CoinDesk Crypto

BitGo has joined the pack of solution providers attempting to bring crypto in line with global anti-money laundering (AML) standards.

Announced Tuesday, the multi-tentacled crypto firm is offering API support for the latest guidelines from the Financial Action Task Force (FATF). The watchdog’s so-called “Travel Rule” stipulates the originators and beneficiaries of financial transactions over $1,000 be identified, and that their personal data must “travel” with those transactions.

BitGo’s offering seeks to remove the headache of identifying wallets and transferring personally identifiable information between clients that use the San Francisco-based firm’s technology or custodial services.

Related: Shyft Debuts ‘Decentralized Version of SWIFT’ for FATF Travel Rule

Back in 2018, FATF said virtual asset service providers (VASPs) would be brought within its ambit, which means creating something akin to the SWIFT interbank network but for pseudonymous cryptocurrency transactions.

Read more: Crypto ‘Gray’ Markets Could Be Unintended Consequence of FATF Travel Rule

BitGo is in a unique situation, said Chris Metcalfe, the wallet platform’s senior product manager, because it is both a VASP and provider of technology to numerous other VASPs. Being a regulated custodian, in the form of BitGo Trust, helped spark the API solution, he said.

“We had to have a Travel Rule solution for our own trust clients because we are a regulated U.S. entity that is a VASP,” said Metcalfe. “So we had to build this tech or figure out how to source it, and since we are a tech provider we built it ourselves and can now offer Travel-Rule-as-a-service to our exchange clients.”

Related: Nearly $60M in Bitcoin Moved to Ethereum in June

The FATF’s recent plenary was thought by many to signal a one-year progress review and the crypto industry has responded with a growing array of technical solutions, to the extent that some commentators have warned this is creating its own interoperability issue.

Read more: FATF Meets Wednesday to Discuss ‘Travel Rule’ for Digital Assets

In Metcalfe’s opinion, large players in the space will exert a gravitational pull on smaller VASPs, thus gradually creating a network effect. 

“Folks who have some of the largest exchanges in their network, using their solution will create the gravity that pulls the smaller players towards those networks,” he said. “So, BitGo, being the wallet platform to many of these large exchanges, has a good reason to believe we are going to be a source of gravity.”

BitGo was unable to say which large exchanges might be adopting its API Travel Rule solution, but the company’s website lists big names including BitStamp, CME and Genesis Trading (like CoinDesk, owned by Digital Currency Group) among its 40-plus trading clients. BitGo’s multi-signature wallet tech handles some 20% of all bitcoin transactions.

BitGo is also involved in the bank-backed Travel Rule Protocol (TRP) group alongside the likes of ING Bank, Standard Chartered and Fidelity, as well as a U.S. Travel Rule working group that also includes Coinbase.

“We are working towards an MVP (minimum viable product) with the TRP, as well as the U.S. Travel Rule working group, so we kind of have our toes in two ponds, and intend to play in both of those networks,” Metcalfe said.

Read more: In Banking First, ING Develops FATF-Friendly Protocol for Tracking Crypto Transfers

A spectrum of Travel Rule solutions has emerged with decentralized blockchain-based solutions at one end and slightly more centralized approaches at the other. Metcalfe believes a decentralized blockchain-based network is “a great destination to arrive at,” but said it could be a heavy lift getting there quickly.

“For the groups we are talking to, getting to an MVP is very important,” Metcalfe said. “That’s not to say we are anti-decentralization. But some of the more centralized solutions allow you to get to MVP much faster; we don’t think decentralization is the first step.”

• FATF Plans to Strengthen Global Supervisory Framework for Crypto Exchanges
• FATF Under Germany: Expand Digital AML/CTF Efforts

Binance has announced the first major roll out of its debit card that allows users to pay for goods and services in crypto.

• Users in the European Economic Area (EEA) will be able to apply for a card from August, those in the U.K. will be able to do so afterwards.
• Powered by Swipe, the card allows users to spend crypto – currently bitcoin, Binance Coin, Swipe Coin, and Binance USD – at any merchant that supports Visa payments.
• First released into beta back in April, the card only converts crypto into the local fiat currency at the point of sale.
• The card was first tested in Vietnam and Malaysia.
• Binance announced last week it had acquired Swipe, which is based in the Philippines, for an undisclosed sum.
• Many existing crypto cards are prepaid and require users to top-up before using; Binance card is connected directly to a user’s wallet and works like a traditional debit card.
• Josh Goodbody, Binance’s director for European growth, commented that the Binance Card was a “critical” part of their expanded offering.

See also: Binance Ordered to Halt Offering Derivatives Trading in Brazil

• Shyft Debuts ‘Decentralized Version of SWIFT’ for FATF Travel Rule
• Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction
• Binance Expands Reach With New Gateway for 15 Fiat Currencies
• Binance Acquires Crypto Debit Card Provider Swipe for Undisclosed Sum

Canadian politicians are seeking answers after the half-brother of Prime Minister Justin Trudeau was paid by the federal government to speak at a blockchain conference last year.

• According to a Monday report by The Globe and Mail, Kyle Kemper was paid C$12,430 (US$9,127) for speaking about blockchain technology at a conference in Zug, Switzerland, in June 2019.
• Kemper had reportedly been requested by Canadian government officials to take on the speaker role after they’d heard him discussing the tech at a previous conference in Dubai.
• Kemper said the choice was not related to his family connections with Justin Trudeau.
• The Prime Minister’s Office said the role was given a seal of approval by Global Affairs Canada, the country’s consular support and diplomatic relations department.
• Opposition members of parliament (MPs) have said Trudeau’s government should detail how the contract came to be gifted to Kemper.
• A spokesperson for Global Affairs Canada, Krystyna Dodds, said the selection criteria for speakers was based on their recognition in the business community, their subject knowledge and their ability to speak in public.
• Kemper was until last year the executive director of the Blockchain Association of Canada and is still an advisor to the group, according to his LinkedIn profile.
• He’s also written a book titled “The Unified Wallet: Unlocking the Digital Golden Age,” and has founded a wallet firm called Swiss Key.

See also: Canada Forges $130,000 Development Deal for Steel-Tracking Blockchain

• Trump Told Treasury Secretary to ‘Go After’ Bitcoin, Bolton Book Reportedly Claims
• Canada’s Central Bank Is Serious About Designing a CBDC, Job Posting Reveals
• This Political Conversation With Vitalik Buterin Shows How Ethereum Could Change the World
• Hut 8 Mining Revenue Continues Decline in Q1

The U.K.’s central bank is discussing the possibility of launching a digital currency, according to its chief.

• Speaking during an online event, Bank of England governor Andrew Bailey told a group of U.K. students on Monday his institution was having talks over the plan, as reported by Bloomberg Tuesday.
• Bailey said ongoing investigations would look at a central bank digital currency (CBDC) which would have implications across “payments and society.”
• Calling it a “very big issue,” he anticipated that the CBDC could be a real possibility in several years, once coronavirus has passed.
• Bailey’s comments come at a time when more and more central banks globally are working at different levels on the idea of implementing a CBDC, either as a national digital currency for retail or for wholesale clearing and settlement between banks.
• Sweden’s Riksbank, the world’s oldest central bank, recently looked into the viability of CBDCs and arrived at mixed results for the purpose of central banking, citing the substantial change and cost involved in the shift to digital.
• The Federal Reserve of Philidelphia also determined that CBDCs might one day replace the role of commercial banks, but with the added risk of potentially harming money markets.
• China, most notably, has already largely developed its digital yuan, which is in trials ahead of a likely live launch.

See also: Digital Dollars Give the State Too Much Control Over Money

• Central Banks Cannot Print Jobs: Understanding Real Economic Recovery, Feat. Daniel Lacalle
• Sri Lanka’s Blockchain Bank KYC Platform to Enter Development ‘Shortly’: Central Bank
• Senate Banking Committee Remains Open to Idea of Digital Dollar in Tuesday’s Hearing
• Zimbabwe Halts Mobile Transactions as Hyperinflation Spurs Currency Flight

This is a weird year for everyone and everything, but it’s a particularly weird year for Ethereum. 

Why? The second-largest blockchain by market cap and the largest by contributing developers has always been known for having lots of events. COVID-19 has put the kibosh on that.

“These folks are in a state of constant BUIDLing” Amanda Cassatt, a ConsenSys alum who launched its Ethereal event series, told CoinDesk in an email. “Ethereum is also, by design, a uniquely collaborative community. These factors contribute to the prevalence of and enthusiasm for in-person events.”

Related: Sale of the Century: The Inside Story of Ethereum’s 2014 Premine

Ethereum turns five on July 30, 2020. CoinDesk is marking five years of Ethereum with a series of retrospective stories and live-streamed Twitter conversations. There are even some “Easter eggs” for eagle-eyed readers. Tune in to our CoinDesk Live sessions July 27-31 at 4 p.m. Eastern each day or call +1 (661) 4-UNICRN.

In normal times, there’s roughly one fairly big Ethereum conference somewhere in the world every month, but that has all come to a halt in 2020. The community’s tentpole event, October’s Devcon, announced its next gathering will be in 2021. Similarly, the Community Ethereum Development Conference, or EDCON, has taken 2020 off.

“I guess normally the number of international events feels a little excessive, but EDCON and Devcon are mainstays and it does feel like a loss not to be able to have them,” Jinglan Wang, leader of the Optimism scaling project, told CoinDesk.

This reticence to meet up makes sense due to safety concerns around COVID-19. 

Related: Marlin Releases Open-Source ‘Layer 0’ Transaction Relayer for Ethereum

After all, one of the last big Ethereum events, EthCC, turned out to be the source of a COVID-19 cluster. Still, it makes for a very different time in the community, particularly if this dearth of gatherings drags on into next year.

Read more: Ethereum Community Grapples With Coronavirus as EthCC Cases Tick Upward

Lane Rettig, an Ethereum core contributor and former Ethereum Foundation employee (now at SpaceMesh), told CoinDesk this time at home has made him realize how much he wasn’t getting done.

“I think I had convinced myself I was operating at 60%-70% productivity. I was probably more at 20% productivity,” Rettig said.

While he’s enjoying this greater sense of accomplishment, Rettig also believes there’s more to Ethereum’s tendency to gather than just having the largest community of devs.

The enjoyment of being together is part of the stickiness of Ethereum’s underlying technology.

“I do think the in-person events are part of the DNA of the community and part of what binds us all together. And some of the affinity we share could hypothetically begin to dissipate,” Rettig said of the current situation. “If this was to go on some indefinite period, I would really be worried.”

But token investor William Mougayar was eager to downplay any risk. “The Ethereum community has been used to working virtually anyway,” Mougayar told CoinDesk.

Rettig, however, cited a comment from a friend to express what he’s worried about if folks go too long without hanging out and having spontaneous encounters at events. “The reason I’m here and the reason we’re all here is because we want to work on cool shit with people we like and do it in a sustainable way,” Rettig said, paraphrasing the comment from his Ethereum colleague.

It’s that “with people we like” part that gets harder and harder to replicate virtually.

Read more: Ethereum Economics Gets Spotlight in Vitalik Buterin EDCON Keynote

No one knows quite when to look for the next big Ethereum gatherings to take place.

“Given our community’s interest in events, I could see larger in-person gatherings resuming in 2021,” Cassatt predicted, but she also expects hybrid on- and off-line gatherings will be the norm from here on out. The virtual experience will vastly improve during COVID-19, she added, even for events that go back to an in-person focus.

“There’s been a lot of snarky discussion around people saying we’re glad in-person conferences aren’t happening because now we are building more, which I think is a little shortsighted,” ConsenSys developer relations staffer Coogan Brennan told CoinDesk.

Optimism’s Wang agreed on the value of in-person events: “They’re great opportunities to meet projects that you’ve been chatting online with, or random crypto people whose tweets you enjoy.”

Rettig shared a particularly concrete example of how events can be helpful for distributed teams. When he was working for the Ethereum Foundation’s eWASM team (which is porting the popular WebAssembly framework, in part, over to Ethereum), he said they tended to gather a few times each year, anchored to some Ethereum event, be it Devcon, ETHDenver or some hackathon. They’d rent a whole-house Airbnb and live together and work side-by-side for a week. A physical hangout that was otherwise unheard of.

“It would be very intense. Professionally as well as socially,” Rettig said.

Jared Wasinger, still of the eWASM team at the Ethereum Foundation, confirmed that these side gatherings have been key. 

“I would say that the in-person events are definitely important from a morale point of view,” he said.

Similarly, ConsenSys’s Brennan said events served as a kind of punctuation in the year that Ethereum teams could organize their work around. A lot of product launches and debuts where driven by reveals at events. That was a way of driving excitement.

“Ethereum conferences are very very known for dogfooding,” the Ethereum Foundation’s Hudson Jameson said. “It inspires a lot of confidence in the community. People are using the things they are building and that brings people a lot of joy.”

Read more: The Next Big Ethereum Conference Will Run Almost Entirely on Blockchains

The online events themselves have been more beta tests than real products as of yet, though, as Cassatt noted. 

“I haven’t seen any event completely crack the code on virtual networking, virtual sponsorships, or ticket sales,” she said. “Virtual events may be a tougher sell to sponsors, but I’m looking forward to seeing creative solutions emerge for virtual events to offer sponsors value in new ways.”

“Maybe there were too many events. This kind of break, if anything, it’s positive. It’s a benefit because there’s been more productivity,” Mougayar said.

“Most events felt like a distraction to me, if I’m being honest,” Spencer Noon, of DTC Capital, told CoinDesk. “I’m actually pretty bullish on people in the community organizing some awesome virtual events, though.”

Noon may have been the only person CoinDesk spoke with that had real excitement about the potential of virtual gatherings. In fact, Rettig in particular noted how virtual events do a bad job of replicating the hallway (or lobby) conference, which is what people really go for. Still, many are looking forward to saving money on travel now and seeing more conference content delivered electronically.

For Jameson, there is an advantage in making the discussion around Ethereum more accessible.

“It is a privilege to be able to travel the world,” Jameson said. “That intrinsically creates this different class system.”

Read more: Devcon Shows Ethereum’s ‘World Computer’ Is a Movement, Not a Product

Moving these things online has a leveling effect that brings more people into discussions in real time, which is when people want to participate in them.

Brennan took this a step further, saying that with online events “you really have to engage people in a way about tangible technologies.” 

He said his team has found a need to actually give people a way to work on their code rather than just wowing folks with a charismatic on-stage presentation. “One of the things we have been trying to do with our ConsenSys Live series is to actually have code on screen,” he said.

Mougayar also spoke about having done a long workshop with on-screen code and feeling that by doing it from home he could really focus in on it more.

The Ethereum Foundation’s Jameson concurred. “I think this creates a whole new paradigm of having to keep people’s attention rather than waiting for the next big event to hear the next big announcement,” he said.

• Introducing the CoinDesk 20: The Assets That Matter Most in Crypto
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Crypto and Taxes 2020: Wednesday is this year’s deadline for Americans to file their tax returns, and cryptocurrency users’ obligations are as confusing as ever. This series of articles explores the complex issues facing digital asset investors.

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A bullish stock market left bitcoin behind Monday with the world’s oldest cryptocurrency trading flat.

• Bitcoin (BTC) trading around $9,226 as of 20:00 UTC (4 p.m. ET) and flat, up only 0.10% over the previous 24 hours.
• Bitcoin’s 24-hour range: $9,193-$9,339
• BTC price below 10-day and 50-day moving average, a bearish signal for market technicians.

The absence of action in bitcoin is in contrast to the performance of global equities on Monday. Stocks across the world today: 

• In Asia the Nikkei 225 closed up 2.2% led by big gains in Mazda Motors and Nikon. 
• In Europe the FTSE 100 index ended the day up 1.3% as optimism for a coronavirus drug treatment led stocks higher.
• The U.S. S&P 500 index slipped 1% after a rally lost steam and tech stocks ended the day in the red.

“In recent trading sessions, bitcoin traded in a narrow range of $9,100-$9,200,” said Constantin Kogan, partner at cryptocurrency fund BitBull Capital. “After a short-term bullish impulse, the asset managed to peak at $9,300, followed by a downward correction.”

Related: Compound Tops $1B in Crypto Loans as DeFi Farmers Keep Digging for Yield

Over the past few days, bitcoin has approached $9,320, only to see the price drop, Kogan noted. 

“The first resistance for bitcoin is at $9,320, the next important zone, the passage of which will give strength to the bulls at $9,400.”

Read More: Drop in Bitcoin ‘Whale’ Addresses Suggests Market May Be Decentralizing

“There is a clear lack of energy in the bitcoin market,” said Chris Thomas, head of digital assets for broker Swissquote. “DeFi has more energy just now [and] some are focusing on that.”

Related: Drop in Bitcoin ‘Whale’ Addresses Suggests Market May Be Decentralizing

Spot exchanges such as Coinbase continue to be plagued with low trading volumes in July, said BitBull’s Kogan. He also pointed out the uncertainty bitcoin traders are currently facing in these unprecedented economic times. “The Index of Fear and Greed has increased by several points since last week and approached a neutral value, which indicates confusion among market participants,” said Kogan. 

Despite the uncertainty, the bitcoin mining sector is showing no signs of slowing down, Kogan noted. “The bitcoin hashrate has reached a new maximum. This indicates the continued interest of miners in cryptocurrency mining,” he said. 

Regardless of the bitcoin volume slump, traders always find assets to trade. Josh Rager, a trader and adviser for crypto brokerage LevelInvest has been focusing on altcoins – alternative assets to bitcoin. “A slow grind is good. I’m neutral, just trading alts,” Rager told CoinDesk.

Ether (ETH), the second-largest cryptocurrency by market capitalization, was flat Monday, trading around $238 and in the red 0.10% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Compound Tops $1B in Crypto Loans as DeFi Farmers Keep Digging

Over the past year, Ethereum network fees have risen from 0.1131 to 0.5089 ETH. That is a 350% bump as usage of the network for decentralized finance, or DeFi, applications has increased. Stablecoins, lending and trading via Ethereum smart contracts are some of the most popular, according to data aggregator DeFi Pulse. 

Goerge Clayton, managing partner of Cryptanalysis Capital, says the rise in fees could be a sign that the Ethereum network could reach some sort of limitation in transactions. “ETH fees are rising,” Clayton said. “Not sure where it all ends up. Could be a choke point for that sector soon.”

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

• tezos (XTZ) + 7.8%
• cardano (ADA) + 7.4%
• chainlink  (LINK) + 5.7%

Read More: Twelve-Fold Gains for Aave’s LEND Token Might Be More Than DeFi Hype

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

• dogecoin (DOGE) – 16%
• 0x (ZRX) – 4.8%
• decred (DCR) – 3.7%

Commodities:

• Oil is down 2.3%. Price per barrel of West Texas Intermediate crude:  $39.64
• Gold is flat Monday, in the green 0.18% at $1,801 per ounce

Read More: SEC, CFTC Hit Crypto App Abra With $300K in Penalties Over Illegal Swaps

Treasurys:

• U.S. Treasury bonds slipped Monday. Yields, which move in the opposite direction as price, are down the most on the two-year, in the red 8.7%.

Read More: Correlation – Crypto’s Most Enigmatic Metric

• First Mover: Twelve-Fold Gains for Aave’s LEND Token Might Be More Than DeFi Hype
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Ethereum developers are aspiring to launch Eth 2.0 in 2020. But that doesn’t mean all the technical details have been spelled out yet.

The sum of account balances maintained by the network’s nodes – called the state – continues to grow larger and larger as applications and projects transact. Adoption is good, but runaway growth is bad. Independent developer Alexey Akhunov may have a solution – one pulled from Cosmos, the interoperability blockchain.

His new proposal, dubbed “ReGenesis,” posted on EthResearch on June 24, would bring stateless client research to the current Ethereum chain (also known as Eth 1.x) by “nuking” certain node’s states and swapping them with a math proof on a rolling basis.

Related: How Chainlink and Cosmos Fit Into China’s Grand Blockchain Initiative

The purpose? Make Ethereum’s data set scalable with minimal sacrifices to security. 

“The older nodes will forget about the state,” Akhunov said in an interview with CoinDesk. “At this point in time, all the nodes will forget what the state was. They will only remember the hashing.”

Nuking the blockchain isn’t a novel idea. In fact, the idea is mentioned in the Ethereum yellow paper by co-founder Gavin Wood.

Akhunov said he drew inspiration for his interpretation of ReGenesis from Cosmos, which has undergone a similar procedure multiple times to make the chain “lighter.”

Related: ConsenSys Spins Up Staking Service in Anticipation of Ethereum 2.0

“I call this ‘relaunch’ ReGenesis, and it can be done regularly to ease the burden on the non-mining nodes. It also represents a less dramatic version of Stateless Ethereum,” Akhunov wrote.

WATCH: Vitalik Buterin Explains the New Tech Behind Eth 2.0

Supporting stateless clients – meaning nodes that would carry as little state information as possible to verify transactions – has been a prime objective of Eth 2.0 in order to decrease data strains on Ethereum nodes. ReGenesis would incorporate some of the Ethereum researchers’ insights into the transitionary period, or Eth 1.x.

Akhunov’s proposal works like a video-game checkpoint. Every time the Ethereum blockchain hits a certain block number, the network would auto save. Then it would delete all its progress minus a “proof” or “witness” of all the past transactions. The autosave could then be stored on other networks like BitTorrent, Akhunov said.

The proof allows the reborn Ethereum chain to begin again from a sure foundation, but only for certain types of nodes, Akhunov said.

“What we are removing is the assumption that all other validating nodes have the access to that implicit state to check that the transactions in the block are valid and the state root hash presented in the block header matches up with the result of the execution of that block,” he wrote.

This checkpoint system is already used in different ways for bringing new nodes online, such as in Beam sync.

ReGenesis is hardly wandering off the range when it comes to Ethereum philosophy. 

Ethereum co-founder Vitalik Buterin describes similar assumptions found in ReGenesis in a 2014 blog entitled, “Proof of Stake: How I Learned to Love Weak Subjectivity.” 

There, Buterin argues a node can be trusted under certain constraints even if it begins from a checkpoint instead of the genesis block. Like ReGenesis, Buterin proposes a node merely “get a recent block hash from a friend” to rejoin the network and begin validating transactions again.

Akhunov’s proposal is intended for Etheruem’s current proof-of-work (PoW) blockchain. But it operates under similar assumptions found in Buterin’s thoughts on proof-of-stake (PoS) by segregating the network into “full nodes” and “stateless clients” that rely on outside proofs.

Weak subjectivity itself is taken to its logical conclusion with the ongoing research project Stateless Ethereum and PoS. That project hopes to create a method for transactions to be verified based on the transaction hash and a math proof alone in Eth 2.0. 

ReGenesis reflects much about Stateless Ethereum and Eth 2.0’s unresolved latter steps. For now, it’s a promising project that many in the community have gotten behind, just as they have done with Akhunov’s other proposal, TurboGeth. 

Read more: ‘Turbo Geth’ Seeks to Scale Ethereum – And It’s Already in Beta

One issue team leader at Ethereum Foundation client Geth Péter Szilágyi pointed out, however, is that ReGenesis does not technically decrease the state. It only “prunes” the chain. 

In other words, Szilágyi is saying some parties will still have to maintain a full copy of the state without the assistance of Akhunov’s proofs because they need to access the old state in order to send transactions. If some must use the full ledger, then the state has not been truly “nuked.”

A big state could be big trouble. Two such consequences include slower processing speeds and an easier target for distributed denial of service (DDOS) attacks. In other words, private transactions have public consequences for blockchains, particularly for application-hosting ledgers.

Not only that, but many decentralized applications (dapps) such as Web 3.0 browsers could struggle to work without a “reboot,” Szilágyi said. Many dapps need to access the full state in order to work and not just a proof. 

“Ultimately, it always boils down to what can you afford to delete. If the Ethereum ecosystem permits us to delete old blocks, or old logs, a loooot can be achieved. If not – and Ethereum sold them that nothing gets deleted – we have problems,” Szilágyi said.

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An index of 50 low-capitalization cryptocurrencies, the so-called Shitcoin Index, is up 114% so far this year. Launched in 2019 by FTX, the index was trading at an all-time high of $1,065 Monday after making all-time highs for the past three consecutive trading days. 

• The novel futures product has outperformed bitcoin by 88 percentage points this year.
• Wednesday marked the first trading day the index closed above $1,000.
• September futures continue to trade in mild backwardation (at a discount) to perpetual futures.
• Daily trading volumes are low, staying below $10 million for the past month, but open interest, or the total value of contracts not yet settled, grew 43% over the past week, according to CoinGecko data.
• “Over the past month the ‘Robinhood Rally’ seems to have made its way into crypto, with popular and /or lower-cap coins running up while their respective market leaders stay quiet,” said Sam Bankman-Fried, CEO of FTX, the exchange that launched the index futures in August 2019.
• The index includes 50 low-cap cryptocurrencies including grin, theta, bitcoin gold, nano and ardor.

• FTX Is Building Lots of Sophisticated Markets Few Traders Use
• Liquidity on Bitcoin Perpetuals Exchange FTX Catches Up to Industry Leader BitMEX
• FTX Releases COMP Derivatives to Keep Up With DeFi Frenzy
• Stablecoin Supply Breaks $10B as Traders Demand Dollars Over Bitcoin

Retail interest in Chainlink, which acts as a bridge between cryptocurrency smart contracts and off-chain data feeds, is now at the highest level it has been in well over a year.

According to Google Trends, worldwide queries for the word “Chainlink” on the search engine reached a score of 100 in the week ended July 12, more than double what it was the preceding week. A score of 100 indicates it is the maximum number of searches observed for a term during a given time frame.  

The increased retail interest in the project could be attributed to the link token’s recent meteoric price rally. 

Related: Drop in Bitcoin ‘Whale’ Addresses Suggests Market May Be Decentralizing

The price of link, an ERC-20 token used to pay for services on the Chainlink network, rose to a record high of $8.48 early Monday, having rallied by 50% in the last week alone. At press time, link was changing hands at around $7.90 on major exchanges, up 73% on a month-to-date basis and 350% on a year-to-date basis.

Due to the record price rally, link is now one of the best-performing cryptocurrencies of 2020 and the tenth-largest cryptocurrency by market value, according to data source Messari. Leading link are DeFi tokens including Aave’s lend protocol, which is up over 900% on a year-to-date basis. Meanwhile, bitcoin, ether, XRP and other major coins are substantially lagging. 

Link’s impressive rally seems to have been fueled by Chainlink’s increased usage in the ever-growing decentralized finance (DeFi) space. 

Read more: DeFi Driving Chainlink’s Link Token to Record Highs 

Related: First Mover: Kyber Token’s Eightfold Increase Reveals Bet on Future Market-Share Growth

Search queries for cryptocurrencies or for any financial asset usually rise during a record price rally. However, quite often it does not translate into increased investor participation. This is because retail investors are averse to high price volatility. 

However, in Link’s case, the number of new addresses and active addresses has risen sharply alongside the spike in search queries. As such, it may be surmised that the peak retail interest is translating into additional buying pressure. 

Daily active addresses rose to a 13-month high of 9,263 and new addresses, as represented by network growth, set a 12-month high of 4,517 on July 8, according to data provided by Santiment, a blockchain analytics company. 

Daily active addresses and new addresses are up 800% and 900%, respectively, on a year-to-date basis.

While Chainlink’s long-term prospects may appear bright courtesy of the ongoing multi-year shift in focus from base layer protocols to middleware services, in the short run the cryptocurrency looks vulnerable to a price pullback, as the sentiment looks to have turned overly bullish. 

“Chainlink is proof that no one knows what they are talking about and crypto fundamentals is basically macro sentiment, alchemy and animal spirits. I love what the team is working on, but the token is going nuts. I do not understand anything of it,” Ryan Selkis, founder of Messari, tweeted early Monday. 

Read more: Chainlink’s Link Token Outperforms Bitcoin as Business Wins Fuel Hype Cycle

Meanwhile, “link token” is currently the top trending term on crypto social media, according to the data from 1,000+ social channels tracked by Santiment. “Usually when the coin’s name appears on the top of our list of social gainers/emerging trends, its price drops by an average of 8.2% within the next 12 days,” Dino Ibisbegovic, market analyst at Santiment, told CoinDesk in a Telegram chat.

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Bitcoin’s mining difficulty is at a record high, Singapore’s central bank digital currency could find commercial use and Chinese firms are going in on Filecoin. Here’s the story:

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. 

Record Level Mining Difficulty
Bitcoin’s mining difficulty, an automatic adjusting feature, is at a record high. This adjustment reflects increasing computer power on the network and, potentially, investment in new mining machines, despite bitcoin ranging between $9,100 and $9,500 since early July. The increased difficulty comes two months after Bitcoin’s quadrennial halving, which has complicated the economy of Bitcoin miners and machinery that secure the network. 

Related: Blockchain Bites: Coinbase’s Untraditional Investor Day and the Ethereum-EOS Arms Race in Latin America

Filecoin Miners
Eight of the top 10 Filecoin testnet miners are Chinese investors or companies, according to the blockchain explorer, while more companies are selling cloud mining contracts and physical hardware for the distributed file sharing system. “The Filecoin craze in China may be largely related to the long-standing popularity of crypto mining in the country in general, which is home to around 65% of the computing power on Bitcoin by estimation,” CoinDesk’s Wolfie Zhao writes. 

Privacy Matters
Developer Chris Belcher is trying to bring privacy to Bitcoin. He’s building out an idea first proposed in 2013, CoinSwap, and has been awarded two grants for his effort. “CoinSwap could be said to allow bitcoins to teleport undetectably to anywhere else on the blockchain,” Bitcoin Wiki writes. Bitcoin’s cryptographic underpinning allows anyone to look at a history of any transaction – skewering any sense of real privacy. CoinSwaps and other privacy-minded advancements are trying to bring the anonymous aspects of cash to the blockchain. 

Not Binding
A federal judge said Telegram’s court battle did not set a precedent for a similar case involving Kik’s battle with the SEC. “I think that there is no binding precedent one way or another,” Judge Alvin K. Hellerstein said. The SEC is pursuing action against Kik related to its $100 million ICO. The SEC won a preliminary injunction against Telegram this year, ordering the company to halt the issuance of its gram tokens, and the firm later discontinued the TON project. 

CBDC Going Live
The next phase for a blockchain-based central bank digital currency project in Singapore “will be in implementing live commercial solutions to solve real world challenges,” after the experiment completed its development cycle. Designed by the Monetary Authority of Singapore and state investor Temasek, Ubin, as the project is known, has been running as a multi-currency payments platform and has leveraged work on a blockchain and digital currency at U.S. investment bank JPMorgan.

• Bitcoin Gold developers foiled a 51% attack 
• Fidelity holds over 10% stake in bitcoin mining firm Hut 8 (The Block)
• A Ripple founder is building a surveillance network in San Francisco (Decrypt)

Related: First Mover: Kyber Token’s Eightfold Increase Reveals Bet on Future Market-Share Growth

Chainlink is surging today, as it has for the past several days, weeks and months. Driven by integrations within the open finance ecosystem and a committed band of “Link Marines,” link is repeatedly passing lifetime highs. 

Messari’s Ryan Selkis reflected on the trend this morning and said, “On a fully diluted basis, $LINK hit $8 [billion]+ today. That’s higher than Coinbase’s last valuation.” This is a significant milestone for what is only a piece of a larger financial system. 

Chainlink is an Ethereum-based system of oracles that supplies data to other decentralized projects. As CoinDesk has reported, insiders think link’s continued price rise is driven by DeFi’s growing reliance on its technology. 

No one can honestly say whether Chainlink is driven by “fundamentals” or FOMO, but this is as good a time as any to get into Gartner’s theory of Hype Cycles. 

According to the research giant, the adoption of novel technologies follows a predictable lifecycle. There’s the initial innovation, a “peak of inflated expectations,” a period of disillusionment, the slope of enlightenment – defined by a growing number of use cases and pilot programs – and, finally, mainstream adoption. 

This tidy theory only works in reverse, if a technology takes off. For some Chainlink observers, the platform is clearly following the slope of enlightenment. Skeptics think the crypto is cresting on a peak of inflated expectations, which will crash and potentially never recover.

There’s no clear answer to whether this is hype or a Hype Cycle, but in the words of CoinDesk Head of Research Noelle Acheson, reflecting on the dogecoin hype and irrational stock market ebullience:

“When markets don’t make any sense, when fundamentals no longer seem to matter, it becomes clear the rules are being rewritten or even thrown out the window. We could be in the creative destruction phase that will give way to a new wave of innovation. And in that wave, new types of assets could have a respectable place in new types of portfolios.”

Whale Breach
There are now 103 addresses holding at least 10,000 BTC, the lowest in more than a year, according to blockchain analytics firm Glassnode. There has been an 8% decline in the number of “whale” addresses over the past two months. What this means for bitcoin’s price is difficult to work out. While some see this as reflecting weaker buying pressure (potentially foreseeing a price drop), the trend also points to the Bitcoin network decentralizing. Data shows the number of addresses holding at least 1 BTC, 0.1 BTC or 0.01 BTC continues to reach new record highs. “As such, one could argue that bitcoin ownership is being transferred from relatively few whales to a large number of smaller investors,” CoinDesk’s Omkar Godbole writes. 

Hyper-Stablecoinization
Pascal Hügli, chief research officer at Schlossberg & Co., sees stablecoins, or crypto dollars appended to a blockchain, as succeeding where the eurodollar has failed. “The eurodollar approach was an attempt by private actors to create a dollar funding system outside the U.S., but still within the traditional financial system. Crypto dollars mainly reside outside of the traditional, U.S.-led financial system. Because of its inherent auditability, the crypto-dollar system is more transparent than the old euro dollar system based on shadow banking (so named for a reason),” he writes. 

Crypto Long & Short: Interpreting Value
Noelle Acheson, CoinDesk’s head of research, dives into last week’s dogecoin phenomenon, which saw a handful of TikTok videos shoot the memetic cryptocurrency on a price tear. “It has nothing to do with fundamentals, potential or even government handouts – most participants probably don’t even understand what cryptocurrency is (many of the videos refer to DOGE as a “stock”). It’s about manipulation, just because,” she writes. “When you have the next generation of investors blatantly flaunting that markets are a meaningless casino, when you have them advertising that markets can be manipulated, then you do have to wonder what role markets will have in their lives as they get older.”

Catching the Lightning Bug
Chaincode Labs researcher Clara Shikhelman has been studying mathematics in university since she was 14 years old. Now, as the bitcoin company’s newest post-doctoral fellow, she is exploring ways to optimize the Lightning Network. Listen in to why Lightning attracted her attention. “There are a lot of people like me, their main thing is academic,” Shikhelman said. “They are not the classic cypherpunk people, but …[t]hey believe in privacy, in political change.”

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Polkadot fans can cast their first votes on a redenomination proposal that could increase the supply of DOT tokens up to a thousand-fold.

• In a blog post on Monday, Gavin Wood, co-founder and president of Polkadot developer Web3 Foundation, said community stakeholders could vote on a proposal to redenominate the smallest unit of DOT – a Planck.
• If successful, it will lead to a corresponding increase in the DOT supply.
• Open to all DOT holders, there are four options on the table: no change or increasing supply by 10x, 100x, or 1,000x.
• If any of the redenomination proposals passes, the DOT price, according to CoinGecko, could well move from its present $152 to $15, $1.52, or $0.15, respectively.
• Polkadot only went live in late May so this will be the protocol’s first community vote.
• A supply of 10 million was originally agreed for the 2017 initial coin offering but Web3 Foundation said in a tweet thread Monday that a token supply of 1 billion would now be more “logical.”
• The polls have now opened and community members have two weeks to cast their vote.
• A similar proposal already passed on Kusama, Polkadot’s test-tube blockchain, more than two months ago.

See also: Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens

• Bitcoin News Roundup for June 19, 2020
• Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens
• Polkadot Goes Live as Web3 Foundation Pushes Prospective Mainnet
• Parity’s Gavin Wood Takes a Swipe at Ethereum

The Polkadot community can cast their first vote on a redenomination proposal that could increase the supply of DOT tokens up to a thousand-fold.

• In a blog post on Monday, Gavin Wood, co-founder and president of Polkadot developer Web3 Foundation, said community stakeholders could vote on a proposal to redenominate the smallest unit of DOT – a Planck.
• If successful, it will lead to a corresponding increase in the DOT supply.
• Open to all DOT holders, there are four options on the table: no change or redenomination based on increasing supply by 10x, 100x, or 1,000x.
• If any of the redenomination proposals passes, the DOT price, according to CoinGecko, could well move from its present $152 to $15, $1.52, or $0.15, respectively.
• Polkadot only went live in late May so this will be the protocol’s first community vote.
• A 10 million supply was originally agreed for the 2017 initial coin offering but Web3 Foundation said in a tweet thread Monday that a billion token supply would now be more “logical.”
• The polls have now opened and community members have two weeks to cast their vote.
• A similar proposal already passed on Kusama, Polkadot’s test tube blockchain, more than two months ago.

See also: Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens

• Bitcoin News Roundup for June 19, 2020
• Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens
• Polkadot Goes Live as Web3 Foundation Pushes Prospective Mainnet
• Parity’s Gavin Wood Takes a Swipe at Ethereum

The World Bank has looked into the benefits of smart contracts and found the blockchain instruments to be a “limited” financial tool.

• In a July 8 blog post summarizing a recent report called “Smart Contract Technology and Financial Inclusion” the international financial institution looked at the role smart contracts could play in improving financial services in poorer nations.
• Smart contracts are pieces of code that automatically execute the terms of a contract based on a specific set of rules.
• The World Bank looked at two main areas of financial services including index-linked insurance and short-term unsecured loans.
• On the insurance side, the institution looked at penetration, or the ratio of policy premiums underwritten over a 12-month period against the gross domestic product (GDP) of a given nation.
• The post stated that smart contracts would not help fix many common issues with insurance penetration, but could assist in determining whether a particular insurance product was suitable as well as increasing trust in the product amongst stakeholders.
• Examining short-term loans, the World Bank found that while smart contracts could increase efficiency with the different phases of a loan cycle, those phases are already highly automated and therefore the new technology would be redundant.
• The post’s authors said a major factor in the costs of consumer credit was based on consumer risk and that smart contracts would be of “limited” benefit in improving borrowers’ credit ratings.
• The World Bank was founded in 1944 for the purpose of providing loans to governments of developing nations in order to tackle poverty.
• The institution has been involved in a number of blockchain projects, including raising over $100 million through the issuance of bonds on the Ethereum network.

See also: Private Firms Can Boost Central Bank Digital Currencies, IMF Official Says

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Crypto financial app Abra has settled charges from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) relating to its offering of swaps deemed unlawful by the regulators.

• In two statements Monday, the SEC and CFTC said they had filed and settled charges against Abra and its Philippine-based partner company, Plutus Technologies.
• The SEC formally charged Abra and Plutus with selling security-based swaps to retail investors without registering or selling them on a recognized national exchange.
• Meanwhile, the CFTC charged both with entering into illegal off-exchange swaps with U.S. and overseas citizens.
• Abra and Plutus have agreed to settle both suits, $150,000 each, without admitting to or denying the accusations of the order.
• Abra launched as a bitcoin remittance app in 2014 and has upped the number of crypto-related services to include more coins and other services over the years.
• The SEC found fault with Abra for offering retail investors contracts that provided synthetic exposure to the U.S. stock market. While not actually securities, the SEC says security-based swaps were nonetheless subject to U.S. securities law.
• Abra started offering the swaps in February 2019.
• Both the SEC and CFTC said the company did nothing to check whether investors were actually eligible.
• Abra briefly shut down the offering after a warning from the SEC early in 2019; it resumed it in May of that year after it limited the service to non-U.S. residents.
• Although Abra moved some of its operations overseas, most of the contracts were still designed and marketed from the company’s headquarters in San Francisco.
• Overall, Abra has raised more than $45 million in a series of venture capital rounds; the Stellar Development Foundation (SDF) invested $5 million into Abra in May.
• Plutus Financial, which conducts business as Abra, received between $350,000 and $1 million in U.S. “PPP” bailout loans in April.

Also read: Telegram’s Defeat Isn’t ‘Binding’ in Kik Case, Judge Tells SEC

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Billion-dollar fund manager Fidelity International has doubled its equity investment in bitcoin mining company Hut 8, bringing its total stake to over 10%.

• In a filing with the Ontario Securities Commission (OSC) last week, the fund manager disclosed it had acquired 4.1 million “units” in Hut 8 on June 23 in an overnight offering.
• Each unit represents a combined offering of one common share and the option to purchase another in the next 18 months.
• Fidelity International, a spin-off of Fidelity Investments, already held approximately 4 million common shares in Hut 8.
• Last month’s purchase, including the options, means it now controls over 10.5% of the Toronto-listed crypto mining company.
• Hut 8 closed a C$8.3 million funding round (US$6.1 million) on June 23, with the total raise being over C$800,000 above its target.
• Fidelity’s investment may have comprised nearly three-quarters of the raise, based on the total of around 5.7 million units changing hands.
• CoinDesk has approached Hut 8 for more information.
• In an overnight offering, a company sells equity once the market has closed at the end-of-day price to prevent short-sellers from depressing it any further.
• Hut 8’s share price spiraled since listing on the Toronto Stock Exchange, falling from $3.35 in April 2018 to a low of $0.50 in March 2020.
• Fidelity may be bullish about Hut 8, though, as the option for a common share is at a purchase price of $1.80 – more than double its current trading value of over $0.80 at press time.
• The news was tweeted by CoinDesk’s Matt Yamamoto earlier on Monday.

See also: Fidelity International Invests $14M in Hong Kong Crypto Exchange Operator

• Crypto Trading Firm B2C2 Eyes Prime Brokerage Space With $30M Stake Sale to SBI
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