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KuCoin Restarts Deposits, Withdrawals for Bitcoin, Ether Following $281M Hack

CoinDesk Crypto
6 years ago

Cryptocurrency exchange KuCoin is bringing more services back online after suffering a major hack late last month.

  • In a service update early on Wednesday, the South Korean platform said it is once more allowing deposits and withdrawals for bitcoin (BTC), ether (ETH) and the tether (USDT) stablecoin after upgrading wallet security for those cryptocurrencies.
  • KuCoin noted that wallet addresses for these coins had been refreshed and, while the older addresses would still work, it recommended users update.
  • The USDT versions for Tron, EOS, Omni and the Ethereum blockchain are all now open for deposits and withdrawals.
  • Full services have been resumed for 65 other cryptocurrency projects, it added.
  • After the breach, which saw $281 million in various crypto assets such as XRP and Ethereum-based coins stolen, KuCoin had moved to freeze all wallets and disable services.
  • On Oct. 3, the company’s CEO, Johnny Lyu, claimed the suspected hackers had been traced and that it had informed law enforcement agencies.
  • Lyu further claimed that another $64 million of stolen cryptos had been recovered, bringing the total value of recovered assets to $204 million at the time.
  • In its latest update on the incident, also posted Wednesday, the exchange said other entities are continuing to help retrieve funds, with Tether having frozen “about $22 million” in stolen USDT.
  • Other projects like Ocean Protocol have returned recovered coins to KuCoin wallets, though the amount involved wasn’t disclosed.
  • It also provided a list of suspicious addresses related to the hack and recommended they be added to blacklists.
  • Blockchain analytics firm Elliptic said Sept. 29 that the hackers had already exchanged millions of stolen tokens for $7.5 million in ETH on the decentralized exchanges Kyber Network and Uniswap.

Also read: Israeli Government Reportedly Investigating Unsuccessful Hack Targeting Crypto CEOs

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South Korea’s Central Bank to Test Digital Currency in 2021

CoinDesk Crypto
6 years ago

The Bank of Korea (BoK) is to run trials of a possible central bank digital currency (CBDC) through next year.

  • As reported by The Korea Herald Wednesday, the move follows the progress of research to the technical phase in the summer and will see testing of distribution and circulation of the digital coin.
  • With China fast moving toward the launch of its CDBC and having already held tests across the nation assisted by banks and firms, South Korea moved to accelerate its work on a CBDC in April.
  • The BoK reportedly said the tests do not necessarily mean it will go ahead with the CBDC launch.
  • Originally saying it saw no need for a CBDC, the central bank has quickly shifted gear on the project: Phase one – designing and reviewing the technology – was completed in several months and phase two – looking at the likely infrastructure with an outside partner – started at the end of August.
  • While China has been testing its digital yuan with other entities, the BoK will test the blockchain-based CBDC in a virtual environment initially, said The Herald.
  • According to the Korea Times, the BoK said it will simulate transactions on a blockchain platform that would be similar to those for cash or traditional means of payment.
  • “The CBDC will be issued and circulated in the virtual world and we are going to test a number of transaction scenarios under a variety of circumstances,” an official said.
  • In June, the central bank formed a legal committee to advise on the possible launch of the digital currency.
  • Edit (14:20 UTC, Oct. 7 2020): This article previously stated that the BoK tests would be held in conjunction with banks, as per the Korea Herald report. This has now been corrected after the Herald amended its article.

Also read: Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

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South Korea’s Central Bank to Test Digital Currency With Banks in 2021

CoinDesk Crypto
6 years ago

The Bank of Korea (BoK) is to run trials of a central bank digital currency (CBDC) through next year, the institution announced Wednesday.

  • As reported by The Korea Herald, the move follows the progress of research to the technical phase in the summer and will see testing of distribution and circulation of the digital coin.
  • With China fast moving toward the launch of its CDBC and having already held tests across the nation assisted by banks and firms, South Korea moved to accelerate its work on a CBDC in April.
  • While the BoK reportedly said that the tests do not necessarily mean it will go ahead with the CBDC launch, they would be the final stage of the development.
  • Indeed, the central bank has been moving quickly, phase one – designing and reviewing the technology – was completed in several months, and phase two – looking at the likely infrastructure with an outside partner – started at the end of August.
  • As with China’s digital yuan tests, the BoK will test the blockchain-based CBDC with partner banks to test the circulation process, said The Herald.
  • In June, the central bank formed a legal committee to advise on the possible launch of the digital currency.

Also read: Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

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Amid US-China Tech War, Can Neo’s DeFi Stack Rival Ethereum’s?

CoinDesk Crypto
6 years ago

Chinese tech companies were once seen as copycats of their Western peers: Alibaba was a knockoff of eBay and Baidu imitated Google. More recently, Chinese firms like TikTok and Huawei have established such dominant international positions that U.S. authorities have tried to hold them back. 

Now, the technological arms race is playing out in the cryptocurrency industry, where one Chinese company is taking on Ethereum, the world’s second-largest blockchain, which U.S.-based developers have used to build semi-automated trading and lending networks under the rubric of decentralized finance, or DeFi.   

Neo took aim at DeFi in late September with its launch of a new platform called Flamingo. Da Hongfei, a Neo co-founder, told CoinDesk in an interview that the protocol will eventually provide users with features found on popular Ethereum-based projects like Uniswap, Curve Finance, yearn.finance, and Synthetix. 

Related: SEC Commissioner Peirce Chats About DeFi, Tokens and Her Unikrn Dissent at LA Blockchain Summit

Flamingo is not simply a product of “copy and paste,” the co-founder said in an interview. “It’s like rebuilding a parallel universe.”

Within a few days of its launch, Flamingo had attracted more than $1.6 billion of collateral locked into the protocol, according to a tweet from its official Twitter account. That was despite unexpected delays in the project’s early days due to “an overwhelming amount of network traffic,” as company officials described it.

The amount represents more than half of the $2.35 billion of crypto collateral locked into Uniswap, the top-ranked DeFi project, according to DeFi Pulse.

Some developers focused on the Ethereum blockchain say Flamingo is little more than a knockoff. 

Related: CryptoPunk Bounties: Ark.Gallery Rolls Out Blind Bids on 8-Bit NFT Collectibles

“It’s the first credible, wholesale, blockchain-scale ‘vampire’ attempt,” money market protocol Compound’s founder Robert Leshner tweeted on Sept 27. He described Flamingo as an attempt to “clone and launch” all the popular DeFi projects on Ethereum at the same time. 

“The success or failure of the project has extremely important ramifications for how we think of Ethereum’s network effect and composability lock-in,” Leshner wrote.

Neo is not the first project that has been trying to challenge Ethereum’s dominance and on the list of “Ethereum Killers.” The roster also includes EOS, Tron and Algorand. And for Neo, one of its biggest “selling points” to developers has been its nearly zero-transaction-fee model since its birth.

As of Tuesday, Ethereum’s average transaction fee was at $2.24, according to BitInfoCharts.

Neo’s DeFi ambition comes amid heightened geopolitical tensions between the U.S. and China, and while there’s no evidence yet of any intervention on behalf of either country’s government, the brewing competition for Ethereum’s business might represent a new front in the technological arms race. 

Ethereum’s native token, ether (ETH), has been beating its Chinese challenger in digital-asset-markets this year, with an approximate 170% gain in 2020 versus around 100% for Neo’s NEO token, according to data from Messari.

A rare recent report from Chinese state-controlled media labeled cryptocurrencies “the top performing investment” of the year, seen as a sign the central government is encouraging development in the space.

Da says approximately 90% of the people he talks to on Neo’s group chats on Discord are English speakers. That suggests Neo has a broad, geographically diversified user base, he said.

“We are not attracting people,” Da said. “We are attracting crypto assets. As long as it’s an asset, then it is welcomed. We don’t care if the private key is Chinese or American.”

One question that might loom in the minds of crypto traders is how much control or oversight Neo might cede to Chinese authorities.

Neo is currently working with the Blockchain-based Service Network (BSN), a Chinese state-sanctioned blockchain infrastructure project, which aims to attract international decentralized applications (dapps) developers to build their projects on it, according to Da.

Neo is like any other startup working furiously to bring new products to market, he says. 

“We don’t want to simply do a Uniswap copycat,” he said. “We are trying to do something original.”

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Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

CoinDesk Crypto
6 years ago

At the height of 2017’s ICO boom, European Union member Estonia said it had the digital backbone to issue its citizens a national cryptocurrency, an “Estcoin.”

At the time, then-European Central Bank (ECB) President Mario Draghi slapped down Estonia’s plans. But in an interesting indication of how far things have come, Estonia’s latest round of experimentation in building a central bank digital currency, or CBDC, is a rare example of a project publicly linked to the ECB’s now-energetic digital euro ambitions.

The ECB’s changed position today signifies how serious the discussion around a digital euro has become, said Luukas Ilves, head of strategy and innovation at Guardtime, the technology provider assisting Eesti Pank, the central bank of Estonia.  

Related: South Korea’s Central Bank to Test Digital Currency With Banks in 2021

It’s a plum assignment for Guardtime, which has a long history helping secure Estonia’s core government infrastructure using a novel industrial-grade blockchain system called KSI (Keyless Signature Infrastructure).

“We know the ECB is going to be appraised of the work we are doing with Eesti Pank,” said Ilves. “Looking ahead, we hope to pull in other eurozone central banks and make a compelling case that a retail CBDC can be deployed at scale for the entire European economy.”

Weighing scale 

The appropriate technical solution for wholesale or retail CBDCs may incorporate elements of blockchain architecture, but these have to be arranged in a way that can meet the necessary scaling requirements, said Guardtime CEO Mike Gault.

Building such as a system for a large economy and taking into consideration areas like micro-payments and internet of things (IoT), could run to millions of transactions per second, Gault said. That sort of scale really rules out the notion of multi-party validators reaching consensus to provide proof of a transaction being submitted to the ledger, he said.

Related: China Central Bank Official Reveals Results of First Digital Yuan Pilots

“The only reason you have these multiple validators is for censorship resistance,” said Gault. “We’ve yet to meet a central bank or a government that is interested in having censorship resistance. They are the censors.”

Eesti Pank did not return requests for comment by press time.

Read more: Digital Euro Would Provide Alternative to Cryptos, ECB President Lagarde Says

Working within the security parameter of a central bank, Gault explained that the KSI mechanism provides proof the system is operating without fault, using a system of hashes rather than slowing things down with public key infrastructure (PKI).  

Current blockchain technology might be fine for launching a wholesale CBDC, added Ilves, which basically amounts to “better clearing of transactions, and bringing some tokenized assets on top of the way banks do things today.” But a retail CBDC requires a different approach.

Identity politics

Meanwhile, the COVID-19 pandemic has highlighted the need for more digitization of the financial system, particularly in adverse circumstances when a government may want to disburse funds directly to its citizens. So would Estonia’s lauded e-government and digital identity system make this an easier lift from the perspective of the central bank?

The exact question of how Estonia’s CBDC will interface with other services is what the research is setting out to explore, said Ilves. What’s clearly the case, he added, is that Estonia’s existing payments and banking landscape is much less prone to things like fraud and identity theft. 

“There are all sorts of ways that digital signatures and a government-issued digital identity could be built into how to manage a wallet and authorize transactions,” said Ilves. “We don’t have any one particular scenario in mind, but we’re sure that a CBDC ecosystem that uses e-ID will work better, faster, safer, cheaper.”

Read more: Estonia’s Central Bank to Research if Blockchain Can Support a Digital Euro

It’s also worth noting that the European Commission, the executive arm that implements the decisions of the European Parliament, has an ambitious proposal to make digital identity systems more interoperable across its various member states. 

“I think by the time a CBDC gets deployed across Europe, the different ID systems will play better with each other and that interoperable infrastructure will be in place,” Ilves said.

Summing up, Guardtime chief Gault acknowledged CBDCs have become a busy and febrile space but reiterated the need for speed when it comes to deploying a truly retail offering.

“We think there are a lot of horses in this race,” said Gault, “but we’ve invented the first combustion engine.”

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Japan’s LINE Starts Crypto Lending Service

CoinDesk Crypto
6 years ago

LVC, the crypto exchange operator and blockchain business unit of LINE, is launching a service that allows users to lend crypto assets like bitcoin and ethereum to its exchange BITMAX. In return lenders will receive a rental fee, which is like the interest on a bank loan.

  • Between Oct. 7- Oct. 30, the company will run a campaign that will let users earn up to 10% per annum of the fee from the lending service, according to a statement filed by LINE at the Tokyo Stock Exchange on Tuesday, CoinDesk Japan reported.
  • LINE is a popular messaging app in Japan, with more than 80 million local users. 
  • LINE Corp, a Tokyo-based subsidiary of the South Korean internet search engine provider NAVER, launched its crypto exchange BITMAX last year after receiving a license from Japan’s financial watchdog FSA, opening up trading services to its messaging app users.  
  • The rental fee is incurred every day starting on the day after the rental. 
  • As reported by CoinDesk Japan, Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Litecoin (LTC) and Bitcoin Cash (BCH) are eligible for the lending service. 
  • In August, LINE launched a digital asset wallet and blockchain development platform. 
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SEC Commissioner Peirce Chats About DeFi, Tokens and Her Unikrn Dissent at LA Blockchain Summit

CoinDesk Crypto
6 years ago

U.S. Securities and Exchange Commissioner Hester Peirce discussed some major trends in the digital asset world during a chat with journalist Laura Shin, at the LA Blockchain Summit on Tuesday. 

While the talk kicked off with Peirce’s letter of dissent against the recent SEC decision to levy a $6.1 million fine on Unikrn, the commissioner spoke about a range of topics including decentralised finance (DeFi), her safe harbor proposal for token issuers, and, whether token airdrops and DeFi governance tokens could run into securities regulations. 

Right at the beginning of the talk, Peirce noted the views laid out in the chat were her own and in no way represent the SEC or her fellow commissioners.

  • Regarding the Unikrn settlement, Peirce said that she felt it was a “rather heavy- handed” settlement over allegations of registration violation. “The message that we send with a case like that is one that is basically if you want to do innovation, go somewhere else to do it,” she said. 
  • Addressing regulations around token airdrops, Peirce stressed that people should come talk to the SEC about how they intend to distribute tokens. While the SEC has previously indicated that airdrops could be seen as security offerings, Pierce said giving something away was clearly distinct from selling something. 
  • “But again, I caution people that I’m one person on the commission, there are other people on the commission who might look at the same facts and circumstances differently than I do,” said Peirce.
  • Speaking about whether governance tokens used by many DeFi platforms could be treated like a securities offering, Peirce said that even though the tokens carry some equity-like benefits, multiple questions regarding regulatory structure and how these tokens could affect corporate governance continue to linger.
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China Central Bank Official Reveals Results of First Digital Yuan Pilots

CoinDesk Crypto
6 years ago

An official for China’s central bank has unveiled usage statistics of state-backed digital currency trials that were conducted in three Chinese cities.

Speaking virtually at the Sibos 2020 conference on Monday, Fan Yifei, deputy governor of the People’s Bank of China, said the bank opened 113,300 consumer digital wallets and 8,859 corporate digital wallets for residents of Shenzhen, Suzhou and Xiong’an to pilot a digital yuan.

The digital wallets processed RMB 1.1 billion ($162 million) across 3.1 million digital yuan transactions between April and August when the pilots launched and ended, Fan said, making it the most widely used central bank digital currency (CBDC) in a commercial setting. 

Related: European Central Bank Moves to Trademark ‘Digital Euro’

Hooked up to facial recognition, barcode scanning and tap and go payment technologies, the digital yuan transactions spanned over 6,700 types of use cases. These applications included retail, hospitality, transportation, utility payments, government services and electronic versions of red envelopes gifted to healthcare workers in Shenzhen’s Luohu district, Fan detailed.

Also known as DC/EP, an acronym that stands for digital currency/electronic payment, the digital yuan is a part of a longstanding initiative by the Chinese government since 2014 — when it established a digital currency research institute — to use cryptocurrency-inspired technology to modernize payments, bypass international trade networks and exert geopolitical strength.

“To protect fiat currency from crypto-assets and safeguard monetary sovereignty, it is necessary for the central banks to digitize bank notes through new technologies,” Fan stressed in his Sibos talk about the importance of a digital yuan.

The digital yuan’s use in tourism will also be explored in a forthcoming pilot at the 2022 Winter Olympic Games in the nation’s capital of Beijing, the People’s Bank of China said in April, when it announced Shenzhen, Suzhou, Xiong’an and Chengdu were chosen as the first sites for trials.

Related: The Bahamas Reveal Details, October Date of Landmark Central Bank Digital Currency Debut

The trials have expanded to Beijing, the Yangtze River Delta region, the provinces of Tianjin, Hebei and Guangdong, and the cities of Hong Kong and Macau, the country’s Commerce Ministry said in August, and they could roll out to central and western China in the future.

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Ripple Chairman Says Firm Could Leave US if Regulatory Environment Doesn’t Change

CoinDesk Crypto
6 years ago

Ripple Executive Chairman Chris Larsen threatened to pull his fintech firm out of the U.S. if what he termed the country’s hostile stance toward cryptocurrency companies does not soon change, according to Fortune.

  • Speaking to Fortune’s Jeff John Roberts at the LA Blockchain Summit on Tuesday, Larsen named Singapore and the U.K. as possible countries the San Francisco-base company could move to if the environment doesn’t improve.
  • He acknowledged that Ripple’s leaving the U.S. would do little to stop top-line federal regulatory oversight but said a softer host government would nonetheless help.
  • His payments company is battling investor allegations that XRP is a security as well as mixed signals from regulators at the U.S. Securities and Exchange Commission.
  • Larsen, saying nearly every other country has a better handling of crypto than the U.S., and claimed the U.S. is letting China lead the way on digital currency innovation.
  • He said a Biden administration may be beneficial in “repatriating” miners currently domiciled in China, noting that 65% of all miners are domiciled there.

Read more: Ripple Has Mixed Success in Motion to Dismiss Lawsuit Alleging Securities Fraud

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CryptoPunk Bounties: Ark.Gallery Rolls Out Blind Bids on 8-Bit NFT Collectibles

CoinDesk Crypto
6 years ago

Regular art and digital art face a similar hurdle: insufficient liquidity. 

A new contract rolled out by Ark.Gallery hopes to inject some fluid in the CryptoPunk market by letting people place blind bids backed by ether (ETH), called bounties, for the increasingly in-demand digital collectibles. 

Launched Friday, the bounties give CryptoPunk owners the option to instantly cash out by accepting any of the live bids, as opposed to listing their product and waiting on bids in a marketplace. On the buyer side, instead of placing bids on multiple collectibles (thereby locking up more ETH) users can place a bounty on “any punk” and wait for an owner to accept it. 

Related: MetaMask Gets Into the Decentralized Exchange Aggregation Business With Token Swaps

One of the first blockchain-enabled art projects, CryptoPunks were built by Larva Labs and debuted in June 2017. Each of the 10,000 punks are unique characters and are sorted by traits such as male, female, alien, spots/no spots, etc. 

Some of these traits – like punks with beanies or zombie punks – are quite rare and tend to be more expensive.

Read more: The Inevitable Marriage of Yield Farming and NFTs, Explained

The collection relies on Ethereum-based non-fungible tokens (NFTs) but predates the ERC-721 token standard that most NFTs currently use, perhaps adding to the CryptoPunks allure. 

Related: CoinDesk Live: Inside the Ethereum Economy

While this was a hiccup encountered in listing the punks on third-party marketplaces, it changed when the “wrapped punks” smart contract was launched by Ark.Gallery, a decentralized autonomous organization (DAO) for shared NFT ownership. 

The smart contract lets owners “wrap” their punk tokens into the ERC-721 standard. Put simply, wrapping the punks makes them more easily swappable. This allows owners to officially list their punks on popular marketplaces like OpenSea and Rarible, which in turn has driven up prices.

So much so that Larva Labs tweeted a thread explaining sales of 1,100 ETH (approximately $387,451) during the second week of September. 

On Saturday, a wrapped punk with rare traits (combination of zombie and beanie) sold for 185 ETH (roughly $65,062) on the Nifty marketplace.

Ark.Gallery charges a fee of 2.5% on every closed deal “so that the liquidity provider does not have to pay anything extra,” Roberto Ceresia, founder of Ark.Gallery, said in an email.  

Read more: Yield Farming Expands From Finance to Digital Collectibles

The platform’s history of “bounties” shows that a total of 26 have been executed as of Tuesday afternoon, at an average price of 3.64 ETH ($1,238). According to Ceresia, the early numbers were encouraging and he expects them to grow as the platform adds bounties for other collections including Autoglyphs.  

“I think that they do have a wall of liquidity that is there, ready to be spent. It’s a great solution for asset owners,” said Ceresia, referring to the bounties. 

While currently under development, Ark.Gallery’s main platform is geared toward shared ownership of digital collectibles. The platform allows people to own a fraction of a token that might otherwise be prohibitively expensive for many users. 

Fractional owners of the NFT also get voting rights on sale offers and, if successful, the proceeds are distributed proportionally.

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Bitcoin Trump-Dumps to $10,500; MetaMask Hits 1 Million Users

CoinDesk Crypto
6 years ago

Bitcoin was able to hit $10,800 Tuesday before falling on U.S. Pres. Donald Trump’s stimulus tweet. Meanwhile, the DeFi ecosystem’s most popular wallet hit 1 million users.

  • Bitcoin (BTC) trading around $10,555 as of 20:00 UTC (4 p.m. ET). Slipping 1.6% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $10,528-$10,800
  • BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin’s price was able to climb to $10,800 on spot exchanges such as Coinbase Tuesday before falling to as low as $10,528 immediately after President Trump tweeted his rejection of opposition lawmakers’ most recent economic stimulus proposal. 

“One thing that is still hanging over this market is the stimulus,” said Andrew Tu, an executive at quant trading firm Efficient Frontier. “It may take until after the elections for them to reach an agreement, which would be really bad for a lot of Americans relying on government aid.”

Related: This Self-Sovereign ‘DocuSign’ Uses Bitcoin for Digital Proofs

Katie Stockton, an analyst at Fairlead Strategies, says bitcoin has been above the key $10,000 price point for some time, which she considers bullish. “Bitcoin has been consolidating within its uptrend since discovering support near $10,000 a month ago,” Stockton said. The last time bitcoin traded below $10,000 was on Sept. 9.

Daniel Koehler, liquidity manager at cryptocurrency exchange OKCoin, says the aftermath of the BitMEX news still has him optimistic. 

Read More: BitMEX Ether Futures Trading Contracts Fall by Half in Wake of US Charges

“It’s bullish to see that bitcoin trading infrastructure is so strong given that the former largest bitcoin derivatives trading platform can lose 25% of [its] BTC open interest deposits overnight and the markets just shrug it off.” Koehler also noted that open interest in the bitcoin futures market overall is ticking up, hitting $3.8 billion on Monday.

Related: MetaMask Gets Into the Decentralized Exchange Aggregation Business With Token Swaps

One of the reasons for resilience may be bitcoin’s potential store-of-value properties, says Henrik Kugelberg, an over-the-counter trader based in Sweden, who is bullish bitcoin but bearish almost everything else. “To me there’s no doubt we will see a housing crash, a stock crash and quite possibly tough deflation in the near future,” he said.

To accomplish this, Kugelberg says U.S. debt, which is already over 100% gross domestic product, will have to increase in order to stave off a traditional market crash. ”Those things will drive the need to increase the debt at the same pace for another year or maybe more,” Kugelberg added. “To me it seems like a point where turning to bitcoin is a good idea.”

MetaMask hits 1 million users

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Tuesday, trading around $341 and slipping 3% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The MetaMask wallet, a browser extension that allows users to interact with the Ethereum network and its multitude of smart contract-based decentralized finance, or DeFi, applications, has hit 1 million users. It’s a fourfold increase for the wallet since 2019, with the United States, India, Nigeria and the Philippines as the top countries with highest MetaMask usage, according to its software developer, Consensys.

Chasing juicy returns in the DeFi space, which can often provide double- or triple-digit returns for lending crypto, is one of the reasons for MetaMask’s growth, said John Willock, CEO of Tritium Digital Assets, a crypto liquidity provider. “I think we can all recognize that a lot of the adoption of MetaMask is through the recent DeFi craze and interest in short-term returns that have been perceived to be out there to chase.”  

Read More: MetaMask Gets Into the Decentralized Exchange Aggregation Business

However, that speculation is bringing real adoption, Willock added. “I look at the MetaMask numbers as the same sort of early adoption indicator the uptake of Netscape browser use was in the 1990s. It is exciting.”  

Other markets

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

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

Read More: Europol Names Privacy Wallets, Coins, Open Marketplaces as ‘Top Threats’

Equities:

Commodities:

  • Oil was up 2%. Price per barrel of West Texas Intermediate crude: $40.17.
  • Gold was in the red 1.3% and at $1,888 as of press time.

Treasurys:

  • U.S. Treasury bond yields fell Tuesday. Yields, which move in the opposite direction as price, were down most on the 10-year, dipping to 0.747 and in the red 4.8%.
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This Self-Sovereign ‘DocuSign’ Uses Bitcoin for Digital Proofs

CoinDesk Crypto
6 years ago

For years, developers have worked on expanding Bitcoin’s use case beyond being a transaction ledger. What if, for instance, whenever you signed a contract –  for starting a new job, for signing on to a service or for closing on a house – you could use the Bitcoin blockchain to publish legally binding, immutable proof of the contract and your signature to it? 

Woleet is a French startup whose business model revolves around this very application. A DocuSign of sorts that uses Bitcoin, the project has been quietly building for four years. Woleet debuted a front end last month, having sold application programming interfaces (API) for its software for the past few years.

“With Woleet Sign we plan to demonstrate our ability to address electronic signatures with the same level of user experience as the traditional actors in this space. The software-as-a-service application will help us to promote our highly customizable API for signature workflows in various business applications,” Gilles Cardignan, the CEO of Woleet, told CoinDesk.

Woleet: Notary meets Bitcoin

Related: Bitcoin Trump-Dumps to $10,500; MetaMask Hits 1 Million Users

Woleet provides a software suite that allows its clients to authenticate documents and signatures using Bitcoin’s blockchain. Anyone needing to authenticate this data can verify these proofs using hashes that correspond to the signatory and the document’s public key.

These proofs can be used as timestamps, electronic signatures, electronic seals and digital IDs. 

Read more: Microsoft Releases Bitcoin-Based ID Tool as COVID-19 ‘Passports’ Draw Criticism

Woleet does not handle customer data; on the backend, it sends transactions to the Bitcoin blockchain to hash proofs for clients, but the documents never leave the client’s local computer or server storage unless it opts for cloud storage through a provider like Google. 

Related: First Mover: Bitcoiners May Not Care if Dollar Keeps Its Reserve Status

This model is a notable exception to traditional e-signature services, which store documents and other data for their clients. With Woleet, clients can use its self-hosted ID server to manage digital identities and key pairs for their documents and signers.

According to its website, Woleet is compliant with the European Union’s General Data Protection Regulations (GDPR), and its signatures are legally binding.

The service already has a growing list of clients including luxury goods company Kering, renewable energy providers EDF and Acciona and pharmaceutical lab Servier, among others.

“At first we were seen as an innovation startup only good for proof of concept, like all the other ‘enterprise blockchain’ technologies available.” Cardigan said. “Today, the fact that big companies trust us is helping a lot to sell to medium-sized companies with the same needs for certification and electronic signatures.”

Self-sovereign digital IDs on Bitcoin

With its launch, Woleet joins a class of Bitcoin startups working to bring self-sovereign digital identities to the fore of Bitcoin’s enterprise applications.

The Microsoft-incubated ION project, for instance, is creating a platform for issuing what it calls Decentralized Digital IDs (DDIDs) on Bitcoin. 

The RGB protocol, which entered beta this summer, could also provide a platform to create similarly decentralized and digital IDs, among a slew of other applications.

Read more: Self-Sovereign Identity Explained

At their core, the difference between these identity systems and their legacy counterparts comes from their “sovereign” nature. Their users would store the data that is being authenticated themselves rather than relinquishing it to a third party. Bitcoin’s blockchain provides an immutable record for the data proofs, eliminating another layer of third-party trust from the process.

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These 3 Trends Are Driving Crypto Market Growth Now

CoinDesk Crypto
6 years ago

In such a fast-growing industry as crypto asset markets, it can be overwhelming to try to extract the main themes driving liquidity and investor interest. Yet, doing so helps to understand how relatively new markets evolve, and what the catalysts will be for the next big steps forward.

The latest CoinDesk Research Quarterly Review focuses on three features that have exhibited astonishing growth in Q3 and are playing a significant role in the evolving maturity of the digital asset markets.

In 24 charts, we look at stablecoins, decentralized finance (DeFi) and derivatives, and tease out some intriguing findings.

Stablecoins

Related: The UK Bans Crypto Derivatives

It is a common misconception that fiat-based stablecoin prices never vary relative to the underlying currency (usually the dollar). This is not true. They are pegged to a fixed unit, but in reality their market prices fluctuate around that level.

This allows for arbitrage opportunities in which investors can mint a stablecoin for $1 and sell it on the market for $1.0003, for example. Multiplied by millions, this can generate a handsome profit. Selling pressure will bring the stablecoin value down towards its pegged price.

Over Q3, the supply of USDC, the second-largest stablecoin by market cap, grew much more than that of tether (USDT), the largest stablecoin, even though the arbitrage opportunities (as measured by the standard deviation of the stablecoin prices) were greater with USDT. This hints at a growing demand for USDC from institutional investors and traders: USDC is run by licensed, U.S.-based firms and has taken a more regulatory-friendly approach.

DeFi

Ethereum’s market capitalization increased 60% in Q3 2020, growing from $25 billion to $40.5 billion by the end of September. The market capitalization of the top 10 DeFi coins by total value locked saw an even greater increase over the quarter, growing over 345% from $1.2 billion to $5.3 billion. Aggregated as one, the market capitalization of DeFi nows makes up roughly 12% of total market value on the blockchain, and has emerged as the driving narrative for the Ethereum ecosystem.

Related: MetaMask Gets Into the Decentralized Exchange Aggregation Business With Token Swaps

Ethereum emerged in 2014 with the aim of being the “world’s computer.” In the ICO boom of 2017, it became the “fundraising platform of the future.” Now, the role of Ethereum in the evolution of decentralized finance is yet again changing the blockchain’s narrative. This could impact not only the levels of interest from both retail and institutional investors; it could also influence technological considerations, especially at a time when the underlying technology is undergoing a profound transformation as the ecosystem migrates to Ethereum 2.0.

Derivatives

While the ether futures market is still a fraction of that of bitcoin, it is starting to exhibit some catch-up activity. Both daily transaction volume and aggregated open interest (OI) in ether futures set dramatic new records, reaching $14 billion on Aug. 2 and $1.7 billion on Aug. 15, respectively. In September, both have fallen back to an elevated “new normal.”

This shows the strong growth in the Ethereum ecosystem and hints at growing institutional acceptance of ether as an investment and trading asset. It also highlights the evolution of crypto markets as a whole – a pre-requisite for a mature market is a lively derivatives market. So far, the derivatives market has been dominated by bitcoin futures. Greater diversity will lead to a healthier market overall.

You can download the report from our Research Hub here.

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CoinDesk

Israeli Government Reportedly Investigating Unsuccessful Hack Targeting Crypto CEOs

CoinDesk Crypto
6 years ago

Israel’s intelligence community is investigating a mysterious but failed hack that targeted about 20 Israeli cryptocurrency executives in early September, according to Haaretz.

  • Executives reportedly lost access to their Telegram and email clients and consequently had their identities stolen, in the likely SMS spoofing incident that only appears to have hit users of the telecom giant known as Partner.
  • The hackers demanded crypto payments in exchange for returning account access, but cyber intelligence firm Pandora Security told Haaretz no payments appear to have been made. 
  • It’s not clear who the hacker was or where he was based, but Pandora’s co-founder Tzahi Ganot said he suspects state-sponsored actors may have mounted the attack from the U.K.’s E.E. network.
  • He told Haaretz that Mossad and Shin Bet agents “were involved” in investigating the incident, as Israel considers its telecom networks to be “critical infrastructure.”
  • Partner denied any wrongdoing in a statement to Haaretz. It said hacks like this can happen to ” clients of other firms as well.”
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CoinDesk

Blockchain Bites: FCA’s Crypto Crackdown, McAfee’s Charges, Ethereum’s Store of Value

CoinDesk Crypto
6 years ago

CoinDesk is preparing for the invest: ethereum economy virtual event on. Oct. 14 with a special series of newsletters focused on Ethereum’s past, present and future. Every day until the event the team behind Blockchain Bites will dive into an aspect of Ethereum that excites or confuses us.

The Top Shelf news you subscribed to is down below. 

Now, a few words from CoinDesk tech reporter Will Foxley.

Making consensus

Related: First Mover: Bitcoiners May Not Care if Dollar Keeps Its Reserve Status

Scaling for censorship-resistance
The shakedown of bitcoin derivatives exchange BitMEX last week is a healthy reminder of what motivates many DeFi developers: building censorship-resistant financial markets.

The meaningful comparison between BitMEX and decentralized finance, of course, is the self-executing nature of decentralized exchanges (DEX) on the Ethereum blockchain. Through bits and bytes, developers are working toward a future where U.S. regulators cannot take down financial markets – let alone any application built on top of the Ethereum blockchain.

Still, while theoretically capable of supporting a new world of censorship-resistant finance, the Ethereum blockchain has hit the hard limits of its own infrastructure. 

Ethereum isn’t ready for prime time performance. Its mainchain and many decentralized applications (dapp) can barely handle the economic strain users have put it under this summer, which saw fees shoot to record highs twice.

Related: Blockchain Bites: Ethereum’s Economy, Estonia’s CBDC Research, Coinbase’s Severances

One of the most urgent and interesting questions in crypto is how to create a censorship-resistant economy that actually works. While there are no easy solutions to rising gas fees, it’s a topic drawing some of the most creative minds, all with their own ideas.

On Oct. 14, MakerDAO’s Rune Christensen and Near Protocol’s Illia Polosukhin will discuss the issue of gas fees at invest: ethereum economy. Others will focus on the future of Ethereum, and the long road it has taken towards scalability with Ethereum 2.0. While under development for years, this updated chain remains a gamble.

For instance, Phase 1.5 and Phase 2 – the latter stages of Eth 2.0 that should theoretically push the blockchain to tens of thousands of transactions per second – have not been fully scoped out. Some aspects remain completely unknown. (Perhaps as it should be, given the fast pace of discovery in crypto land.)

But phase 0 is nearly upon us. Multiple testnets have led developers and stakers to the autumn’s main event: the release of a deposit contract for stakers expected this month. Once enough ether (ETH) is deposited in the contract, the new Proof-of-Stake (PoS) blockchain can begin to turn along.

Called the Beacon chain, the PoS blockchain will act as a spinal cord of sorts for Eth 2.0’s multi-blockchain settlement scheme. For now, the Beacon chain stands as a symbol of a censorship resistant future. A promise of technology, but one under development.

It’s a topic Vitalik Buterin will likely go into during his keynote speech at Invest. Others, like Alchemy’s Michael Garland and Anchorage’s Diogo Mónica, will go further into the weeds, discussing not only the mechanics behind this multi-year blockchain swap but also why it matters for people’s bottom line during “ETH Staking: The Service You’ll Want to Buy.”

Join us for a day-long exploration of the ins and outs of the go-to platform for decentralized applications, its current setup and future roadmap.

– Will Foxley

Featured panel

Stake it or farm it? 
Ethereum has introduced new ways for people to get their money to work for them. Whether it’s securing or participating in a network or creating other interest from your money, new rewards and incentives abound for those willing to engage. In a panel discussion, titled “Making Your Money Work for You,” Gauntlet’s Tarun Chitra, Stake’s Tim Ogilvie and Balancer Lab’s Fernando Martinelli will discuss how to manage risks, optimize rewards and build a portfolio using ether-based assets. 

Tune in from 10:30 a.m. – 11:00 a.m. ET, Oct. 14.

Ethereum 101

Ethereum 2.0 represents the first time the cryptocurrency industry will see a blockchain of its size and value attempt to transition all users, as well as assets, to an entirely new decentralized network while keeping all operations on the old network active and running. 

So what will happen to your ether and non-fungible tokens (NFT) once Ethereum 2.0 goes live? CoinDesk research analyst Christine Kim explains.

Ethereum 2.0 is coming 
The years-long upgrade – intended to radically transform the world’s largest smart-contract platform – is inching closer to deployment. 

As of July 10, some developers, including Ethereum founder Vitalik Buterin, estimate the oft-delayed Eth 2.0 will launch by the end of this year. 

When phase zero of Eth 2.0 does ship, little about Ethereum will change in the near term for users and dapp developers. This is because unlike all other system-wide upgrades in Ethereum history, the Eth 2.0 overhaul will primarily be happening on a different blockchain. 

The first phase of development for Eth 2.0 is centered around the creation of a separate proof-of-stake blockchain network called the beacon chain. On this new network, ETH holders with a minimum of 32 ETH can earn rewards in the form of annualized interest on their wealth. To earn these rewards, ETH holders must have the appropriate hardware and software connecting to the beacon chain and a strong understanding of how the technology works. 

Ethereum as we know it today will eventually be folded into the Eth 2.0 upgrade in its entirety. The report features commentary from Ethereum developers about what benefits – but also risks – this may bring. 

The culmination of over five years of research and development, Ethereum 2.0 is a highly ambitious upgrade.

For an even deeper dive, CoinDesk Research published a 22-page report on “Ethereum 2.0: How It Works and Why It Matters.”

– Christine Kim

At stake

Osho Jha is an investor, data scientist and tech company executive who enjoys finding and analyzing unique data sets for investing in both public and private markets. 

In this essay, published in early 2020, Jha details why the transition to a Proof-of-Stake chain will turn Ethereum into a functioning store of value.

Store of value
Before diving into the impact that staking could have on ether (ETH), it is important to understand how the ETH “money supply” currently works. As we know, bitcoin (BTC) has a fixed supply of 21 million coins and the rate at which these coins are released into the money supply decreases over time. ETH does not have a fixed supply but, like BTC, it has a declining inflation rate.

There is a fixed issuance of new ETH annually. As the money supply grows, that fixed issuance becomes a smaller portion of the total money supply. As with BTC halvings, ETH over time has reduced the block reward for miners. The transition to Ethereum 2.0’s staking mechanism is set to reduce the inflation rate of ETH to 0.5%-2.0%, putting it in the same company as BTC and gold in terms of supply inflation. 

I look at ETH as the fiat to BTC’s gold. Despite negative connotations in the crypto community, fiat currencies aren’t inherently bad and the main advantage of an unfixed total supply is flexibility to adjust supply during different economic climates. Central banks have taken this flexibility to an extreme in recent years, and, while ETH’s supply is not fixed, its projected long term inflation may be a happy middle ground between fixed supply and unbridled money printing.

Demand-side dynamics
In many ways, ETH trades like a venture investment. Investors believe Ethereum will be the underlying technology for the future of decentralized apps and they buy ETH in the same way they would shares [of stock]. I find this troubling because, by its very nature, ETH is not a stock and these investors are taking on a bigger risk than they might think.

Staking is the key to making ETH function as a value store. At its core, staking incentivizes holding ETH in a node that can then be used by the network to verify transactions. The greater the number of nodes, the faster the network can function and the more secure it becomes. Staking is not new. Projects ranging from Hedera Hashgraph to Facebook Libra have some sort of staking mechanism built in. But they don’t have the advantage of being the de facto network decentralized app developers lean on.

For investors, there are incentives to staking tokens in a node, including rewards similar to earning interest on a bank deposit. While the staking rewards vary based on network performance and utilization, target returns are close to 10% annually. Though actual returns will vary as the network gets up and running, the possibility of earning returns on coins that would otherwise be in a wallet should entice ETH holders to stake.

In a global low-rate environment, these returns are certainly attractive. And staking may be the killer app that allows ETH to become a “positive carry asset.” In other words, it generates a positive return for holding it as opposed to, say, gold, which is negative-carry, as it incurs storage costs. Long term, positive carry stimulates demand and creates an incentive to borrow cash to purchase and earn yield. Overall, positive-carry assets increase stability of price movements by creating long term holders and widening the investor base.

Investors are becoming aware of this dynamic. To stake a node, there is a minimum required 32 ETH (thought staking pools can allow staking to be done with as little as 1 ETH). 

ETH as a store of value
Current events have forced us to adapt to a more digital life and also shown us the limitation of legacy banking systems. Even the distribution of stimulus checks became a nontrivial problem. With the market focused on bitcoin and its role in unstable economic times, the advances being set forth by Ethereum 2.0 have been largely overlooked. However, Ethereum 2.0 lays out a platform which can help create better digital experiences and ease the friction as individuals and institutions transition to a digital-first world.

As we mentioned earlier, staking will turn ETH into a positive carry asset, which in turn brings price stability and broadens the investor base. By staking accumulated tokens, investors will both earn yield and help scale the network in a secure way. 

While ETH is being staked, there is demand for stablecoins and banking-esque services, which are being deployed and iterated on in the DeFi space as a whole. With this dynamic, transactions can be made using stablecoins while ETH itself is staked to generate interest income. This may sound foreign and futuristic but it’s not much different than when people keep savings in an interest-generating savings accounts, or investments, and keep day-to-day money in a checking account.

– Osho Jha

The ledger

Going back to Will Foxley’s introduction, Ethereum 2.0 promises to revolutionize finance and the crypto economy, but there are still a lot of open questions. 

Last year, my former colleague Leigh Cuen wrote an article examining many of the most contentious issues surrounding the development and eventual deployment of Eth 2.0. 

During the largest blockchain overhaul to date, many of the nuances being discussed are reduced to simple gut reactions: is what’s happening a “scam” or an iteration. 

Iterative processes
For Ethereum’s critics in the Bitcoin community, [September 2019] brought a “gotcha” moment.

Joseph Lubin, co-founder of the second-largest cryptocurrency by market cap, acknowledged onstage at Ethereal Tel Aviv that the network, in its original form, wasn’t built for mass adoption. “We knew it wasn’t going to be scalable for sure,” the ConsenSys CEO said.

Predictable cries of “scam” from ardent bitcoiners followed. But Lubin’s statement wasn’t scandalous in the least to the Ethereum fans at Devcon – the community’s largest and most influential annual gathering – where roughly 3,000 attendees gathered this week in Osaka, Japan.

Even those who knew the first version wasn’t scalable don’t see early marketing claims as misleading. They see iteration as an inherent process.

“Bitcoiners are kinda like hardcore fascist Catholics that just think everything else is wrong,” Dean Eigenmann, a researcher at the Ethereum startup Status, said [in 2019]. “I think [Ethereum] underdelivered on its promises, but it has delivered.”

The sanguine vibe at Devcon highlights the difference between Bitcoin and Ethereum, which has emerged as its own force to be reckoned with: Bitcoin is an individualistic monetary asset while Ethereum, convoluted as its path to mass adoption may be, is a communal promise to continue experimenting with smart contracts, together.

James Prestwich, one of the leaders of a project aiming to create cross-chain capital flows between Bitcoin and Ethereum, said at the time he believes all cryptocurrency narratives evolve. So even if a blockchain manifests something different than the original white paper, that doesn’t make it a scam.

So what have the Ethereum founders delivered since they sold more than 7 million tokens to retail investors to kickstart the network in 2014?

The original Ethereum platform inspired billions of dollars worth of economic activity, from token sales to DeFi loans, and influenced the way regulators view cryptocurrencies that “decentralize” after fundraising. 

But the jury is still out as to whether that accrued value will translate to the next version of the smart contract platform.

‘Lack of strategy’
Devcon attendees weren’t shy in discussing the road ahead, or who will fund this work.

According to Peter Mauric, Ethereum client Parity’s head of communications, the bulk of Ethereum-related funding programs will now prioritize creating a new blockchain, Eth 2. Sources with knowledge of such development plans estimated it would take at least two years to build this next version of Ethereum.

“No one really knows what Eth 1 will look like once Eth 2 exists,” Mauric said at the time. “There’s not a ton of new development going on in the current chain clients. Most of the ongoing work is maintenance.”

There’s no clear plan for how to migrate hundreds of Ethereum-based tokens and smart contracts, including DeFi projects, to the new chain in the foreseeable future, according to Buterin, Prestwich and Mike Porcaro, head of communications at the MakerDAO Foundation.

Developer Jamie Pitts, contracted by the Ethereum Foundation, kicked off the opening ceremony on Tuesday by sharing his concerns.

“I feel like there’s a lack of strategy,” Pitts said. “I think there’s a lot of teams working on their ideas, but there’s a lack of coordination.”

According to James Beck, communications lead at ConsenSys, the Brooklyn-based venture studio helmed by Lubin, there were in 2019 nine teams working on clients for the upcoming Eth 2 blockchain, including Prysmatic Labs, Chainsafe, Status and the ConsenSys-owned startup PegaSys.

However, according to several sources with knowledge of Ethereum infrastructure projects, the bulk of funds for Eth 1 and Eth 2 development still comes from either the Ethereum Foundation or ConsenSys, in addition to smaller funding mechanisms like the MolochDAO and the Meta Cartel, both of which also accept public donations. Pitts told CoinDesk this doesn’t concern him because these funders don’t control development choices.

While there are still many unanswered questions about how the project will diversify beyond reliance on funding from its founders, Josh Cincinnati, director of the Zcash Foundation, said Ethereum has achieved a significant level of decentralized participation from the bottom-up.

“Something Ethereum has proven to be really good at is making exotic financial contracts approachable for developers,” Cincinnati said.

Vitalik’s view
From Buterin’s perspective, Eth 1 was a successful experiment that paved the way for Eth 2, which will require a focus on incentives, through Proof-of-Stake, before live transactions.

“I’d argue it has done a lot of good. The ICO boom has pretty much single-handedly funded research into all of these general cryptography things,” Buterin told CoinDesk.

As for layer-two solutions, which allow a high number of transactions to take place off-chain and reserve the ethereum ledger for final settlement, Buterin said some are proceeding “slower than expected. Raiden hasn’t gotten too far too fast and Plasma hasn’t gotten too far too fast. But people are still iterating and working on that.”

Buterin also mentioned pressure from businesspeople who discouraged him from speaking openly about these scaling challenges, which, as noted, many felt were obvious.

“You’re not supposed to say your own platform has limitations,” Buterin said.

Top shelf

McAfee arrested
John McAfee, the 74-year-old software magnate turned crypto bull, was reportedly arrested in Spain on allegations of tax evasion, according to the U.S. Department of Justice. His extradition to the U.S. is pending. The announcement comes the same day the U.S. Securities and Exchange Commission (SEC) sued McAfee for allegedly pumping initial coin offerings (ICOs) without disclosing he was being paid to do so. McAfee is said to have received BTC and ETH worth more than $11.6 million for promoting seven ICOs in 2017 and 2018. He also allegedly received $11.5 million in the promoted tokens. The SEC does not name the projects in the suit.

Crypto crackdown
The Financial Conduct Authority (FCA) has published final rules banning the sale of derivatives and exchange-traded notes (ETNs) that reference certain types of crypto assets to retail consumers. The U.K. financial regulator said it considers these products to be ill-suited for retail consumers due to the harm they pose. Specifically, the ban will affect “the sale, marketing and distribution” to retail investors of any derivatives contract or ETNs that are linked to “unregulated transferable crypto assets” issued by entities in or outside the U.K. The U.K. ban will come into effect on Jan. 6, 2021. Some U.K.-based crypto firms plan to dispute the ruling.

Buck up
Bitcoin is unlikely to replace the greenback as a global reserve currency any time soon, according to one of the most highly regarded analysts in foreign exchange. “Backing the dollar is the world’s biggest, deepest and the most transparent government bond market,” Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book “Making Sense of the Dollar,” told CoinDesk in a recent video chat. “I just don’t know how bitcoin can replace the greenback from that viewpoint.” CoinDesk’s Omkar Godbole reports, before bitcoin can threaten the dollar’s hegemony, the crypto community’s focus needs to shift from playing for price rallies to building infrastructure that would accelerate adoption at the institutional level. 

Ripple suit
Ripple was only partially successful in its bid to have a class-action lawsuit over alleged securities fraud thrown out. In a court ruling filed last Friday, District Judge Phyllis J. Hamilton granted with prejudice two parts of Ripple’s motion to dismiss the 10 claims against it and its CEO, Brad Garlinghouse. The accusations come as a consolidated action from a group of disgruntled investors who claim Ripple and Garlinghouse failed to register XRP as a security and made misleading statements about the cryptocurrency. Judge Hamilton ruled that some of the plaintiff’s claims were unsupported, though the case was not dismissed. 

Going dark
Popular privacy-enhancing cryptocurrency wallets and other technologies were named as “top threats” in Europol’s 2020 Internet Organized Crime Threat Assessment published Monday. According to a report by the European Union’s law enforcement agency, “privacy-enhanced wallet services using coinjoin concepts (for example, Wasabi and Samurai [sic] wallets) have emerged as a top threat in addition to well established centralized mixers.” And, “Criminals have started to use other privacy-focused, decentralized marketplace platforms, such as OpenBazaar and Particl.io to sell their illegal goods,” the report says. According to the report, bitcoin remains the top currency on the darkweb, though privacy coins are seeing increased use.

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MetaMask Gets Into the Decentralized Exchange Aggregation Business With Token Swaps

CoinDesk Crypto
6 years ago

MetaMask announced a new feature Tuesday: token swaps directly within the popular Ethereum browser extension and mobile application.

MetaMask, a wholly owned product of Ethereum software company ConsenSys, is probably the most popular way for users to access the Ethereum blockchain. It functions much like a Bitcoin wallet, while also enabling users to sign in to decentralized applications and use them through a regular browser. 

The token-swapping feature will release first on its Firefox browser extension, before adding extensions for other browsers and MetaMask mobile. 

Related: CoinDesk Live: Inside the Ethereum Economy

MetaMask also announced Monday it had reached 1 million monthly active users. 

Jacob Cantele, product lead at MetaMask, wrote in a press release, “We believe bringing greater transparency and efficiency to DeFi on Ethereum will result in a better network experience for all.”

Up to now, to make a swap of tokens, an Ethereum user would need to go to the website of a specific decentralized exchange or exchange aggregator, sign in and run the swap. By building a token-swapping function into MetaMask itself, it should improve the user experience by automatically routing users to a service, cutting out a step. 

MetaMask will seek the best exchange rate for any given trade, accessing all the best-known places to conduct an exchange. The MetaMask announcement lists services such as Uniswap, Kyber, ParaSwap, 1inch.exchange and dex.ag. 

Related: First Mover: Bitcoiners May Not Care if Dollar Keeps Its Reserve Status

It should be noted this service really isn’t any different than what existing decentralized exchange aggregators (like 1inch or ParaSwap) purport to do, but MetaMask has a big advantage. Odds are, most users of those aggregators already used MetaMask to access them, so if the same users can do the same thing directly in MetaMask, many likely will. 

This new service is the latest step in monetizing MetaMask. “There are dynamic fees that range from 0.3% to 0.875% based on order size,” James Beck, a ConsenSys spokesperson, told CoinDesk in an email. 

In late 2019, MetaMask began monetizing by charging a small fee on fiat to Ethereum exchanges facilitated over the application, according to Beck. 

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CoinDesk Live: Inside the Ethereum Economy

CoinDesk Crypto
6 years ago

Ethereum’s highly anticipated 2.0 upgrade is poised to bring the network ever closer to fulfilling its original vision to be a “world computer” that plays host to a parallel, decentralized financial system. 

At invest: ethereum economy on Oct. 14, we will address the ramifications for investors as decentralized finance takes the crypto world by storm. 

In a run-up to the event, our two-part CoinDesk Live: Inside the Ethereum Economy virtual miniseries on Oct. 8 and Oct. 12 introduces trending narratives we will break down at the main event: Why all the hype behind yield farming and food-inspired tokens? Should investors take them seriously or are they a fading trend?

DeGeneration: How Ethereum Is Making Finance Weird  

Related: MetaMask Gets Into the Decentralized Exchange Aggregation Business With Token Swaps

Decentralized finance (DeFi) has made a pivot to what might be called Weird DeFi: a set of difficult-to-parse projects whose larger value to the ecosystem is suspect at best and whose community is at least 20% driven by inside jokes. 

This created a new way to make money in crypto called yield farming. Then Yearn.Finance came along and dropped a smart-contract-governed robo-adviser for yield atop a lot of these projects, one that put users in control. 

Imaginations then caught fire, leading to the oddly food-inspired birth of Weird DeFi, with its YAM, Spaghetti, Tendies and a side of Sushi.

CoinDesk senior business reporter Brady Dale hosts Priyanka Desai of Open Law and Mason Nystrom of Messari to assess the newest crazes sweeping the DeFi landscape.

Bitcoin’s $1 Billion Crop: Why Hodlers Are Harvesting Yield on Ethereum

Related: First Mover: Bitcoiners May Not Care if Dollar Keeps Its Reserve Status

For decentralized finance (DeFi), as in the heady days of the initial coin offering (ICO) boom of 2017, the numbers are only trending up, with some $2 billion in crypto assets locked into the market. 

Crypto users are putting more value to work in DeFi applications, driven largely by the introduction of a whole new yield-generating pasture, Compound’s COMP governance token. Governance tokens are presenting fresh ways for DeFi founders to entice assets onto their platforms.

Whether it’s wBTC, renBTC or tBTC, tokenized bitcoin is the hottest thing on Ethereum right now. A phenomenon that hardly existed at the beginning of this year has pushed the total value locked in bitcoin past $1.3 billion. 

CoinDesk markets reporter Zack Voell discusses the yield farming phenomenon with Matt Luongo of Thesis, Jeff Garzik of Bloq, Loong Wang of Ren Project and Kiarash Mosayeri of BitGo.

CoinDesk Live: Inside the Ethereum Economy

Oct. 8 and Oct. 12, 2020

Streaming on CoinDesk.com, Twitter and YouTube.

Day 1: DeGeneration: How Ethereum Is Making Finance Weird  

Thursday, Oct. 8 | 12-1 p.m. ET

Speakers: Priyanka Desai, Open Law; Mason Nystrom, Messari 

Moderator: Brady Dale, CoinDesk senior business reporter

Day 2: Bitcoin’s $1 Billion Crop: Why Hodlers Are Harvesting Yield on Ethereum

Monday, Oct. 12 | 12-1 p.m. ET

Speakers: Matt Luongo, Thesis; Jeff Garzik, Bloq; Loong Wang, Ren Project; Kiarash Mosayeri, BitGo

Moderator: Zack Voell, CoinDesk markets reporter

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Stablecoin Growth Knocks Silvergate Exchange Network Volume Over $100B

CoinDesk Crypto
6 years ago

All-time transaction volume on the Silvergate Exchange Network (SEN) has reached $100 billion, with SEN transactions correlated to bitcoin and stablecoin trading.

The La Jolla, Calif.-based Silvergate Bank has seen a significant adoption of the payments platform, which is open 24/7 to offer fiat on-ramps for the crypto markets. For full-year 2019, the bank saw around $33 billion transacted on the network compared to $76 billion in the first nine months of this year, said Alan Lane, Silvergate’s CEO. (The bank did not track how much these volumes were affected by the average price of bitcoin each year.)

For the first and second quarters of 2020, Silvergate advertised that its activity on the SEN had outpaced the trading in the bitcoin markets. “A dollar going across the SEN was growing at an even faster rate than what we were seeing in terms of the transactions on the bitcoin blockchain,” Lane said.

Related: CBDCs Could Challenge US Dollar’s Dominance: Deutsche Bank

In general the bank sees more SEN transactions when there is bitcoin volatility, but SEN transactions have increased while volatility has been down because of increased SEN adoption.

DeFi boost

Silvergate has also seen a correlation between SEN transactions and decentralized finance (DeFi) adoption as it’s the transactional bank for all of the U.S. regulated stablecoins such as USDC and PAX, Lane added.

The SEN has allowed Silvergate to be one of the few American banks to offer its customers a transaction API. Like whitelisted investors on Ethereum, customers who want to transact on the SEN have to be members of the network, allowing Silvergate to not worry about the know-your-customer (KYC) risk of offering an API that would automate transactions. 

“They’re coding our APIs right into their technology stack,” Lane said. “It is secure and 24/7 and you don’t need human intervention when they have coded in the API.” 

Related: Wyoming Bank Regulator Taps Chainalysis to Boost Crypto Tracing Efforts

After wrapping the pilot of SEN Leverage, a bitcoin-backed lending product, Silvergate will become the only bank to offer a lending API. 

“We aren’t doing the loan from start to finish on the API,” Lane said. “But once we’ve approved you, you’re on the SEN and you want to borrow, you can do that on nights and weekends.”

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US-Regulated Bitcoin Derivatives Market Bitnomial Raises $11.6M in Electric Capital-led Series B

CoinDesk Crypto
6 years ago

Bitnomial, a bitcoin derivatives exchange with access to the lucrative, and exclusive, U.S. institutional market, has raised $11.6 million in a Series B led by Electric Capital, according to a source familiar with the matter.

With additional participation from Jump Capital, the latest raise will help Bitnomial expand its operations, the source said. The Chicago-based market for physically settled bitcoin futures and options trading already offers both services on margin.

  • The Commodity Futures Trading Commission-regulated derivatives market disclosed its equity sale in an Oct. 5 filing with the U.S. Securities and Exchange Commission.
  • The raise confirms August reporting by The Block that indicated Bitnomial CEO Luke Hoersten sought to raise $10 million to expand Bitnomial’s market infrastructure, employee base and product offering.
  • Bitnomial surpassed that benchmark: investors joined the round for a total raise of $11,644,051.
  • Hoersten declined to comment, telling CoinDesk: “Bitnomial does not comment on capital raising or commercial strategy.”  
  • Electric Capital declined to comment. A representative from Jump Capital did not immediately respond to requests for comment.
  • The disclosure follows U.S. regulators’ multi-pronged crackdown on crypto derivatives market BitMEX last week.
  • It’s worth noting that Binomial’s raise notched its first sale in the weeks leading up to the BitMEX allegations.
  • Also of note: the two companies service vastly different client bases. Bitnomial services institutional investors, whereas BitMEX plays to retail traders. 
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CFTC Enforcement Director McDonald to Leave This Week

CoinDesk Crypto
6 years ago

The Commodity Futures Trading Commission (CFTC) said on Tuesday Division of Enforcement Director James McDonald will depart the agency this Thursday, Oct. 8. McDonald has served as director of Enforcement since April 2017.

  • No reason was given for the departure.
  • McDonald, who has overseen numerous cases involving crypto, said in 2018 that the CFTC and his division didn’t want to hinder innovation in the crypto space.
  • Vincent McGonagle, principal deputy director of the Division of Enforcement, will serve as acting director.
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