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Craig Wright Trial Over a Fortune in Bitcoin Moved to 2021

6 years 1 month ago

The trial of nChain Chief Scientist Craig Wright over his alleged billions in bitcoin has been moved to Jan. 4, 2021.

  • In an order signed Thursday, Judge Beth Bloom at the District Court in the Southern District of Florida granted the joint motion from Wright and plaintiff Ira Kleiman to move the trial from the previous date of Oct. 13.
  • Judge Bloom further extended some pre-trial deadlines to mid- and late December.
  • The case was brought by Kleiman on behalf of the estate of his late brother David, who had worked with Wright in the early days of bitcoin.
  • Ira is suing Wright for half of his alleged fortune of 1.1 million bitcoin (worth over $11 billion) he claims the two mined together, as well as intellectual property.
  • A jury trial was ordered in June after an attempt by Kleiman to sanction Wright over his claimed misbehavior in court was denied.
  • Judge Bloom said at the time she was concerned by the facts of the allegations, but ruled the matter was best left “for a jury to make as fact finder at trial.”
  • She took into account that Wright had provided an expert witness to testify that he had been diagnosed with autism to explain his erratic testimony.
  • Wright has proclaimed himself as the inventor of bitcoin, known by the pseudonym Satoshi Nakamoto.
  • However, many in the cryptocurrency space dispute the claim, which has not been backed by convincing evidence, such as moving bitcoin thought to have been mined by Satoshi.

Also read: Craig Wright Called ‘Fraud’ in Message Signed With Bitcoin Addresses He Claims to Own

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V-Shaped Recovery From Bitcoin’s Biggest Drop Since March Unlikely, Say Analysts

6 years 1 month ago

Despite a slight bounce Friday morning, some analysts don’t expect bitcoin to chart a quick recovery from the double-digit price drop over the last two days.

  • Bitcoin fell by over 10% on Thursday to $10,006, according to CoinDesk’s Bitcoin Price Index.
  • That’s the biggest single-day percentage decline since March 12 when bitcoin prices crashed around 40% amid a major sell-off across the equities markets.
  • Other data sources such as Bitstamp even logged bitcoin as dropping a little below $10,000.
  • At the press-time price of $10,520, the cryptocurrency is down 18.59% from the recent high of $12,476 registered on Aug. 17.
  • Similar double-digit price pullbacks observed in April and May were quickly reversed in a couple of days, a sign of buy-the-dip mentality.
  • This time, though, a quick V-shaped recovery back to recent highs around $12,000 looks unlikely due to cryptocurrency’s increased sensitivity to traditional markets.
  • “The worst may be behind us, but bitcoin can take days to form a good base,” crypto analyst Edward Morra, who called the market top at $12,000, tweeted early on Friday.
  • Matthew Dibb, co-founder, and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk that prices could drop below $10,000 if the global equity markets retrace.
  • “Macro factors are currently at play, and bitcoin shows a higher correlation to global equities markets in this ‘risk-off’ period,” Dibb said.
  • Indeed, sharp losses on Wall Street look to have accentuated the bitcoin price drop on Thursday.
  • Stocks may extend the sell-off, pushing bitcoin below $10,000 on Friday if the all-important U.S. non-farm payrolls report shows the labor recovery is losing momentum.
  • The data, scheduled for release at 12:30 UTC, is forecast to show the economy added 1.4 million jobs in August versus 1.76 million additions in July.
  • Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks also sees scope for additional price declines on the back of risk aversion in equity markets.
  • “The next key support comes in the form of the June low at around $8,900,” Kruger told CoinDesk in a Telegram chat.
  • However, he still expects bitcoin will eventually realize its potential as a store of value.
  • Additionally, activity in the bitcoin options market suggests investors are adding bets to position for an extended decline in the cryptocurrency.
  • The one-month and three-month put-call skews have recovered sharply to positive territory this week.
  • That’s probably due to investors buying put options (bearish bets) to hedge buy positions in the spot/futures market, according to Vishal Shah, an options trader and founder of Polychain-backed derivatives exchange Alpha5.

Also read: 3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

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Tether, Bitfinex File Motion to Dismiss Market Manipulation Lawsuit

6 years 1 month ago

Tether and affiliate exchange group iFinex have called for a market manipulation suit to be dismissed – partly, they say, because plaintiffs don’t prove that billions of dollars of unbacked stablecoins did actually enter the market.

  • Lawyers for Tether and iFinex – the parent firm of the Bitfinex exchange – filed a motion Thursday calling for a class action accusing them of deceptive, anti-competitive and market-manipulative behavior to be dismissed with prejudice.
  • Claiming they had lost money as a result, the plaintiffs alleged in a complaint last October that over five years Tether issued as much as $3 billion-worth of unbacked USDT tokens, which Bitfinex then used to purchase cryptocurrencies on the open market to prop prices up during market downturns.
  • Per the complaint, this allegedly caused the total market cap of cryptocurrencies to skyrocket to $795 billion in late 2017.
  • The plaintiffs are five crypto traders who allege that they bought cryptocurrencies at inflated prices and, therefore, incurred monetary losses. As a class action, the suit represents anyone in the U.S. who might also have been injured by inflated prices.
  • But in a supporting memorandum, the defendants’ lawyers argue the case falls down partly because the accusation Tether printed its USDT stablecoins without any actual backing is based on “unfounded allegations,” rather than direct knowledge of the matter.
  • They also argue the plaintiffs have not demonstratively shown that cryptocurrency prices were indeed artificial at the time in question.
  • This means, according to the memorandum, that accusations of market manipulation and RICO conspiracy should be thrown out because plaintiffs can’t prove they actually suffered a monetary loss at the hands of the defendants – a pre-requisite in the U.S.
  • Allegations of anti-competitive and monopolistic behavior should also be thrown out because the class action doesn’t show how defendants tried to claim a dominant market position by raising prices or restricting output, the memorandum reads.
  • iFinex and Tether are battling two other separate cases on similar accusations that USDT isn’t properly backed by collateralized reserves.
  • These include one suit brought by the New York Attorney General’s office in April 2019.
  • According to market data site CoinGecko, Tether has a circulating supply of over 10 billion USDT, which are aimed to maintain a value of $1 each.
  • Tether’s website lists as “proof of funds” a letter from Washington-based law firm FFS, an affirmation that the company held $2.538 billion as of June 1, 2018.
  • The company states, however, that USDT is “backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

See also: Bittrex and Poloniex Move for Summary Judgment in Market Manipulation Case

Read the memorandum in full below:

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Voatz Calls for Restrictions on Independent Cybersecurity Research in Supreme Court Brief

6 years 1 month ago

Blockchain voting startup Voatz argued that bug bounty programs concerning cybersecurity should be operated under strict supervision in a “friend of the court” brief before the Supreme Court of the United States (SCOTUS).

Voatz weighed in Thursday on Van Buren v. United States, a Supreme Court case examining whether it is a federal crime for someone to access a computer “for an improper purpose” if they already have permission to access other files on that computer.

Nathan Van Buren, the petitioner in the case, is a former Georgia police officer who was charged under the Computer Fraud and Abuse Act (CFAA) after looking up a license plate for an acquaintance. Van Buren claims that a lower court ruling which upheld his conviction could be taken to mean that “any ‘trivial breach’” of a computer system could be a federal crime.

Related: Hardware Wallet Flaw Lets Attackers Hold Crypto for Ransom Without Touching Device

The case’s scope appears to have broadened, addressing not just breaches, but how the CFAA itself can be interpreted. The question listed on SCOTUS briefs reads:

“Whether the evidence was sufficient to establish that petitioner, a police sergeant, exceeded his authorized access to a protected computer to obtain information for financial gain, in violation of 18 U.S.C. 1030(a)(2)(C) and (c)(2)(B)(i), when in exchange for a cash payment, he searched a confidential law-enforcement database for information about whether a particular person was an undercover police officer.”

The U.S., the respondent, argued the case is “poor vehicle” for examining whether the CFAA is too broad, and said in its brief that SCOTUS review isn’t even warranted.

In its brief, Voatz says that the CFAA does not need to be narrowed, and some breaches of computer systems are necessary. However, the firm argues that researchers looking into potential vulnerabilities should specifically check with the companies they are evaluating prior to doing so, and should only proceed with authorization from the companies.

Related: Russia’s New Blockchain Voting System Isn’t Ready, but It’ll Be Used This Month Anyway

“Bug bounty programs are highly effective,” Voatz wrote. “They are extremely widespread in the technology industry, and even outside that industry, one survey in 2019 reported that 42 percent of companies outside of the technology industry were running a crowdsourced cybersecurity program.”

The brief may come in response to another filed by a group of security researchers who argue the CFAA has indeed “been interpreted too broadly,” which is holding back computer security efforts. This brief criticizes Voatz among its other arguments.

Broad rules

Voatz has notably faced criticism from cybersecurity researchers, including by a team at MIT who published a report in February claiming Voatz had insufficient transparency and that its internal systems faced a number of vulnerabilities. Voatz has disputed the claims in the report. 

Trail of Bits, another cybersecurity firm tapped by Voatz to conduct an audit of its systems, confirmed the MIT researchers’ claims in a subsequent report.

Voatz has tussled directly with researchers as well. Late last year, U.S. Attorney Mike Stuart announced that the FBI was looking into “an unsuccessful attempted intrusion” into Voatz, which was likely caused by a University of Michigan student or students participating in a security course. 

In its brief, Voatz said the “students’ ill-advised activity” was reported to West Virginia officials because the company could not distinguish between their research and an actual hostile attack. 

“Regardless of the particulars, however, the West Virginia incident illustrates the harm caused by attacking, or ‘researching,’ critical infrastructure without proper access or authorization especially in the middle of an election,” Voatz wrote.

Non-malicious researchers trying to break into digital tools “imposes significant additional costs” to organizations, the legal brief said, and could harm public confidence.

Jake Williams, who founded Rendition Security, told CNET that a “vast majority” of cybersecurity researchers likely do not have authorization, meaning Voatz’s support for a broad CFAA would “100% make it more difficult” for researchers.

Voatz’s brief comes a day after it published a press statement claiming the Michigan Democratic Party used its app during a recent party convention when voting for a number of positions. The Michigan Democratic Party did not immediately return a request for comment.

Contrary views

Voatz’s arguments aside, its brief makes a number of citations and claims which seem to lack context.

Voatz says it has been used in 70 elections, including state and municipal elections, and claims in the brief that it is considered “critical infrastructure” by the Department of Homeland Security.

The elections include West Virginia (which announced in March it would not be using Voatz for its upcoming elections) and Utah County (whose clerk and auditor received a $1,500 campaign donation from Overstock CEO Jonathan Johnson, who is also the president of Voatz investor Medici Ventures).

The company has said it’s meeting requirements by Pro V&V, a federal Voting System Test Laboratory, but according to Politico cybersecurity reporter Eric Geller, “the report is meaningless” because the standards were set years ago and the evaluation was not objective.

Eddie Perez, the global director of tech development at the Open Source Election Technology Institute, wrote that the Election Assistance Commission (EAC), the federal entity that accredited Pro V&V, doesn’t actually have any national standards for remote voting systems.

The EAC itself released a statement saying “these test reports should not be viewed as implicit approval by either the [voting system test laboratories] or the EAC that the evaluated systems are compliant with the [voluntary voting system guidelines] standard or are equivalent to an EAC-certified voting system.”

“Currently these programs are organized by Voatz itself, but in the past some were conducted through a vendor such as HackerOne Inc.,” the brief said. It did not mention that HackerOne severed ties with Voatz in March.

What’s more, HackerOne founder and CTO Alex Rice said on Twitter that “we support the opposing arguments made by” the Electronic Frontier Foundation (EFF), which calls for a narrowing of the CFAA, unlike Voatz, which cited HackerOne in the brief.

Similarly, Casey Ellis, founder and CTO of crowdsourced security platform Bugcrowd, which Voatz cited a number of times, also wrote that he signed off on and supported the EFF’s brief, and not Voatz’s.

Both Rice and Ellis said Voatz did not contact them prior to filing the brief.

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BitMEX to List Futures for New Crypto Coins for First Time in Over 2 Years

6 years 1 month ago

BitMEX said early Friday morning it plans to introduce futures markets for two cryptocurrencies, the first new coins to appear on the exchange in over two years.

  • The stalwart cryptocurrency derivatives exchange announced new futures markets for chainlink (LINK) and tezos (XTZ), two cryptocurrencies with triple-digit year-to-date returns, in addition to new contracts for EOS and cardano (ADA), two coins already traded in futures markets on BitMEX.
  • Tezos has traded on BitMEX before, however. Prior to the project’s initial coin offering (ICO) in 2017, XTZ/BTC futures were listed on BitMEX and settled at the sale price of 0.0002 BTC per tezos.
  • The last time BitMEX listed a new token was June 2018, when it announced a TRON/BTC futures market.
  • Shortly before that announcement, the exchange removed six altcoin futures markets, including ethereum classic (ETC), zcash (ZEC), and monero (XMR).
  • Notably, the new altcoin futures will trade against tether (USDT) instead of bitcoin (BTC). In Friday’s announcement, BitMEX said the reason for this is because “USDT pairs account for over 60% of overall altcoin volume.” By listing tether pairs, “we are providing users with the trading options to better meet their needs,” BitMEX said.
  • More details are to come later Friday, the Seychelles-based exchange said.

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BitClub Promoter Pleads Guilty for Role in $722M Fraudulent Mining Scheme

6 years 1 month ago

50-year-old Joseph Abel pleaded guilty to two securities and tax-related offenses Thursday due to his involvement in promoting BitClub Network, a fraudulent investment scheme worth $722 million that purported to be a cryptocurrency mining pool.

  • Abel admitted to selling shares of the BitClub Network’s purported mining pools without approval from the U.S. Securities and Exchange Commission. He also failed to report roughly $1 million in income that he received in exchange for his promotion of BitClub.
  • “Abel operated as a large-scale promoter of the BitClub Network,” according to a press release from the District of New Jersey U.S. Attorney’s Office. The scheme took money from investors in exchange for shares in the scheme and rewarded its investors for recruiting new participants.
  • BitClub highlights how widespread investor enthusiasm over bitcoin and other cryptocurrencies can be co-opted by fraudulent actors.
  • In July, the 35-year-old Romanian programmer behind the operation pleaded guilty to his role in defrauding investors of hundreds of millions of dollars in bitcoin, as CoinDesk previously reported.
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Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

6 years 1 month ago

Brazil’s chief central banker Roberto Campos Neto said Wednesday that his country could be ready for a digital currency (CBDC) by 2022.

  • By that time, the Banco Central president said, Brazil will have an interoperable instant payments system and a “credible” and “convertible” international currency – “all the ingredients to have a digital currency,” he said at a Bloomberg event covered by local outlet Correio Brazilienese.
  • Campos Neto also was reported to have said that CBDCs are the consequence of fast-digitizing financial systems such as Brazil’s. Banco Central is rolling out its PIX instant payments system in November and launching an Open Banking initiative later this year.
  • The comments place some context around Banco Central’s late August move to create a working group to begin studying CBDC issuance. That group’s final report should be ready within six months to a year, he said Wednesday.

Read more: Brazil’s Central Bank Tasks Group With Laying Out Road Map to Digital Currency Issuance

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Market Wrap: Bitcoin Tanks to $10.4K; ETH Market Dominance at 2020 High

6 years 1 month ago

Bitcoin continues to slide while ether has a larger share of the crypto market than it has had in years.

  • Bitcoin (BTC) trading around $10,726 as of 20:00 UTC (4 p.m. ET). Slipping 6.1% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $10,468-$11,474
  • BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin continues its downward trend Thursday, with prices descending as low as $10,468 on spot exchanges such as Coinbase. While it has recovered a bit, traders selling for profits has certainly been the theme right now. 

Read More: Bitcoin Plunges $403 in 1 Hour to Lowest in a Month

Related: 3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

“This is similar to what we’ve seen as bitcoin approached the $10,000 and $11,000 levels, where profit-taking occurred on a few different occasions,” said John Kramer, a trader at crypto over-the-counter firm GSR. “Many investors will see this as an opportunity to buy the dip.”

Just like Wednesday, leveraged liquidations played a role in exacerbating bitcoin’s price drop. However, Thursday’s wipeout of long traders on derivatives exchange BitMEX was a bit higher, with $10 million in hourly liquidations topping Wednesday’s $9 million hourly spree, the equivalent of a margin call in crypto parlance. 

Read More: Bitcoin Risks Deeper Price Pullback as Exchange Inflows Spike

“Some people who were buying in over $11,500 in BTC with leverage suddenly got stopped out when we moved back down towards $11,100,” said Chris Thomas, head of digital assets for Swissquote Bank. 

Related: First Mover: As Bitcoin Falls for Second Day, Long-Term Holders Probably Won’t Care

Thomas suspects bitcoin’s price will not reach new 2020 highs in the near term, despite testing that level as recently as Tuesday when the price hit $12,085. “I think we trade in the $11,000-$12,000 range for a while,” he said. 

In equities, while the major Asian Nikkei 225 index was buoyed by expectations new leadership in Japan will continue economic stimulus policies put in place by outgoing Prime Minister Shinzo Abe, stocks in Europe and particularly in the U.S. are awash in red – as it is in most of the crypto ecosystem Thursday.

GSR’s Kramer views the equities markets with some trepidation, and has concerns about the performance of traditional finance for the balance of 2020. “Stock valuations remain overinflated in the eyes of many observers, and economic uncertainty persists,” he said. “A crypto drop like this won’t deter the majority of investors who have a longer-term investment thesis.”

Read More: Jump Trading Invests in Decentralized Exchange Serum

Ether dominance dominates

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Thursday, trading around $402 and slipping 7.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: DeFi Risk Management Startup Cozy Finance Debuts With $2M Funding 

But while the price is down, ether’s dominance of the broader crypto market hit a 2020 high of over 14% Wednesday. Although dipping a bit Thursday, the last time ether’s share was at these levels was back in August 2018. 

“A large number of useful projects on the Ethereum blockchain contribute to ether dominance growth,” said Azamat Malaev, co-founder of HodlTree, a decentralized lending protocol. However, scaling is an issue that could cause ether’s share to wane, Malaev added. “To maintain this trend, Ethereum urgently need to scale the network. For ordinary users, transactions are already very expensive”

Read More: Ethereum Developers Focus on Congestion as Fees Spike Over 600%

Other markets

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

  • tron (TRX) + 36%
  • nem (XEM) + 0.89%

Read More: New Crypto Derivatives Let You Bet on (or Against) Tether’s Solvency

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

Read More: Hardware Wallet Flaw Lets Attackers Hold Crypto for Ransom

Commodities:

  • Oil is down 0.67%. Price per barrel of West Texas Intermediate crude: $41.29.
  • Gold was in the red 0.61% and at $1,930 as of press time.

Read More: Around the Crypto World in 15 Charts

Treasurys:

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

Read More: Digital Bank Revolut Expands Crypto Buying and Selling Service to Australia

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US Air Force and Raytheon Are Studying How Distributed Ledgers Could Help Command the Skies

6 years 1 month ago

The U.S. Air Force’s (USAF) continuing series of blockchain investments is entering the realm of battle management systems with a nearly $500,000 contract award to defense giant Raytheon.

  • Raytheon BBN Technologies won a $495,039 contract titled: “Characterizing the applicability and relevance of DLT (Distributed Ledger Technology) in Air C2″ (CARDIAC) from the Air Force Research Laboratory (AFRL).
  • The contract’s title indicates that Raytheon’s advanced tech researchers will consider how DLT can benefit commanders’ ability to keep their eyes on the skies and their pilots safe and lethal. That’s the gist of C2, Pentagon shorthand for Command and Control.
  • Other than the title, the parties, the funding and the date, the CARDIAC viewed by CoinDesk Thursday had little to reveal. Raytheon BBN did not immediately respond to a request for comment and neither did AFRL.
  • But Lt. Col. Neil Barnas, who has studied blockchain’s military potential, told CoinDesk DLT could be an asset for the USAF’s C2. He said distributing otherwise centralized C2 systems makes them less vulnerable to enemy attack.
  • “If you have the one command and control system to rule them all you’ve really just created a target,” he said, speaking to CoinDesk in a personal capacity.
  • The USAF has made clear this year that it is preparing to spend millions of dollars on modernizing C2. “Highly advanced and lethal tools” help airmen “to prevail in the high-end fight,” officers wrote in their FY2021 budget overview.
  • That document requested $435 million for an “Advanced Battle Management System” that links USAF and Space Force’s war-fighting capacity.

See also: US Air Force Gives Blockchain Firm $1.5M to Build Supply Chain Network

Update (9/3/20 22:14 UTC): This article has been updated to include comment from Lt. Col. Neil Barnas.

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Stacks Foundation to Spend ‘Majority’ of STX Token Fortune on Ecosystem Development

6 years 1 month ago

An army of Web 3.0 educators, developers and platform boosters can now secure funding from Blockstack’s nonprofit arm – so long as their blockchain projects focus on the Stacks ecosystem.

  • Under the Stacks Open Internet Foundation’s beta grant program, projects will get between $1,000 and $5,000 to support their visions for Stacks blockchain tools, initiatives, evangelism and development.
  • Funding these relatively small-dollar projects will help grow Stacks’ community and facilitate its mission of supporting a user-built internet, said Brittany Laughlin, the nonprofit’s chief.
  • For now, the foundation said it will dole out its grants in dollar form in lieu of stacks tokens (STX). That’s a notable break from the crypto space’s now commonplace practice of fostering development with grants in their target project’s native token.
  • Stacks plans to switch over to STX payouts just as soon as the blockchain upgrade called Stacks 2.0 goes live, Laughlin said.
  • Her foundation has no shortage of the token. Last month Blockstack PBC turned 100 million STX tokens (worth $21.5 million at press time) over to Stacks, along with intellectual property rights to certain patented Blockstack technologies.
  • Laughlin said Stacks will pour most of its token fortune into “grants and ecosystem development.”
  • “At least 30 million STX are dedicated to fund application development, as they were set aside for App Mining’s next evolution, which will likely be awarded in the form of app development grants,” she said.

Read more: Stacks Foundation Will Soon Put Those 100M Tokens to Work

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Wasabi Wallet Patches Flaw That Could Have Thwarted Bitcoin Privacy Feature

6 years 1 month ago

Wasabi Wallet users need to upgrade to the latest version if they want to continue using the CoinJoin feature to keep their Bitcoin transaction histories private.

That’s because those running older iterations of the wallet can no longer use this feature to mix their coins with users who have the newest version.

The Wasabi Wallet team hard-forked the wallet Thursday to address a vulnerability discovered by a team member at Trezor, a leading maker of hardware wallets. A hard fork is a code change that makes older versions of a software incompatible with newer ones.

Related: Wasabi Wallet Is Revamping Its CoinJoin Design to Allow Bitcoin Mixing With Differing Values

The flaw’s discovery is another example of the open-source community’s camaraderie and cooperation. Developers are constantly tinkering to improve their peers’ software, and many vulnerabilities have been responsibly disclosed during these processes to patch flaws before they can be exploited by bad actors. (Sometimes, however, the disclosures by rival teams are less-than-cordial, as evidenced by the long-running tensions between Wasabi and rival Samourai Wallet.)

Read more: Hardware Wallet Flaw Lets Attackers Hold Crypto for Ransom Without Touching Device

According to a Wasabi Wallet blog post, Trezor hardware wallet developer Ondřej Vejpustek responsibly disclosed the potential denial-of-service (DoS) attack to the Wasabi team on May 10 (a DoS attack entails an attacker spamming a network or protocol with the hopes of stymying its operations, hence “denial of service”).

“Vejpustek has been very cooperative since the beginning and left us total freedom on how to manage the disclosure, both in terms of time and communication. This demonstrates the importance of proper communication between security researchers and dev teams. This is how a responsible disclosure should be,” Wasabi Wallet contributor and marketing strategist Riccardo Masutti told CoinDesk, adding that Vejpustek was paid a bitcoin bounty for his efforts.

Related: Twitter Hacker Is Mixing Bitcoin Loot Using a Wasabi Wallet, Elliptic Says

This hypothetical DoS attack, which Wasabi Wallet assumes has never been carried out, would have interfered with the wallet’s implementation of CoinJoin, a privacy protocol that allows users to mix their bitcoin with others’ to obscure the coins’ transaction histories.

Wasabi Wallet’s CoinJoin implementation requires each participant to take out as much as they put in. If, for instance, 10 participants join a mix for 0.1 BTC, then each user must send exactly that amount (plus a miner fee) and must receive that exact amount for the mix to be successful and to retain CoinJoin’s privacy protections. Mixing coins makes it harder for blockchain snoops and nosy parkers to pin bitcoin transactions to known addresses and their owners’ identities.

Read more: Wasabi Wallet Is Revamping Its CoinJoin Design to Allow Bitcoin Mixing With Differing Values

The disclosed DoS vulnerability would have halted the mixing process. The attacker would register bitcoin for a mix without that bitcoin being signed (verified) by the mix’s coordinator, while at the same time submitting a real, verified transaction to the mix.

The result would be an incongruity between the total value of inputs made to the CoinJoin and the value of expected outputs. As a result, the coordinator would unwittingly “build a transaction that can’t be valid, since the sum of all inputs is less than the sum of all outputs,” according to Vejpustek’s analysis.

If the attack were pulled off, it would foil the CoinJoin, though it would not have given the attacker the ability to steal any coins nor could they deanonymize any peers in the mix.

Wasabi Wallet patched the fix with the hard fork deployed Thursday. This upgrade was applied to v.1.1.12 of the wallet, which was released on Aug. 5.

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3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

6 years 1 month ago

Bitcoin prices tumbled 6.2% Thursday, falling below $11,000 for the first time in a month.

The price drop trimmed the largest cryptocurrency’s 2020 rally to 50% and sent digital-asset market traders and analysts scrambling to explain the sell-off.

Here are three reasons cited by analysts:

1. Bitcoin slid in sync with traditional markets

Related: DeFi Degens Are Crypto’s Suicide Squad

The Standard & Poor’s 500 Index of large U.S. stocks retreated Thursday after climbing to a new record high earlier in the week. A report showing new U.S. jobless claims at 881,000 in the final week of August was better than feared – and the lowest since the pandemic hit earlier this year – but still well above the 665,000 level that marked the high point of the last recession in early 2009. Pantheon Macroeconomics called the figure “still grim,” while Navy Federal Credit Union economist Robert Frick said the labor market was “continuing to struggle, and not showing improvement despite COVID-19 levels that declined in August.

John Todaro, director of institutional research at the cryptocurrency analysis firm TradeBlock, said:

“There could be an overlap between equity sellers and digital currency sellers. The largest equity market decliners this morning are tech stocks, including retail trading darlings, Tesla and the FAANG names [Facebook, Amazon, Apple, Netflix and Alphabet, once Google]. It is unclear if this will push into a continued broader crash in equity markets, which could put more pressure on digital currencies, or if it is just a short-term correction.” 

2. Bitcoin got pulled down because of DeFi unwinding

Traders have been getting out of the recent speculative fervor in decentralized finance, or DeFi, much of which takes place on Ethereum, the second-largest blockchain. Prices for ether, the native currency of the Ethereum blockchain, tumbled 8.3% on Thursday after a 7.6% drop the prior day. Yet those price drops followed gains of 54% in July and 25% in August amid reports of eye-popping dollar amounts flowing into DeFi – especially with recently-launched projects like Compound, Yearn.Finance and SushiSwap – attracting attention from traders to the fast-growing and lucrative-but-risky pursuit of “yield farming.” Total value locked in DeFi more than doubled in August to $9.5 billion, but in the past few days the amount has shrunk to $9.1 billion, according to the website DeFi Pulse.

Related: DeFi Risk Management Startup Cozy Finance Debuts With $2M Funding Round

Denis Vinokourov, head of research at the crypto prime broker BeQuant, told CoinDesk in an email: “The explosive growth that decentralized exchanges (DEXs) and all things DeFi has finally reached levels that begin to impact on the sentiment across its centralized exchange (CEX) counterparts, with the sell-off triggered by a combination of stratospheric Ethereum fees. Also, an aggressive unwind of the very crowded trade across Uniswap token related positions in the wake of a number of tokens, namely PIZZA and HOTDOG, dramatically collapsed from $6,000 to $1 in a mere few hours. This is likely because the same assets (bitcoin, ether and others) are used aggressively to structure collateralized positions. Similarly to another DeFi heartthrob SushiSwap, these offerings were also Uniswap clones. DEX and DeFi trading is no longer a hobbyist activity and a number of firms that dominated CEX space have recently ventured out into DeFi to generate alpha. As such the Chinese wall that once separated markets is no longer in place and sentiment from one market will flow into another, and vice versa.”

3. Miners sold some of their bitcoin

Bitcoin miners and possibly traders decided to take risk off the table by trading in some of their cryptocurrency, which they receive as rewards for helping to maintain the security of the blockchain network. CoinDesk reported prior to Thursday’s sell-off that blockchain data were showing elevated transfers of bitcoin to exchange wallets, typically seen as a precursor of heightened selling pressure. According to CryptoQuant, a blockchain-data analysis firm, tracking of major bitcoin-mining pools showed an increase in bitcoin being transferred out – ostensibly also to exchanges for a possible sale.

Ki Young Yu, founder of CryptoQuant, told CoinDesk in a Telegram chat: “Miners are good traders. I think they are just looking for selling opportunities, not capitulation. I think it’s going to be the war of miners between those who want a bitcoin price rally and those who don’t. Some Chinese miners already realize their mining profitability (ROI), and they might not want new mining competitors joining the industry because of the bull market.”

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CoinDesk

Russia’s Latest Draft Bill Would Still Largely Ban Crypto, Stifle Miners

6 years 1 month ago

The Russian Ministry of Finance has drawn up a new draft bill that echoes a previous attempt to outlaw cryptocurrency use and, if passed, would have a major impact on the nation’s crypto miners.

The document, sent by the ministry to other government branches for feedback, states that miners located in Russia and using Russia-based infrastructure may not be rewarded for their work in cryptocurrency, according to the Russian newspaper Izvestia, which first reported the bill.

The draft is intended to amend a new law on digital assets signed by Russian President Vladimir Putin at the end of July.

Blow for miners

Related: Robinhood May Face $10M SEC Fine Over Disclosure Failures

If the bill becomes a law, it might push individual miners outside of lawful operations, says Igor Runets, CEO of BitRiver, one of the largest mining farms in Russia. “They receive crypto as a reward [for recording transactions on the blockchain], and this becomes illegal,” Runets said.

A way around this issue would be for a miner or mining farm to establish a foreign entity through which to conduct its finances, Runets suggested. However, the process isn’t cheap, and wouldn’t be an option for small miners that can’t afford the legal costs.

Read more: Russia’s Crypto Mining Farms Would Have to Report to Government Under Proposed Bill

The draft bill, obtained by CoinDesk (see below), states that the “actions allowing third parties to use digital currency, creation of software and hardware for issuance of the digital currency and transactions with it in the computer systems created by the foreign laws,” are “not forbidden.” However, accepting digital assets as a payment for such work would be outlawed.

Related: Russia’s New Blockchain Voting System Isn’t Ready, but It’ll Be Used This Month Anyway

The new rules could affect facilities in Russia that host clients’ mining devices and get paid in cryptocurrency for the electricity and services they provide.

According to Jakhon Khabilov, head of the Sigmapool mining pool, currently only smaller mining farms in Russia accept crypto as payment, while larger ones are paid in fiat currency via bank transfers.

Prison threat

The bill includes stipulations from a previous draft, introduced into the Russian parliament but abandoned after a public outcry. Both state that Russian citizens can only possess crypto assets if they inherit them, receive them as debtors of a bankrupt company or receive them as compensation after winning a lawsuit.

Read more: Russia Is Blocking Bitcoin-Related Websites Again

The new draft also carries over the proposal that illegal issuance and usage of cryptocurrency, and accepting it as a means of payment, should be punished with fines of up to 1 million Russian rubles (about $13,240) or up to seven years in prison.

These measures were introduced in May but met strong criticism from the Russian crypto community as well as from the country’s Ministry of Justice and Ministry of Economic Development. The draft did not become a part of the law that was signed by Putin in July.

See the full draft bill (Russian language) below:

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CoinDesk

Saudi Arabia Pitches Blockchain-Based Business Passport to Boost Trade Finance

6 years 1 month ago

Saudi Arabian business leaders think they have a solution to trade finance woes caused by COVID-19: a blockchain-based business passport to cut through red tape.

  • This “Global Value Chain” (GVC) passport would allow firms already following their host country’s financial rulebook to tout their credentials elsewhere, easing trade and increasing financial access globally, according to the Saudis’ Wednesday proposal before a group of G20 business leaders, developed in partnership with the OECD.
  • Blockchain technology would provide the GVC Passport a distributed, trusted, real-time source for global regulators to verify business’ accreditation claims, according to the Saudis’ accompanying white paper.
  • The result: a more efficient financial system with firms – especially small and midsize ones that normally lack a global presence –  cut free from repetitive, redundant, cross-border regulatory burdens, the Saudis said.
  • “SMEs represent 90% of businesses and 50% of employment worldwide, and therefore hugely impacted by the events of the past nine months. Adoption of this policy initiative will help SMEs in the recovery phase,” said B20 Chair Yousef Al-Benyan in a press statement.
  • Saudis pitched their GVC Passport to global business leaders at a Wednesday B20 summit. They noted that it is a long-term proposal only possible with close international support, so they asked the business community and the G20 to get on board.

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CoinDesk

Blockchain Bites: Bitcoin’s Steep Sell-Off, Pornhub’s Crypto Payments, Twitter’s Latest Hack

6 years 1 month ago

Pornhub will accept BTC and LTC payments, a nonprofit is calling upon Coinbase to be more transparent and credit default swaps are coming to the Ethereum blockchain. 

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

Top shelf

Porn payments
Pornhub, the popular adult entertainment site, has added bitcoin (BTC) and litecoin (LTC) payment options for its Pornhub Premium product. The company is an example of legal, though untraditional, online businesses struggling with centralized payment processors: PayPal has blocked payments to the site without explanation, CoinDesk’s EU News Editor Daniel Palmer reports. The company has accepted verge (XVG) since 2018, and has recently added support for dollar-linked stablecoin tether (USDT). 

Related: First Mover: As Bitcoin Falls for Second Day, Long-Term Holders Probably Won’t Care

Crypto for taxes
People and businesses in the Swiss canton of Zug, home to “Crypto Valley,” will be able to pay their taxes in bitcoin (BTC) or ether (ETH) beginning next February. Authorities have partnered with the Zug-based crypto broker and custodian Bitcoin Suisse, which will convert cryptocurrency payments into Swiss francs and hand them over to the tax office. The canton will accept tax payments up to 100,000 CHF (around $109,000) in those cryptos, though no partial payment will be accepted. In a statement Thursday, Zug Finance Director Heinz Tannler said the move would help to normalize the use of cryptocurrencies in everyday life.

Another Twitter hack
Prime Minister Narendra Modi of India has become the latest victim of a Twitter hack meant to siphon cryptocurrency from unsuspecting users. A Twitter account of Modi’s personal website known as the Prime Minister’s National Relief Fund (PMNRF) was hacked and began soliciting 2.5 million followers to donate to the relief fund using cryptocurrency, the Nikkei Asian Review reported and Twitter confirmed. The social media giant is “not aware of additional accounts being impacted,” a Twitter representative said. Modi’s hack follows a high-profile breach that compromised several accounts, including those of U.S. Democratic Presidential nominee Joe Biden, Tesla’s Elon Musk, Kanye West and CoinDesk. The alleged perpetrators of that attack have been apprehended.

Full disclosure
The Electronic Frontier Foundation (EFF) is calling upon Coinbase to release regular transparency reports related to the government and law enforcement requests for information it receives. In a Wednesday blog post, the digital advocacy nonprofit said financial data is one of the “most sensitive types of information” a user produces. The way Coinbase responds to government requests could “have a huge impact on what types of speech thrive online,” CoinDesk’s Sebastian Sinclair reports. In June, Coinbase initiated procurement deals with the Drug Enforcement Administration and the Internal Revenue Service (IRS), for its investigations tool called “Coinbase Analytics,” which traces transactions conducted across the exchange ecosystem. 

COVID-19 relief
The Congressional Blockchain Caucus is urging President Donald Trump and other federal officials to adopt blockchain solutions to boost COVID-19 relief efforts. In a Wednesday letter, lawmakers said blockchain technology can help identify and authenticate individuals set to receive government benefits, streamline supply chains and create a registry of medical professionals. They further cited blockchain’s strong encryption mechanism that protects sensitive data. The U.S. government’s response to a pandemic has been a case study in governmental inefficiency, with states duking it out over critical supplies. Last April, 11 representatives signed a letter calling on the U.S Treasury Department to consider blockchain and distributed ledger technologies (DLT) in streamlining the distribution of stimulus funds to citizens across the nation.

Quick bites At stake

Related: Blockchain Bites: How SushiSwap Drove Uniswap to DeFi’s Top Spot

Tether financialization
Credit default swaps (CDS), known for their role in the 2008 recession, have come to the Ethereum blockchain. Derivatives exchange Opium has introduced CDS for the dollar-linked stablecoin tether (USDT), providing insurance to buyers in case Tether, the issuer of the stablecoin, defaults. 

Tether, a key component of the crypto marketplace and fifth largest cryptocurrency by market capitalization, claims a 1-to-1 backing with U.S. dollars. This is often contested.

Tether revealed in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.” The firm later said USDT was once again fully backed in a November 2019 retort to an academic paper that blamed the stablecoin for the 2017 bitcoin bubble. 

Further, the firm behind the stablecoin is under investigation by the New York Attorney General’s office for alleged misappropriation of funds.

Opium’s CDS product finally lets the controversial crypto’s critics and defenders “put their money where their mouths are,” CoinDesk’s Will Foxley reports. 

A CDS is a “transfer of the insurance from people who know and are confident to people who’d like to be insured. Derivatives are just about transferring the risk. Some people would like to have the risk and get paid, some people would like to pay to get rid of risk,” Opium founder Andrey Belyakov said.

The new CDS tethered to USDT can be customized to pay out under different scenarios, such as the stablecoin falling under a preset value, said Aave founder Stani Kulechov, who is advising Opium.

In this case, a sharp drop in USDT’s price from the usual $1 is used as a proxy for Tether turning out to be insolvent. So if the token fell to 70 cents, the writer of the contract would pay the buyer 30 cents at maturity.

Investors don’t need to hold USDT to purchase this coverage. They can use CDS to bet against the asset, while those who trust Tether to honor its obligations can earn a premium for standing ready to cover defaults.

Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Therefore, this solution is not really interesting to us or our community.”

Market intel

Steep pullback
Bitcoin (BTC) pulled back about $403 to $10,838 early Thursday, deepening a two-day sell-off that pushed the largest cryptocurrency to its lowest point in a month. CoinDesk’s Omkar Godbole previously reported an influx of 92,000 BTC on Wednesday – the biggest-single day rise in 37 days – could deepen bitcoin’s descent. “Inflows surged as people rushed to sell at near $12,000,” Philip Gradwell, chief economist at Chainalysis, tweeted early Thursday. There’s evidence exchanges have not fully absorbed this selloff, hinting at a lack of buyers, which could lead to a profound drop in price. 

Ether options
Ether option contracts listed on Deribit, the largest crypto options exchange, rose to a record high of $507 million on Tuesday. This is possibly due to yield farming, the act of putting crypto holdings to work on decentralized applications to earn more crypto, Godbole reports. Open positions in ether options have surged by 45% from $349 million to $507 million over the past five days and nearly doubled since the end of July, while the total value locked (TVL) in the DeFi applications has surged by over 20% to $8.65 billion in the past five days. 

Tech pod

Hypothetical attack
A recently disclosed vulnerability in popular Trezor and KeepKey hardware wallets would have allowed attackers to hold users’ cryptocurrency for ransom without going anywhere near the device, CoinDesk’s Colin Harper reports. ShiftCrypto, the Swiss company that manufactures the BitBox hardware wallet, has disclosed a potential man-in-the middle ransom attack vector that leverages the two wallet’s optional passphrase feature users can use to unlock their device in lieu of a PIN. Trezor has issued a patch, KeepKey has delayed taking action, though it has not been suggested the hypothetical attack has been carried out. 

Op-ed

DeFi, meet CeFi.
Author of “The Business Blockchain,” William Mougayar thinks centralized finance and decentralized finance should link up for each other’s benefit. “CeFi” will bring users and expertise to DeFi – which will struggle to grow beyond its pen of hardcore users – but must begin thinking like wholesalers and hurry to “pick the DeFi products they want to build on top of,” he writes. “The CeFi market potential is staring DeFi in the face. If CeFi exchanges want to start looking more like full-service financial services institutions, they need to become DeFi’s best distribution channels.”

Podcast corner

Policy shift?
Luke Gromen, founder of the Forest for the Trees consulting firm, joins The Breakdown to discuss his thoughts on Jerome Powell’s Jackson Hole address last week. Is this really a change in policy?

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CoinDesk

DeFi Risk Management Startup Cozy Finance Debuts With $2M Funding Round

6 years 1 month ago

A group of VC heavyweights and crypto entrepreneurs, including Blockfolio founder Ed Moncada, are backing a new risk management tool for the exploding decentralized finance (DeFi) space.

Announced Thursday, Cozy Finance has raised a $2 million seed round, led by Electric Capital and including Variant Fund, Dragonfly Capital, Robot Ventures, Slow Ventures, Volt Capital, Spencer Noon, Moncada and others.

The team attempting to bring some order to the creative chaos that is DeFi consists of Cozy co-founders Tony Sheng, formerly of Multicoin Capital, and Payom Dousti, co-founder of Rare Bits, a peer-to-peer marketplace for crypto goods.

Related: DeFi Degens Are Crypto’s Suicide Squad

The value of assets deposited in Ethereum-based DeFi dapps has soared from $1 billion to over $8 billion in the span of six months. Developers have unlocked massive value for crypto investors by creating useful ways for them to manage their assets. However, these users face new forms of risk, like irreversible technical vulnerabilities.

See also: Retail Trading Platforms Pile Into $5M Funding Round for Zero Hash Crypto Settlements Firm

“As DeFi has grown, a clear and important hole are tools for people to be able to manage their risk appropriately,” Electric Capital co-founder Avichal Garg told CoinDesk. “Tony and Payom have deep experience in crypto and novel ideas on how to build risk management tools. We are thrilled to be working with them.”

DeFi hedging options

At the current moment, the transformative potential of DeFi is being hindered by a lack of appropriate risk management tools, the firms said in a Medium post.

Related: 3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

“Today, the most common method of managing risk is ‘position sizing’ – even the most active users and funds aren’t deploying as much capital into the ecosystem as they’d like to,” Sheng told CoinDesk via email. “Part of this is that demand for risk management tools currently outstrips supply. The other part is that we have yet to see a truly ‘DeFi native’ ways to manage the risk.”

Other players trying to make DeFi safer include London-based Nexus Mutual, which runs a decentralized risk pool designed to hedge against DeFi smart contracts blowing up – something which appears more and more to be an acceptable risk of late.

But Sheng disagreed that blow-ups are simply part and parcel of the nascent DeFi economy. 

“I don’t think anybody believes we should learn by making mistakes with user deposits,” he said. “Major blow-ups set the entire industry back. Better risk management is a key enabler of more experimentation.”

See also: SPiCE Takes Tokenized Blockchain VC Fund to Asia in Quest for Greater Liquidity

Asked how Cozy Finance compared with risk management in traditional finance, Sheng said the unique risks of DeFi require unique solutions. 

“We’re building something that is – to our knowledge – quite new. What we plan to launch will not look like anything on the market today,” he said.

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Bank of England Governor Wants Global Regulations as Stablecoins Pick Up Steam

6 years 1 month ago

The governor of the Bank of England (BoE) has said stablecoins need global regulation, warning private issuers that an international regulatory framework could soon be in the cards.

  • Governor Andrew Bailey said regulators have to come together for a “global response” so they can effectively regulate stablecoins.
  • Speaking Thursday, he said the international nature of stablecoins, which can be based in one country and operate in another, meant failure to coordinate could result in confusion and regulatory fragmentation.
  • Bailey addressed an audience at the Hutchins Center on Fiscal & Monetary Policy of the Brookings Institution – a think tank that has called on policymakers to devise regulation for cryptocurrencies.
  • In a published speech, he said: “[H]ost regulators of global stablecoins must, and are, working with other regulators in other jurisdictions to ensure that they are appropriately regulated and gaps in coverage, opportunities for regulatory arbitrage, do not emerge.”
  • While Bailey recognized stablecoins could reduce frictional costs, he emphasized that private issuers had to do more to ensure users can always redeem their stablecoins 1:1 with the underlying fiat currency.
  • He also warned that future stablecoin offerings may have to do more to satisfy regulatory standards at both a national and international level.
  • Compared to bitcoin, which he described as wholly unsuitable for payments, he said some stablecoin proposals could become the primary means for purchasing goods and services.
  • In a possible inference to Facebook’s libra coin, he said discussions about multi-asset stablecoins were currently premature.
  • The BoE has previously toyed with the idea of launching a digital pound – even suggesting private companies could play a role in issuance.
  • It also joined a working group with five other central banks and the Bank of International Settlements (BIS) at the start of the year.

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

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CoinDesk

Buterin, Ethereum Developers Focus on Congestion as Fees Spike Over 600% in 1 Month

6 years 1 month ago

Ethereum developers are turning their focus back to the current version of the network after months of focus on the upcoming Ethereum 2.0 release to address exponential fee growth.

  • The surge in fees is being driven by the explosive popularity of decentralized finance (DeFi) applications that are predominantly built on Ethereum.
  • Average network fees reached $15.21 on Wednesday, up 660% from $2 a month ago. Ethereum’s median fees also spiked nearly 900% over the same period, reaching $8.95.
  • Moreover, the day after CoinDesk reported about new record highs Tuesday for transaction costs, average fees climbed another 24% and median fees spiked 37 percent. 
  • In a bid to ameliorate soaring fees, Ethereum co-founder Vitalik Buterin released his Ethereum Improvement Proposal (EIP) 2929 Tuesday that proposes making certain heavy contracts more expensive by a factor of three. Contracts affected would be those that update the Ethereum state, including some applications.
  • This repricing proposal could break some smart contracts already operating on Ethereum, Buterin wrote. He added that developers “have had years of warning” about potential changes.
  • Approving this proposal, however, requires consensus from the Ethereum community, a process that can take weeks or months. Other broad-brush scaling solutions like EIP 1559 or sharding remain on the distant horizon as well.

Read more: Ethereum Developers Consider New Fee Model as Gas Costs Climb

  • For now, individual developers need to incorporate their own individual scaling solutions, said Hendrik Hofstadt, founder of staking firm Certus Oneit, in an email with CoinDesk. “I think the pain is now big enough to push the people to move quicker with L2 (layer 2) solutions,” he added.
  • Tether, for example, announced its intention to explore zk-rollups for settling tether (USDT) transactions on the Ethereum blockchain Tuesday. The stablecoin’s transaction on Ethereum consumes the second largest amount of fees, just behind the wildly popular decentralized exchange Uniswap.
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CoinDesk

First Mover: As Bitcoin Falls for Second Day, Long-Term Holders Probably Won’t Care

6 years 1 month ago

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team and edited by Bradley Keoun, 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.

Price Point

Bitcoin was down early Thursday to about $11,250, extending Wednesday’s sell-off and falling to its lowest price since early August. [Update: At press time prices had slumped further to around $10,850.]

The cryptocurrency tumbled 4.4% on Wednesday, the most in a month, leading to a heightened level of margin calls and position liquidations. Prices appeared to fall in sync with gold and silver prices, which tumbled as the dollar rebounded following a recent slide. 

Related: Buterin, Ethereum Developers Focus on Congestion as Fees Spike Over 600% in 1 Month

“Failure to hold at the $12,000 level has turned the milk sour,” the crypto trading firm Diginex wrote in a note to clients. “Leveraged longs have been forced to drink it.”

Market Moves

With stocks soaring to new records after a decade-long climb, traders in traditional markets are asking how much higher they can go in the midst of a global pandemic, openly discussing whether the market is just propped up by government stimulus checks and Federal Reserve money injections. 

The conversation around bitcoin is very different. The assumption among many digital-asset investors is the cryptocurrency’s price will definitely, inevitably go higher, much higher. It’s only a matter of time. 

Cameron and Tyler Winklevoss, who run the cryptocurrency exchange Gemini, wrote last week that bitcoin prices could reach $500,000, in an extensive analysis that somehow relates to a database of 600,000 asteroids. 

Related: Bitcoin Plunges $403 in 1 Hour to Lowest in a Month

Nobody really knows if any of that will pan out, of course. What’s clear is a lot of investors have bought bitcoin because they see it as a deep out-of-the-money option (with no expiration date) on financial Armageddon, severe currency debasement or at the very least an inflation rate well above the Federal Reserve’s 2% annual target. According to CoinDesk Research’s monthly review published this week, bitcoin’s price appears to be rising whenever the dollar falls in foreign-exchange markets.  

Bitcoin costs $11,200 now, and it might be possible to lose it all, but it also might be worth $500,000 at some point. That’s the general gambit anyway.  

Invented just 11 years ago, bitcoin is exceedingly difficult to value partly because it has such a short track record. Similar to gold and many other commodities, the cryptocurrency offers no yield, so bond math won’t work. Bitcoin has no earnings or dividend, so stock analysis won’t work either. 

Philip Bonello, director of research for the money manager Grayscale (owned by CoinDesk parent Digital Currency Group), says his favorite chart for thinking about bitcoin’s price trajectory might be one showing “holders” versus “speculators.” A holder in this case is defined as a bitcoin that has not moved for one to three years, while a speculator coin has moved in the past 90 days.

An increase in holders is considered “likely bullish,” while an increase in speculators is “likely bearish,” according to a recent Grayscale report. The idea is that it’s positive for the market if more investors appear to be holding the cryptocurrency for the long term, versus those who merely appear to be in it for a quick volatility ride. 

Right now, the chart shows holders increasing and speculators decreasing. According to Grayscale, it’s a “similar structure to that of early 2016,” just before bitcoin went on a bull run toward its all-time high around $20,000. 

“It’s reassuring,” Bonello said Wednesday in a phone interview, “that the sentiment of the investor base is growing day by day.” The holders appear to have been unfazed by the volatility witnessed in March, when the spread of the coronavirus quickly sent bitcoin prices swooning from above $9,000 to below $5,000. “It’s probably unlikely that they’re going to sell right now at $11,000,” Bonello said.  

All of this might mean nothing for the future price of bitcoin. It just shows that a growing number of investors are holding onto their tokens in a bet that the cryptocurrency’s price will – or even that it might – eventually go up. By a lot.  

Bitcoin Watch
  • Bitcoin may extend Wednesday’s price pullback, as exchange flows indicate increased selling pressure in the market.
  • While the top cryptocurrency fell by 4% on Wednesday, it defended the long-held support zone of $11,100-$11,200. [Update: At press time prices had slumped further to below $10,850.]
  • The cryptocurrency may breach the support zone, as exchanges witnessed an inflow of 92,000 BTC on Wednesday – the biggest single day rise in 37 days, according to blockchain intelligence firm Chainalysis.
  • “Inflows surged as people rushed to sell at near $12,000,” Philip Gradwell, chief economist at Chainalysis, tweeted early Thursday. In other words, the number of coins on exchanges, potentially poised for liquidation, increased.
  • “I think there is still sell pressure to work through,” Gradwell said.
  • A violation at immediate support at $11,170 would confirm a bearish reversal pattern on technical charts.

Read more: Bitcoin Risks Deeper Price Pullback as Exchange Inflows Spike

– Omkar Godbole

Token Watch

Ether (ETH): Open positions in Deribit’s ether options hit record high above $500 million.

Bitcoin Cash (BCH): Proposed changes by development team could reduce rewards for miners, splitting community support.

OKB (OKB): OKEx CEO says foundation burned 3.8 million of its utility tokens, just over 1% of total supply, deepening commitment to “deflation” at time when “central banks around the world are ceaselessly printing money.”  

Theta Network (THETA): Decentralized streaming network says DeFi could be used to pay content providers who are just starting out, with few followers.

What’s Hot

U.S. Senate Banking Committee Chair Crapo wants clear crypto rules “without stifling innovation” (CoinDesk)

Ethereum miners are cashing in on DeFi-driven gas-price hikes (CoinDesk)

Japanese crypto exchange Bitgate to offer cold storage through BitGo (CoinDesk)

Boosting Blockchain: Germany to introduce electronic securities (JDSupra)

Are bitcoin ATMs an anomaly or just an aberration? (Hacker Noon)

Analogs The latest on the economy and traditional finance

German ministry predicts V-shaped recovery in Europe’s largest economy (WSJ)

French president Macron unveils 100 billion-euro ($118B) stimulus plan (Bloomberg)

India bans 118 Chinese apps, including Tencent’s hit games, as border tensions flare (CNBC)

United Airlines to cut 16,370 workers, as company and union press for more aid (Reuters)

CEO of Calvin Klein owner: Retail sales hinge more on containing coronavirus than stimulus spending (CNBC)

Times Square Hilton hotel in New York City is set to close (Wall Street Journal)

Shopping centers from Miami to Alabama start to evict delinquent store operators (WSJ) 

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CoinDesk

Jump Trading Invests in Decentralized Exchange Serum, Signs On as Market Maker

6 years 1 month ago

Jump Trading, the publicity-shy market maker for Robinhood, Bitfinex and BitMEX has made a significant investment into decentralized exchange (DEX) Serum.

  • Serum announced Thursday it had received a significant investment from Jump Trading and inked a liquidity partnership with the firm.
  • Per a release shared with CoinDesk, Jump Trading will provide market making and liquidity services for assets as they go live on Serum’s platform, which only launched last week.
  • The value of the investment was not disclosed.
  • Serum’s founding partner Sam Bankman-Fried said the news represented a major step for the maturation of the DeFi space.

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

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