CoinDesk Crypto

Bitcoin continues its rebound this week after Sunday’s crash. Meanwhile, the ether options market suggests a roller coaster ride ahead for the world’s second largest cryptocurrency.

• Bitcoin (BTC) trading around $11,868 as of 20:00 UTC (4 p.m. ET). Gaining 1.8% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,528-$11,915
• BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

It’s been a positive week for bitcoin so far. The world’s oldest cryptocurrency is continuing its rebound from a Sunday price crash, appreciating 12% on a bullish run that isn’t showing signs of slowing down.

Read More: Bitcoin Rises More in One Day Than Stocks Have Gained All Year

Related: Bitcoin’s Patronage System Is an Unheralded Strength

“Bitcoin reached above $12,000 on Aug. 2, but its ascension was stopped short,” said Jean-Baptiste Pavageau, a partner at quantitative trading firm ExoAlpha. “However, the impact on bitcoin was short-lived, and a breakout above $12,500 on high volume would definitely put BTC on the way.”

For Pavageau, history may never repeat but it does often rhyme. “If one looks at how the price of bitcoin moved after the second halving in 2016, the path taken so far is highly similar: A sideways period of six to eight weeks post-halving, followed by a run-up and a correction before heading to all-time highs a few months later.”

Read More: Bitmain Delays Bitcoin Miner Shipments by Three Months

Henrik Kueglberg, a Sweden-based over-the-counter bitcoin trader, says the grim realities of the global economy continue to make the case for investment in cryptocurrencies over the next few months as well. “Let’s get real. Stocks will fall and interest rates will be kept low. I expect another bitcoin all-time high in September and increasing prices all through Q4.”

Record ether options open interest

Related: Bitcoin Entering ‘New Adoption Cycle,’ Coin Metrics Exec Says

Ether, the second-largest cryptocurrency by market capitalization (ETH), was down Thursday trading around $397 and slipping 0.45% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ethereum Classic Suffers Second 51% Attack in a Week

The ether options market is on an absolute tear and seeing huge amounts of bets. Open interest is now approaching $400 million. Most of it is on Netherlands-based platform Deribit, which leads the way with $351 million, according to data from aggregator Skew. Options give owners to the right, though not the obligation, to buy or sell an underlying asset.

“Open interest is now 2.5 times higher than it was just a few weeks ago, touching a new record,” noted Chris Thomas, head of digital assets for broker Swissquote.

“There’s almost zero real institutional volume through these exchanges,” said Thomas. He indicated those using ether options are high-net-worth individuals or small cryptocurrency funds preparing for increased ETH volatility. “The options market has now caught up with the underlying (ether) and is anticipating further moves in the near future as implied volatility is now greater than realized volatility,” he added.

When implied volatility is greater than realized volatility, it generally means that the market expects increased price fluctuations are ahead. 

Other markets

Digital assets on the CoinDesk 20 are mixed Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• dash (DASH) + 12.3%
• nem (NEM) + 9.4%
• bitcoin cash (BCH) + 7.7%

Read More: Goldman Sachs Eyes Own Token as it Appoints New Head of Digital Assets

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• ethereum classic (ETC) – 2%
• bitcoin gold (BTG) – 1%
• stellar (XLM) – 0.75%

Read More: Investors Suing Over Status ICO Can’t Find Execs to Serve Papers

Equities:

• In Asia, the Nikkei 225 closed in the red 0.43% as industrial stocks Mitsui Engineering, Honda Motor and Kawasaki Heavy Industries dragged the index lower.
• In Europe, the FTSE 100 ended the day down 1.27% as the sterling’s strength against the U.S. dollar damped multinational stocks such as Unilever.
• In the United States, the S&P 500 gained 0.50% as tech stocks made gains and the most recent unemployment data was better than expected.

Read More: German Police Seize $29M in Bitcoin From Alleged Content Pirate

Commodities: 

• Gold is up 1.2% and at $2,063 as of press time, with a new intraday high of $2,070.
• Oil is down 0.45%. Price per barrel of West Texas Intermediate crude: $41.97.

Read More: IDEX Raises $2.5M to Rebuild Hybrid Exchange for Algorithmic Traders

Treasurys:

• U.S. Treasury bonds all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the 10-year, in the red 2.8%.

Read More: Federal Reserve Is Rushing to Get Its Instant Payments Offering Ready

Related Stories

• Ethereum Classic Suffers Second 51% Attack in a Week
• Market Wrap: Bitcoin Trudges Past $11.7K as DeFi Lending Rates Gyrate

The Director of the Cato Institute’s Center for Monetary and Financial Alternatives gives an eye-opening, 200-year history of today’s most powerful economic institution.

For more episodes and free early access before our regular 3 p.m. Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, iHeartRadio or RSS.

This episode is sponsored by Crypto.com, Bitstamp and Nexo.io.

Today on the Brief:

• Better news in the jobless claims this week
• A new bitcoin adoption cycle?
• Checking on Lebanon

Related: Bitcoin News Roundup for Aug. 6, 2020

See also: Hedgeye CEO Keith McCullough on Stagflation, Bitcoin and the Devalued Dollar

Our main conversation is with Dr. George Selgin.

Dr. Selgin is a Senior Fellow and director of the Cato Institute’s Center for Monetary and Financial Alternatives as well as Professor Emeritus of Economics at the University of Georgia. 

In this eye-opening conversation, he and NLW go deep on the history, present and future of central banks, including:

• Why the Scottish and Canadian banking systems in the 19th century show that central banks aren’t a prerequisite for stability
• Why the U.S. “free banking” system wasn’t free at all
• Why the instability in the late 19th century U.S. banking system was caused by regulation, not the lack of a Federal Reserve
• Why the Fed’s first decades were a disaster
• Why the Fed gets more power when it underperforms 
• The problems with the Fed’s response to 2008
• What lessons the Fed could have learned (but didn’t) between the Great Financial Crisis and COVID-19 

Find our guest online:
Website: Alt-M.org
Twitter: @GeorgeSelgin

Related: Hedgeye CEO Keith McCullough on Stagflation, Bitcoin and the Devalued Dollar

For more episodes and free early access before our regular 3 p.m. Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, iHeartRadio or RSS.

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Today, financial infrastructure is lacking in many South American nations, leaving many individuals unbanked and businesses struggling to find efficient payment systems and banking services

Parity Technologies’ Polkadot has launched a testnet, Rococo, of the protocol’s first parachain specification, according to a blog Thursday. Parachains underlie Parity Tech’s vision of a “protocol for protocols.”

• Rococo allows developers to “register” a Substrate-based blockchain as part of Polkadot’s grander parachain network.
• Substrate is a blockchain building kit for other networks to interoperate as a Polkadot parachain.
• Rococo is the first test of inter-blockchain communication through its Relay Chain logic.
• Rococo launched as a Proof-of-Authority (PoA) network under the governance of Parity Technologies. The testnet will begin with three parachains, the firm said.

Read more: Polkadot Raises $43M in 72-Hour Private Sale: Source

Related Stories

• Federal Reserve Is Rushing to Get Its Instant Payments Offering Ready
• German Regulator Seizes Crypto ATMs
• Goldman Sachs Eyes Own Token as Bank Appoints New Head of Digital Assets
• IDEX Raises $2.5M to Rebuild Hybrid Exchange for Algorithmic Traders

The Federal Reserve is bullish on technologies that aim to speed payments, and is now rushing to get its own platform, FedNow, up and running.

• In a Thursday webinar, Federal Reserve Board Governor Lael Brainard said the U.S. central bank will debut its instant payment service “as soon as practically possible.”
• COVID-19 showcased Americans’ dire need of a “resilient instant payment system,” Brainard said. FedNow aims to be the answer, even if it won’t arrive until 2023 or 2024.
• FedNow, which the Federal Reserve is developing in response to private-sector, real-time, gross settlement initiatives, may play a key part in that future.
• “By creating that neutral platform, banks in partnership with these other companies will be able to offer much more innovation services, services that we may not even be imagining,” Brainard said.
• In the meantime, the Federal Reserve “remains optimistic” that emerging payment technologies could benefit consumers at the retail payments level “when the appropriate safeguards are in place,” she said.
• She also cited the impact of the Facebook-linked libra stablecoin, repeating her past assertion the global stablecoin project raises “fundamental questions” about private money regulation, legality and its potential economic implications.

Related Stories

• Polkadot Releases Rococo, Its Test Environment for Interoperable ‘Parachains’
• German Regulator Seizes Crypto ATMs
• Goldman Sachs Eyes Own Token as Bank Appoints New Head of Digital Assets
• IDEX Raises $2.5M to Rebuild Hybrid Exchange for Algorithmic Traders

Germany’s financial regulator BaFin is seizing bitcoin ATMs run by “Shitcoins Club” months after ordering its Polish operator to cease trading crypto in the country.

• On Wednesday, authorities began shuttering “Shitcoins Club” storefronts and seizing its bitcoin ATM machinery, a BaFin official confirmed with CoinDesk, for allegedly operating without banking or proprietary trading licenses.
• BaFin ordered Shitcoins’ parent company KKT UG to cease all German crypto trading operations in February. But CEO Adam Gramowski flaunted regulators’ demands and kept his kiosks running, according to financial news site Handelsblatt. Gramowski did not immediately respond to a CoinDesk request for comment.
• The action will likely take a substantial portion of Germany’s crypto ATMs offline. Shitcoins Club has around 17 bitcoin, litecoin and ether ATMs in the country; Germany as a whole has only 67 operational bitcoin ATMs.

Related Stories

• Goldman Sachs Eyes Own Token as Bank Appoints New Head of Digital Assets
• German Police Seize $29M in Bitcoin From Alleged Content Pirate
• IDEX Raises $2.5M to Rebuild Hybrid Exchange for Algorithmic Traders
• Judge Worries Plaintiffs’ Lawyers Trying to Line Their Pockets in Block.one ICO Lawsuit

Ethereum Classic was hit again, Instagram is seeing a proliferation of crypto scams and shipments of Bitmain’s latest bitcoin mining machines have been delayed.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

Double Trouble
Ethereum Classic has suffered its second 51% attack in a week after more than 4,000 blocks were reorganized Thursday morning. A chain reorg occurs when a party gains more hashing power than the rest of the network miners, allowing them to rewrite the chain’s history and “double-spend” its crypto. Bitfly and Binance reported the reorganization, announcing all Ethereum Classic payouts, withdrawals and deposits had been suspended due to the attack. The network has suffered major reorg attacks at least twice in the last two years. In late July, hackers moved more than 807,000 ETC from an unspecified crypto exchange to several wallets, according to Bitquery.

Related: First Mover: Bitcoin Rises More in One Day Than Stocks Have Gained All Year

Crypto-Gram Scams
Crypto scams are running rampant on Instagram, and attempts at moderation sometimes adversely affect real crypto influencers on the platform. There are more than 1.3 million Instagram posts using #Coinbase, an overwhelming number of which display inauthentic behavior. In July, at least three crypto influencers were temporarily locked out of their platforms as Instagram attempted to stymie scams. Still, Instagram has become a conduit to inform and engage with audiences – particularly in the developing world, where many people rely on mobile phones to access the internet. 

Power Struggle
An internal power struggle between Bitmain’s founders has delayed production by months. Orders of the mining giant’s latest machines expected in June and July will now arrive in September and October, the company said via one of its official WeChat accounts. The delay is caused by “external interference over the company’s management,” the official account said. Bitcoin miners are typically sold via pre-orders that are placed two to three months in advance – meaning customers who ordered the machines due this summer could have placed their orders as early as March.

“Test Case”
Conflict-ridden Ukraine is embracing cryptocurrency. “Our political situation is somewhat unstable, and Ukrainians are tech savvy, so this combination creates incentives for people fleeing from fiat to crypto,” Gleb Naumenko, a Ukrainian Bitcoin developer who recently got a $100,000 grant from BitMEX, said. With the national currency losing value, people are exploring technological means, he said, but that doesn’t mean the government is trying to squash development. Regulators are working with crypto entrepreneurs to develop a framework to support crypto, which could remain a competitive jurisdiction for crypto startups, Alex Bornyakov, deputy minister for digital transformation, said.

EOS Ethics
A judge choosing the lead plaintiff in a lawsuit against Block.one has expressed concern over the motivations of some parties. The case, which alleges EOS’ creator committed securities fraud, could stretch on for many years, making it a lucrative prospect for the lead plaintiff’s legal team, District Judge Lewis Kaplan said. A class-action lawsuit for five investors showed a distinct lack of diligence and commitment that made them unsuitable to become the lead plaintiff in the Block.one lawsuit. Known as the “Williams Group,” Judge Kaplan said the plaintiffs had submitted incomplete, inaccurate and unsubstantiated trading data that failed to show how much money they lost from investing in the EOS initial coin offering (ICO). 

Quick bites

• Investors suing over Status ICO can’t find the executives to serve papers.
• Reflexer Labs raised $1.7 million to build a somewhat-stable coin for DeFi.
• U.S. Congressman Tom Emmer says “Bitcoin ain’t going away.” (The Block)
• Crypto venture firm Draper Goren Holm goes big on DeFi. (Decrypt)

At stake

Related: Blockchain Bites: Square’s Revenue Surge, Eth 2’s Final Testnet, c-Lightning’s Latest Update

Three days ago David Portnoy, founder of Barstool Sports, invited the Winklevoss twins to explain bitcoin to him. 

Portnoy, who the New York Times christened “the captain of the day traders,” transitioned from sports media to market commentary during the coronavirus crisis. He’s become the face of the growing crowd of Robinhood and fin-twit investors, who gather around daily livestreams where Portnoy picks stocks and “half screams into a microphone.”

Portnoy is clear he’s not offering investment advice. In fact, it’s unclear what he’s offering. His catchphrase of “stocks only go up” walks the line between parody and a sincere appraisal of irrational markets during this age of monetary expansion and experimentation. Facetious or not, Portnoy has a band of loyal followers with enough weight to move markets.

“What all these new market gamblers seem to have in common is utter contempt for the system – almost any system,” the Wall Street Journal wrote in a profile of Portnoy. 

If that statement were true, Portnoy likely would have found himself to bitcoin sooner. As it is, a recent market move towards $12,000 caught his eye – hence his invitation to the Winklevii. “I want to buy all the bitcoins,” he added later. 

“Amazing,” Messari’s Ryan Selkis tweeted. Many in the crypto industry see this as a bullish opportunity. The real benefit may be in the mirror Portnoy holds up to crypto, exposing irrationalities, just as he does in fintwit. 

As Nathaniel Whittemore noted, Portnoy admitted he didn’t know how to buy bitcoin, found wallets confusing and claimed he may have already lost his stake – all potential barriers to entry to less-savvy individuals. 

Market intel

Hedge Trimmings
Bitcoin prices surged 5% on Wednesday, outpacing stocks and gold amid calls for more government stimulus. Bitcoin rose to $11,755 and is now approaching $12,000 for the second time in a week, a level that bitcoin hasn’t sustainably traded above for more than a year. Bets are growing that governments and central banks will have to pump trillions of dollars more into the financial system to stimulate the economy out of the worst recession since the 1930s. Gold surged this week to a new record above $2,000 – a 35% gain this year that falls short of bitcoin’s 63% price increase. The Standard & Poor’s 500 Index is now up 3% on the year, with some traditional investors arguing that stocks have become detached from reality. This insight comes from First Mover, which you can subscribe to here.

Dollar’s Decline
Publicly traded business intelligence company MicroStrategy said it will invest $250 million of its excess cash in bitcoin, gold and other “alternative assets” over the next 12 months as a hedge against U.S. dollar (USD) inflation. CEO Michael Saylor said the weakening USD is no longer a tenable place to park MicroStrategy’s $500 million cash reserves. Near-zero interest rates, infinite helicopter money and the specter of coming inflation are all forces Saylor said are chipping away at the dollar. 

Tech pod

Backrunning Bots
An architectural quirk in the most-used software version of Ethereum, Geth, has led to an uptick in spams, according to Certus One co-founder Hendrik Hofstadt. Transaction spamming is one reason the average Ethereum user fee has increased some 800% since May. Algorithmic trading firms have created bot swarms to watch the Ethereum transaction queue (called the mempool). These bots wait for large trades on DeFi platforms such as Uniswap. After they go through, the bots quickly place orders to take advantage of price movements in what is called “backrunning.”

Op-ed

Bulls Reborn
Anil Lulla, COO of Delphi Digital, thinks crypto is due for a bull run. Converging forces of the larger, inflationary economy is the test case for bitcoin and a trend of investors reallocating capital away from “ghost protocols” (the dying token projects from the last bull cycle) into more promising DeFi applications. “The foundation for the base infrastructure of the decentralized economy is being laid as we speak. The composability between projects allow teams to iterate much faster than traditional software companies and opens up experimentation going forward,” he writes. 

Lessons Learned
Lex Sokolin, CoinDesk columnist and Global Fintech co-head at ConsenSys, thinks the U.S. can learn from China’s experimentation with open-source technologies. “Competition in the next century is going to be far more complex than intellectual property ownership. It is going to be waged over multinational open-source networks, reintegrating finances and economies into a digital global superstructure. We have to develop clearer ways of thinking about this competition, and in this entry we will discuss one such framework,” he writes.

Podcast corner

Going Stag
Keith McCullough, CEO of financial media and research firm Hedgeye, sits down to talk about stagflation, Bitcoin and why the “Old Wall” media distracts rather than educates in the latest episode of The Breakdown.

Who won #CryptoTwitter? Related Stories

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Goldman Sachs is seriously considering its own cryptocurrency, possibly a stablecoin, as it significantly expands its digital assets team and appoints a new head to spearhead efforts.

• Matthew McDermott, Goldman’s new digital asset global head, confirmed the U.S. investment bank was exploring whether to launch its own digital asset, CNBC reported Thursday.
• “We are exploring the commercial viability of creating our own fiat digital token, but it’s early days as we continue to work through the potential use cases,” he said.
• Last month McDermott hired Oli Harris as head of strategy. Harris was instrumental in JPMorgan’s blockchain, Quroum, as well as its settlement coin, JPMCoin.
• McDermott said he is already looking at how blockchain can make savings in the inefficient repurchase, or “repo”, market used by banks to lend money to one another, as well as credit and mortgage markets.
• He also said Goldman might consider collaborating with its rival, JPM, as well as Facebook on future digital asset initiatives.
• McDermott said he plans to significantly expand Goldman’s digital asset team, including doubling headcount in both Asia and Europe.

See also: Goldman Sachs: Cryptocurrencies ‘Are Not an Asset Class’

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• IDEX Raises $2.5M to Rebuild Hybrid Exchange for Algorithmic Traders
• Judge Worries Plaintiffs’ Lawyers Trying to Line Their Pockets in Block.one ICO Lawsuit
• Man Accused of Arranging Murder to Avoid Crypto Debt Can’t Escape Jail, Brazilian Court Rules

German authorities have seized €25 million ($29.6 million) in bitcoin and bitcoin cash from the alleged programmer behind movie2k.to, a massive online pirated film library that once drew the ire of the Motion Picture Association of America (MPAA).

• Movie2k.to’s unnamed programmer forfeited his bitcoin to Dresden prosecutors and agreed to assist in their ongoing investigation, prosecutors said in a Tuesday press release. He and his real estate broker have been in custody since last November.
• Prosecutors allege the programmer helped distribute 880,000 pirated films during the site’s five-year run, which ended abruptly in May 2013 when the MPAA sued to block access in U.K. court.
• The programmer bought over 22,000 BTC with the site’s advertising and subscription revenue and then flipped some of the crypto for real estate properties.
• Prosecutors said they are still hunting for information on movie2k.to’s “second main operator” who is still at large.

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Sberbank, Russia’s biggest consumer bank, is launching a blockchain platform built on Hyperledger Fabric, potentially with its own stablecoin. 

The blockchain system is designed for trade finance transactions, including exchanging letters of credit, the bank’s press representative told CoinDesk Thursday. 

Anatoly Popov, Sberbank’s deputy chair, told the Russian newspaper Vedomosti on Wednesday the bank is also planning to launch its own stablecoin, pegged to the price of the ruble, that could be used to buy digital assets.

Related: Russian Voters’ Data on Sale After Blockchain Poll to Keep Putin in Power: Report

However, Sberbank’s press office told CoinDesk there is no concrete plan for the stablecoin yet. The bank is waiting for a new digital assets law to come into force in January 2021, and after that will talk to its partners and make the final decision. 

Russian President Vladimir Putin signed the first of two bills on digital assets into law on July 31.

A stablecoin would be a logical component of the blockchain platform for faster payments and settlements, which Sberbank is planning to launch during Q3.Read also: ‘Disappointed’ by Central Bank Blockchain, Russia’s Largest Bank Eyes Alternatives

The system is built on Hyperledger’s Fabric blockchain framework, with nodes hosted in Sberbank’s own cloud computing service, SberCloud. According to Sberbank, the system will be open, so any firm would be able to join and set up its own node.

Related: Putin Signs Russian Crypto Bill Into Law

“Any company will be able to use smart contracts created by Sberbank right away or create their own,” Popov told CoinDesk through the press representative. “Payments via smart contracts go through automatically and the vendors receive funds in a matter of seconds.”

Trade finance is just one potential use case for the platform. Sberbank is planning to put a number of its existing services on its blockchain as well. Other banks and tech companies will be able to join, and the platform “has a good chance of becoming a new industry standard,” Popov said.

Sberbank currently holds about 43% of individual savings deposits in Russia and is a major shareholder in several big electronic payment, online retail and delivery companies. As such, the potential scale of its blockchain platform could be significant if it is widely adopted. 

Read also: Russia’s Largest Bank Buys $15 Million in Debt Using Hyperledger Blockchain

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IDEX has raised $2.5 million to relaunch as a trading platform accessible to market makers and algorithmic traders.

• The Ethereum-based hybrid exchange said Thursday the $2.5 million would go to launching IDEX 2.0, a new, more liquid platform.
• The money came in a seed round led by G1 Ventures and Borderless Capital, with other commits from Collider Ventures and Gnosis.
• IDEX’s creator, Panama-based Aurora Labs, raised $6 million in an initial coin offering (ICO) in early 2018.
• Market makers and algorithmic traders (a prominent subset being high-frequency traders, or HFTs) will be able use the new exchange. They have previously been shut out because of high transaction costs.
• In a statement, the exchange said this new group of traders will tighten spreads, making IDEX cheaper and more seamless for its users.
• HFTs use powerful computers to process thousands of transactions in fractions of a second, earning revenue from exploiting minuscule disparities in listed prices. They are controversial: some allege they manipulate markets, but advocates say they improve liquidity and market performance.
• IDEX is a hybrid exchange in that settlement and storage are decentralized, while trade executions and deposits are processed centrally. This makes it fast enough to be usable while offering the security of a fully decentralized exchange.
• The hybrid aspect of IDEX’s design will remain unchanged with the IDEX 2.0 launch, expected in the next few weeks.

See also: FTX to Launch ‘Scalable’ Decentralized Exchange in Weeks

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• Nasdaq-Listed MicroStrategy, Wary of Looming Dollar Inflation, Turns to Bitcoin and Gold
• 17-Year-Old Pleads Not Guilty to Twitter Hack as Defense Tries to Lower Bail From $725K

Dapper Labs has closed a $12 million funding round led by National Basketball Association (NBA) stars Spencer Dinwiddie, Andre Iguodala, JaVale McGee, Aaron Gordon and Garrett Temple, according to a press release shared with CoinDesk.

The funds will be used for further development of blockchain games including the eventual launch of NBA Top Shot out of private beta, Dapper Labs founder and CEO Roham Gharegozlou told CoinDesk in a phone interview.

“Sports are our most important vertical now,” Gharegozlou said.

Related: DeFi-Focused Derivatives Platform Hedget Raises $500K in Seed Funding

NBA Top Shot runs on the developer’s custom Flow blockchain. The firm pivoted off the Ethereum blockchain due to scalability concerns following the 2017 CryptoKitties debacle.

Read more: The Team Behind CryptoKitties Is One Step Closer to Leaving Ethereum

The round was also joined by new venture capital firms such as Coinbase Ventures and existing partners Union Square Ventures and Andreessen Horowitz (a16z) Cultural Leadership Fund – the offshoot’s first investment – among others.

Dapper Labs has raised $51 million to date in seven rounds, according to Crunchbase.

NBA Top Shot

Related: Charlie Lee, Adam Back Lead $3.1M Private Token Raise for Blockchain Game Infinite Fleet

As first reported by The Block, NBA Top Shot broke $1.2 million in revenue three months after Beta trial launch. The app allows basketball fans to purchase officially licensed digital tokens of NBA player rosters similar to a trading-card game.

“Flow can create the vehicle for consumers to enter the space through products like NBA Top Shot where they have fun, but at the same time create a new self-sovereignty,” Dinwiddie said in a statement.

Read more: CryptoKitties Creator Debuts NBA Game on Its Own Blockchain

NBA players like Dinwiddie and McGee are not unfamiliar with cryptocurrency investments. Dinwiddie experimented with tokenizing his NBA contract on the Ethereum blockchain while McGee was an early investor in bitcoin, according to Gharegozlou. 

Iguodala has found some success as a fintech investor as well; he recognized Zoom’s potential long before it became a pandemic business staple.

“Blockchain technology has the potential to revolutionize consumer ownership on the internet,” Iguodala said in a statement. “Projects like Dapper Labs’ Flow are already driving consumer adoption, with NBA Top Shot proving the experience is not only engaging, but smooth and fan-friendly.”

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Bitcoin user adoption looks to be gathering pace as its price rises amid a coronavirus-induced rush for assets with safe-haven appeal.

• The number of bitcoin addresses holding at least $10-worth of cryptocurrency recently rose to a record high of 16.6 million, according to data source Glassnode.
• That number is now up 14% from the previous peak of 14.5 million reached in January 2018, soon after the cryptocurrency’s all-time price high of $20,000. 
• Essentially, there are now more addresses with a small balance than were seen at the height of the previous bull market.
• The data suggests “a new bitcoin adoption cycle is brewing,” according to Lucas Nuzzi, network data product manager at crypto data provider Coin Metrics.
• Address growth is not a precise indicator of bitcoin’s user base because a single individual or entity can hold multiple addresses. 

• Adoption has gone up by 27% in the 4.5 months since the major crash in mid-March. 
• Bitcoin’s price has rallied by over 200% during the same period, and is up 64% year to date. 
• Relatively scarce assets like bitcoin and gold seem to have benefited from fears of a dwindling U.S. dollar and the inflation-boosting policies of central banks and governments.

Looking ahead

• Some analysts expect bitcoin’s price to challenge record highs by the end of December.
• Continued price gains could have an exponential effect on user growth as FOMO (fear of missing out) hits consumers.
• Bitcoin may have a tough time scaling $12,000 in the short run if traders and crypto miners take advantage of the recent price rise and liquidate holdings.
• As per Chainalysis Market Intel, 230,000 BTC (worth around $2.6 billion) with an on-paper profit of 25% or more were sent to exchanges last week.
• It’s not known whether, or how many of, these coins were liquidated during Sunday’s sell-off.
• Bitcoin is trading near $11,700 at press time, representing a 0.5% drop on the day.

Correction (13:10 UTC, Aug. 8, 2020): An earlier version of this article erroneously stated Lucas Nuzzi was from Messari. This has been corrected.

Also read: Bitcoin Price Rises 3% as Gold Trades Above $2K for First Time

Related Stories

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• Market Wrap: Bitcoin Trudges Past $11.7K as DeFi Lending Rates Gyrate
• Bitcoin Price Rises 3% as Gold Trades Above $2K for First Time
• First Mover: Ethereum’s Transition to Staking Could Push More Traders to Use Derivatives

Announced Thursday, exchange OKCoin is awarding its largest individual grant so far to Bitcoin Core maintainer Marco Falke, the second-most prolific contributor to Bitcoin Core in the software’s history. 

OKCoin is awarding Falke an Independent Developer Grant, which is the “equivalent of a developer salary for the year,” though Falke requested that the exact amount not be disclosed for the sake of his financial privacy.

Read more: OKCoin, BitMEX Sponsor Bitcoin Core Developer Amiti Uttarwar

Related: BitMEX Owner Awards $50K Grant to Bitcoin Smart Contract Developer

With his grant, Falke will continue his work as maintainer of Bitcoin Core, the key software underpinning Bitcoin, which he’s been heads-down on since 2016. His work helps to ensure that changes to Bitcoin Core are merged, helps to organize developers that are spread out over the globe, and runs tests to ensure the code is working properly, among other tasks.

When asked about his personal accomplishments, Falke emphasized that Bitcoin Core is a team effort, with developers from around the world making it what it is. “I am proud to see what Bitcoin Core is today and how everyone’s contributions shaped Bitcoin Core for the future,” Falke told CoinDesk.

‘Maintenance’ work

Falke is one of a handful of Bitcoin Core maintainers. Maintainers are sometimes described as the leaders of sorts of Bitcoin’s code. But, while maintainers are crucial to Bitcoin, the role isn’t as authoritative as has been painted.

“Some of my days are surprisingly unexciting maintenance work,” as Falke put it.

Related: Conflux Blockchain Announces Ecosystem Grants Program

Testing ensures code works as intended. He spends a lot of time keeping tests of the code in line, ensuring that any issues they expose will be fixed. “On top of that, I am running my own nightly test runs, code coverage runs, benchmarks and fuzzers,” Falke said. 

In addition, he reviews proposed code changes and merges them into Bitcoin Core “when they have been sufficiently vetted.”

Read more: Hard Fork vs Soft Fork

Helping to speed up this maintenance process is what he believes is his “most useful” contribution to Bitcoin Core.

DrahtBot

He created a little bot for GitHub, where Bitcoin Core’s code is stored, and where developers propose code changes, and discuss them. The bot, called DrahtBot, “does all the automatable things that I used to do,” Falke said.

Many Bitcoin Core developers are working on the code at the same time. It’s easy for little code clashes to arise. Once a change is approved and “merged” into the code base, it might impact other people’s code. DrahtBot notifies developers of these conflicts. “The bot will also list all future conflicts, assuming a pull request was merged, to aid maintainers planning ahead,” Falke added.

DrahtBot also “builds” the Bitcoin Core code into binaries that bitcoiners can run on their devices, among other tasks.

This bot frees up “a lot more” time for Falke to focus on other more difficult tasks, which can’t be automated and taken over by a robot.

Fleeing COVID-19

One reason Falke is happy to be receiving this grant is that he is leaving Chaincode, a startup in New York City that funds developers and researchers dedicated to improving Bitcoin.

He decided to move back to his farm in Germany. “Given that I grew up on a remote farm, away from big cities, NYC was definitely a new, lasting and exciting experience. Nonetheless, I couldn’t see myself settle down in NYC long-term,” Falke said.

Then, coronavirus hit, making New York City an even less attractive place to live for Falke.

“Even before COVID, I saw many of my friends and colleagues leave NYC. Then with the COVID situation happening, and seeing politics and immigration policy becoming increasingly hostile towards immigrants and visa holders, it convinced me to move back to Germany,” he said.

Read more: Here’s How to Expand Who Contributes to Bitcoin Core

Chaincode only employs people who live in New York City. When Falke decided to depart, Chaincode’s head of special projects Adam Jonas helped him find new funding at OKCoin.

“I’d like to thank Adam Jonas from Chaincode for reaching out to various companies in the space and showing them the importance of supporting Bitcoin developers,” Falke said.

OKCoin: Funding Bitcoin Development

With a global health crisis that’s far from over and a feeble world economy, 2020 has been a disaster of a year. The sliver of a silver lining, though, is that 2020 has been the best ever in terms of funding developers tinkering to make bitcoin better after a long dearth of funding.

Read more: Square Crypto, Human Rights Foundation Ramp Up Bitcoin Development Grants

These sorts of grants have been growing in popularity. Many open source Bitcoin developers work on the code as a side project, essentially improving the digital currency for free, despite their contributions helping everyone in the industry, including the companies profiting from it. But now, more exchanges and other bitcoin organizations are beginning to support this work financially. 

“We are inherently incentivized to invest in Bitcoin, which is fundamental to the growth of our industry,” said OKCoin CEO Hong Fang in a statement. “Supporting Marco’s work on strengthening the testing framework in addition to his general responsibilities as a maintainer is important to continuing quality development.”

OKCoin has awarded a number of grants this summer, including to Bitcoin Core contributor Amiti Uttarwar and to open-source payment processor BTCPay.

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Bitcoin prices surged 5% on Wednesday, outpacing stocks and gold amid calls for more government stimulus, as the economic toll of the coronavirus mounts.

The oldest and largest cryptocurrency rose to $11,755. The price is now approaching $12,000 for the second time in a week, a level that bitcoin hasn’t sustainably traded above for more than a year. 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here. 

Related: Bitcoin Entering ‘New Adoption Cycle,’ Coin Metrics Exec Says

Bloomberg News went so far as to declare in an article Wednesday that “bitcoin mania appears to be almost back in full bloom.”  

Bitcoin is seen by many digital-asset investors as a hedge against inflation, and the bets are growing that governments and central banks will have to pump trillions of dollars more into the financial system to stimulate the economy out of the worst recession since the 1930s. 

Gold, historically seen as a reliable inflation hedge, surged this week to a new record above $2,000. 

Yet, even gold’s 35% gain this year is no match for bitcoin’s 63% price increase. The Standard & Poor’s 500 Index is now up 3% on the year, with some traditional investors arguing that stocks have become detached from reality, merely propped up by the roughly $3 trillion of freshly created money that the Federal Reserve has pumped into the global financial system this year.  

Related: Blockchain Bites: Square’s Revenue Surge, Eth 2’s Final Testnet, c-Lightning’s Latest Update

“Bitcoin and the crypto markets are once again able to claim independence from the traditional markets,” Mati Greenspan, co-founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote Wednesday in a newsletter.  

The U.S. government’s budget deficit this fiscal year is projected to soar to $3.7 trillion, far surpassing the previous record of $1.4 trillion in 2009, according to the Associated Press. 

An extra $600-per-week federal benefit for laid-off workers lapsed last week, threatening the economic recovery, and U.S. lawmakers are wrangling over the details of a new spending measure that could range from $1 trillion to more than $3 trillion.  

“Bitcoin’s long-term value proposition as a hedge against fiat currency debasement only grows stronger,” Anil Lulla, of cryptocurrency research firm Delphi Digital, noted Wednesday in an op-ed for CoinDesk.

The International Monetary Fund warned this week in a blog post that “another bout of global financial stress could trigger more capital flow reversals, currency pressures and further raise the risk of an external crisis for economies with preexisting vulnerabilities, such as large current account deficits.”

All that just plays to bitcoin’s strengths, as more investors start to extrapolate the likely stimulus needed to recover from a protracted economic downturn. According Bloomberg News, analysts for the U.S. bank JPMorgan wrote Tuesday that while older investors are buying gold, younger investors are buying bitcoin. 

The analysis firm Coin Metrics noted that over the past week bitcoin had averaged over 1 million daily active addresses for the first time since January 2018. That was in the wake of the cryptocurrency hitting an all-time high around $20,000 in 2017. 

And Norwegian cryptocurrency-analysis firm Arcane Research noted in a report this week that bitcoin daily trading volumes have been “growing strongly,” with several days topping $2 billion. The number of open bitcoin futures contracts on the CME exchange has jumped to a new record around $850 million.  

“The strong momentum in the market continues,” Arcane wrote. “The sharp rise in open interest at CME is a clear indication of increased institutional demand for bitcoin.”

Chris Thomas, head of digital assets for broker Swissquote, told CoinDesk’s Daniel Cawrey on Wednesday that bitcoin could break past $12,000 by Friday. 

The signs certainly appear to be pointing in that direction. 

Tweet of the day Bitcoin watch

BTC: Price: $11,700 (BPI) | 24-Hr High: $11,807 | 24-Hr Low: $11,380

Trend: Bitcoin is looking north after twin bullish cues were activated by a 5% rally Wednesday. 

Firstly, with the UTC close at $11,755, bitcoin marked an upside break of a narrowing price range witnessed Monday and Tuesday. 

In addition, Wednesday’s UTC close established a strong foothold above $11,400. The bulls had repeatedly failed to keep gains above that level on Monday and Tuesday. 

The combination of range breakout and convincing move above a key hurdle has opened the doors for a re-test of recent highs above $12,100.

Still, the case for a rally to recent highs would only weaken if prices fall back below the former hurdle-turned-support of $11,400. At press time, bitcoin is changing hands near $11,700. 

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A judge choosing the lead plaintiff in the Block.one lawsuit has expressed concern some parties appear to be there primarily for the promise of high legal fees.

• Earlier this week, District Judge Lewis Kaplan said a class-action lawsuit for five investors showed a distinct lack of diligence and commitment that made them unsuitable to become the lead plaintiff in the Block.one lawsuit.
• Known as the “Williams Group,” Judge Kaplan said the plaintiffs had submitted incomplete, inaccurate and unsubstantiated trading data that failed to show how much money they lost from investing in the EOS initial coin offering (ICO).
• For example, trading data submitted from one of the plaintiffs shows he allegedly sold more than 3,000 EOS tokens than he had actually bought.
• Judge Kaplan added that Token Fund I, one of the plaintiffs, failed to provide evidence of trading losses and was only set up two days before it filed a motion to become lead plaintiff, suggesting it was created as a vehicle specially for this lawsuit.
• A decision to remove a couple of plaintiffs at the last minute “raises further concerns that the application is being driven by the lawyers, rather than the plaintiffs,” Judge Kaplan added.
• The lead plaintiff’s case represents all other plaintiffs with similar suits and is the only one that goes to court, meaning the lead plaintiff’s lawyers pick up the legal fees.
• In the Block.one case, which alleges the EOS creator committed securities fraud, Judge Kaplan said it was possible the suit could stretch on for many years – making it a lucrative prospect for the lead plaintiff’s legal team.
• Instead of the Williams Group, Judge Kaplan chose the lawsuit from the Crypto Assets Opportunity Fund (CAOF), which was filed in May, as lead plaintiff, saying they had bigger financial interest and had actually supplied accurate and evidenced trading data.

See also: Block.one Plans to Start Voting on EOS, the Blockchain It Birthed

Read the judgement below:

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Attorneys for investors suing a secure messaging app want the judge’s permission to use “alternative means” to serve the firm’s executives with papers, saying they’ve been unable to reach them through traditional means. 

• Court documents are typically served via mail or delivered in person to defendants, but plaintiffs bringing the case against Switzerland-based Status filed a motion Monday asking the court to allow its top executives to be served through the firm’s attorneys, or via email and social media accounts.
• Status chief executive officer Jarrad Hope and chief communications officer Carl Bennetts were named as individual defendants in the class action lawsuit filed in April.
• The suit alleges the $100 million raised in its initial coin offering (ICO) through the sale of Status’ native SNT token in 2017 was an unregistered securities sale and demands a trial by jury. 
• According to Monday’s motion, plaintiff’s counsel undertook “exhaustive efforts” to locate Hope and Bennetts who are supposedly residing in Switzerland. 
• They were, however, unsuccessful in retrieving an address for either executive, despite expending resources searching through social media, registries and even employing a private investigator. 
• The letter also specified an attempt to serve them through the 1965 Hague Convention, on the service of judicial documents abroad. This effort fell through because the defendants’ addresses were unknown.
• The motion alleges Status executives have been avoiding being served, after attorneys for the plaintiffs attempted to serve the executives through Status’ counsel.
• “Indeed, Mr. Nagy, counsel for Status, has represented that he spoke to one of the Individual Defendants by phone about accepting service in this suit, but this individual did not authorize Mr. Nagy to accept service on his behalf,” the motion said.
• The lawsuit against Status is one of a number of token offerings accused of violating the U.S. federal and state security laws, with the Securities and Exchange Commission taking two messaging apps (Telegram and Kik) to court over similar allegations in the last year.
• The plaintiffs will now await a court order approving alternative means of service to let the suit proceed. 

See also: Ripple Says XRP Lawsuit Based on ‘Unsupported Leaps of Logic’

Read the motion and full complaint below:

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The same type of crypto scams that plague Twitter are running rampant on Instagram in 2020.

For example, there are more than 1.3 million Instagram posts using #Coinbase, an overwhelming number of which display inauthentic behavior. Coinbase declined to comment on any past influencer campaigns, with the short statement: “We don’t have an active influencer campaign right now.” Instagram isn’t tackled specifically in the company’s blog post about social media scams. 

Efforts to curtail this trend sometimes harm entrepreneurs like influencer and educator Rachel Siegel, better known as Crypto Finally. She was temporarily de-platformed from Instagram in July. For several days she was among at least three real crypto influencers, all young women, who temporarily lost access to their accounts.

Related: Can Social Media Be Redeemed? Feat. Bobby Goodlatte

“I think that the policies for banning over impersonation should be looked at, there are dozens of fake accounts impersonating me that are kept up on Instagram,” Siegel said. “I’m glad that they were able to reinstate my account, but I believe new preventative measures should be taken to protect their users from falling victim to scams and impersonators. Banning the original creator just makes the problem worse.”

Along with Siegel, the Argentinian influencer Catalina was also suspended. Instagram spokesperson Raki Wane told CoinDesk “the accounts were taken down unintentionally, when the mistake was discovered we overturned.”

Read more: Your Property Rights Should Extend to Social Media

To be fair to Instagram, it’s clear COVID-19 fraud trends are outpacing current moderation practices. (I’ve been impersonated on almost every platform, including Instagram, along with many CoinDesk staffers. But scam accounts on Instagram try to contact or follow me weekly, more than other platforms, especially since the COVID-19 crisis began.) There are many authentic influencer accounts doing giveaways on Instagram as part of their COVID-19 marketing strategies.

Related: FinCEN Warns on Coronavirus Scams Demanding Crypto

Despite this climate, Instagram still does provide an important networking platform for the crypto industry. Especially in Latin America, some entrepreneurs rely on Instagram to communicate with customers about their products.

Brazilian entrepreneur Edmilson Rodrigues, of both Bonnum and Lovecryptonet, often serves Venezuelan refugees who rely on mobile apps for communication. He said he uses Instagram to both “show pictures of my family and to publish updates about our product.” He said he interacts with product users via Instagram at least once every few weeks, especially when his startup launches a new feature. 

Insta-Brazil

Yet another crypto company operating in Brazil, the Abakus Group-supported exchange Novadax, shows how startups leverage Instagram for customer relations during COVID-19.

Chinese investor turned Novadax CEO Beibei Liu said thousands of Brazilians used her exchange to buy bitcoin for the first time over the past few months. Out of roughly 150,000 user total accounts, she said surveys indicated 20% were new to crypto. 

“We do a lot of basic educational content on Instagram,” Liu said, adding they also do Instagram Live sessions to answer user questions. “Instagram is a very important channel in Brazil, it’s a large population that is pretty young.”

Read more: Crypto Influencers Are Following the Beauty Playbook – Even if They Don’t Know It

More than half of the exchange’s Brazillian users are mobile-only, Liu said, so mobile-friendly customer support options are crucial. Even for the minority of professional traders using the platform, such as Portugese-speaking liquidity providers in Europe or the United States, Instagram marketing helps the startup establish trust. 

“They are more skeptical, they have concerns. So we post a lot of things related to our company background and team background,” Liu said about how the startup uses Instagram for customer relations with experienced traders. “It shows we are a trustworthy company. We show that we continue to update our products.” 

Indeed, the company is officially opening support for European traders in August, after months of limited onboarding, to help boost liquidity and create a complementary flow between institutions and the emerging retail market. This is why authenticity on social media platforms like Instagram, which is so difficult for moderators to safeguard, is a key factor influencing cryptocurrency adoption patterns. 

Speaking to the global dynamics of Crypto Instagram, where some users struggle to identify authentic accounts, Siegel said she hopes Instagram “will create a new model for a more active effort to protect their users.”

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The escalating internal power struggle at Bitmain is starting to have a more serious impact on its business and customers.

• The Beijing-based bitcoin miner maker said via the official WeChat account of its AntMiner brand Thursday that customers whose equipment were due in June and July will have to wait until September and October.
• The delay is caused by “external interference over the company’s management,” the official account said.
• It’s important to note that bitcoin miners are typically sold via pre-orders, which must be made two to three months in advance.
• That means customers who ordered the June and July batches could have placed their orders as early as March and April.
• The delay comes amid the escalating fight for control of Bitmain between its two co-founders, Wu Jihan and Micree Zhan Ketuan, which has essentially “hard-forked” the firm’s bitcoin miner production.
• Currently, the official WeChat account of the AntMiner brand is controlled by Wu’s faction within the firm.
• Zhan was ousted by Wu in last October, but returned to power in June and has controlled Bitmain’s Shenzhen-based factory since then.
• The situation threatens to become a kind of stalemate: Zhan’s side will likely not have an easier time with shipments either, as Wu also controls the miner chip supply chain via Beijing Bitmain’s parent entity in Hong Kong.
• Bitmain is now offering two mutually exclusive options for customers whose orders are delayed.
• The first option is to send Bitmain a written request to speed up the delivery. If they still don’t receive their machines 60 days after the notice, they can request a refund.
• The second is to wait patiently until the actual delivery, with Bitmain saying it will compensate customers with their theoretical mining revenue between now and delivery in the form of cash coupons to be used in future purchases.

Read more: Power Struggle Inside Bitmain ‘Hard Forks’ Bitcoin Miner Production

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Ethereum Classic has suffered its second 51% attack in a week after more than 4,000 blocks were reorganized Thursday morning.

Mining pool Ethermine’s parent entity Bitfly and crypto exchange Binance reported the reorganization, announcing all Ethereum Classic payouts, withdrawals and deposits had been suspended due to the attack.

The reorganized transaction history is currently the longest chain on the network. However, the majority of Ethereum Classic miners – such as mining pool Ethermine – are continuing to mine on the shorter version of the network.

Related: Ethereum Classic Suffers Reorganization That Resembles 51% Attack Amid Miner Complications

Developers behind Ethereum Classic said in a tweet minutes before Bitfly’s report that exchanges and mining pools are advised to “significantly raise confirmation times on all deposits and incoming transactions” in light of “recent network attacks.”

A chain reorg occurs when a party gains more hashing power than the rest of the network miners. The adversary can then rewrite the chain’s history and “double-spend” the blockchain’s native currency (in this case, ETC). Hashing power on Ethereum Classic looks to have decreased considerably since Monday, August 3 dropping nearly 20% from 1.6 TH/s to 1.3 TH/s as of press time. 

Read more: Ethereum Classic Suffers Reorganization That Resembles 51% Attack Amid Miner Complications

This fresh attack to Ethereum Classic’s network follows on from a recent attack that occurred between July 29 and August 1, according to blockchain analytics firm Bitquery.

Related: Market Wrap: Bitcoin’s Price and Ether’s Dominance Sit at 2020 Highs

While Ethereum Classic developers initially said the network did not suffer from a reorganization or a 51% attack in that previous attack, Bitquery said Wednesday that an attacker double-spent a little over 800,000 ETC (about $5.6 million), and paid about 17.5 BTC ($204,000) to acquire the hash power for the attack.

The monetary value of Thursday’s 51% attack in terms of the double spends is not yet known. However, at $23.44 per block reward on Ethereum Classic, the attacker has most likely earned $93,760 from block rewards alone.

The attack follows the deprecation of the OpenEthereum client on July 16. Nearly half of the network’s nodes – including important mining and exchange connections – operated on OpenEtheruem software which became immediately outdated following the first chain reorg July 31.

Ethereum Classic developers have urged node operators to switch to Besu or Multi-geth implementations as soon as possible.

Ethereum Classic’s price was $7.03 as of press time, down less than 1% over 24 hours.

Not the first

The network has suffered major reorg attacks at least twice in the last two years.

In the more recent attack, the perpetrator moved more than 807,000 ETC from an unspecified crypto exchange to several wallets between July 29-31, according to Bitquery.

The attacker then started mining blocks after purchasing the hash power from a user on cryptocurrency mining platform Nicehash.

On July 31, the attacker sent money to their own wallet address via private transactions and then implemented the transactions into the blocks they were mining.

The attacker then sent back money to a crypto exchange, which Bitquery alleges belongs to Malta-based OKEx.

By August 1 the attacker published their blocks and initiated the chain reorg.

As of press time, none of the funds compromised in the 51% attack have moved from the OKEx exchange, according to Bitquery.

Nikhilesh De, Wolfie Zhao, William Foxley and Christine Kim contributed reporting.

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