CoinDesk Crypto

One of the most popular Bitcoin wallets, Electrum, now supports Lightning Network payments.

The latest swathe of major changes was released in version 4.0, one of its biggest upgrades since the Bitcoin wallet launched in 2011. (Note: Since the 4.0 release, some bug fixes have been added.) Lightning payments are seen as the future of Bitcoin because they’re cheaper and would allow many more users to make bitcoin cryptocurrency transactions at once. 

This makes Electrum the oldest wallet to have adopted Lightning payments so far.

Related: WikiLeaks Shop Now Accepts Bitcoin Lightning Payments

Lightning support in Electrum is a long time coming. Electrum founder Thomas Voegtlin first told CoinDesk last summer that Lightning would make it into the next release.

“[We] decided to adopt Lightning because we see it as the way forward for Bitcoin. Lightning is quite complicated and not without its issues but ultimately it is the most promising currently known way of scaling Bitcoin. It also allows fast, cheap and more private payments,” pseudonymous Electrum developer SomberNight told CoinDesk in an email.

Read more: What is Bitcoin’s Lightning Network?

In order to support Lightning transactions, the developers actually wrote an entirely new implementation of the Lightning protocol “from scratch,” SomberNight said, instead of using a popular implementation, such as Lightning Labs’ LND or Blockstream’s c-lightning. That’s one reason the release took so long.

Related: Bitcoin’s Lightning Network Is Vulnerable to ‘Looting’: New Research Explains

In addition to support for Lightning payments, Electrum 4.0.2 now supports a number of other innovations with this new release that could make using Lightning more secure and less bumpy for users.

For one, Electrum has implemented its own Lightning watchtower, an important component of the Lightning Network, which scans the Bitcoin blockchain in order to detect and prevent fraud.

Read more: Bitcoin Lightning Fraud? Laolu Is Building a ‘Watchtower’ to Fight It

Though there are a few watchtower implementations out there now, they still aren’t commonly used yet across the Lightning Network, despite being an important piece. In this way, Electrum’s watchtower support is a step toward a better Lightning Network. 

Then, there are “submarine swaps.” Accepting payments is still a tricky part of the Lightning Network because users need what’s called “incoming capacity” to receive payments, which means funds need to be placed in a certain part of a person’s Lightning “channel,” which is sort of like an account . 

The irony is users “will not be able to receive payments until they spend some money,” as SomberNight put it.

“To solve this, we implemented ‘submarine swaps,’ which are atomic exchanges of on-chain and Lightning bitcoins,” SomberNight told CoinDesk. In other words, submarine swaps makes it possible to send normal bitcoin to a Lightning channel, offering one way for users to fill up their incoming capacity.

“Electrum Technologies runs a central server that facilitates these swaps, for a fee. This allows users to buy incoming capacity to be able to receive Lightning payments,” the developer added.

Electrum also integrated Lightning with hardware support. Because hardware wallets store bitcoin offline beyond the reach of hackers they are considered one of the best ways of securing bitcoin.

“You can [now] use Lightning directly with your hardware wallet: Channel-opens and channel-closes can directly pay from and to addresses backed by a hardware device. Your Lightning balance, while in channels, will not be secured by the hardware but all your on-chain balance will be, and it’s very convenient to have a shared single wallet that you can use to pay both on-chain and Lightning,” SomberNight told CoinDesk.

The Electrum team has been working on other features too. Electrum wallet users can view the full release notes here.

• Researchers Expose Flaw in Bitcoin Wallets That Could Be Exploited for Double-Spending
• Cryptography Startup Brings Private Payment Channels to Tezos Blockchain

Coinbase will host its first investor day, New York State prosecutors won a jurisdictional dispute involving Bitfinex and a protocol arms race is unfolding in Latin America. 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. 

Not Your Traditional Investor Day
On the same day Reuters reported Coinbase is looking to go public, the exchange scheduled its first-ever investor day, for Aug. 14. Investor days can often signal a planned direct listing, Jamie McGurk, a former operating partner at Andreessen Horowitz, has said. “This will not be a traditional investor day, but rather an opportunity to hear our perspective on the cryptoeconomy and learn about Coinbase’s role in the ecosystem,” said Coinbase spokesperson Daniel Harrison.

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

Employment Kerfuffle
Former Tron Foundation employees are challenging a court order allowing the  foundation to settle a lawsuit through arbitration, rather than in court. The initial complaint centers around allegations of wrongful termination and hostile work practices at BitTorrent, a file-sharing service acquired by the Tron Foundation.

Appeal Denied
Bitfinex will have to face allegations from New York State prosecutors that it lost $850 million in client and corporate funds and tried to cover this hole with funds from the affiliated tether stablecoin, according to a ruling by the State Supreme Court’s Appellate Division on Thursday. The exchange’s parent iFinex initially claimed the prosecutors didn’t have jurisdiction over the Hong Kong-headquartered firm, which the appeals court rejected. The court also dismissed the argument that tether was neither a commodity nor a security.

Canaan Shakeup
Three Canaan Creative directors were dropped from the company’s business registry, prompting speculation of a power grab. For months an internal power struggle between co-founders Micree Zhan and Jihan Wu has wracked the Nasdaq-listed firm, which has been suffering growing competition and reduced profits following the Bitcoin network’s programmatic halving. 

Ethereum v. EOS
Ethereum and EOSIO are battling it out over enterprise blockchain business across Latin America. The square up pits ConsenSys in one corner and LatamLink in the other, a project backed by the Inter-American Development Bank, over which decentralized protocol will win the arms race.

• WikiLeaks online store now accepts Bitcoin Lightning payments
• Crypto "giveaway" scams continue to flourish on YouTube
• A 35-year-old programmer pleaded guilty to a $722 million (in bitcoin) Ponzi scheme

Related: Blockchain Bites: CENTRE’s Blacklist, Brazil’s Stablecoin Boom and Coinbase Is Going Public?

Venezuela’s Real Use Case
After airdropping cryptocurrency to 60,000 users in Venezuela, an AirTM survey gives a snapshot of how crypto is actually used in the economically troubled nation.

Venezuela is often a proving ground for do-gooding crypto companies and protocols. Payments network Dash, for one, famously made headway in the nation beset by hyperinflation. 

AirTM distributed approximately $300,000 worth of crypto to Venezuelans, and while only 57% of recipients engaged with the funds, many were able to successfully use the donations to buy food and medicines. Others began treating the AirTM platform as a personal bank. 

The bigger picture is coming into focus: Crypto only becomes a viable alternative to traditional financial systems if there is robust infrastructure to support it. “If Venezuela offers an example of bitcoin usage, then it appears there is user demand for bitcoin-friendly services provided by a regular fintech company,” CoinDesk’s Leigh Cuen reports.

Balance Sheet Contractions. Bullish for Bitcoin?
As the U.S. Federal Reserve begins to unwind its balance sheet, contracting $88 billion to $6.97 trillion (-1.5%) in the week ending July 8, some crypto observers are saying this could have negative consequences for bitcoin’s price. That’s because in recent months bitcoin has been positively correlated with traditional assets, which have rallied on the back of the Fed’s balance sheet expansion. But that’s far from the consensus view. “Zooming into the details of the Fed’s balance sheet reveals the reduction has been primarily driven by a drop in demand for emergency liquidity measures, a sign the coronavirus-induced stress in the financial system has eased,” CoinDesk’s Omkar Godbole writes. 

Blockchain Credentials, Not Credentialism
Blockchain certification can verify expertise and experience, making transferring schools and changing jobs easier. But certificate proliferation may be a bigger problem, argues Stephanie Hurder, a CoinDesk columnist and founding economist at Prysm Group. “Non-degree credentials, such as badges and certificates, in particular are rapidly multiplying because they can now be digitally transmitted and verified at a minimal cost,” she writes.

Inequality, Social Chaos, Bankruptcy Rallies
From the “Robinhood Rally” to the most profit-disconnected stock market in history, these are the most interesting ideas from FinTwit last month.

• First Mover: Pie Anyone? DeFi Pushes ETF-Style Investing Toward Decentralization
• Blockchain Bites: DiDi to Trial the Digital Yuan and a Look at Chainlink’s Gains

Coinbase will host its first investor day, New York State prosecutors won a jurisdictional dispute involving Bitfinex and a protocol arms race is unfolding in Latin America. 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. 

Not Your Traditional Investor Day
On the same day Reuters reported Coinbase is looking to go public, the exchange scheduled its first-ever investor day, for Aug. 14. Investor days can often signal a planned direct listing, Jamie McGurk, a former operating partner at Andreessen Horowitz, has said. “This will not be a traditional investor day, but rather an opportunity to hear our perspective on the cryptoeconomy and learn about Coinbase’s role in the ecosystem,” said Coinbase spokesperson Daniel Harrison.

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

Employment Kerfuffle
Former Tron Foundation employees are challenging a court order allowing the  foundation to settle a lawsuit through arbitration, rather than in court. The initial complaint centers around allegations of wrongful termination and hostile work practices at BitTorrent, a file-sharing service acquired by the Tron Foundation.

Appeal Denied
Bitfinex will have to face allegations from New York State prosecutors that it lost $850 million in client and corporate funds and tried to cover this hole with funds from the affiliated tether stablecoin, according to a ruling by the State Supreme Court’s Appellate Division on Thursday. The exchange’s parent iFinex initially claimed the prosecutors didn’t have jurisdiction over the Hong Kong-headquartered firm, which the appeals court rejected. The court also dismissed the argument that tether was neither a commodity nor a security.

Canaan Shakeup
Three Canaan Creative directors were dropped from the company’s business registry, prompting speculation of a power grab. For months an internal power struggle between co-founders Micree Zhan and Jihan Wu has wracked the Nasdaq-listed firm, which has been suffering growing competition and reduced profits following the Bitcoin network’s programmatic halving. 

Ethereum v. EOS
Ethereum and EOSIO are battling it out over enterprise blockchain business across Latin America. The square up pits ConsenSys in one corner and LatamLink in the other, a project backed by the Inter-American Development Bank, over which decentralized protocol will win the arms race.

• WikiLeaks online store now accepts Bitcoin Lightning payments
• Crypto "giveaway" scams continue to flourish on YouTube
• A 35-year-old programmer pleaded guilty to a $722 million (in bitcoin) Ponzi scheme

Related: Blockchain Bites: CENTRE’s Blacklist, Brazil’s Stablecoin Boom and Coinbase Is Going Public?

Venezuela’s Real Use Case
After airdropping cryptocurrency to 60,000 users in Venezuela, an AirTM survey gives a snapshot of how crypto is actually used in the economically troubled nation.

Venezuela is often a proving ground for do-gooding crypto companies and protocols. Payments network Dash, for one, famously made headway in the nation beset by hyperinflation. 

AirTM distributed approximately $300,000 worth of crypto to Venezuelans, and while only 57% of recipients engaged with the funds, many were able to successfully use the donations to buy food and medicines. Others began treating the AirTM platform as a personal bank. 

The bigger picture is coming into focus: Crypto only becomes a viable alternative to traditional financial systems if there is robust infrastructure to support it. “If Venezuela offers an example of bitcoin usage, then it appears there is user demand for bitcoin-friendly services provided by a regular fintech company,” CoinDesk’s Leigh Cuen reports.

Balance Sheet Contractions. Bullish for Bitcoin?
As the U.S. Federal Reserve begins to unwind its balance sheet, contracting $88 billion to $6.97 trillion (-1.5%) in the week ending July 8, some crypto observers are saying this could have negative consequences for bitcoin’s price. That’s because in recent months bitcoin has been positively correlated with traditional assets, which have rallied on the back of the Fed’s balance sheet expansion. But that’s far from the consensus view. “Zooming into the details of the Fed’s balance sheet reveals the reduction has been primarily driven by a drop in demand for emergency liquidity measures, a sign the coronavirus-induced stress in the financial system has eased,” CoinDesk’s Omkar Godbole writes. 

Blockchain Credentials, Not Credentialism
Blockchain certification can verify expertise and experience, making transferring schools and changing jobs easier. But certificate proliferation may be a bigger problem, argues Stephanie Hurder, a CoinDesk columnist and founding economist at Prysm Group. “Non-degree credentials, such as badges and certificates, in particular are rapidly multiplying because they can now be digitally transmitted and verified at a minimal cost,” she writes.

Inequality, Social Chaos, Bankruptcy Rallies
From the “Robinhood Rally” to the most profit-disconnected stock market in history, these are the most interesting ideas from FinTwit last month.

• First Mover: Pie Anyone? DeFi Pushes ETF-Style Investing Toward Decentralization
• Blockchain Bites: DiDi to Trial the Digital Yuan and a Look at Chainlink’s Gains

In his most recent video, Charles Hoskinson frets that massive egos and bitter conflicts threaten to undermine the cryptocurrency community. But, with a touch of Trumpian hyperbole, he suggests that journalists and rivals are trying to keep his project down.

“Are we being too overzealous with Cardano?” the IOHK CEO mulls at the start of the YouTube talk.

He’s in a cluttered home study. Tribal masks leer down from the walls and a six-foot reprint of Jean-Leon Gerome’s “Pollice Verso” with its vanquishing gladiator hangs to the left.

Related: Cardano at One-Year High on Shelley Upgrade

Hoskinson leans forward on his desk, folding his arms: “Let’s be honest, as a community we’ve been really treated unfairly, we’ve been [urinated] on, [defecated] on, ‘scam, scam, scam, scam, no working product’ … everything that could be said, has been said.”

“In particular, crypto media has got it wrong a lot,” he says, looking directly at the camera.

For the past year, the chief of IOHK, the developer house for blockchain platform Cardano, has used YouTube extensively to communicate directly to his followers. Sometimes these videos are basic protocol updates or “ask me anything” sessions (AMAs). Other times it’s to hit back at perceived criticism.

This week’s animus surrounds a video that made the rounds on social media last week, which showed a marketing group promoting the Cardano project in a rural province of China. Both the Cardano project and Hoskinson said they have no affiliation with the group.

Related: IOHK Invests Six-Figure Sum Into Crypto Asset Manager Wave Financial

Similarly, Hoskinson talks about an article from industry news site Crypto Briefing that argued the upcoming launch of staking protocol Shelley would not suffice to give Cardano the edge it needs over rival blockchain platforms such as TRON or EOS.

Following the article’s publication, he took to Twitter to call Crypto Briefing a “dumpster fire of a publication.”

See also: Cardano Developer IOHK Launches $20M Fund for Ecosystem Startups

In this video, Hoskinson’s head sways as he speaks, eyes still fixed on the camera. Journalists, podcasters and other influential figures, he says, have taken a definitive hard stance against Cardano; many of them won’t retract what they’ve said because they’re concerned about losing credibility with their audiences.

“You know, this is where Trump derangement syndrome came from,” Hoskinson says, pensively stroking his beard. The U.S. president is a “horrible human being … but everyone kinda just wrote him off and then, when he won, everyone went a little crazy about that and said we have to remediate this grievous mistake.”

Hoskinson goes on: “Well, similarly there is a bit of a Cardano derangement syndrome in the cryptocurrency space. People said our ideas will never work, we’ll never deliver, we’ll never actually ship anything, we’ve never actually accomplished anything. They just sometimes misrepresent reality completely.”

The tempo rises. Cardano’s been going for five years, he says. The critics have ignored everything the project has accomplished and a complex of rival project leads and media entities – he doesn’t specify who – have never ceased calling it a scam or a fraud.

Hoskinson’s brows knit. The criticism is personal: “How would you feel if someone came up to you and said: ‘so when did you stop beating your wife? When did you stop being a child molester?’”

See also: Coinbase Custody to Support Secure Cardano Staking This Year

Still, he concedes, the digital asset industry has a serious problem with over-inflated egos and a lack of respect towards others. If this isn’t addressed soon, he warns, then the Amazons and the Googles will swoop in and co-opt crypto for themselves.

In the spirit of reconciliation, he says Cardano will try harder to connect with other projects. Possibly even build some sort of cross-chain operability with Litecoin. “It’ll be fun project – they think about it, we think about it, why not?”

But that doesn’t mean Hoskinson will ever stop speaking out publicly, especially when he feels “my community” is being attacked.

“Every now and then I’m going to kick people in the teeth on Twitter, it’s my style, I’m Italian, my grandmother’s Italian. It’s who I am, it’s where I come from, it’s how I think,” he says.

“I’ll never apologize for kicking people in the teeth that call my community bad.”

Talking to CoinDesk about the use of such strong rhetoric, Hoskinson said, while he may have said and done things that are “counter-productive or regrettable,” these came from the strain of “operating in a low empathy medium where people don’t even attempt to understand each other.”

Plus, what he considered unfair media coverage over the years, “does create a bit of bitterness and disappointment.”

In the end, Hoskinson said, “You should never forget that these ecosystems aren’t just protocols. They are people.”

Disclosure: The author previously worked at Crypto Briefing.

• Coinbase Custody to Support Secure Cardano Staking This Year
• Cardano Developer IOHK Launches $20M Fund for Ecosystem Startups

In his most recent video, Charles Hoskinson frets that massive egos and bitter conflicts threaten to undermine the cryptocurrency community. But, with a touch of Trumpian hyperbole, he suggests that journalists and rivals are trying to keep his project down.

“Are we being too overzealous with Cardano?” the IOHK CEO mulls at the start of the YouTube talk.

He’s in a cluttered home study. Tribal masks leer down from the walls and a six-foot reprint of Jean-Leon Gerome’s “Pollice Verso” with its vanquishing gladiator hangs to the left.

Related: Cardano at One-Year High on Shelley Upgrade

Hoskinson leans forward on his desk, folding his arms: “Let’s be honest, as a community we’ve been really treated unfairly, we’ve been [urinated] on, [defecated] on, ‘scam, scam, scam, scam, no working product’ … everything that could be said, has been said.”

“In particular, crypto media has got it wrong a lot,” he says, looking directly at the camera.

For the past year, the chief of IOHK, the developer house for blockchain platform Cardano, has used YouTube extensively to communicate directly to his followers. Sometimes these videos are basic protocol updates or “ask me anything” sessions (AMAs). Other times it’s to hit back at perceived criticism.

This week’s animus surrounds a video that made the rounds on social media last week, which showed a marketing group promoting the Cardano project in a rural province of China. Both the Cardano project and Hoskinson said they have no affiliation with the group.

Related: IOHK Invests Six-Figure Sum Into Crypto Asset Manager Wave Financial

Similarly, Hoskinson talks about an article from industry news site Crypto Briefing that argued the upcoming launch of staking protocol Shelley would not suffice to give Cardano the edge it needs over rival blockchain platforms such as TRON or EOS.

Following the article’s publication, he took to Twitter to call Crypto Briefing a “dumpster fire of a publication.”

See also: Cardano Developer IOHK Launches $20M Fund for Ecosystem Startups

In this video, Hoskinson’s head sways as he speaks, eyes still fixed on the camera. Journalists, podcasters and other influential figures, he says, have taken a definitive hard stance against Cardano; many of them won’t retract what they’ve said because they’re concerned about losing credibility with their audiences.

“You know, this is where Trump derangement syndrome came from,” Hoskinson says, pensively stroking his beard. The U.S. president is a “horrible human being … but everyone kinda just wrote him off and then, when he won, everyone went a little crazy about that and said we have to remediate this grievous mistake.”

Hoskinson goes on: “Well, similarly there is a bit of a Cardano derangement syndrome in the cryptocurrency space. People said our ideas will never work, we’ll never deliver, we’ll never actually ship anything, we’ve never actually accomplished anything. They just sometimes misrepresent reality completely.”

The tempo rises. Cardano’s been going for five years, he says. The critics have ignored everything the project has accomplished and a complex of rival project leads and media entities – he doesn’t specify who – have never ceased calling it a scam or a fraud.

Hoskinson’s brows knit. The criticism is personal: “How would you feel if someone came up to you and said: ‘so when did you stop beating your wife? When did you stop being a child molester?’”

See also: Coinbase Custody to Support Secure Cardano Staking This Year

Still, he concedes, the digital asset industry has a serious problem with over-inflated egos and a lack of respect towards others. If this isn’t addressed soon, he warns, then the Amazons and the Googles will swoop in and co-opt crypto for themselves.

In the spirit of reconciliation, he says Cardano will try harder to connect with other projects. Possibly even build some sort of cross-chain operability with Litecoin. “It’ll be fun project – they think about it, we think about it, why not?”

But that doesn’t mean Hoskinson will ever stop speaking out publicly, especially when he feels “my community” is being attacked.

“Every now and then I’m going to kick people in the teeth on Twitter, it’s my style, I’m Italian, my grandmother’s Italian. It’s who I am, it’s where I come from, it’s how I think,” he says.

“I’ll never apologize for kicking people in the teeth that call my community bad.”

Talking to CoinDesk about the use of such strong rhetoric, Hoskinson said, while he may have said and done things that are “counter-productive or regrettable,” these came from the strain of “operating in a low empathy medium where people don’t even attempt to understand each other.”

Plus, what he considered unfair media coverage over the years, “does create a bit of bitterness and disappointment.”

In the end, Hoskinson said, “You should never forget that these ecosystems aren’t just protocols. They are people.”

Disclosure: The author previously worked at Crypto Briefing.

• Coinbase Custody to Support Secure Cardano Staking This Year
• Cardano Developer IOHK Launches $20M Fund for Ecosystem Startups

In cryptocurrency markets, newfangled “decentralized exchanges” like Kyber are piddling compared with more-established and centralized venues like Binance.

But in the eyes of traders, it’s the upstarts who are winning lately – at least based on the year-to-date performance of digital tokens affiliated with the various exchanges.

Take Kyber Network Crystal (KNC), which is used to pay trading fees on the decentralized exchange Kyber. The token’s price has surged eight-fold in 2020. That compares with a 21% gain for Binance Coin (BNB), which customers of the exchange can use to pay trading fees, at a discounted rate.

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

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.

Part of the performance gap is due to the fast growth in usage of Kyber, one of the biggest players in the white-hot arena of decentralized finance, or DeFi. Daily transactions on the Kyber network so far in July are averaging more than double their June level, according to CryptoCompare.

The price moves are also driven by speculation over future growth, and cryptocurrency traders are betting that decentralized exchanges could gain market share over time. In the meantime analysts are crunching the numbers and realizing that the KNC tokens might provide more ongoing yield than the Binance coins.

BNB is often categorized by crypto-market taxonomists as a utility token, whereas KNC is often lumped in with other DeFi coins.

Related: The Federal Reserve’s Declining Balance Sheet Is Bearish for Bitcoin. Or Is It?

But Michael Gord, CEO of Toronto-based trading firm Global Digital Assets, says he looks at them side by side, as rivals in the exchange business.

“Kyber is actually competitive to exchanges like Binance,” Gord said in a phone interview.

Just this week, Kyber announced a protocol upgrade known as Katalyst that will allow KNC holders to earn so-called staking rewards – essentially like earning interest denominated in more of the same tokens – starting in a few weeks.

Those staking rewards will come from a cut of the trading fees borne by users of the decentralized exchange. At the current rate, the platform charges trading fees of 0.20%, some 65% of which go directly to stakers. But KNC holders also can vote to change the fee rates and payout mix.

Decentralized exchanges (DEXs) such as Kyber are trading platforms constructed atop the Ethereum blockchain, with built-in programming known as “smart contracts” that allow trading to take place without a middleman to hold funds and match orders. Binance, by contrast, has embraced the middleman role since it was set up in 2017 (though it also launched a DEX in 2019).

Here’s where the centralized exchanges are winning: first-mover advantage, reflected in their dominant share of trading volumes. According to the data aggregator Dune Analytics, decentralized exchanges are averaging a combined daily volume of about $60 million in July. And Binance alone, according to CoinGecko, has $2.1 billion in volume per day.

“DEXs are a great development within the digital-asset ecosystem to trade crypto to crypto,” David Lifchitz, chief investment officer for the Paris-based trading firm ExoAlpha, told First Mover in an email message. “But it’s not a scalable infrastructure, with the current trading volume, for an active trader.”

Jake Brukhman, managing director at token asset manager CoinFund, said that because DEX volumes are low, there’s “slippage,” the difference between the expected price of a trade and the price at which it’s actually executed.

“While I can exchange an asset instantly, I might actually pay a lot of slippage to do that,” Brukhman told CoinDesk in a phone interview.

Comparing the economics of the tokens requires some work. Kyber’s KNC token gives holders a return, or “yield” for providing liquidity, or “staking” by sending crypto to the KyberDAO smart contract.

Binance, in addition to providing discounts for fees paid in BNB tokens, occasionally “burns” some of the tokens or eliminates them from the outstanding supply, offering an additional reward in the form of anti-dilution.

Gord acknowledges Kyber’s network liquidity is still pretty paltry compared with Binance, and that makes it a non-starter for large trading volumes. But he sees the price jump in the KNC tokens as a bet that decentralized exchanges will continue to grow. 

“Once Kyber has much deeper liquidity it would impact our trading business more,” he said.

BTC: Price: $9,192 (BPI) | 24-Hr High: $9,441 | 24-Hr Low: $9,133

Trend: Bitcoin fell below $9,150 early Friday, reversing most of the gain from $9,060 to $9,480 seen in the first half of the week.  

The pullback has invalidated the bullish view put forward by Wednesday’s upside break of a falling channel represented by trendlines connecting June 1 and 22 highs and June 2 and 15 lows. 

Essentially, it’s a case of failed breakout, which chart analysts consider a powerful bearish signal. In addition, the 3% decline seen in the past 24 hours has established another bearish lower high on the daily chart, as noted by popular analyst Josh Rager. 

Even so, it is still too early to say the bears have regained control because the cryptocurrency is holding above $9,000. Sellers have failed multiple times in the last four weeks to establish a strong foothold below that psychological support. 

As such, the immediate outlook would remain neutral as long as prices are trapped in the range of $9,000 and $9,480 (Wednesday’s high). Acceptance under $9,000 may prove costly – so much so that the cryptocurrency may end up falling to $7,100, according to crypto market analyst Josh Olszewicz. 

Meanwhile, a move above $9,480 would put the focus on the psychological hurdle of $10,000 once more. Option traders are betting on a bullish breakout, as discussed Thursday. At press time, bitcoin is trading near $9,190, as per CoinDesk’s Bitcoin Price Index. 

• Blockchain Bites: CENTRE’s Blacklist, Brazil’s Stablecoin Boom and Coinbase Is Going Public?
• First Mover: Pie Anyone? DeFi Pushes ETF-Style Investing Toward Decentralization

In cryptocurrency markets, newfangled “decentralized exchanges” like Kyber are piddling compared with more-established and centralized venues like Binance.

But in the eyes of traders, it’s the upstarts who are winning lately – at least based on the year-to-date performance of digital tokens affiliated with the various exchanges.

Take Kyber Network Crystal (KNC), which is used to pay trading fees on the decentralized exchange Kyber. The token’s price has surged eight-fold in 2020. That compares with a 21% gain for Binance Coin (BNB), which customers of the exchange can use to pay trading fees, at a discounted rate.

Related: The Federal Reserve’s Declining Balance Sheet Is Bearish for Bitcoin. Or Is It?

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.

Part of the performance gap is due to the fast growth in usage of Kyber, one of the biggest players in the white-hot arena of decentralized finance, or DeFi. Daily transactions on the Kyber network so far in July are averaging more than double their June level, according to CryptoCompare.

The price moves are also driven by speculation over future growth, and cryptocurrency traders are betting that decentralized exchanges could gain market share over time. In the meantime analysts are crunching the numbers and realizing that the KNC tokens might provide more ongoing yield than the Binance coins.

BNB is often categorized by crypto-market taxonomists as a utility token, whereas KNC is often lumped in with other DeFi coins.

Related: Blockchain Bites: CENTRE’s Blacklist, Brazil’s Stablecoin Boom and Coinbase Is Going Public?

But Michael Gord, CEO of Toronto-based trading firm Global Digital Assets, says he looks at them side by side, as rivals in the exchange business.

“Kyber is actually competitive to exchanges like Binance,” Gord said in a phone interview.

Just this week, Kyber announced a protocol upgrade known as Katalyst that will allow KNC holders to earn so-called staking rewards – essentially like earning interest denominated in more of the same tokens – starting in a few weeks.

Those staking rewards will come from a cut of the trading fees borne by users of the decentralized exchange. At the current rate, the platform charges trading fees of 0.20%, some 65% of which go directly to stakers. But KNC holders also can vote to change the fee rates and payout mix.

Decentralized exchanges (DEXs) such as Kyber are trading platforms constructed atop the Ethereum blockchain, with built-in programming known as “smart contracts” that allow trading to take place without a middleman to hold funds and match orders. Binance, by contrast, has embraced the middleman role since it was set up in 2017 (though it also launched a DEX in 2019).

Here’s where the centralized exchanges are winning: first-mover advantage, reflected in their dominant share of trading volumes. According to the data aggregator Dune Analytics, decentralized exchanges are averaging a combined daily volume of about $60 million in July. And Binance alone, according to CoinGecko, has $2.1 billion in volume per day.

“DEXs are a great development within the digital-asset ecosystem to trade crypto to crypto,” David Lifchitz, chief investment officer for the Paris-based trading firm ExoAlpha, told First Mover in an email message. “But it’s not a scalable infrastructure, with the current trading volume, for an active trader.”

Jake Brukhman, managing director at token asset manager CoinFund, said that because DEX volumes are low, there’s “slippage,” the difference between the expected price of a trade and the price at which it’s actually executed.

“While I can exchange an asset instantly, I might actually pay a lot of slippage to do that,” Brukhman told CoinDesk in a phone interview.

Comparing the economics of the tokens requires some work. Kyber’s KNC token gives holders a return, or “yield” for providing liquidity, or “staking” by sending crypto to the KyberDAO smart contract.

Binance, in addition to providing discounts for fees paid in BNB tokens, occasionally “burns” some of the tokens or eliminates them from the outstanding supply, offering an additional reward in the form of anti-dilution.

Gord acknowledges Kyber’s network liquidity is still pretty paltry compared with Binance, and that makes it a non-starter for large trading volumes. But he sees the price jump in the KNC tokens as a bet that decentralized exchanges will continue to grow. 

“Once Kyber has much deeper liquidity it would impact our trading business more,” he said.

BTC: Price: $9,192 (BPI) | 24-Hr High: $9,441 | 24-Hr Low: $9,133

Trend: Bitcoin fell below $9,150 early Friday, reversing most of the gain from $9,060 to $9,480 seen in the first half of the week.  

The pullback has invalidated the bullish view put forward by Wednesday’s upside break of a falling channel represented by trendlines connecting June 1 and 22 highs and June 2 and 15 lows. 

Essentially, it’s a case of failed breakout, which chart analysts consider a powerful bearish signal. In addition, the 3% decline seen in the past 24 hours has established another bearish lower high on the daily chart, as noted by popular analyst Josh Rager. 

Even so, it is still too early to say the bears have regained control because the cryptocurrency is holding above $9,000. Sellers have failed multiple times in the last four weeks to establish a strong foothold below that psychological support. 

As such, the immediate outlook would remain neutral as long as prices are trapped in the range of $9,000 and $9,480 (Wednesday’s high). Acceptance under $9,000 may prove costly – so much so that the cryptocurrency may end up falling to $7,100, according to crypto market analyst Josh Olszewicz. 

Meanwhile, a move above $9,480 would put the focus on the psychological hurdle of $10,000 once more. Option traders are betting on a bullish breakout, as discussed Thursday. At press time, bitcoin is trading near $9,190, as per CoinDesk’s Bitcoin Price Index. 

• First Mover: Pie Anyone? DeFi Pushes ETF-Style Investing Toward Decentralization
• Bitcoin Option Traders Bet on Bullish Move Following Volatility Squeeze

The U.S. Federal Reserve’s balance sheet is contracting, but despite popular opinion that’s not necessarily bad news for bitcoin.

The central bank’s balance sheet declined by $88 billion to $6.97 trillion (-1.5%) in the week ending July 8, having hit a record high of $7.16 trillion in early June, according to the data source Federal Reserve Bank of St. Louis. The decline is the largest in 11 years.

The drop is a sign of the Fed starting to unwind the liquidity-boosting measures rolled out over the past four months to counter the economic effects of the coronavirus crisis. Some have anticipated a pullback in bitcoin prices as a result. 

Related: Market Wrap: Traders Buy the Dip and Bitcoin Holds at $9,200

That’s because the leading cryptocurrency by market value has recently developed a relatively strong positive correlation with the S&P 500. And Wall Street’s equity index has rallied by over 40% since a slump in March, largely on the back of Fed’s balance sheet expansion. 

Also read: Bitcoin’s Price Correlation With S&P 500 Hits Record Highs

As such, a contracting balance sheet could portend a pullback in stocks, and perhaps bitcoin.

However, zooming into the details of the Fed’s balance sheet reveals the reduction has been primarily driven by a drop in demand for emergency liquidity measures, a sign the coronavirus-induced stress in the financial system has eased. 

Related: Bitcoin App Bottlepay Is Back From the Dead With a New Lightning App

“Less emergency funding being used is a healthy sign,” said Richard Rosenblum, co-founder of GSR. “Markets might not be able to stand completely on their own two feet, but they are at least a bit further from code red emergency mode.”

Notably, dollar swap lines – reciprocal agreements between central banks to keep currency available for their commercial banks – have fallen by over $40 billion, as noted by Lyn Alden, founder of Lyn Alden Investment Strategy. 

The Fed opened dollar swap lines with other central banks after the coronavirus crash caused a dollar shortage in the international markets. Therefore, the latest decline in the dollar swap lines could be considered good news. 

Meanwhile, the balance of outstanding repurchase agreements, or repos, slipped to zero from $61.2 billion seen in the week ended July 1. Repos are a source of short-term funding for commercial banks. The Fed began injecting liquidity in the repo market in mid-September 2019 and ramped up the effort following the market crisis in March. 

As such, the decline in repos to zero indicates that the coronavirus-induced stress in the funding markets has eased significantly. 

However, the Fed is still injecting liquidity into the U.S. economy via purchases of U.S. treasuries at a faster pace. The central bank accumulated treasuries worth $18 billion during the past week, pushing the overall bond holdings to a new high of $4.23 trillion. 

All in all, the Fed’s balance sheet contraction and drop in repos and swap lines appear indicative of a Goldilocks scenario for equities, given the ongoing crisis at least, and seems unlikely to pose a threat to bitcoin’s price.

The cryptocurrency would still face stronger selling pressure if stocks once more collapse on adverse coronavirus news. But the market is still showing resilience with a measured drop, even though U.S. registered 65,551 new coronavirus cases on Thursday, a new daily record, according to John Hopkins University.

At press time, futures tied to the S&P 500 are reporting a 0.33% decline, while bitcoin is changing hands near $9,170, having faced rejection above $9,400 on Thursday. 

Disclosure: The author holds no cryptocurrency assets at the time of writing.

• Bitcoin Reaches Record High Correlation to S&P 500
• First Mover: Kyber Token’s Eightfold Increase Reveals Bet on Future Market-Share Growth

The U.S. Federal Reserve’s balance sheet is contracting, but despite popular opinion that’s not necessarily bad news for bitcoin.

The central bank’s balance sheet declined by $88 billion to $6.97 trillion (-1.5%) in the week ending July 8, having hit a record high of $7.16 trillion in early June, according to the data source Federal Reserve Bank of St. Louis. The decline is the largest in 11 years.

The drop is a sign of the Fed starting to unwind the liquidity-boosting measures rolled out over the past four months to counter the economic effects of the coronavirus crisis. Some have anticipated a pullback in bitcoin prices as a result. 

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

That’s because the leading cryptocurrency by market value has recently developed a relatively strong positive correlation with the S&P 500. And Wall Street’s equity index has rallied by over 40% since a slump in March, largely on the back of Fed’s balance sheet expansion. 

Also read: Bitcoin’s Price Correlation With S&P 500 Hits Record Highs

As such, a contracting balance sheet could portend a pullback in stocks, and perhaps bitcoin.

However, zooming into the details of the Fed’s balance sheet reveals the reduction has been primarily driven by a drop in demand for emergency liquidity measures, a sign the coronavirus-induced stress in the financial system has eased. 

Related: Market Wrap: Stocks Tick Downward and so Does Bitcoin, to $9,200

“Less emergency funding being used is a healthy sign,” said Richard Rosenblum, co-founder of GSR. “Markets might not be able to stand completely on their own two feet, but they are at least a bit further from code red emergency mode.”

Notably, dollar swap lines – reciprocal agreements between central banks to keep currency available for their commercial banks – have fallen by over $40 billion, as noted by Lyn Alden, founder of Lyn Alden Investment Strategy. 

The Fed opened dollar swap lines with other central banks after the coronavirus crash caused a dollar shortage in the international markets. Therefore, the latest decline in the dollar swap lines could be considered good news. 

Meanwhile, the balance of outstanding repurchase agreements, or repos, slipped to zero from $61.2 billion seen in the week ended July 1. Repos are a source of short-term funding for commercial banks. The Fed began injecting liquidity in the repo market in mid-September 2019 and ramped up the effort following the market crisis in March. 

As such, the decline in repos to zero indicates that the coronavirus-induced stress in the funding markets has eased significantly. 

However, the Fed is still injecting liquidity into the U.S. economy via purchases of U.S. treasuries at a faster pace. The central bank accumulated treasuries worth $18 billion during the past week, pushing the overall bond holdings to a new high of $4.23 trillion. 

All in all, the Fed’s balance sheet contraction and drop in repos and swap lines appear indicative of a Goldilocks scenario for equities, given the ongoing crisis at least, and seems unlikely to pose a threat to bitcoin’s price.

The cryptocurrency would still face stronger selling pressure if stocks once more collapse on adverse coronavirus news. But the market is still showing resilience with a measured drop, even though U.S. registered 65,551 new coronavirus cases on Thursday, a new daily record, according to John Hopkins University.

At press time, futures tied to the S&P 500 are reporting a 0.33% decline, while bitcoin is changing hands near $9,170, having faced rejection above $9,400 on Thursday. 

Disclosure: The author holds no cryptocurrency assets at the time of writing.

• Bitcoin Started Moving in Sync With S&P 500, Volume Dropped, Kraken Says in June Volatility Report
• Bitcoin Option Traders Bet on Bullish Move Following Volatility Squeeze

Crypto scams on video hosting platform YouTube are continuing to prey on unsuspecting victims.

• In scam videos seen this week, the identities of Ethereum founder Vitalik Buterin and Tyler and Cameron Winklevoss, founders of the U.S.-based Gemini exchange, have been used to lure people into giving up cryptocurrencies like bitcoin and ether.
• The “giveaway” scams are based on the promise of doubling one’s funds after send an initial amount to a wallet address via QR code.
• Victims, in fact, receive nothing in return and lose the crypto they sent.
• In separate videos, which have since been removed by YouTube, both Buterin and the Winklevoss twins can be seen talking on stage, praising the benefits of their projects.
• The video grabbed for one of the scams featuring Buterin appears to be taken from an Ethereum event held in London earlier this year.
• YouTube has been under fire from Ripple Labs and CEO Brad Garlinghouse, who are suing over allegations the social media giant fails to police its platform against fake XRP giveaway scams.
• YouTube frequently blocks cryptocurrency-focused accounts that are not scams. The firm has previously said errors occur because of the sheer volume of content it has to monitor.
• YouTube, Gemini Exchange and the Ethereum Foundation did not return requests for comment by press time.

See also: Encrypted Messaging Site Privnote Cloned to Steal Bitcoin

• Ferrari, McLaren and $15M in Crypto Seized as Chinese Police Bust Arbitrage Scam
• Social Media Bans ‘Highlight the Profound Censorship on Web 2.0’
• Singapore Man Fined $72K for Promoting Crypto Ponzi OneCoin
• Singapore Begins Crackdown on Unlicensed Bitcoin Sellers

Crypto scams on video hosting platform YouTube are continuing to prey on unsuspecting victims.

• In scam videos seen this week, the identities of Ethereum founder Vitalik Buterin and Tyler and Cameron Winklevoss, founders of the U.S.-based Gemini exchange, have been used to lure people into giving up cryptocurrencies like bitcoin and ether.
• The “giveaway” scams are based on the promise of doubling one’s funds after send an initial amount to a wallet address via QR code.
• Victims, in fact, receive nothing in return and lose the crypto they sent.
• In separate videos, which have since been removed by YouTube, both Buterin and the Winklevoss twins can be seen talking on stage, praising the benefits of their projects.
• The video grabbed for one of the scams featuring Buterin appears to be taken from an Ethereum event held in London earlier this year.
• YouTube has been under fire from Ripple Labs and CEO Brad Garlinghouse, who are suing over allegations the social media giant fails to police its platform against fake XRP giveaway scams.
• YouTube frequently blocks cryptocurrency-focused accounts that are not scams. The firm has previously said errors occur because of the sheer volume of content it has to monitor.
• YouTube, Gemini Exchange and the Ethereum Foundation did not return requests for comment by press time.

See also: Encrypted Messaging Site Privnote Cloned to Steal Bitcoin

• Ferrari, McLaren and $15M in Crypto Seized as Chinese Police Bust Arbitrage Scam
• Social Media Bans ‘Highlight the Profound Censorship on Web 2.0’
• Singapore Man Fined $72K for Promoting Crypto Ponzi OneCoin
• Singapore Begins Crackdown on Unlicensed Bitcoin Sellers

Over the past two years, many bitcoin believers donated cryptocurrency to initiatives in Venezuela, often holding up the small nation as the pinnacle example of the technology’s potential.

The truth on the ground is much more nuanced. 

The fintech startup AirTM distributed roughly $300,000 worth of cryptocurrency donations to 60,829 ID-verified Venezuelan e-wallets throughout 2019. The donated crypto came from entities like GiveCrypto, the Electric Coin Company and the artist Cryptograffiti. 

Related: Ethereum and EOSIO Square Up Over Enterprise Blockchain Business in Latin America

“To incentivize donations, the largest donor did receive a piece of the mural,” Cryptograffiti told CoinDesk, describing the crowdfunded mural project. 

Read more: Bolivars to Bitcoin: Activists Take Down Venezuela’s Maduro in Crypto Art Exhibit

The muralist’s crowdfunding campaign made up the bulk of bitcoin (BTC) donations, which in total represented less than 12% of funds donated to AirTM’s Venezuelan users. The bulk of donations were assets such as bitcoin cash (BCH), zcash (ZEC) and dai (DAI) and amounted to roughly $5 per donation. AirTM’s data shows few users chose to withdraw the crypto donations, opting instead to keep it inside the AirTM system.

According to an AirTM user survey, only 57% of recipients engaged with the funds. For some, even converting crypto to AirTM credits (AirUSD) inside a custodial user account was too much hassle.

Related: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

For those who did access the funds, more than 2,000 Venezuelans said it was helpful for buying food. (You can see the full survey results here.) They typically did this by using AirTM to cash out bolivars as needed, using the digital wallet provider like a bank. Others used it as savings.

“So far I only use this crypto in AirTM,” one such user, Neysa Hurtado, said in an interview. 

Read more: Crypto Exchange AirTM Targets Troubled Markets With $7 Million Raise

Even bitcoiners like freelance engineer Geraldo Meneses, who does hold a small amount of crypto in his own wallet, preferred to use most of the donated crypto as AirTM credits. 

“Bitcoin is a way to charge for my work,” Meneses said via WhatsApp. “AirTM is my exchange platform and personal bank.”

Meneses said he used the extra bitcoin from this charity campaign to buy medicine for his mother, which was expensive and had to be shipped from abroad. 

Before the coronavirus crisis, he said it was possible to ship medicine from Europe within roughly two weeks, but now it can take up to a month. So having the capital to order in advance is important. 

“Many people are looking for ways to exchange dollars and cryptocurrencies,” he said. “The most cunning [exchangers] try to defraud innocent people.”

This was the benefit AirTM offered. Customers trusted the platform and knew how to use it, although few know how to operate zcash or bitcoin wallets. One new AirTM user, attorney Michael Barráez, said this was his first time learning about cryptocurrency. He said he might buy some bitcoin to hold for himself, as savings.

Read more: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

“When democracy is back and the U.S. sanctions are over, our economy will flourish again,” Barráez said. 

Even if users have the skills to use cryptocurrency, some of them still prefer to manage most of their money with the option for recourse that a company provides. Others don’t want to hold a highly volatile asset at all. 

“I could see that the money [AirUSD] did not devalue,” first-time crypto user Jannet García de Rivas, an experienced engineer who works in the tech industry, said about why he converted the crypto donation. 

If Venezuela offers an example of bitcoin usage, then it appears there is user demand for bitcoin-friendly services provided by a regular fintech company. 

In short, people trust the service provider, even if they may occasionally choose to hold a small amount of bitcoin themselves. The service provider makes it easier for them to transact with bitcoin across borders or liquidate it. Other users, with specific needs, require lots of planning and preparation in order to use bitcoin directly and be their own proverbial banker.

“There is still so much work to be done in order to have bitcoin adoption in the region,” Cryptograffiti said. “For example, we had a random selection of refugees participate who just happened to be in the area, many of whom didn’t even have email addresses. In order to be the most effective, we could have tried to target a particular subset ahead of time.”

• Venezuela Is a Testing Ground for Digital Dollarization (and Zelle Doesn’t Like It)
• US Offers $5M Bounty for Arrest of Venezuela’s Crypto Chief

Over the past two years, many bitcoin believers donated cryptocurrency to initiatives in Venezuela, often holding up the small nation as the pinnacle example of the technology’s potential.

The truth on the ground is much more nuanced. 

The fintech startup AirTM distributed roughly $300,000 worth of cryptocurrency donations to 60,829 ID-verified Venezuelan e-wallets throughout 2019. The donated crypto came from entities like GiveCrypto, the Electric Coin Company and the artist Cryptograffiti. 

Related: Ethereum and EOSIO Square Up Over Enterprise Blockchain Business in Latin America

“To incentivize donations, the largest donor did receive a piece of the mural,” Cryptograffiti told CoinDesk, describing the crowdfunded mural project. 

Read more: Bolivars to Bitcoin: Activists Take Down Venezuela’s Maduro in Crypto Art Exhibit

The muralist’s crowdfunding campaign made up the bulk of bitcoin donations, which in total represented less than 12% of funds donated to AirTM’s Venezuelan users. The bulk of donations were assets like bitcoin cash (BCH), zcash (ZEC) and dai (DAI) and amounted to roughly $5 per donation. AirTM’s data shows that few users chose to withdraw the crypto donations, opting instead to keep it inside the AirTM system.

According to an AirTM user survey, only 57% of recipients engaged with the funds. For some, even converting crypto to AirTM credits (AirUSD) inside a custodial user account was too much hassle.

Related: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

For those who did access the funds, more than 2,000 Venezuelans said it was helpful for buying food. (You can see the full survey results here.) They typically did this by using AirTM to cash out bolivars as needed, using the digital wallet provider like a bank. Others used it as savings.

“So far I only use this crypto in AirTM,” one such user, Neysa Hurtado, said in an interview. 

Read more: Crypto Exchange AirTM Targets Troubled Markets With $7 Million Raise

Even bitcoiners like freelance engineer Geraldo Meneses, who does hold a small amount of crypto in his own wallet, preferred to use most of the donated crypto as AirTM credits. 

“Bitcoin is a way to charge for my work,” Meneses said via WhatsApp. “AirTM is my exchange platform and personal bank.”

Meneses said he used the extra bitcoin from this charity campaign to buy medicine for his mother, which was expensive and had to be shipped from abroad. 

Before the coronavirus crisis, he said it was possible to ship medicine from Europe within roughly two weeks, but now it can take up to a month. So having the capital to order in advance is important. 

“Many people are looking for ways to exchange dollars and cryptocurrencies,” he said. “The most cunning [exchangers] try to defraud innocent people.”

This was the benefit AirTM offered. Customers trusted the platform and knew how to use it, although few know how to operate zcash or bitcoin wallets. One new AirTM user, attorney Michael Barráez, said this was his first time learning about cryptocurrency. He said he might buy some bitcoin to hold for himself, as savings.

Read more: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

“When democracy is back and the U.S. sanctions are over, our economy will flourish again,” Barráez said. 

Even if users have the skills to use cryptocurrency, some of them still prefer to manage most of their money with the option for recourse that a company provides. Others don’t want to hold a highly volatile asset at all. 

“I could see that the money [AirUSD] did not devalue,” first-time crypto user Jannet García de Rivas, an experienced engineer who works in the tech industry, said about why he converted the crypto donation. 

If Venezuela offers an example of bitcoin usage, then it appears there is user demand for bitcoin-friendly services provided by a regular fintech company. 

In short, people trust the service provider, even if they may occasionally choose to hold a small amount of bitcoin themselves. The service provider makes it easier for them to transact with bitcoin across borders or liquidate it. Other users, with specific needs, require lots of planning and preparation in order to use bitcoin directly and be their own proverbial banker.

“There is still so much work to be done in order to have bitcoin adoption in the region,” Cryptograffiti said. “For example, we had a random selection of refugees participate who just happened to be in the area – many of whom didn’t even have email addresses. In order to be the most effective, we could have tried to target a particular subset ahead of time.”

• Venezuela Is a Testing Ground for Digital Dollarization (and Zelle Doesn’t Like It)
• US Offers $5M Bounty for Arrest of Venezuela’s Crypto Chief

There may be an enterprise blockchain arms race brewing in Latin America.

LatamLink, an alliance of three organizations involved in the launch of the EOS public blockchain in 2018, is now busy integrating the EOSIO software for enterprise uses. The group seems to be competing for business in the region with ConsenSys, a globally distributed outfit focused on all things Ethereum.

Up for grabs is LACChain, a blockchain framework that has the backing of the Inter-American Development Bank (IDB) and a host of public and private entities across Latin America and the Caribbean.

Related: A Rare Glimpse Into How Crypto Is Really Used in Venezuela

ConsenSys set up a Besu testnet for LACChain early last year, to create infrastructure that is both public and permissioned, where necessary, to accommodate digital identity and tokenized fiat money. It’s meant to enable use cases in government procurement, land registry programs, social impact projects and so on.

Read more: CoinDesk 50: Besu, the Marriage of Ethereum and Hyperledger

The Latin American EOS contingent is a voluntary alliance put together by EOS Costa Rica, with EOS Argentina and EOS Venezuela as founding members. All three organizations have experience running EOSIO infrastructure and were genesis block producers during the EOS mainnet launch, for which EOSIO creator Block.one raised over $4 billion in a protracted token sale.

Now EOS Costa Rica is set to unveil a testnet for LACChain, setting off a blockchain beauty contest of sorts between the two technology tribes – one that may ultimately lead to the beginnings of EOSIO-Ethereum interoperability.

Related: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

The choice is LACChain’s.

“They [LACChain] can see if there is interoperability between the protocols, or choose one over the other,” said EOS Costa Rica co-founder Edgar Fernández. “You can see them side by side.” 

For his part, Fernández said it’s not going to be a “winner takes all” battle to see which will be the preferred mainnet option. Certain apps or use cases may be better suited to Ethereum; others might work best on EOSIO.

Something both sides agree on, though: The project could be a big deal.

“If LACChain becomes the gold standard, given the IDB’s deep relationships with governments, the private sector and international organizations, ConsenSys technology has the potential to serve billions of people across the world,” ConsenSys spokesperson Kara Miley told CoinDesk via email. 

ConsenSys added that it had not yet entered into any discussions about interoperability with EOSIO in the context of LACChain.

Read more: Inter-American Development Bank to Pilot Land Registries on Blockchain

LACChain tech lead Marcos Allende was at pains to point out the project was set up to be “tech agnostic” and is not a competition or a race between protocols.

“We are not launching the EOSIO network because there is anything wrong with Besu,” said Allende. “It’s not a competition between Besu and EOSIO to see which one is better or worse. It’s not a race to see which one has more transactions per second or better privacy. LACChain is about collaboration.” 

Being careful not to protest the case too much, IDB Lab Principal Specialist Alejandro Pardo reiterated the project’s original “agnostic, multiplatform” mission. 

“As part of our learning and exploration, we welcome LatamLink and EOS as part of LACChain, as we are fully aware of the exceptional value they bring,” Pardo said.

EOS Costa Rica recently demonstrated just how it could shake up the enterprise blockchain world. In May of this year, the group fielded an audacious winning bid to provide accountancy major Grant Thornton with a blockchain for intercompany transactions. Speed and scalability were deciding factors, the accounting firm said. 

Fernández of EOS Costa Rica said the Grant Thornton team had weighed Ethereum and Hyperledger before choosing EOSIO. 

LACChain has also gone through a process of tire-kicking, he said, starting out with Quorum – the Ethereum-based enterprise client built by JPMorgan Chase – and then also testing Linux Foundation-affiliated Hyperledger Fabric, the preferred enterprise blockchain platform of IBM. 

Read more: Hyperledger Conference Shows Where Blockchain Can Fight Global Warming

“IDB Labs started out with Quorum but it didn’t really work, it had too many problems,” Fernández said. “Then with Hyperledger Fabric, they found it wasn’t exactly what they were looking for either.”

Allende said LACChain has done tests with Hyperledger Fabric but is yet to launch a Fabric network. “We are interested in [Fabric], but we found it easier with Ethereum-based tech, and now with EOSIO, to get what we were looking for,” Allende said.

One thing that’s clear is the LatamLink team has had its sights locked on LACChain since its inception. The group made “a very interesting” presentation to IDB and LACChain around November of last year, according to Allende.

In the opinion of Fernández, bringing in some homegrown engineering talent is another important factor when it comes to LACChain.

Read more: Bitcoin in Emerging Markets: Latin America

“We know what EOSIO can do, and we wanted to show that Latin American talent can also build on this Latin American blockchain,” said Fernández. “We don’t need to rely on North America or Europe or Asia. We have the ability and talent to run this infrastructure from three Latin American tech companies.”

That said, LACChain’s Allende wanted to qualify this point, which he said had no bearing on the decision to run the EOSIO network.

“It’s great that we are bringing in more Latin American talent. But that is not the reason we are launching EOSIO. If the developers from LatamLink were from the U.S., we would be doing exactly the same thing,” Allende said.

• ConsenSys, Polychain, Tron, CipherTrace: Blockchain Startups Got $30M+ in US ‘PPP’ Bailout Loans
• Irish Charity Receives $1.1M Grant to Build Blockchain Platform for Aid Distribution

There may be an enterprise blockchain arms race brewing in Latin America.

LatamLink, an alliance of three organizations involved in the launch of the EOS public blockchain in 2018, is now busy integrating the EOSIO software for enterprise uses. The group seems to be competing for business in the region with ConsenSys, a globally distributed outfit focused on all things Ethereum.

Up for grabs is LACChain, a blockchain framework that has the backing of the Inter-American Development Bank (IDB) and a host of public and private entities across Latin America and the Caribbean.

Related: A Rare Glimpse Into How Crypto Is Really Used in Venezuela

ConsenSys set up a Besu testnet for LACChain early last year, to create infrastructure that is both public and permissioned, where necessary, to accommodate digital identity and tokenized fiat money. It’s meant to enable use cases in government procurement, land registry programs, social impact projects and so on.

Read more: CoinDesk 50: Besu, the Marriage of Ethereum and Hyperledger

The Latin American EOS contingent is a voluntary alliance put together by EOS Costa Rica, with EOS Argentina and EOS Venezuela as founding members. All three organizations have experience running EOSIO infrastructure and were genesis block producers during the EOS mainnet launch, for which EOSIO creator Block.one raised over $4 billion in a protracted token sale.

Now EOS Costa Rica is set to unveil a testnet for LACChain, setting off a blockchain beauty contest of sorts between the two technology tribes – one that may ultimately lead to the beginnings of EOSIO-Ethereum interoperability.

Related: Brazil’s Ailing Economy Is Helping Dollar-Pegged Stablecoins Find Traction

The choice is LACChain’s.

“They [LACChain] can see if there is interoperability between the protocols, or choose one over the other,” said EOS Costa Rica co-founder Edgar Fernández. “You can see them side by side.” 

For his part, Fernández said it’s not going to be a “winner takes all” battle to see which will be the preferred mainnet option. Certain apps or use cases may be better suited to Ethereum; others might work best on EOSIO.

Something both sides agree on, though: The project could be a big deal.

“If LACChain becomes the gold standard, given the IDB’s deep relationships with governments, the private sector and international organizations, ConsenSys technology has the potential to serve billions of people across the world,” ConsenSys spokesperson Kara Miley told CoinDesk via email. 

ConsenSys added that it had not yet entered into any discussions about interoperability with EOSIO in the context of LACChain.

Read more: Inter-American Development Bank to Pilot Land Registries on Blockchain

LACChain tech lead Marcos Allende was at pains to point out the project was set up to be “tech agnostic” and is not a competition or a race between protocols.

“We are not launching the EOSIO network because there is anything wrong with Besu,” said Allende. “It’s not a competition between Besu and EOSIO to see which one is better or worse. It’s not a race to see which one has more transactions per second or better privacy. LACChain is about collaboration.” 

Being careful not to protest the case too much, IDB Lab Principal Specialist Alejandro Pardo reiterated the project’s original “agnostic, multiplatform” mission. 

“As part of our learning and exploration, we welcome LatamLink and EOS as part of LACChain, as we are fully aware of the exceptional value they bring,” Pardo said.

EOS Costa Rica recently demonstrated just how it could shake up the enterprise blockchain world. In May of this year, the group fielded an audacious winning bid to provide accountancy major Grant Thornton with a blockchain for intercompany transactions. Speed and scalability were deciding factors, the accounting firm said. 

Fernández of EOS Costa Rica said the Grant Thornton team had weighed Ethereum and Hyperledger before choosing EOSIO. 

LACChain has also gone through a process of tire-kicking, he said, starting out with Quorum – the Ethereum-based enterprise client built by JPMorgan Chase – and then also testing Linux Foundation-affiliated Hyperledger Fabric, the preferred enterprise blockchain platform of IBM. 

Read more: Hyperledger Conference Shows Where Blockchain Can Fight Global Warming

“IDB Labs started out with Quorum but it didn’t really work, it had too many problems,” Fernández said. “Then with Hyperledger Fabric, they found it wasn’t exactly what they were looking for either.”

Allende said LACChain has done tests with Hyperledger Fabric but is yet to launch a Fabric network. “We are interested in [Fabric], but we found it easier with Ethereum-based tech, and now with EOSIO, to get what we were looking for,” Allende said.

One thing that’s clear is the LatamLink team has had its sights locked on LACChain since its inception. The group made “a very interesting” presentation to IDB and LACChain around November of last year, according to Allende.

In the opinion of Fernández, bringing in some homegrown engineering talent is another important factor when it comes to LACChain.

Read more: Bitcoin in Emerging Markets: Latin America

“We know what EOSIO can do, and we wanted to show that Latin American talent can also build on this Latin American blockchain,” said Fernández. “We don’t need to rely on North America or Europe or Asia. We have the ability and talent to run this infrastructure from three Latin American tech companies.”

That said, LACChain’s Allende wanted to qualify this point, which he said had no bearing on the decision to run the EOSIO network.

“It’s great that we are bringing in more Latin American talent. But that is not the reason we are launching EOSIO. If the developers from LatamLink were from the U.S., we would be doing exactly the same thing,” Allende said.

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Crypto trading platform bitFlyer is developing a digital wallet for Brave browser users in Japan, the companies announced Thursday. 

BitFlyer, which claims to be Japan’s largest cryptocurrency exchange by bitcoin trading volume, has partnered with the privacy-focused browser’s subsidiary, Brave Software International SEZC, which performs token operations, to offer the wallet feature to users of both companies.

Read more: Crypto Exchanges Must Stop Acting Like Casinos in Wake of Robinhood Suicide: bitFlyer Exec

Related: Crypto Exchanges Must Stop Acting Like Casinos in Wake of Robinhood Suicide: bitFlyer Exec

Ryotaro Chikaki, Brave’s chief marketing officer for Asia, told CoinDesk via email the wallet feature was already available to Brave users outside Japan, and that the development of a crypto wallet is essential to “realize a new ecosystem.” 

“We decided to work with bitFlyer as they’re the largest exchange in Japan with high trust by users for its security standard,” Chikaki said. “Also, they are one of the key players in crypto-asset and blockchain technology. For Brave, it was a natural choice to work with them to expand our ecosystem in Japan.”

In a press statement, bitFlyer said it listed Brave’s basic attention token (BAT) in April 2020 and will now be Brave’s first crypto wallet partner in Japan.

Read more: Compound’s ‘Yield Farmers’ Briefly Turned BAT Into DeFi’s Largest Coin

Related: Brave Browser’s Affiliate Link Controversy, Explained

“By leveraging the expertise and security that has characterized us since 2014, we will build a crypto asset wallet for Brave browser users to make owning and storing crypto as convenient as possible,” a bitFlyer spokesperson told CoinDesk via email. 

Earlier this year, Brave partnered with Binance to build an in-browser crypto trading tool, and was later involved in a controversy where the secure browser automatically added a URL tag when users typed “Binance” into the browser, suggesting visits to the exchange were being tracked.   

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Crypto trading platform bitFlyer is developing a digital wallet for Brave browser users in Japan, the companies announced Thursday. 

BitFlyer, which claims to be Japan’s largest cryptocurrency exchange by bitcoin trading volume, has partnered with the privacy-focused browser’s subsidiary, Brave Software International SEZC, which performs token operations, to offer the wallet feature to users of both companies.

Read more: Crypto Exchanges Must Stop Acting Like Casinos in Wake of Robinhood Suicide: bitFlyer Exec

Related: Crypto Exchanges Must Stop Acting Like Casinos in Wake of Robinhood Suicide: bitFlyer Exec

Ryotaro Chikaki, Brave’s chief marketing officer for Asia, told CoinDesk via email that the wallet feature was already available to Brave users outside Japan, and that the development of a crypto wallet is essential to “realize a new ecosystem.” 

“We decided to work with bitFlyer as they’re the largest exchange in Japan with high trust by users for its security standard,” Chikaki said. “Also, they are one of the key players in crypto-asset and blockchain technology. For Brave, it was a natural choice to work with them to expand our ecosystem in Japan.”

In a press statement, bitFlyer said it listed Brave’s basic attention token (BAT) in April 2020 and will now be Brave’s first crypto wallet partner in Japan.

Read more: Compound’s ‘Yield Farmers’ Briefly Turned BAT Into DeFi’s Largest Coin

Related: Brave Browser’s Affiliate Link Controversy, Explained

“By leveraging the expertise and security that has characterized us since 2014, we will build a crypto asset wallet for Brave browser users to make owning and storing crypto as convenient as possible,” a bitFlyer spokesperson told CoinDesk via email. 

Earlier this year, Brave partnered with Binance to build an in-browser crypto trading tool, and was later involved in a controversy where the secure browser automatically added a URL tag when users typed “Binance” into the browser, suggesting visits to the exchange were being tracked.   

• Japan’s Biggest Banks Are Talking About Building a Digital Payments System
• Coincheck Customers Fall Victim to Data Breach After Domain Account Error

Coinbase has scheduled its first-ever investor day for Aug. 14, amid rumors that the crypto exchange is exploring a public stock listing.

It is unclear, however, whether the virtual event is related to the rumored efforts to go public. A Coinbase spokesperson confirmed the meeting is coming but said it was meant simply “to facilitate a wider understanding of cryptocurrencies and blockchain technology.”

“This will not be a traditional investor day, but rather an opportunity to hear our perspective on the cryptoeconomy and learn about Coinbase’s role in the ecosystem,” said the spokesperson, Daniel Harrison, in a prepared statement. He declined to provide further details.

Related: Coinbase Exploring Stock Market Listing, Reuters Reports

Reuters reported earlier Thursday that Coinbase was seeking legal teams in advance of filing for a public offering with the Securities and Exchange Commission (SEC), ahead of a direct listing. In a direct listing, shareholders in the private market are able to sell their holdings though the company itself does not issue new shares or raise additional money.

An investor day can often be a harbinger of a planned direct listing, as Jamie McGurk, a former operating partner at Andreessen Horowitz (a16z), wrote on the venture capital firm’s blog lost year. 

“The company will invite investors to their Investor Day, where they will publicly talk about the company and financial results – though still only about historical performance,” wrote McGurk (now a managing partner with Coatue Management), noting that this takes place about five weeks prior to the first trading day. 

A16z, it should be noted, is one of Coinbase’s investors, including leading its $25 million Series B round in December 2013. 

Related: Circle Confirms Freezing $100K in USDC at Law Enforcement’s Request

Direct listings allow existing shareholders, such as venture capitalists, to trade their equity in a public market without the company itself selling any new shares. Silicon Valley darlings Slack and Spotify previously followed this route, which minimizes the use of traditional Wall Street middlemen.

Such a route does not preclude a later public offering. In fact, it can make them more successful. 

“If further financing is needed in the future, the company now has access to the public capital markets as a seasoned issuer, which is one of the primary benefits of being public anyway,” McGurk wrote.

One person with knowledge of the upcoming meeting said a direct listing would make sense for Coinbase now, with many people in crypto anticipating an upward trajectory to the market soon. 

As newer companies like Compound and Kyber use innovative methods to extend ownership of their platforms to users, a direct listing would be the most cost-efficient way to provide Coinbase users with access to shares in the company, the source noted, while still adhering to its legal structure.  

Since its founding in 2012, Coinbase has raised a total of $547 million, according to Crunchbase. Its Series E round, in October 2018, valued the company at $8 billion. The San Francisco-based company boasts more than 35 million users and would be the first major U.S. crypto startup to go public, if it were to pursue a listing.

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Bitcoin is back at $9,200 Thursday as crypto derivatives helped push its price down and equities closed lower.

• Bitcoin (BTC) trading around $9,211 as of 20:00 UTC (4 p.m. ET), slipping 2.3% over the previous 24 hours.
• Bitcoin’s 24-hour range: $9,154-$9,469
• BTC below 10-day and 50-day moving average, a bearish signal for market technicians.

When stocks overall trend lower, it often leads to bitcoin prices dropping, said Karl Samsen of Global Digital Assets. He added that as public companies continue to release their dismal quarterly business results, equities will drop even more. “We’re seeing a W-effect in terms of the COVID-19 reopening” of the economy, he told CoinDesk. Thus, the stock markets aren’t performing well Thursday.

• Asia’s Nikkei 225 closed flat, eking out a 0.40% gain as transportation and real estate stocks pushed up the index.
• Europe’s FTSE 100 index ended the day down 1.7%. Rolls-Royce stock fell 11% on poor first-half financial results.
• The U.S. S&P 500 was in the red 0.56% as losses in retail hammered the index, even while tech stocks were mostly up for the day.

Read More: Bitcoin Started Moving in Sync With S&P 500, Volume Dropped, in June 

Related: Bitcoin Started Moving in Sync With S&P 500, Volume Dropped, Kraken Says in June Volatility Report

As spot bitcoin headed lower Thursday, the cryptocurrency derivatives market saw its first excitement in a week as sell liquidations popped up on BitMEX. Traders who were long bitcoin saw over $20 million in BitMEX positions exited as price dropped on the spot exchanges such as Coinbase. 

Meanwhile, traders continue to place fewer bitcoin option bets, a sign they don’t expect crypto volatility to return – at least not yet, according to Vishal Shah, an options trader and founder of exchange Alpha5.

“When volatility is much lower, as it is now, there is no natural game,” said Shah. “It’s not worth it to sell options down here, and hence activity comes to a standstill,” he added. Indeed, the volume on options market is much lower, and the amount of traders using the commodities exchange CME for bitcoin options have dried up in July.

“Honestly, it is frustrating for all of us – lower volatility and a narrower range,” said Christopher Thomas of cryptocurrency broker Swissquote. “We’ll likely explode out of it at some point. We need a trigger.” 

Related: Bitcoin Option Traders Bet on Bullish Move Following Volatility Squeeze

Nevertheless, things change, especially in uncertain times, said George Clayton, managing partner of New York-based Cryptanalysis Capital. “Crypto never stays in one place for long,” Clayton said. “I don’t like the technical picture, but a big move in either direction wouldn’t surprise me.”

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Thursday, trading around $239 and slipping 3.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The total value locked in Curve is $71 million, the second-highest for a decentralized exchange, or DEX. Curve is used to quickly trade between stablecoins and has $12 million in daily trading volume, just behind Uniswap for DEXs. 

Peter Chan, a trader at Hong Kong-based OneBit Quant, says Curve could see increased volume due to traders moving out of USDC and into other stablecoins amid recent news that CENTRE, the consortium behind USDC, froze $100,000 worth of the token in one account at the behest of an unspecified law enforcement agency. 

Read More: Circle Confirms Freezing $100K in USDC at Law Enforcement’s Request

“I saw this news about USDC freezing assets of a few addresses,” Chan said. “Quite concerned about it. Might see flow on USDC switching to other stablecoins”.

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

• stellar (XLM) + 12%
• decred (DCR)+ 3.9%
• dogecoin (DOGE) + 0.52%

Read More: Hong Kong’s National Security Law Could Threaten Local Crypto Brokerages

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

• cardano (ADA) – 8.8%
• 0x (ZRX) – 7.4%
• tezos (XTZ) – 6.7%

Read More: London Stock Exchange Parent Assigns ‘Bar Codes’ to 169 Cryptos

Commodities:

• Oil is down 3.4%. Price per barrel of West Texas Intermediate crude:  $39.46.
• Gold is holding on around $1,800 Thursday, in the red by just 0.30%.

Read More: DeFi Pushes ETF-Style Investing Toward Decentralization

Treasurys:

• U.S. Treasury bonds all slipped Thursday Yields, which move in the opposite direction as price, were down most on the 10-year, in the red 9%.

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Cryptocurrency exchange Bitfinex will have to face allegations from New York State that it hid millions in lost funds, according to a ruling by the State Supreme Court’s Appellate Division on Thursday. 

New York prosecutors alleged in April 2019 that Bitfinex lost $850 million in client and corporate funds, and then used money from affiliated stablecoin Tether to cover the loss. Bloomberg first reported the ruling.

iFinex, which operates both Bitfinex and Tether, argued the funds had been deposited with a Panama-based company and were later seized by authorities in different countries. The firm had earlier also said it has been working to recover the funds seized by the Portuguese, Polish and American governments. 

Related: Tron Arbitration Challenged in Hostile Work Environment Lawsuit

In its decision, the appeals court rejected the argument that tether was neither a commodity nor a security, and affirmed the stablecoin falls under the court’s jurisdiction. 

“Not even virtual currencies are above the law,” New York Attorney General Letitia James told CoinDesk in a statement.

As it’s headquartered in Hong Kong and registered in the British Virgin Islands, Bitfinex had also argued it does not fall under the jurisdiction of state authorities and doesn’t cater to local traders. 

The court rejected the argument on the grounds the Attorney General’s office was seeking documents going back to 2015, and iFinex had permitted New York customers to trade on the Bitfinex platform until January 2017. In addition, the court noted some of the firm’s executives had been based out of New York. 

Related: Coinbase Exploring Stock Market Listing, Reuters Reports

“We will respect the court’s order. We have no further comment on this matter at this time,” BitFinex’s General Counsel Stuart Hoegner said in an emailed statement.

Read the court ruling below:

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