Skip to main content

CoinDesk Crypto

Twitter Says ‘Phone Spear Phishing’ Let Hackers Gain Employee Credentials

6 years 2 months ago

Twitter revealed that a number of employees fell victim to a “phone spear phishing attack” in a new update on how its systems were compromised in the social media giant’s largest hack to date on July 15, according to a blog post shared Thursday.

  • A spear-phishing attack is a targeted attempt to steal information such as account details or financial information from a particular individual, in this case, Twitter employees via their phones.
  • The success of the hack hinged on two key factors – that the hacker(s) gained access to Twitter’s internal network and that they obtained the credentials from specific Twitter employees.
  • The credentials of the employees provided “god mode” access to Twitter’s internal support tools, blockchain startup Make Sense Labs’ CTO Ben Sigman previously told CoinDesk.
  • According to Twitter, not all employees that had been targets of the phishing attack had the necessary permissions to use account management tools.
  • The hackers instead gained access to Twitter’s internal systems and discovered further information relating to the social media giant’s processes allowing the hackers to target employees who did have that access to support management tools. The New York Times previously reported that the hackers found additional credentials in the company's Slack server.
  • The hacker(s) targeted 130 Twitter accounts tweeting bitcoin giveaway scams and accessing the DM inbox from 36 accounts including CoinDesk's.
  • Twitter said the attack relied on a “significant and concerted effort” to mislead particular employees and “exploit human vulnerabilities” in order to gain access to its platform.
  • Since the hack, Twitter said it has “significantly” limited access to its internal support management tools to “ensure ongoing account security” while it finalizes its investigation.
  • For the time being, features such as its “Your Twitter Data” and processes have been impacted by the limitation of its tools.
  • A detailed technical report on the hack is expected to be released at a later date as it awaits ongoing law enforcement investigations and further work to safeguard its platform.

See also: Twitter Hack: Chainalysis and CipherTrace Confirm FBI Investigation

Related Stories
CoinDesk

Ethereum History in 5 Charts

6 years 2 months ago

Five years ago this week, the first general-purpose blockchain went live on mainnet. Ethereum paved the way for a whole new use case for blockchain technology untethered from Bitcoin’s original vision as electronic cash.

CoinDesk marked the milestone with a special series of stories, live–streamed conversations and even a pop-up newsletter. These charts first appeared in the newsletter, one for each day.

Here are five charts for understanding Ethereum’s evolution.

Part 1: A Bloodless Secession

Related: Audius Rallies EDM Artists, Crypto VCs to Back Vision for Music Payments on Ethereum

Not one year after the launch of Ethereum, a seminal event split the community in two.

So acute was the disagreement between these two subcommunities that the row resulted in the creation of a new cryptocurrency called “Ethereum Classic,” cloned from the original Ethereum codebase.

Ethereum Classic (ETC) was created July 20, 2016, after $60 million worth of ether (ETH), Ethereum’s native cryptocurrency, was stolen from users of a dapp known as The DAO. At the time, The DAO was the only dapp of its kind where users could pool funds and vote on which projects the money would be invested in. The DAO’s vision (before it was hacked and drained of a significant chunk of its finances) was to be an investor-guided venture capital fund. 

After weeks of deliberation, Ethereum developers reached a consensus that they should turn back the clock – reverse The DAO hack transactions and restore users’ lost ETH. The changes could only be implemented through a network-wide upgrade, also called a hard fork. Those who opposed the change argued in favor of retaining the integrity of the original blockchain’s history of transactions and balances – hacked funds and all.

Related: Ether Addresses in Profit Have Soared 132% in a Year

So, on July 20, 2016, when the upgrade to restore user funds was executed, the Ethereum blockchain split in two. The portion of the community that retained the original log of transactions and balances from The DAO hack and did not upgrade the software created a parallel network, Ethereum Classic. 

Since the split, the Ethereum network has hard forked seven additional times, though none of these subsequent upgrades have reached the same level of controversy as “The DAO Fork” of 2016.

Part 2: Those Darned Cats

The first dapp on Ethereum to gain real user traction was a collectibles game known as CryptoKitties. Launched in November 2017, the “digital cats” became so popular they were covered by news outlets around the world including The Financial Post, BBC and The New York Times. 

At the height of their popularity, tokenized cats were trading on Ethereum for upwards of $200,000. However, the influx of users and a high volume of transactions from this one viral dapp clogged the Ethereum blockchain to unprecedented levels. A backlog of 30,000 transactions had piled up by December 2017, meaning that users would have to wait days for their transfers of ETH to be confirmed. 

The developers behind CryptoKitties hastened to help stem the tide of new users by increasing game fees. Shortly after CryptoKitties’ launch, Ethereum saw the highest total for daily transaction fees in its history, on Jan. 10, 2018. Over $4.5 million was collected in fees by Ethereum miners that day. The same month, CryptoKitties reached 250,000 registered users. 

In many respects, the CryptoKitties craze was the rude awakening that reminded Ethereum developers of the platform’s technical limitations. How could Ethereum become the world computer when one viral dapp was enough to overwhelm it? If the developers wanted to be serious about onboarding not thousands but millions of dapp users, they would need to come up with a concrete plan to increase throughput.

Part 3: Testing the Limits

The need for Ethereum 2.0 and its expected benefits to network efficiency, as well as scalability, has only grown stronger since the CryptoKitties craze of 2017. The popularity of initial coin offerings (ICOs) – a way to crowdfund early stages of a cryptocurrency project – by dollar amount raised reached its peak in 2018. A total of $7.8 billion was raised for over 1,000 projects that year. According to ICObench, over 80% of all ICOs rely on the Ethereum blockchain to create their tokens and issue them to investors. 

Trends like the ICO boom of 2018 are indicative of the ways blockchain technology can be leveraged in more ways than simply peer-to-peer electronic cash. Ethereum, as the world’s first general-purpose blockchain platform, has become the central hub where dapp developers congregate to build any and all types of use cases for blockchain, be it gaming- or finance-related. 

As a result, despite the technical limitations of the platform, dapp developer activity on Ethereum continues to thrive. The latest trend dominating user traffic and transaction volume on Ethereum is decentralized finance (DeFi). The DeFi movement currently sweeping Ethereum is made up of dapps modeled after traditional financial players such as lending services, exchanges and derivatives markets. As of July 29, 2020, $3.68 billion worth of crypto assets are locked by users into various DeFi protocols.

Part 4: Dapp Dominance

Ethereum’s vision since its inception has always been to be “the world computer” on top of which decentralized applications (dapps) and assets of any kind can be freely created and deployed.

To this end, Ethereum developers pioneered new technology in the emerging space of blockchain called “smart contracts.” A new programming language called Solidity was invented to help code dapps on Ethereum. In order to ensure interoperability between different dapps on the network, common frameworks were developed – like the ERC-20 and ERC-721 token standards. 

These innovations have blazed the trail for other general-purpose blockchain platforms to emerge since Ethereum’s birth in 2015. EOS, Stellar, Tezos and Tron are four cryptocurrencies in the top 15 by market share that also feature dapp creation and deployment. Despite the growth in the number of alternative dapp platforms, Ethereum remains the most popular general-purpose blockchain both in terms of number of users and dapps, as shown in the chart above.

Ethereum hasn’t fulfilled its vision yet, however. Developers are convinced that the current blockchain infrastructure is wholly inadequate to handle an influx of millions, if not billions of users around the world. This was always the suspicion of the early founders of Ethereum, including Vitalik Buterin. Five years after releasing their creation into the wild, Buterin and others have worked out a roadmap called “Eth 2.0” to bring Ethereum’s development to completion. Eth 2.0’s first step is expected to launch sometime this year or early next. 

Part 5: The Long Road to 2.0

Ethereum hasn’t fulfilled its vision yet.

Developers are convinced that the current blockchain infrastructure is wholly inadequate to handle an influx of millions, if not, billions of users around the world. This was always the suspicion of the early founders of Ethereum such as Vitalik Buterin. Five years after releasing their creation into the wild, Buterin and others have worked out a roadmap called “Ethereum 2.0” to bring Ethereum’s development to completion and it is anticipated to launch sometime this year or early next. 

The Ethereum 2.0 roadmap is almost as ambitious as the original one which brought the first dapps into existence. While the launch of this technology is forthcoming, an important part of understanding Ethereum’s five-year history lies in studying the many iterations that Ethereum 2.0 underwent in its years of planning. 

Originally, Ethereum 2.0 in 2015 was thought of as the final development phase for the project and dubbed “Serenity.” Serenity was tentatively expected to be rolled out 16 months after initial mainnet launch (which would have been November 2016). The upgrade would transition Ethereum from its reliance on a computationally intensive process for block production inherited from Bitcoin, known as “mining,” to a more energy-efficient process of validating.

To this end, developers created what is called the “difficulty bomb” to slowly but surely encourage this transition away from mining. The bomb, which was activated on March 14, 2016, increases the difficulty levels for miners to find an Ethereum block over time. This schedule at which this bomb slows block production has been delayed three times over the course of the last five years as developers re-worked plans for launching Ethereum 2.0. 

The most recent delay to the difficulty bomb occurred on Jan. 2, 2020. This may be the last time the difficulty bomb is pushed back as tentative estimations by some developers suggest the transition to Ethereum 2.0 could begin officially sometime this year and replace the existing network by late next year.  

While there is no telling what new technologies and standards of blockchain practice will be innovated as a result of Ethereum 2.0, looking back at the first five years of the network’s development does give some indication. In that time, Ethereum has undergone network-splitting upgrades, faced crippling technology bottlenecks, advanced new forms of fundraising for crypto projects and formalized a launch plan for migrating to Ethereum 2.0.

Related Stories
CoinDesk

Market Wrap: Bitcoin Clings to $11,000 as Ether Futures Top $1B

6 years 2 months ago

Bitcoin was little changed at around $11,000 with lower spot volumes as traders eye growth in the market for ether futures.

  • Bitcoin (BTC) trading around $11,142 as of 20:00 UTC (4 p.m. ET). Slipping 0.90% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $10,811-$11,348
  • BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin was little changed at around $11,000 Thursday as traders digested reports the U.S. economy shrank during the second quarter at the fastest pace on record, and that President Donald Trump is wondering if the Constitutionally mandated November presidential election could be delayed. 

Trading was light, with volume of about $113 million on the Coinbase exchange, after a price rally earlier this week led to a surge in volumes.

Related: Dollar Falls to Lowest Level in Over 2 Years While Gold, Silver, Bitcoin Continue to Shine

“Bitcoin’s push has been fueled by the drive towards safe-haven assets,” said Micah Erstling, trader at digital-asset trading firm GSR. “Markets are being driven by ongoing coronavirus concerns as well as U.S.-China trade tensions, which also helps to explain gold’s meteoric rise.” 

Gold is up 28% for the year, while bitcoin has gained 53%.

“In the last couple of weeks, the majority of assets are up – stocks, commodities, crypto – so despite fundamental weaknesses, there’s a seemingly positive risk environment,” said Matt Ficke, head of capital markets for cryptocurrency exchange OKCoin. 

Read More: Circle Gets $25M From DCG to Drive USDC Mainstream

Ether futures open interest over $1 billion

Related: Ether Addresses in Profit Have Soared 132% in a Year

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Thursday, trading around $334 after climbing 3.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

“Ethereum has been propelled by a new wave of DeFi and stablecoin activity,” said GSR’s Erstling. “The bullish sentiment has been great for market involvement but it has come at a cost as ETH fees are at an all-time high, highlighting how scalability issues are still present,” he added. 

Read More: Ether Addresses in Profit Have Soared 132% in a Year

Open interest, or the number of outstanding contracts, in ether futures is at a 2020 high, at over $1.1 billion, according to data aggregator Skew. 

The cryptocurrency exchange OKEx is the top ether futures platform, with $307 million in open interest, followed by Huobi at $253 million, BitMEX at $208 million, Binance at $118 million and FTX at $117 million. 

Other markets

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

Read More: Dharma Adds Uniswap Trading in Bid to Become ‘the Robinhood of DeFi’

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

Read More: A Crypto Derivatives Exchange Is Getting a Nasdaq Listing in Q3

Equities:

Read More: Sleepy Fed Meeting Belies Tense Economic Reality That May Buoy Bitcoin

Commodities:

  • Gold is in the red 0.75% at $1,955 as of press time.
  • Oil is down 2.8%. Price per barrel of West Texas Intermediate crude: $40.17 

Read More: Privacy-Focused Smart Contract Forges Ahead After Settlement

Treasurys:

  • U.S. Treasury bonds all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 12.5%.

Read More: Bank of England Building Network to Support a Potential Digital Pound

Related Stories
CoinDesk

Dollar Falls to Lowest Level in Over 2 Years While Gold, Silver, Bitcoin Continue to Shine

6 years 2 months ago

The dollar on Thursday dropped to its lowest level since May 2018 as the Federal Reserve said it plans to keep interest rates close to zero, and inflation hedges continue to show strength. 

  • The dollar’s trade-weighted index – a measure of its value relative to a basket of other dominant currencies – dropped to $93.04 Thursday afternoon.
  • The last time the index traded this low was on May 15, 2018, according to TradingView.
  • As the dollar weakens, gold continues to trade near its new all-time highs, reaching $1,980 on Tuesday.
  • The yellow metal has gained more than 10% in July.
  • Silver has rallied nearly 30% in July, trading at $23.26 at last check.
  • Bitcoin, previously stuck trading in a tight range between $9,000 and $10,000 for nearly two months, followed the rallies in precious metals when it broke above $11,400 on Tuesday.
  • Bitcoin has soared 53% in 2020, according to Messari.
  • “In the coming weeks you’ll see the dollar weakening further,” Qi Gao, a currency strategist at Scotiabank, told the Financial Times.
Related Stories
CoinDesk

Aave’s LEND Token Jumps 23% on Plan for Liquidity Mining

6 years 2 months ago
  • Aave’s LEND token has rallied by 23% in the past 24 hours and is trading at $0.3440 at press time, according to data source Messari. It’s the day’s top performer among cryptocurrencies with at least $100 million market capitalization.
  • On Wednesday, the protocol announced the Aavenomics Proposal, a plan to transition to decentralized governance by token holders, featuring a liquidity-mining rewards system similar to the one that helped drive growth recently in Compound, a rival decentralized lender.
  • “The price rally suggests the protocol’s upcoming swap and revamped tokenomics has started to gain steam,” Su Zhu, CEO of the cryptocurrency-focused investment fund Three Arrows Capital, told CoinDesk in a Telegram chat. Three Arrows holds the LEND tokens.
  • The new model will convert the existing 1.3 billion LEND to AAVE governance tokens in 100:1 ratio, effectively a reverse split.
  • AAVE holders will be able to stake their tokens in return for new tokens and a percentage of protocol fees.
  • “The market seems to have approved our proposal,” Marc Zeller, integration lead at Aave, told CoinDesk in a Twitter chat. “New actors are preparing to participate in the governance proposal and in the upcoming safety module.”
  • LEND has jumped 18-fold in 2010, the most among large- and mid-cap cryptocurrencies, according to Messari.

See also: Aave’s LEND Token Is Now Up 1,600% in 2020

Related Stories
CoinDesk

Audius Rallies EDM Artists, Crypto VCs to Back Vision for Music Payments on Ethereum

6 years 2 months ago

Music is back on the blockchain. 

Audius, a streaming service that connects music fans directly with artists, has raised $3.1 million in a strategic round co-led by Multicoin Capital and Blockchange Ventures, with participation from Pantera Capital and Coinbase Ventures. 

Audius has now raised a total of $8.6 million as the platform prepares for prime time, having grown in less than a year to over 250,000 monthly users and 40,000 artists. EDM artists seem to be the site’s burgeoning specialty with notables including RAC, deadmau5, Lido, 3LAU, Zeds Dead, Mr. Carmack and REZZ all signed on.

Related: Ether Addresses in Profit Have Soared 132% in a Year

The blockchain use case for music is a familiar one: the inequity and tardiness of the revenue model of streaming services like Apple Music and Spotify.

“It shouldn’t take a year and a half to get paid, and it’s just crazy that the people creating the music only take 12%,” Audius CEO Roneil Rumburg said in an interview. “After this extreme time delay, the artist just gets this check, so they don’t actually see who’s listening to them. There is no visibility because the artist doesn’t own their own data or their audience.” 

The Audius P2P network allows artists to be paid in full by their fans, directly and instantly for every stream with the ability to cash out daily or hourly if they want, Rumburg added.

‘Fair trade’ but for music

Ethereum-based Audius picks up the mantle carried by ConsenSys-backed Ujo Music and groundbreaking projects like Imogen Heap’s Mycelia, which the artist described as “fair trade” music.

Related: CoinDesk Live Recap: The DAO Hack Is Still a Mystery

Indeed, folks such as Jesse Grushack, co-founder and CEO of the now-shuttered Ujo Music, have helped and advised Audius, as has Ujo’s former artist-in-residence, André Allen Anjos, better known by his stage name RAC, a Grammy Award winner who has remixed the likes of New Order, Lady Gaga and the Kings of Leon.

Anjos, who worked with Ujo for over a year and released an album on Ethereum, said the problem was the complexity of onboarding users.

“We used to kind of joke that it could take like 36 steps to get ether into MetaMask,” Anjos said in an interview. “Just to interact with these systems you needed to go through this crazy setup, and I think Ujo kind of suffered from that. But today, if you go to Audius it’s a pretty similar experience to any other platform, arguably better. That initial barrier to entry is not a problem anymore.”

Audius, which was founded in 2018 by Stanford University buddies Rumburg and Chief Product Officer Forrest Browning, has benefitted from “a kind of diaspora of talent that had already been working on this problem,” said Rumburg. 

“Back in 2016, when these projects came about, was just really early,” he said. “The amount of stuff that [ConsenSys founder] Joe [Lubin] had to build from scratch was just this astronomical ask.”

The Audius team may have built the music player with a user interface that looks and feels like Spotify or SoundCloud, but it couldn’t be more different under the hood.

Decentralized streaming

The network consists of indexing nodes, which provide a discovery service, and content-posting or creator nodes. This intersection of fans, artists and infrastructure providers who host and index content (“stakers” in blockchain parlance), uses both the Ethererum public blockchain (which is where all the staking and look-up nodes are running) and a second, permissioned network where the uploaded content lives. 

“It’s fully community-operated and hosted,” said Rumburg. “Today, if we shut down Audius, the company, all of this could keep working and keep running so long as the community wants to keep it up and running.”

Following on from a minimum viable product mainnet launch in the next couple of months, the next stage is to add instant payments for monetized content, which will use a system of stablecoins and be in place before the end of the year, said Rumburg.

“Payments will be done with a kind of stablecoin mechanism. So that’s not like an Audius native token, but a basket of third-party tokens. It’ll probably be a couple of the bigger ones,” he said. “We’re looking for good fiat to crypto on-ramp options. From the user’s perspective, they don’t even know this is happening. They just put in a credit card and top up that account and see a balance.”

The user interface for artists is just as simple, said Audius CPO Forrest Browning.

“As an artist, if you decide to monetize some of your content, your Audius dashboard might show you have $500 or whatever is your local currency, and with a one-click direct deposit you can pull that out, without knowing a stable token system was integrated,” Browning said.

Deep cuts

Music distribution on the internet has moved on since the time of Napster, but when an artist is signed to a label the label owns the rights to the artist’s master copies and gets to decide where that content is distributed. There seems to be more opportunity for negotiation these days, particularly between artists and forward-thinking independent labels. 

“The majority of our usage right now is coming from independent artists who are not signed,” said Rumburg. “Those that are signed to progressive labels have gone and got permission from their label. I think the mentality is, the sooner you sign up to a system like this, the more following and momentum you build, similar to early accounts on SoundCloud or anything else like that.”

RAC, who is signed to iconic U.K. indie label Ninja Tune, said the conversation about him releasing an album on Ethereum back in 2017 was “very easygoing,” because the label is tech savvy.

“The way to go is obviously to ask the label for permission, but I feel like it would be a non-issue in most cases. I think most labels would say, ‘Why not?’ and just approach this as another distribution platform,” he said.

Related Stories
CoinDesk

Blockchain Bites: Plus Token Ponzi Popped, Cardano Forked and tZERO Cut

6 years 2 months ago

Cardano hard forked to its proof-of-stake network, token platform tZERO cut staff and compensation, and a derivatives exchange is looking to list on Nasdaq.

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

Hello, Shelley
Cardano is now running a proof-of-stake consensus mechanism. Announced Wednesday, the open-source smart-contract platform designed to challenge Ethereum’s lead position, hard-forked from the centralized Byron network into the decentralized Shelley network. IOHK, the lead design firm, said “hundreds” of assets are expected to run on the blockchain in a year’s time. The PoS delegation process lets users holding Cardano’s native token (ADA) commit their tokens to a pool for a share of rewards. A number of additional upgrades and improvements are expected in the coming months, including a new governance model, Project Catalyst.

Related: First Mover: Sleepy Fed Meeting Belies Tense Economic Reality (Brrr) That May Buoy Bitcoin

Ponzi Popped
Chinese police have arrested all 27 primary suspects thought to be responsible for running the $5.7 billion Plus Token Ponzi scheme. Led by the Ministry of Public Security, China’s top police force agency, the investigators has also arrested another 82 core members of the scheme in what looks like the first crackdown on an international, crypto Ponzi. The scheme allegedly scammed two million people by using cryptocurrencies including bitcoin as a funding channel.

Public Backdoor
Newly launched derivatives platform EQUOS.io is set to become the first publicly traded crypto exchange in the U.S. through a “backdoor listing” on Nasdaq later this year. Its operator, Hong Kong-based Diginex, announced Thursday it is combining EQUOS.io with the Nasdaq-listed Singapore’s 8i Enterprises Acquisition Corp – a special-purpose acquisition company. SPACs are shell companies that use funds from their IPOs to acquire target companies, bringing them public through the “backdoor,” a process that is faster and cheaper than traditional listings, according to Diginex CEO Richard Byworth.

Cuts & Capital
Security token platform tZERO has cut staff and salaries as it eyes another capital raise. CEO Saum Noursalehi said tZERO had “significantly reduced” its cash burn rate 45% year on year by cutting legal costs and staff and trimming executive salaries in exchange for company equity. A majority-owned subsidiary of Overstock, tZERO raised $134 million in a 2018 ICO – short of its $250 million target – and secured $5 million investment from Chinese fund GoldenSands Capital in April. 

Bit by Bit
Binance launched a new Australian fiat-to-crypto exchange platform Wednesday that CoinDesk has discovered is run by the founders of a company providing crypto payment services for the local tourist industry. A spokesperson said Binance Australia was a separate entity from the main exchange group, and operated by InvestbyBit, a Queensland-based private company and a licensed Australian digital currency exchange. Through InvestbyBit, Binance Australia is registered with AUSTRAC, one of the country’s primary financial enforcement agencies, the spokesperson added. As the name suggests, InvestbyBit has close ties to TravelbyBit, a crypto payment provider for the tourist industry in which Binance invested $2.5 million in late 2018.

Quick bites At stake

Related: Blockchain Bites: Ledger’s Breach, Celsius’ Contradictions and DeFi’s Next Frontier

Wednesday, the House Judiciary Committee held an investigation into anti-competitive practices at Amazon, Apple, Facebook and Google. 

Documents and testimony gave a window into hostile business practices and a business environment where these four U.S.-based firms could crush, buy or steal from startups. This isn’t news. In 2011, it was revealed Google was buying one company a week. It’s market consolidation, not meant to help consumers but an attempt to maintain corporate control over data flows and innovation. 

Many, like The Verge’s Casey Newton, criticized the hearing for going widely off-topic, including tangents into conspiracy theories, and generally avoiding the topic of tech innovation. But he still walked away with the sense the federal government is ready to pursue meaningful antitrust action. 

“Members of the subcommittee have largely come to believe, as I do, that tech companies have grown too powerful and are in need of regulation,” he wrote. 

It’s a sentiment that’s percolating through the small subset of tech called crypto. Coin Center’s Jerry Brito tweeted midway through the hearing, “Repeat after me: Antitrust law exists to protect consumers, not competitors.”

While Elizabeth Renieris, founder of Hackylawer, shot off a succinct Shoshana Zuboff quote: “Surveillance capitalism unilaterally claims human experience as free raw material for translation into behavioral data.” 

Crypto got wise to Big Tech’s chokehold over the internet early. Instead of waiting for government-led action, technologists and developers started building ways to exit the system. 

While these systems are still niche, they offer an alternative to both the public and “private governments” that Amazon, Apple, Facebook and Google have become. 

Market intel

Overbought or Overwrought? 
With bitcoin rising to its highest level in 11 months this week, some investors are beginning to worry that the cryptocurrency is overbought and may be due for notable price drop. Bitcoin’s price rose to $11,319 on Monday, the highest level since August 2019, according to CoinDesk’s Bitcoin Price Index. The sudden rally has pushed the 14-day relative strength index (RSI) above 80.00, a number indicating the bullish move may be overstretched. Asim Ahmad, co-chief investment officer at London-based Eterna Capital, said that an above-70 RSI does not necessarily imply an impending major price slide. 

In the Green
About 93% of all bitcoin address balances were estimated to be “in profit,” according to Glassnode, when bitcoin traded above $11,000 Wednesday. The metric measures the on-paper profits of wallet balances. More than 90% of bitcoin addresses were last in profit through July and August 2019 when bitcoin traded around $11,500, a local top for the leading cryptocurrency. The 11-month high for in-profit addresses came amid bitcoin’s rally to $11,400 and follows steady long-term accumulation by investors at lower prices, with fewer than 40% of all bitcoins having been moved in the past year. 

Frozen Fed Moves Zero Degrees
The Federal Reserve said Wednesday it would hold benchmark U.S. interest rates close to zero (in range between 0% and 0.25%) and continue buying Treasury bonds to support the coronavirus-devastated economy. The “path of the economy will depend significantly on the course of the virus,” it said. Not said at the press conference: Another $5 billion of freshly created money was injected into financial markets, based on the $80 billion of bond purchases that the Fed is conducting every month to keep financial markets functioning smoothly as the fast-spreading coronavirus devastates the global economy, according to First Mover. Cue the inflationary hedge and brr memes. 

Year Zero: From Those Who Were There – Thursday, July 30, 4 p.m. ET

Speakers: Anthony Di Iorio, Anthony D’Onofrio, Adam Levine, Camila Russo, Ken Seiff

Getting the “world computer” operational was no easy task. Hear about the 24/7 coding, the infighting and the instant millions minted in that process. Camila Russo, author of the new book “The Infinite Machine,” digs into Ethereum’s highs and lows with the programmers, entrepreneurs and investors who got in on the ground floor.

Watch today’s CoinDesk Live session at 4 p.m. ET and sign up for the Ethereum at Five limited-run newsletter, published every morning until July 31.

Tech pod

$500M in Fees
A new study from Bitcoin startup Veriphi finds companies and users sending bitcoin transactions could have saved more than $500 million in fees if everyone had used SegWit and a technique called transaction batching. SegWit, a 2017 update to Bitcoin, allows for more space for transactions per block, and transaction batching enables the sending of multiple transactions at once to cut down on paying for each individual transaction. The average fee costs about $3 per transaction, but increases with demand and transaction volume. 

Autonomous Aave
Aave is going fully autonomous – transferring ownership of the money protocol to a “genesis governance” built and approved by token holders. Formerly EthLend, the platform raised a $16.2 million initial coin offering in 2017, and launched as a peer-to-peer lending protocol. It has since renamed and switched to a pooled protocol that allows for more dynamic asset listings, network liquidity and variable interest rates. Launched January 2020, Aave was among the first to include the novel DeFi product flash loans, and now has plans to incorporate liquidity mining. 

Opinion

Lightning Round
Richard Myers, a decentralized applications engineer at goTenna’s Global Mesh Labs initiative, thinks as long as people are paying for internet connectivity in fiat, online censorship is inevitable. “As long as telecommunications tools are being paid for in fiat, they will never be free from governmental or corporate repression. To be truly censorship resistant, internet publishers must be able to accept anonymous payments from their subscribers and advertisers,” he said. 

Podcast

DeFi Disruptor
Chainlink co-founder Sergey Nazarov appeared on the latest episode of The Breakdown to discuss his life’s work: disrupting traditional finance. “Imagine a world without counterparty risk…” he said. 

Who won #CryptoTwitter? Related Stories
CoinDesk

Suspects Detained in Ukraine for Bomb Threats Demanding Bitcoin

6 years 2 months ago

The Security Service of Ukraine (SSU) detained terrorists who demanded bitcoin in return for not blowing up buildings in the country’s capital.

According to a post on SSU’s Facebook page, two 60-year-old men posted a paper note on an apartment building in Kyiv threatening to blow up that building or another one if they didn’t receive 50 BTC to their bitcoin address.

To prove they were serious, the alleged terrorists detonated a small bomb near a subway station on July 21 and then called the police twice, reporting bombs were planted in other locations in Kyiv, and that those actions were related to the explosion near the subway station.

Related: Ukraine’s Digital Ministry to Trace Suspicious Crypto Using Crystal Blockchain Software

After analyzing cell phone data and street camera footage, the SSU detained two suspects.

“Despite their advanced age, they learned how various criminals have been using crypto and hoped to avoid punishment after getting money in a digital wallet,” wrote Anton Herashchenko, deputy minister at the Ukrainian Ministry of Internal Affairs, on his Facebook page.

The bitcoin wallet address on the threat notice has only one incoming transaction on record, receiving 0.00012258 BTC on July 22 from an unknown address. According to data from Crystal Blockchain transaction tracing software, the money came to the wallet from the LocalBitcoins marketplace via nine hops through other addresses, including several transactions to the Russian dark market Hydra. 

In December 2019, a series of bomb threats disrupted work at schools, courthouses, shopping malls and airports in Russia, with anonymous terrorists claiming to be defrauded users of the defunct WEX exchange and demanding 120 BTC.

Related Stories
CoinDesk

CoinList Launches ‘Pro’ Exchange for Token Sale Buyers

6 years 2 months ago

The Jack Dorsey-backed token platform CoinList launched an exchange Thursday aimed at institutional traders. 

CoinList Pro, modeled after incumbent rival Coinbase Pro, is an exchange tailored to trading and buying the new tokens listed by CoinList clients.

CoinList launched some of the trendiest cryptocurrency sales to date for non-U.S. and accredited investors, including offerings from Celo, Solana and Filecoin. CoinList President Andy Bromberg said the token-issuing platform has facilitated nearly $1 billion worth of transactions from “hundreds of thousands” of users since 2017. 

Related: A Crypto Derivatives Exchange Is Getting a Nasdaq Listing in Q3

Read more: Investors on CoinList Pour $10M Into Celo Token Sale in Roughly 12 Hours

The new service will rely on partnerships with startups such as BitGo, Bison Trails and Anchorage for staking and custody options, including nearly a dozen assets by 2021. 

CoinList Pro lists bitcoin (BTC), ether (ETH), celo (CELO), orchid (OXT) and algorand (ALGO) tokens for now. It will be the first exchange to support filecoin trading when the token launches in September, Bromberg said. 

Bromberg said CoinList will facilitate roughly a dozen token sales in 2020, so this complementary exchange is meant to reduce friction. Users won’t even need to own separate cryptocurrency wallets, they can wire money from their bank accounts.  

Related: Bitcoin’s Latest Rally May Have Staying Power, Exchange Flows Suggest

“Our dream sequence is users buying from a token sale and eventually selling that asset on CoinList Pro for a seamless flow,” Bromberg said in an interview.

Related Stories
CoinDesk

Dharma Adds Uniswap Trading in Bid to Become ‘the Robinhood of DeFi’

6 years 2 months ago

Dharma wants to do for DeFi what Robinhood did for stock trading: make it stupid easy. 

The Coinbase-backed decentralized finance startup is adding token-exchange protocol Uniswap as its latest in-app offering. In addition to earning “interest” on Ethereum stablecoins, Dharma users will now be able to trade any ERC-20 token for another.

“This continues our strategy of building Dharma as the gateway to doing the important things in DeFi,” co-founder Brendan Forster said in an interview.

Related: Aave’s LEND Token Jumps 23% on Plan for Liquidity Mining

With only tens of thousands of active users by most estimates, the $3.8 billion DeFi market is still niche. For the sector to realize its potential of unseating legacy lending systems (think student loans rather than crypto “arb opps”) a user-friendly gateway is sorely needed.

Read more: CoinDesk Live Recap: Ethereum’s DeFi Luminaries Discuss What’s Next

Dharma is trying to be that gateway. A crypto app with the looks of a mainstream fintech, the startup has been focused on stablecoin savings accounts, powered by lending protocol Compound, since August 2019. Dharma’s approach is notable in that it puts DeFi’s oft-touted “money Lego” meme into practice.

“Dharma now supports the three core money services,” explained Forster. “Savings and yield via Compound, investing and trading via Uniswap and peer-to-peer payments.”

Related: CoinDesk Live Recap: Ethereum’s DeFi Luminaries Discuss What’s Next

The app wants to be both consumer-friendly and non-custodial, in keeping with DeFi’s “trustless” ethos, he added.

“Our goal in building ‘the Robinhood of crypto’ is to bridge the final gap between these blossoming markets and the millions of individuals who will want to tap into them as they gain popularity and mindshare,” CEO Nadav Hollander said in a statement.

Timed to the release of the new trading feature, Dharma is covering users’ gas costs through Aug. 30. Gas fees on Ethereum have surged in recent weeks to two-year highs, driven largely by demand for DeFi services.

Related Stories
CoinDesk

Ether Addresses in Profit Have Soared 132% in a Year

6 years 2 months ago

Even with ether (ETH) close to yearly highs, profitable addresses have grown by a hefty 132% since last July.

  • In the last week, ether has established a foothold above $300 for the first time in 12 months.
  • While the second-largest cryptocurrency is trading with only a relatively small price increase year on year, the number of profit-making or “in the money” ether addresses has more than doubled to 31.37 million from 13.5 million over that time, according to blockchain analytics firm IntoTheBlock.
  • The numbers indicate many took advantage of the opportunity to buy ether under $300, resulting in almost 18 million more in-profit addresses – a rise of 132%.
  • The majority of the buying may have happened following the cryptocurrency’s dips to levels near $100 in December 2019 and March 2020.
  • An address is said to be in the money if the current price of the token is higher than the average cost at which the coins were acquired or sent to the address.
  • It’s worth noting that individuals and entities can own more than one address, so the 18 million figure does not represent investor numbers.
  • While in-the-money addresses have more than doubled year on year, the total number of addresses showing a balance has also risen by 55%, up 15.5 million from 28.11 million last July.
  • With the two metrics showing such different levels of growth, IntoTheBlock suggested that some holders – addresses with a balance a year ago – opted to bring their average cost down by buying dips below $300.
  • Ethereum’s network has recently witnessed some of its busiest days since the beginning of 2020 due to increased issuance of stablecoins and solid growth in Defi projects on the network.

Read: DeFi Hype Has Sent Ethereum Fees Soaring to 2-Year High: Coin Metrics

Related Stories
CoinDesk

SEC Wants to Start Scrutinizing Binance Chain Transactions

6 years 2 months ago

The U.S. Securities and Exchange Commission (SEC) appears to be gearing up for a closer look at Binance coin (BNB) and other tokens on cryptocurrency exchange giant Binance’s eponymous blockchain.

  • SEC disclosed in a Wednesday memo that it intends to award Menlo Park, Calif.-based CipherTrace a single-source contract on the grounds it’s the only blockchain analysis firm capable of tracing Binance Chain transactions.
  • “CipherTrace products are the only known blockchain forensics and risk intelligence tool that can support BNB and all tokens on the Binance network,” the securities watchdog said in the contract description.
  • In November 2019, CipherTrace partnered with Binance to bring anti-money laundering tracing tools to Binance Chain, which hosts the exchange’s nearly $3 billion market cap cryptocurrency BNB as well as 189 other tokens.
  • Company executives telegraphed in a press release that November the possibility of regulators one day putting eyes on Binance Chain. CipherTrace CEO Dave Jevans said regulators “demand better transparency,” while Binance Chief Compliance Officer Samuel Lim said the partnership put Binance in line “with global regulatory standards.”
  • CipherTrace, Binance and the SEC did not immediately respond to CoinDesk requests for comment.

Related Stories
CoinDesk

Bank of England Building Payments Network to Support a Potential Digital Pound

6 years 2 months ago

The Bank of England’s upcoming settlement service is being designed to support a possible central bank digital currency (CBDC).

  • CoinDesk has learned the BoE will ensure its redesigned real-time gross settlement service (RTGS), the payments network used by U.K. financial institutions, can be forwards compatible with CBDCs, such as a digital pound.
  • The new settlements system is being designed that the bank could “bolt on” a facility for digital currency transactions, should it decide to support a CBDC.
  • Modules for other future capabilities, as well as the digital pound, are also being considered for the upcoming settlement system.
  • RTGS is a key component in the U.K.’s financial infrastructure – it’s where institutions hold their sterling accounts and acts as the main channel for the BoE to inject liquidity into the economy.
  • On average, RTGS settles more than £685 billion ($900 billion) worth of transactions each working day.
  • The BoE announced Thursday it had chosen Irish tech consultancy firm Accenture for a £150 million ($195 million) contract to redesign the payments network.
  • In a statement, Accenture said the new RTGS system would adapt to the changing financial system by providing access to more firms, as well as greater interoperability and functionality.
  • The new RTGS system is expected to go live in 2022.
  • Earlier this month, BoE Governor Andrew Bailey said the 400-year-old central bank was seriously considering whether to launch a CBDC.
  • Officials have previously said the BoE was open to the idea of private companies having a greater role in the issuance of a digital pound, insofar that they stick to the bank’s design and policy principles.

See also: Canada’s Central Bank Is Serious About Designing a CBDC, Job Posting Reveals

Related Stories
CoinDesk

Coda Protocol Touts User Growth One Year Into Testnet

6 years 2 months ago

Coda protocol’s disappearing blockchain is still in the testnet phase, but the O(1) Labs-led project has already garnered a substantial following.

  • O(1) Labs Head of Product Bijan Shahrokhi told CoinDesk the project has grown its member-base 1,200% since unveiling its testnet for a protocol that cuts down blockchain size using recursive zk-SNARKs exactly one year ago today.
  • Those 850 users are scattered among 28 different countries, including Russia, Germany, the U.S., China and South Korea, Shahrokhi said. Partner firms now include Bison Trails and Figment Networks.
  • “The rapid community growth and global participation is validation for what the lightweight blockchain and ZKP featureset supplied by Coda brings to the table,” said O(1) Labs CEO Evan Shapiro.
  • The team expects its mainnet to launch in Q4.
Related Stories
CoinDesk

China Aims to Be the World’s Dominant Blockchain Power – With Help From Google, Amazon and Microsoft

6 years 2 months ago

The Takeaway:

  • China’s blockchain infrastructure BSN is set to provide global access to its services next month.
  • The network’s reliance on U.S. cloud service providers makes it vulnerable to geopolitical risks.
  • Rising tension between the U.S. and China over the last several months could increase such risks.
  • China’s developments in other technology areas have already met with resistance from the U.S. government.

A state-backed blockchain infrastructure project from China aims to be the dominant internet services provider for decentralized applications (dapps). Its first-mover advantage is significant, as are the geopolitical risks.  

The project, called the Blockchain-based Service Network (BSN), is expanding globally as U.S.-China relations become increasingly tense. BSN is a Chinese state-sanctioned blockchain project, but few may realize the network is supported by U.S. technology companies. 

Related: Police Arrest 27 Alleged Masterminds Behind $5.7B Plus Token Crypto Scam

Amazon Web Services (AWS), Microsoft and Google are among the major cloud service providers for BSN’s overseas data centers. 

This arrangement is notable, given the U.S. government’s hawkishness on Chinese technology. The Trump administration is considering a ban on Chinese social media app Tik Tok, Congress approved $1 billion for rural telecom carriers to ditch services from Huawei and the U.S. Commerce Department restricted semiconductor companies from providing chips to Huawei. 

At Wednesday’s House antitrust hearing, Facebook CEO Mark Zuckerburg painted the China-U.S. tech competition as a zero-sum game. According to Zuckerberg, “China is building its own version of the internet focused on very different ideas, and they are exporting their vision to other countries.”

This charged environment could potentially spell trouble for BSN. “China tries to grab the lead in blockchain and dominate this domain and that may end up putting this BSN project further into the spotlight of the U.S.-China tech competition,” said Paul Triolo, practice head of geotechnology at Eurasia Group. 

Related: Indian Users Almost 5 Times More Likely to Encounter Crypto Hacking: Microsoft Report

“This would be the perception in places like Washington,” he added.

U.S.-China technology competition has been ongoing for decades, but the focus is shifting from search engines and social media to more fundamental levels of technology like telecom equipment provided by Huawei, Triolo said. 

Tension between the U.S. and China reached fever pitch earlier this month as the U.S. shut down the Chinese consulate in Houston and China took over the U.S. consulate in Chengdu in retaliation. In a recent speech, U.S. Secretary of State Mike Pompeo slammed U.S.-China engagement as a failure.  

It’s unclear whether these tensions will calm in the near future, even if a new U.S. president is elected.

“Even if we get a new administration in the U.S., for example, under [former Vice President and Democratic nominee Joseph] Biden, there is still going to be a lot of scrutiny on China from the technology front,” Triolo said. 

There is a real risk that technology that doesn’t present a national security risk will nonetheless be banned because of politics, said Graham Webster, China digital economy fellow at New America, a think-tank with a focus on public policy issues. 

Amazon, Google and Microsoft did not return requests for comment by press time. 

Containment

One way to limit Chinese tech companies from growing and developing global services is to pressure their suppliers to sever ties with them. 

The U.S. prohibited Huawei’s major provider – Taiwan Semiconductor Manufacturing Company (TSMC) – from using American tools to make chips if it produces any product for Huawei. The Chinese company denounced the move as a “pernicious decision.” 

BSN could potentially end up in a similar situation, given the prominence of American firms as its overseas data center hosts.

The Chinese network does not build or own any of the data centers where it runs its  technical infrastructure; 90% of BSN’s domestic data centers are provided by the telecom company China Mobile. Most overseas data centers will be provided by Amazon’s AWS, given the scope of the cloud services provider’s operations across the globe, according to BSN. 

BSN pays these cloud services providers to use their servers and integrates the servers with their software. 

Read more: Inside China’s Plan to Power Global Blockchain Adoption

The network has two data centers hosted by AWS in China. It also uses a few global data centers built on Microsoft’s cloud computing arm and Google Cloud Platform. BSN has one data center from Google Cloud based in Tokyo, one from Microsoft in Johannesburg and two from AWS in Paris and California.  

Dapp developers can more quickly and easily access services from BSN if they use a data center that is physically close to them. That’s why overseas data centers are crucial in terms of providing internet services for the global blockchain community. 

“If I were the Chinese company, I would be careful about setting up a system that really depends on continued services in the U.S.,” Webster said. “Anybody who wants to use the global version of this Chinese network should take into account  the risk that a data center in the U.S. could get taken off the network because of geopolitics.”

One motivation for curbing Chinese tech companies’ global expansion is data security concerns. 

Blockchain technology clearly provides a structurally unusual level of security and integrity, but there is a battle going on over data localization and cloud services, said James Mulnevon, director of intelligence integration at SOS International, a Washington, D.C.-based defense and intelligence company that supports U.S. government agencies.

“The world is clearly becoming a ‘splinternet’ with national boundaries and domestic regulations overturning the previous ‘techno globalism’ motif,” Mulnevon said. 

U.S. cloud providers offer services to a wide range of clients and it is hard to tell what specific cyber security concerns would exist if they allow Chinese companies to use their services, Webster said. 

No immediate threat

So far, BSN’s global expansion has not met with challenges from U.S. regulators, perhaps because it is relatively new. Or maybe it’s just that few Washington lawmakers can actually make sense of it. 

“Part of the reason that BSN has not met with challenges from the U.S. policy makers as the other emerging technologies such as 5G and artificial intelligence is that blockchain technology is not well understood,” Triolo said. 

The U.S. government is considering restricting Chinese cloud services companies from operating in the U.S., but has yet to address the question of U.S. companies hosting applications that have a China connection.    

Last May, the Federal Communications Commission (FCC) denied China Mobile’s application to operate telecommunications services in the U.S. This could mean Chinese businesses trying to build cloud-based networks in the U.S. need to be aware of the geopolitical risk, said James Mulvenon, director of Intelligence Integration at SOS International, a DC-based defense and intelligence firm. 

“I would be wary about big investments in these kinds of transnational cloud networks because regulators seem very grumpy about them right now,” Mulvenon said.

Read more: Meet Red Date, the Little-Known Tech Firm Behind China’s Big Blockchain Vision

Lawmakers who do have concerns might be reassured by the fact that even if the Chinese government does ask for data from BSN nodes hosted overseas, it may not be able to get it.

The Chinese government has a very expansive view of extraterritoriality, Mulnevon said. 

“The Chinese government certainly believes that Chinese companies operating abroad (even when they are incorporated abroad) are subject to Chinese law,” he said. 

Theoretically, the Chinese government would solicit data from a Chinese company like the one behind BSN regardless of where it is run, meaning it could ask for data stored in the network’s overseas data centers. However, Red Date, the tech firm that architected BSN’s technical framework, has claimed the network does not have access to user data, due to its technical structure.

Red Date CEO Yifan He previously told CoinDesk that BSN’s technical framework fully protects its users’ data privacy and functions like an adapter that better connects developers with data centers where they can run nodes and build applications. He even invited skeptics to examine the network’s code for themselves.

The China connection

The BSN Development Association is led by the State Information Center of China (SIC), a public institution under the National Development and Reform Commission (NDRC), the highest economic planning committee in China. State-owned tech conglomerates China Mobile and China UnionPay are also deeply involved in building the network. 

It is certainly rare to get a government affiliate to endorse and lead the effort for a large-scale blockchain infrastructure, and for two of the largest Chinese tech giants to support the network. However, unlike China’s national digital currency, higher-level government agencies such as the Chinese central bank and the Ministry of Industry and Information Technology of China (MIIT) do not appear to be involved in BSN yet. 

The precise nature of the relationship between the Chinese government and BSN is not clear. But given BSN’s state connection, its reliance on major U.S. cloud services providers could be a point of contention on the Chinese side as well.

“No foreign firms sit on any BSN leadership committees. As stated in official documents, Beijing intends for BSN to be a ‘global infrastructure network autonomously innovated by Chinese entities,’” according to a May report from Eurasia Group. 

Related Stories
CoinDesk

Paxful Chips Away at LocalBitcoins’ Russian P2P Market Dominance

6 years 2 months ago

Paxful’s year-old foray into Russian crypto markets is bringing more revenue, boosted liquidity and an influx of new users to the peer-to-peer bitcoin exchange as it challenges LocalBitcoins’ regional rule.

  • The exchange said Thursday Russian site usage is up 350% and the number of new Russian users has spiked 364% from spring 2019 through spring 2020. Monthly trading volume for the region now averages around $4 million.
  • Anton Kozlov, Paxful’s Russia manager, said the exchange has made a concerted effort since late 2019 to challenge competitor LocalBitcoins’ Russia dominance by adding support staff, partnering with local influencers and establishing a 10-person specialist team.
  • LocalBitcoins’ “biggest revenue market is Russia, so Paxful decided as a strategic growth decision to go into Russia as well,” Kozlov said, claiming Paxful’s Russia user base is rising while LocalBitcoins’ growth has stalled following its 2019 know-your-customer policy changes.  
  • While LocalBitcoins remains by far the strongest player in Russia’s peer-to-peer bitcoin trading scene, with monthly ruble trading volume around $30 million, Kozlov said Paxful will continue to chip away.

Related Stories
CoinDesk

Circle Gets $25M From DCG to Drive USDC Mainstream

6 years 2 months ago

USDC backer Circle is teaming with Genesis Trading in a $25 million deal aimed at pushing the stablecoin to the fintech masses.

Announced Wednesday, the funding comes from Genesis parent company Digital Currency Group (DCG), which, full disclosure, also owns CoinDesk.

The new partnership and funding will enhance Circle’s suite of products, and launch some new ones too, the companies said. It’s all geared toward additional USDC yield and lending services with a view toward mainstream adoption.

Related: Proof-of-Stake Chains Team Up to Prove DeFi Is Bigger Than Ethereum

“We’re seeing the evolution from stablecoins as something that’s exclusively been in the crypto capital markets to really moving into a broader set of use cases in payments and commerce and financial applications around the world,” Circle CEO Jeremy Allaire said in an interview. “The logical evolution is that lending markets built on stablecoins are going to grow significantly.”

Read more: Circle CEO Claims ‘Explosive’ Stablecoin Demand From Everyday Businesses

Dollar stablecoins are on a roll, with about 12 billion now in circulation. Out of the stablecoin cohort, USDC has shone in recent months, growing from just over 400 million in early 2020 to around 1.1 billion today. 

Meanwhile, Genesis originated more than $2 billion in crypto loans in Q1 2020, and more than $8 billion since launching the business in March 2018. The broker has seen a marked increase in the percentage of USDC within its loan portfolio, said Genesis CEO Michael Moro.

Related: Australian Payment Card Company to Trial Micropayments Using Hedera Hashgraph

“Look at the interest rates that various lending platforms like ours have been paying people just to buy and hold crypto, in addition to the price move in the crypto itself,” said Moro. “Now compare that to interest rates in the U.S., as well as negative interest rates abroad. With a 10-year Treasury note, we’re looking at 65, 70 basis points a year, versus being able to earn 8% potentially on your crypto, including stablecoins.”

Doubling down

Looking back, Circle has raised $246 million over seven funding rounds, with DCG being a regular investor in the company as far back as early 2014. The USDC stablecoin was born in October 2018 out of a partnership between Circle and San Francisco-based crypto exchange Coinbase, dubbed the CENTRE Consortium.

Allaire could not say specifically if Genesis or anyone else might be joining the CENTRE consortium soon, but he did say expansion plans are afoot.

“Right now, Circle and Coinbase are the two members of the CENTRE consortium, and what I call the board of managers for the governance of the stablecoin standard itself,” said Allaire. “We are going to be expanding ecosystem participation in CENTRE and involving a far broader range of participants in the direction of USDC as a standard.”

DeFi vs. CeFi

Decentralized finance (DeFi) lending is all the rage right now, and stablecoins like USDC are being sucked onto platforms such as Compound and Maker at a rapid pace, which presents something of a contrast to the more traditional world of crypto lending.

Read more: MakerDAO Adds USDC as DeFi Collateral Following ‘Black Thursday’ Chaos

The high-net-worth clients, family offices and institutional players that Genesis typically serves are definitely following everything that’s happening in the DeFi space, said Moro, but these sorts of investors need to know who is the counterparty on the other end of a contract. 

“The idea of smart contracts kind of being your counterparty is still a new and nebulous idea, certainly to the legal and compliance arm of a business,” said Moro. “That’s not to say that DeFi couldn’t make its way into corporate America, but it’s a long way from now, in my opinion.”

The logical evolution is that lending markets built on stablecoins are going to grow significantly.

There are possible areas of crossover, involving crypto hedge funds that can handle the counterparty risk in return for price arbitrage opportunities, Moro added.

“There are guys that are comfortable with the counterparty risk, trading liquidity and volatility, who are able to [arbitrage] to two markets and kind of intersect both worlds,” said Moro. “That’s a natural development, but it’s also hard to price the risk.”

Read more: Behind ‘Prime Broker’ Buzzword Lies a Complex Strategy Game for Crypto Firms

While USDC’s 200% growth this year is impressive, in terms of volume, tether (USDT) dominates the stablecoin space with about 10 billion in circulation. Allaire believes issuing a transparent, regulated dollar stablecoin (USDC is audited by global accountancy firm Grant Thornton) will win out in the long run.

“There are obviously other stablecoins that have been in the market for a long time and are not regulated,” Allaire said. “What’s backing them is an open question and we have seen various legal inquiries. If you’re talking about building the future financial system, I think you want to build on something solid.”

Related Stories
CoinDesk

First Mover: Sleepy Fed Meeting Belies Tense Economic Reality (Brrr) That May Buoy Bitcoin

6 years 2 months ago

After a two-day closed-door meeting this week, the Federal Reserve issued a six-paragraph statement on Wednesday and held an hour-long press conference.

None of that was news, of course, and neither was anything else emanating from the U.S. central bank, which announced no policy changes. 

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: Ether Addresses in Profit Have Soared 132% in a Year

But here’s what really happened over the past two days: Another $5 billion of freshly created money was injected into financial markets, based on the $80 billion of bond purchases the Fed is conducting every month to keep financial markets functioning smoothly as the fast-spreading coronavirus devastates the global economy. 

The contrast couldn’t have been starker between the lack of drama at the Fed meeting and investors’ growing anxiety over what is, by all accounts, one of the most excruciatingly tense and fragile moments in modern economic history. 

Mati Greenspan, founder of the cryptocurrency and foreign-exchange firm Quantum Economics, told clients in a note late Tuesday the Fed’s money printer – often known by the purported sound it makes, “Brrr” –  was now mostly producing a “yawwwwwwwnnnn.” (That’s six w’s, four n’s.)

“The Fed is doing its best to speak softly (literally) so as not to wake up the markets,” Greenspan wrote. “The more boring, the better.”

Related: Federal Reserve Keeps Rates Close to Zero, Continues Buying Treasurys

Beneath the surface, all is not well, and a recent jump in prices for bitcoin might be one of the best indications of that, because a growing number of investors see the cryptocurrency as a decent hedge against everything from hyperinflation to economic armageddon. Similar to gold, even if not always perfectly in sync. 

Bitcoin is up 57% this year, climbing to about $11,261 on Wednesday in an anemic but upward drift that barely twitched from its listless trajectory when the Fed’s statement emerged at 2 p.m. ET.  

U.S. lawmakers are at odds on everything from the specifics of a relief bill likely to cost at least $1 trillion to the possibility of contracting the disease from a mask. The Wall Street firm Goldman Sachs warned earlier this week that the U.S. dollar is at risk of losing its status as the de facto global reserve currency.

Dwindling numbers of big investors are assigning any credibility to the assurances of President Donald Trump’s administration that the economy is headed toward a V-shaped recovery. Pantheon, a macroeconomic forecasting firm, says the U.S. economy in the second quarter probably had its “biggest drop ever recorded, by far.” Jobless claims probably rose to about 16.5 million last week.

Rick Rieder, chief investment officer of global fixed income at money-market giant BlackRock, told CNBC that the U.S. dollar, which is on course to post its worst month in a decade, will likely continue to decline. 

“I think we’re in a different regime around the dollar,” Rieder told the channel. 

The only thing that seems certain is that the Federal Reserve will keep creating billions of dollars a day and pumping them into global markets. On Wall Street, it’s not even controversial anymore to suggest that the stock market is being propped up by the U.S. central bank. 

This week’s Fed meeting “underscored the focus, especially in an election year, that our federal government has in keeping the economy humming,” Joe DiPasquale, CEO of cryptocurrency-focused hedge fund BitBull Capital, told First Mover in a phone interview.

“They’re going to keep the monetary stock flowing, and that should be good for bitcoin as people become more comfortable with an asset that has in the past been seen as more risky,” DiPasquale said.

Fidelity Investments, which oversees $7.3 trillion of customer assets, wrote this month in a report that bitcoin’s “next wave of awareness and adoption could be driven by external factors such as unprecedented levels of intervention by central banks and governments, record low interest rates, increasing fiat money supply, deglobalization and the potential for ensuing inflation, all of which have been accelerated by the pandemic and economic shutdown.”

It’s quite a list. And hard to argue with any of that, which collectively provided the subtext for this week’s Fed meeting. 

Powell was candid about the Fed’s willingness to provide further monetary accommodation, even after policy makers earlier this year slashed interest rates close to zero and expanded the central bank’s balance sheet by roughly $3 trillion. The amount represents roughly 75% of the total amount of money previously created in its 107-year history.    

One question might be whether the Fed can stimulate markets with more dollars if the U.S. currency is looking weak in foreign-exchange markets. According to Pantheon, the Fed may have to increase the pace of its monthly bond purchases once the “Treasury begins to issue the $1.5 trillion extra debt we reckon will be needed to finance the next relief bill.”  

“We are committed to using our full range of tools to support the economy,” Powell said during the press conference, using language nearly identical to language he has used on multiple prior occasions since March, when the Fed first began plying the financial system with emergency loans and liquidity. 

“The way Powell emphasizes it, they’re going to continue to pump liquidity and easy money into the markets,” John Todaro, of the digital-asset analysis firm TradeBlock, said Wednesday in a phone interview. “It was just kind of a rehash of, Hey, how dovish are these folks going to get?”

First Mover reported earlier this week that Deutsche Bank Strategist Jim Reid sees the Fed adding another $12 trillion to its balance sheet over the next few years, to the $7.01 trillion of total assets as of last week. 

Fed policy makers did their best this week not to make news. That doesn’t mean they’re not doing a lot. Bitcoin traders are more focused on the Brrr than the yawwwwwwnnnn. 

Tweet of the day Bitcoin watch

BTC: Price: $10,955 (BPI) | 24-Hr High: $11,345 | 24-Hr Low: $10,913

Trend: Despite a small drop, bitcoin’s overall trend still looks bullish with longer duration charts showing an upside break of a 2.5-year long descending trendline. 

That doesn’t necessarily imply a 90-degree run toward resistance at $12,000. In fact, we could see the cryptocurrency pull back to the former resistance-turned-support at $10,500 (February high) in the next day or so, recent price action suggests. 

The cryptocurrency hit a wall during another attempt to establish a foothold above $10,300 during the U.S. hours on Wednesday and has been losing altitude ever since. At the time of writing, bitcoin is changing hands a little below $11,000, representing a 1.7% drop on the day. 

A similar pattern was seen on Monday, when the cryptocurrency tagged a multi-month high above $11,300 before making a quick retreat to $11,000.

The consecutive failure to keep gains above $11,300 alongside an overbought reading on the 14-day relative strength index (RSI) may indicate ebbing bullish momentum. The 4-hour chart RSI, too, has breached a bullish trendline, representing the rally from $9,000 to $11,300. 

As such, a deeper pullback to $10,500 cannot be ruled out. A violation there would expose the psychological support of $10,000. The broader bullish bias would be invalidated only if prices find acceptance under $9,760 – a trendline falling from December 2017 and June 2019 highs. 

The case for deeper retracement would weaken if prices rise above the Asian session high of $11,126. In that case, the bulls will likely have another attempt at breaching the newfound resistance zone above $11,300.

Related Stories
CoinDesk

Dapp Data Storage Provider Bluzelle to Begin Mainnet Launch in August

6 years 2 months ago

Distributed data storage network Bluzelle, headquartered in Singapore, will begin the launch of its mainnet on Aug. 8, the company said Thursday. 

  • According to a press statement, phase 1 of the mainnet will enable users to stake bluzelle (BLZ) tokens and earn rewards for participating in the network’s validation process.
  • Participants are required to create a BluzelleNet address using the Bluzelle staking platform to start earning BLZ, which will be deposited to their addresses every 24 hours.
  • The launch also marks the platform’s transition to the newest version of Tendermint.
  • Bluzelle CEO Pavel Bains told CoinDesk that, unlike Filecoin and Storj, which provide file storage services to customers as Dropbox does, Bluzelle facilitates the storage of data particularly for application developers.
  • The network, marketed as the “Airbnb of databases” will allow developers to pay for storage space and write to the decentralized database, the statement said.
  • Bluzelle raised $19.5 million in its initial coin offering (ICO) in 2018 to create the network of decentralized databases.
  • The mainnet will launch in full on Sept. 8.

Read more: The Decentralized Web Just Might Need Databases, Too

Related Stories
CoinDesk
Checked
10 minutes 37 seconds ago
CoinDesk Crypto
Leader in cryptocurrency, Bitcoin, Ethereum, XRP, blockchain, DeFi, digital finance and Web 3.0 news with analysis, video and live price updates.
Subscribe to CoinDesk Crypto feed