GDP from 76% last year (WSJ) 

Writing off student debt is one way Biden can build Black wealth (Bloomberg) 

The deadline to divest U.S. operations  for video-sharing app TikTok has come and gone, leaving the social media giant in limbo (Nikkei Asian Review)

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CoinDesk

US Company Now Lets Travelers Pay for Passports With Bitcoin

5 years 10 months ago

Peninsula Visa, a firm providing passport and visa services in the U.S., says it now accepts payments in bitcoin.

  • Peninsula said Wednesday that the payments will be processed through Coinbase Commerce, the merchant payments arm of the cryptocurrency exchange.
  • Not all services are included; currently, customers can use bitcoin to fund passport renewals, name changes and second passports.
  • Other passport and visa services will be included in the program over the next year, the firm said.
  • “Never before has anyone been able to pay for a U.S. passport using a digital currency,” said Evan James, chief operating officer at Peninsula Visa.
  • With the coronavirus pushing the world to be increasingly digital, bringing in the new payment options now “feels like the right move at the right time,” he added.

Also read: Coinbase’s Retail Payments Wing Crosses $200M in Transactions

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CoinDesk

Ripple Files Trademark for Possible New Payments Service

5 years 10 months ago

Ripple, the San Fransisco-based blockchain payments infrastructure provider, has registered a trademark for a possible new product called “PayString.”

  • Filed with the U.S. Patent and Trademark Office (USPTO) late last week, the application is classified in the U.S. under the general categories “Advertising and Business” and “Insurance and Financial.”
  • A logo for the branding takes the form of “a stylized circle design with four lines radiating from it” in multiple colors.
  • It’s tempting, of course, to speculate as to what the new trademark will be used for, but there’s not a lot of information to go by.
  • The filing describes use cases in “electronic financial services, namely, monetary services for receiving and disbursing remittances and monetary gifts in fiat currencies and virtual currencies over a computer network and for exchanging fiat currencies and virtual currencies over a computer network.
  • All of which does fit in with Ripple’s existing business model of providing distributed ledger-based technology for payments between institutions such as banks and money senders, some of which use the XRP cryptocurrency.
  • The USPTO filing for RippleNet, the firm’s primary offering, has the same description.
  • CoinDesk reached out to Ripple for more information, but did not receive a reply by press time.

Also read: Ripple Opens Dubai HQ as Blockchain Firm Mulls Leaving US

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CoinDesk

$300M in Bitcoin Flow to Binance From Huobi as China Gets Tougher on Exchanges

5 years 10 months ago

As the Chinese government cracks down on several crypto exchanges catering to traders based in China, many of those customers – and their bitcoin – have been making their way to Binance over the past few days.

Bitcoin flows to Binance from Huobi reached an all-time high since the Huobi chief operating officer, Robin Zhu, allegedly went missing on Nov. 2. According to data provided by CryptoQuant, a total number of 18,652 bitcoin, worth nearly $300 million, was transferred from Huobi to Binance from that day until Nov. 11.

“A lot of users went to Binance because Chinese users are more familiar with Binance and Binance’s executives are all overseas,” Colin Wu, a Chinese crypto reporter behind the Twitter account @WuBlockchain, told CoinDesk on a WeChat message.

Related: How Ant’s Suspended IPO Is Related to China’s Digital Yuan

A spokesperson from Binance declined to comment on any impact China’s crackdown could have on its business.

For months, Chinese regulators have been clamping down on many crypto trading platforms that cater mainly to Chinese clients. Some of these exchanges appear to have close, albeit informal, relationships with the Chinese government.

The whereabouts of Huobi’s Zhu remains unclear since rumors began circulating in early November that alleged he was arrested by “local officials.” Prices for Huobi Token (HT) dropped to as low as $3.744 on Nov. 3, down 11.3% from $4.22 on Nov. 1, according to Messari.

Over at rival exchange OKEx, with deep ties to China, all withdrawal services remain suspended after it said a holder of a private key needed to authorize withdrawals was out of touch while cooperating with public security investigators in China. OKEx’s native token OKB lost nearly 30% of its market value after the news broke. 

Related: Hackers, Scammers Have Stolen $7.6B in Crypto Since 2011

Other exchanges are also feeling the heat. On Nov. 9, the person running TokenBetter, another crypto exchange with mostly Chinese users, was reportedly “under investigation.” TokenBetter’s platform banned its withdrawal service on Oct. 16.

This is not the first attempt by the regulators in China to crack down on crypto exchanges. Bitcoin exchanges received orders to close their businesses in China after the country banned crypto trading activities in 2017. 

Huobi is now based in Seychelles, while OKEx is in Malta. It is unclear where Binance’s main business operations are located – Changpeng Zhao, Binance’s chief executive officer, told CoinDesk his company’s locations are “decentralized.”

Huobi did not answer CoinDesk’s question on where Zhu is currently, but in a WeChat message Ciara Sun, vice president of Huobi Global Markets, wrote that all operations at the company are “normal.” 

“Do not listen to rumors,” she continued. “Huobi reserves the right to pursue legal responsibilities for those who spread rumors.”

Many have associated OKEx’s lost contact with one of its key holders with the arrest of its co-founder Mingxing “Star” Xu. With Huobi’s executive allegedly being arrested, its users are afraid the same things will happen to the Seychelles-based exchange – even though Huobi has guaranteed its users many times it is maintaining normal operations.

China tightens its grip in FinTech

Multiple sources close to OKEx and Huobi told CoinDesk the new crackdown is associated with China’s efforts to fight money laundering and fraud, and it is unlikely to have any connection with China’s rollout of its central bank digital currency (CBDC), the digital yuan.

“[China] doesn’t want digital [renminbi] products to be disruptive to what’s already in the financial system,” Felix Wang, managing director and partner at financial investment research firm Hedgeye, told CoinDesk in an interview. “The government wants to encourage innovation and development. They only want to crack down on products that they think are misleading to the public.”

Crypto exchanges are not the only target of the Chinese regulators in recent months. Perhaps the most well known case was Ant Group’s initial public offering, which was suspended on both the Shanghai and Hong Kong stock exchanges after the company’s founder, Jack Ma, criticized China’s regulators in a speech on Oct. 24.

Is there an upside?

A possible, positive, long-term outcome of the crackdown for exchanges could be that it may encourage the regulators in China to eventually push some sort of a compliance process for crypto exchanges instead of banning them, according to Hao Wang, founder and chief executive officer of Hong Kong-based crypto brokerage CyberX.

“Most of these lost users from Huobi will eventually flow to the white-label exchanges because most traders [in Asia] do not currently have access to trading platforms with regulatory compliance,” Wang told CoinDesk in a WeChat message.

Nonetheless, as China increasingly tightens its grip on its fintech industry, others are also concerned that it will hurt the fintech industry as a whole – blockchain included – as such companies expand their business overseas.

“The sentiment is very bad for all countries outside of China looking to do business with China at this time,” Wang said.“People got worried when [China] introduced those micro financial regulations. They are thinking now this is going to be part of a little step of a bigger crackdown on fintech, finance-related payment and maybe blockchain.”

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