CoinDesk Crypto

Bitcoin remains in consolidation below a critical resistance despite hashrate reaching record highs over the weekend. 

• Data from Glassnode shows the seven-day average for bitcoin’s hashrate – the computing power dedicated to mining blocks – rose to a record high of 129.03 tera hashes per second (TH/s) over the weekend.
• Bitcoin’s July rally has stalled near $12,000, making the psychological level a resistance to beat for the bulls. It was sidelining near $11,900 at press time.
• But some argue that an increasing hashrate is a bullish price signal.
• Earlier this year, Jeremy Britton, CEO of Boston Trading Co. told Finance Magnates rising hashrate forced miners to hoard rather than sell newly mined coins, reducing downwards pressure and raising the price floor.

• But price increases don’t always follow from higher hashrates, according to Philip Gradwell, an economist at the blockchain intelligence firm Chainalysis.
• “Miners may be better at predicting the future price, but that doesn’t really cause the prices to go up,” Gradwell told CoinDesk in a Telegram chat on Monday.
• A direct correlation between the hash rate and the price has not been seen before – bitcoin's price fell 30% in the second half of 2019 even though the hashrate rose 64% to 97 TH/s.
• Stack Fund co-founder and COO Matthew Dibb told CoinDesk miners may be scaling up their capacity, ergo hashrate, in anticipation of a rising bitcoin price, but didn’t think there was actually an established causal link between the two.

Also read: Marathon Signs New $23M Contract With Bitmain for 10,500 Bitcoin Mining Rigs

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The cryptocurrency litecoin is often referred to as the silver to bitcoin’s gold. This year, litecoin investors might have been better off staying in the analog world: While bitcoin has gained twice as much as gold, litecoin has barely kept up with silver.

Some investors now foresee a rally developing in litecoin prices, with a key upgrade looming and signs that activity is increasing on the blockchain network.

The upgrade will put in effect a “privacy protocol” known as Mimblewimble, which is supposed to help shield the identities of holders of senders and recipients of litecoin tokens while also improving the network’s ability to scale to handle more transactions. A testnet of Mimblewimble, in the works for almost a year, is targeted for the end of September.

Related: First Mover: Litecoin and Mimblewimble, Ether Futures, Chainlink, Curve

And based on market data, it appears the looming addition is generating enthusiasm among users: Daily confirmed transactions on litecoin’s blockchain has more than doubled this year, reaching a seven-day average of 48,948 last week, the highest since February 2018, according to data source Glassnode. 

Litecoin backers hope the token’s added privacy features from the Mimblewimble upgrade will help attract users who otherwise might gravitate toward existing privacy coins like monero (XMR) and zcash (ZEC). Those tokens come with their own risks, such as the potential for holders to get diluted by new issuance. 

The speculation is the upgrade could help litecoin, which has gained about 50% this year to $63, catch up with bitcoin’s 64% increase. 

“Litecoin’s upcoming Mimblewimble upgrade has led to a spike in transactions and active addresses,” said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index futures.

Related: Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High

Litecoin’s facility for handling a large number of transactions at any given moment is supposed to increase with the upgrade, helping to solve “scalability” concerns that had deterred some users and investors, according to Nicholas Pelecanos, head of trading at NEM Ventures, a cryptocurrency investment firm. 

“In 2017, a huge bottleneck for development in the blockchain space was scaling,” Pelecanos said. “The issue will now be solved with protocol upgrades due across the majority of leading protocols, leaving valuations at lifetime highs.”

The litecoin network’s processing speed has doubled this year to about one transaction every two seconds. But that’s still far slower than the Bitcoin blockchain, which can handle about 3.7 transactions every second. The upcoming protocol upgrade could further boost transaction capacity.

One concern with the added privacy features is that it’s not yet clear how they’ll sit with regulators. Coinbase UK delisted zcash last year, likely due to pressure from financial watchdogs. South Korean exchange Upbit delisted privacy coins monero, dash and zcash in 2019.

“There’s some stigma against privacy coins, and some exchanges have delisted them,” Litecoin founder Charlie Lee told CoinDesk in a recent interview. “But from what I can tell, the exchanges are OK with this litecoin privacy upgrade as an extension block because it’s kind of on the side. The exchanges don’t have to support the extension block side of things.”

David Schwartz, project director at Litecoin Foundation, a non-profit organization that sponsors development on the blockchain, wrote on Twitter earlier this month that he thought the cryptocurrency was undervalued.

“Its average usage has doubled since the start of the last bull run & is gaining steam,” he tweeted. “So much so, that transactions have outpaced historical price, which means price is not showing its true value.”

There’s some skepticism, of course. Crypto markets are notoriously speculative.

“The recent pickup may be attributable to the upcoming upgrade,” says Connor Abendschein, research analyst at Digital Assets Data, but “greater bullish sentiment across the entire crypto market has driven prices of most assets higher over the past few months.”

“As the upgrade draws closer, we will see whether litecoin is just rising bitcoin’s coattails, or if it can find some legs and run on its course,” Abendschein said.

Correction (12:50 UTC, Aug. 17, 2020): An earlier version erroneously quoted Nicholas Pelecanos as saying that LTC’s network faced bottlenecks in 2017. This has been corrected.

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Institutions and the well-heeled have poured millions of dollars into a Pantera Capital fund, helping it more than double in size since it launched in 2018.

• The Pantera Venture Fund III has received $164.7 million in private placements from just under 200 investors, according to a Form D filing with the U.S. Securities and Exchange Commission (SEC) Friday.
• That’s nearly $60 million more than at the date of its last filing in 2019 and well over $93 million – double – what the fund had two years from when it first filed with the U.S. markets watchdog.
• Pantera declined to disclose the fund’s revenue.
• A Form D exempts offerings directed at accredited investors from registering with the SEC
• Asset manager New York Digital Investments Group (NYDIG) has used this exemption for the three crypto funds it has launched just this year.
• But Pantera’s filing, this year’s as well as in previous years, has claimed a 3(c)7 exemption, meaning its offering is aimed at the higher-tiered qualified purchasers, or those with at least $5 million in investments.
• Pantera had originally hoped to raise $175 million for Venture Fund III and said in March last year it had crossed the $160 million milestone.
• Per a blog post, Pantera disclosed it had primarily invested in infrastructure, finance and exchanges in the digital asset space.
• One of its first investments was the institutional derivatives exchange Bakkt.

See also: Crypto Long & Short: The Surprisingly Sunny Outlook for Crypto Hedge Funds

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One of the quietest yet best-funded bitcoin companies in the world is gearing up to enter the 2020 decentralized finance (DeFi) bull run. 

In July the DG Lab conglomerate, which like Ethereum powerhouse ConsenSys includes both an investment arm and an adjacent software company, open sourced its proposal for self-sovereign derivatives trading on the Bitcoin blockchain, using the Lightning Network. 

These contracts turn bitcoin, the asset itself, into programmable money capable of a wider variety of functions. 

Related: Bitcoin Surges Past $12,000 to New 2020 High

This offers a stark contrast to the typical DeFi approach so far, which relies on “wrapped” representations of bitcoin or exchange platforms. The Silicon Valley startup cLabs recently acquired DeFi firm Summa, which spearheaded the bitcoin-on-Ethereum approach. Now it looks as though DG Lab, founded in 2015, is the leading incumbent exploring DeFi opportunities for Bitcoin. 

Read more: These Bitcoin Users Want DAI and DeFi – Here’s How They Plan to Get It

“I’ve been working on a proposal to integrate DLC [Discreet Log Contracts] and channels into the Lightning Network,” DG Lab researcher Ichiro Kuwahara said of his recent work. “We can establish many contracts without broadcasting transactions on the blockchain.”

This software uses the Lightning Network to execute business logic without clogging up the base-layer blockchain. The hottest trend among Bitcoin veterans these days is imagining DeFi functionality applied to the bitcoin currency through such layers. There are many opinions on how to approach this opportunity, from DLC to soft forks.

Competition

Related: Huobi Launches Consortium of DeFi Providers and Platforms With MakerDAO, Compound

Not everyone agrees on how to use Lightning for smart contracts. 

Bitcoin veteran Jeremy Rubin, who launched his Judica startup this summer, believes Blockstream’s Liquid Network, which companies like Crypto Garage use to experiment with such smart contracts, overcomplicates the construction. 

“I think we can do it much simpler. … It’s solvable on-chain but can be done in [Lightning] channels as well,” Rubin said in an interview, explaining how his proposed Bitcoin soft fork could optimize the base layer for smart contracts. “I can construct this contract, which is a derivative, without you being online. I can make a valid contract then email it to you.”

Read more: This New Coding Language Could Help Unlock Bitcoin’s Smart Contract Potential

These days, both ends of a Lightning transaction need to participate at roughly the same time for the payment to go through. (Or, at least, both need to set everything up in advance.) Rubin is arguing there’s a way to make it so one party can execute a consensual transaction. Public keys allow the other party to see, whenever they come online, proof of everything about the deal.

“It’s this notion of flow and conditionality that doesn’t currently exist in Bitcoin,” Rubin said. “[These 2020 DeFi projects] are about helping define commutes … a sequence of steps that can happen based on choices along the way.”

There are enough engineers working on DeFi options for Bitcoin that one of them might technically work, even if socially it doesn’t catch on. Only time will tell which ones find product market fit, and how that may or may not spur crypto adoption.

Japanese bulls

Stepping back, the DeFi bulls at DG Lab Fund raised over $93 million in 2019 and, according to the firm’s blog post, are raising a second fund in 2020. 

The fund invested in DG Lab, the separate namesake startup, which simultaneously attracted investors from Japanese enterprises including the e-commerce giant Kakaku.com and the telecommunications provider KDDI. Meanwhile, the DG Lab Fund itself invested in River Financial, Arwen, Blockstream and Curv, to name a few, in addition to startups in adjacent sectors such as AI and security. 

Read more: Polychain Capital, Square Crypto’s Steve Lee Invest in Bitcoin Broker’s $5.7M Seed Round

“We have several startups that are working with DLC. For example, Suredbits is one of the key players in this field and we are working closely with them,” said Shunichi Kimuro, senior manager at DG Lab Fund. “We wanted to show what is possible using the Bitcoin protocol by using our peer-to-peer [P2P] derivatives.”

Yet another startup called Crypto Garage, in which DG Fund did not invest directly, is using Blockstream’s Liquid technology to explore this type of smart-contract software.  

Read more: Custody Startup Curv Follows Crypto Demand Into Asia With New Hong Kong Office

“You define the outcomes of your contracts and create a transaction for each of the outcomes. And it can only be unlocked with one of the outcome transactions or with mutual agreement between the contract participants,” Crypto Garage engineer Thibaut Le Guilly said in an interview. 

Rubin pointed out that even if he disagrees with Le Guilly on certain aspects these Bitcoin projects have much more in common with each other than with Ethereum DeFi projects.

Different goals

“There’s a really big gap between DeFi, as Ethereum is trying to do it, and P2P finance,” Rubin said. “Uniswap is really great. But they tokenize their liquidity pools. … We [Bitcoiners] are talking about finding a way for people to work directly with each other.”

Bitcoin DeFi projects aren’t using representatives of bitcoin, they want to enable traders to do tasks directly with bitcoin.

“There are about 20 people in the Bitcoin community working on tools, applications and specifications for [Discreet Log Contracts], including at SuredBits,” Le Guilly said in an interview. “[Traders] don’t have to involve an exchange.”

It appears as though Ethereum DeFi advocates offer a different interpretation of decentralization than their node-obsessed Bitcoiner brethren. Bitcoin advocates are focused on every user being able to participate in the network by running their own full financial stack, while Ethereum fans are more focused on the ability to offer their services from any data center around the world.

Bison Trails CEO Joe Lallouz said his infrastructure startup can easily move accounts across borders, thanks in part to a distributed team. This, from his perspective, is a slightly decentralized step away from Silicon Valley norms. 

Read more: Token Sales Are Back in 2020

“If Amazon said you can’t run nodes, for example, we can very quickly and seamlessly move our infrastructure to other cloud providers,” Lallouz said. “Everyone at the same time would have to say the blockchain network is something we don’t support [to censor our customers] across the internet.” 

While Ethereum DeFi experiments attract quick flashes of capital, losing considerable sums as advocates iterate, Bitcoin DeFi experiments seem comparatively modest. Yet, veterans know not to underestimate the Bitcoin development scene in Tokyo, home to the creators of self-sovereignty experiments including BTCPay and DG Lab. This period may just be the calm before a perfect storm. 

“Once there are enough people to create a real market, we might offer services or tools we can monetize,” Crypto Garage’s Le Guilly said. “At this stage, our goal is to raise awareness about what can be done with Bitcoin.”

Related Stories

• Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High
• Ex-Prudential Securities CEO Calls Bitcoin a ‘Safe Haven’

One of the quietest yet best-funded bitcoin companies in the world is gearing up to enter the 2020 decentralized finance (DeFi) bull run. 

In July the DG Lab conglomerate, which like Ethereum powerhouse ConsenSys includes both an investment arm and an adjacent software company, open sourced its proposal for self-sovereign derivatives trading on the Bitcoin blockchain, using the Lightning Network. 

These contracts turn bitcoin, the asset itself, into programmable money capable of a wider variety of functions. 

Related: Huobi Launches Consortium of DeFi Providers and Platforms With MakerDAO, Compound

This offers a stark contrast to the typical DeFi approach so far, which relies on “wrapped” representations of bitcoin or exchange platforms. The Silicon Valley startup cLabs recently acquired DeFi firm Summa, which spearheaded the bitcoin-on-Ethereum approach. Now it looks as though DG Lab, founded in 2015, is the leading incumbent exploring DeFi opportunities for Bitcoin. 

Read more: These Bitcoin Users Want DAI and DeFi – Here’s How They Plan to Get It

“I’ve been working on a proposal to integrate DLC [Discreet Log Contracts] and channels into the Lightning Network,” DG Lab researcher Ichiro Kuwahara said of his recent work. “We can establish many contracts without broadcasting transactions on the blockchain.”

This software uses the Lightning Network to execute business logic without clogging up the base-layer blockchain. The hottest trend among Bitcoin veterans these days is imagining DeFi functionality applied to the bitcoin currency through such layers. There are many opinions on how to approach this opportunity, from DLC to soft forks.

Competition

Related: Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High

Not everyone agrees on how to use Lightning for smart contracts. 

Bitcoin veteran Jeremy Rubin, who launched his Judica startup this summer, believes Blockstream’s Liquid Network, which companies like Crypto Garage use to experiment with such smart contracts, overcomplicates the construction. 

“I think we can do it much simpler. … It’s solvable on-chain but can be done in [Lightning] channels as well,” Rubin said in an interview, explaining how his proposed Bitcoin soft fork could optimize the base layer for smart contracts. “I can construct this contract, which is a derivative, without you being online. I can make a valid contract then email it to you.”

Read more: This New Coding Language Could Help Unlock Bitcoin’s Smart Contract Potential

These days, both ends of a Lightning transaction need to participate at roughly the same time for the payment to go through. (Or, at least, both need to set everything up in advance.) Rubin is arguing there’s a way to make it so one party can execute a consensual transaction. Public keys allow the other party to see, whenever they come online, proof of everything about the deal.

“It’s this notion of flow and conditionality that doesn’t currently exist in Bitcoin,” Rubin said. “[These 2020 DeFi projects] are about helping define commutes … a sequence of steps that can happen based on choices along the way.”

There are enough engineers working on DeFi options for Bitcoin that one of them might technically work, even if socially it doesn’t catch on. Only time will tell which ones find product market fit, and how that may or may not spur crypto adoption.

Japanese bulls

Stepping back, the DeFi bulls at DG Lab Fund raised over $93 million in 2019 and, according to the firm’s blog post, are raising a second fund in 2020. 

The fund invested in DG Lab, the separate namesake startup, which simultaneously attracted investors from Japanese enterprises including the e-commerce giant Kakaku.com and the telecommunications provider KDDI. Meanwhile, the DG Lab Fund itself invested in River Financial, Arwen, Blockstream and Curv, to name a few, in addition to startups in adjacent sectors such as AI and security. 

Read more: Polychain Capital, Square Crypto’s Steve Lee Invest in Bitcoin Broker’s $5.7M Seed Round

“We have several startups that are working with DLC. For example, Suredbits is one of the key players in this field and we are working closely with them,” said Shunichi Kimuro, senior manager at DG Lab Fund. “We wanted to show what is possible using the Bitcoin protocol by using our peer-to-peer [P2P] derivatives.”

Yet another startup called Crypto Garage, in which DG Fund did not invest directly, is using Blockstream’s Liquid technology to explore this type of smart-contract software.  

Read more: Custody Startup Curv Follows Crypto Demand Into Asia With New Hong Kong Office

“You define the outcomes of your contracts and create a transaction for each of the outcomes. And it can only be unlocked with one of the outcome transactions or with mutual agreement between the contract participants,” Crypto Garage engineer Thibaut Le Guilly said in an interview. 

Rubin pointed out that even if he disagrees with Le Guilly on certain aspects these Bitcoin projects have much more in common with each other than with Ethereum DeFi projects.

Different goals

“There’s a really big gap between DeFi, as Ethereum is trying to do it, and P2P finance,” Rubin said. “Uniswap is really great. But they tokenize their liquidity pools. … We [Bitcoiners] are talking about finding a way for people to work directly with each other.”

Bitcoin DeFi projects aren’t using representatives of bitcoin, they want to enable traders to do tasks directly with bitcoin.

“There are about 20 people in the Bitcoin community working on tools, applications and specifications for [Discreet Log Contracts], including at SuredBits,” Le Guilly said in an interview. “[Traders] don’t have to involve an exchange.”

It appears as though Ethereum DeFi advocates offer a different interpretation of decentralization than their node-obsessed Bitcoiner brethren. Bitcoin advocates are focused on every user being able to participate in the network by running their own full financial stack, while Ethereum fans are more focused on the ability to offer their services from any data center around the world.

Bison Trails CEO Joe Lallouz said his infrastructure startup can easily move accounts across borders, thanks in part to a distributed team. This, from his perspective, is a slightly decentralized step away from Silicon Valley norms. 

Read more: Token Sales Are Back in 2020

“If Amazon said you can’t run nodes, for example, we can very quickly and seamlessly move our infrastructure to other cloud providers,” Lallouz said. “Everyone at the same time would have to say the blockchain network is something we don’t support [to censor our customers] across the internet.” 

While Ethereum DeFi experiments attract quick flashes of capital, losing considerable sums as advocates iterate, Bitcoin DeFi experiments seem comparatively modest. Yet, veterans know not to underestimate the Bitcoin development scene in Tokyo, home to the creators of self-sovereignty experiments including BTCPay and DG Lab. This period may just be the calm before a perfect storm. 

“Once there are enough people to create a real market, we might offer services or tools we can monetize,” Crypto Garage’s Le Guilly said. “At this stage, our goal is to raise awareness about what can be done with Bitcoin.”

Related Stories

• Ex-Prudential Securities CEO Calls Bitcoin a ‘Safe Haven’
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George Ball, the former chief executive officer of Prudential Securities and now CEO of Sanders Morris Harris, suggested bitcoin or other cryptocurrencies could be “a safe haven” for investors and traders as an alternative investment.

Ball, who claimed himself as a Bitcoin and blockchain opponent, said in an interview with Reuters on Aug. 14 that bitcoin or another cryptocurrency is “very attractive” both in the long term and short term and predicted more people will turn to the crypto market after the Labor Day.

“The government can’t stimulate the markets forever,” Ball said. “The liquidity flood will end. Sooner or later, the government’s got to start paying for some of these stimulus, for some of the deficits, for some of the well-deserved, very smart subsidies that it’s providing to people. Are they going to raise taxes that high? Or, if not, are they going to print money? If they print money, that debases the currency and probably even things like TIPS – Treasury inflation-protected securities – can be corrupted.” 

Related: Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High

This would likely lead to very wealthy investors and traders to turn to bitcoin “or something like it as a staple,” he concluded, hinting that a growing interest in cryptocurrencies from high-net-worth investors.

Ball is not the first one who has noticed this investment trend in the wake of the coronavirus pandemic.

Mike Novogratz, chief executive of the digital-current firm Galaxy Digital, told Bloomberg TV back in April that he has observed new players including hedge funds and high-net-worth individuals have been buying cryptocurrencies amid the financial shakeup caused by the COVID-19 pandemic.

Ball also stressed that seeking cryptocurrencies as an alternative investment is not for the purpose to find a tax refuge but “to have something that can’t be undermined by the government.”

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Investor interest in the ether (ETH) futures and options market hit a new peak on Friday as the cryptocurrency’s price rose to 25-month highs. 

• Open interest in futures or total value of outstanding contracts rose to a record high of $1.73 billion on Friday, according to data source Skew.
• The previous record high of $1.45 billion was reached on Aug. 5.
• The value of open positions in the options market also reached a record high of $454 million.
• ETH’s price jumped to a two-year high of $445 on Friday and is trading near $435 at press time, according to CoinDesk’s ether price index.

• Futures open interest has increased by nearly 300% this year.
• On July 22, ETH’s price broke out of a two-month price range of $210 to $250.
• Since then, ETH has rallied by 65% and the number of open positions in the futures market and options market has increased by 50% and 53%, respectively. 
• Increasing open interest is viewed as indicating money flowing into the marketplace.
• That rise in open interest combined with a price rally is usually taken to indicate there is solid support for the upward trend.
• ETH has established a foothold above the June 2019 high of $365, while bitcoin is yet to clear the high of $13,880 seen 13 months ago.
• The second-largest cryptocurrency by market value, ETH, has gained nearly 240% this year, powered by the exploding popularity in decentralized finance (DeFi), which runs on the Ethereum blockchain.
• “The DeFi boom looks to be powering gains in ether,” said John Ng Pangilinan, managing partner at Singapore-based Signum Capital.
• Right now, the options market is currently skewed bullish on ETH with calls (bullish bets) claiming higher prices than puts (bearish bets) on the one, three, and six-month time frames. In short, most of those placing bets on the future direction of ether think the cryptocurrency still has room to rise.
• In another sign of this belief, the futures market is in contango – a condition where futures price trades higher than the spot price. 
• Denis Vinokourov, head of research at the London-based digital asset firm Bequant, noted that the continued rise in ETH’s price is notable considering how the costs of executing transactions on Ethereum’s blockchain have recently gone nuclear.

Also read: Decentralized Finance Frenzy Drives Ethereum Transaction Fees to All-Time Highs

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• Market Wrap: Stuck at $11.5K, Bitcoin Surpasses 25K Locked in DeFi

Since Sunday, 1,043 more bitcoins were tokenized through Wrapped Bitcoin than were actually created by bitcoin miners as the Ethereum-based decentralized finance (DeFi) boom shows no signs of abating.

• About 900 bitcoins are mined per day, given the current issuance rate of 6.25 bitcoins minted per block and the target 10-minute block time.
• At last check, nearly 31,000 bitcoins have been tokenized on Ethereum, according to Dune Analytics, 75% of which were minted by Wrapped Bitcoin (WBTC).
• Ethereum’s supply of tokenized bitcoins hovered below 3,000 until mid May when the rate of new tokens shot up.
• The rate of bitcoin tokenization signals the surging demand to use bitcoin in the burgeoning network of Ethereum-based DeFi applications.
• “WBTC continues to exhibit strong growth as demand for bitcoin in DeFi has exploded,” said Kyle Davies, co-founder of Three Arrows Capital, in a private message with CoinDesk. “I expect this trend to continue,” he added.

• In July, Three Arrows Capital minted its tokenized bitcoins through BitGo, the company that helped spearhead Wrapped Bitcoin in 2019.
• Within a year, WBTC will be a “first class asset” in the decentralized finance ecosystem, predicted Three Arrows co-founder Su Zhu, “just as USDC and USDT are now.”

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According to a recent lawsuit filed in the U.S. Western District Court of Texas, data center power management firm Lancium has accused bitcoin mining firm Layer1 of infringing upon its patented technology to adjust power usage in bitcoin mining facilities. 

Backed by investors including PayPal co-founder Peter Theil and the Digital Currency Group, CoinDesk’s parent company, Layer1 currently operates bitcoin mining facilities in West Texas. 

• According to Lancium’s filed complaint, Layer1’s “demand-response” model that allows the firm to shut down mining operations and redirect power to the grid during high demand violates the firm’s patent. 
  
• Granted in March of this year, Lancium holds a patent on technology to help adjust power consumption at “flexible” data centers that kick into action when there is low demand for power, hence making it cheaper, and shut down when there is a spike.
  
• According to exhibits attached with Lancium’s filed complaint, the firm tried to alert Layer1 of this possible infringement in May 2020 but received no response from the mining firm.
  
• In its filed complaint, Lancium argues it should receive damages commensurate with willful infringement of the firm’s patent and a permanent injunction should be granted to prevent any further violation by Layer1 or any of its employees.
  
• Layer1 did not respond to a request for comment on the lawsuit by press time.

Read more: Peter Thiel Backs $200 Million Valuation for Renewable Bitcoin Mining in the US

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According to a recent lawsuit filed in the Western District Court of Texas, data center power management firm Lancium has accused bitcoin mining firm Layer1 of infringing upon its patented technology to adjust power usage in bitcoin mining facilities. 

Backed by investors like PayPal Co-founder Peter Theil and the Digital Currency Group, CoinDesk’s parent company, Layer1 currently operates bitcoin mining facilities in West Texas. 

• According to Lancium’s filed complaint, Layer1’s “demand-response” model which allows the firm to shut down mining operations and redirect power to the grid during high demand violates the firm’s patent. 
  
• Granted earlier in March this year, Lancium holds a patent on technology to help adjust power consumption at “flexible” data centers that kick into action when there is low demand for power, hence making it cheaper, and shut down when there is a spike.
  
• According to exhibits attached with Lancium’s filed complaint, the firm tried to alert Layer1 of this possible infringement in May this year but received no response from the mining firm.
  
• In its filed complaint, Lancium argues it should receive damages commensurate with wilful infringement of the firm’s patent and a permanent injunction should be granted to prevent any further violation by Layer1 or any of its employees.
  
• Layer1 did not respond to a request for comment on the lawsuit by press time.

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• Riot Blockchain Mined 227 Bitcoin in Q2
• Mining Stocks Are Beating Bitcoin in a Bullish Cryptocurrency Market
• Riot Blockchain Ends Week Up 29%, Hits 2020 High Ahead of Q2 Earnings Report

Bitcoin is up Friday while ether options traders are overwhelmingly bearish.

• Bitcoin (BTC) trading around $11,823 as of 20:00 UTC (4 p.m. ET). Gaining 2.4% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,517-$11,865
• BTC slightly above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin is back on the move Friday, breaking above $11,800 after a Thursday of relative quiet on the spot market. 

Read More: As Wall Street Goes Topsy-Turvy, Crypto Traders Are Bullish as Ever

Related: First Mover: As Wall Street Goes Topsy-Turvy, Crypto Traders Are Bullish as Ever

“Crypto has had a good run for about three weeks in a row, since late July,” said David Lifchitz, chief investment officer for quantitative trading firm ExoAlpha. “There is a current resistance level of $12,500 for bitcoin, which looks pretty normal as markets, even crypto, cannot go up in a straight line day after day.”

Indeed, over the past month, bitcoin reached a high of $12,130 before dipping. That signaled a retrenchment will be likely before a move to further highs in 2020, according to Lifchitz. “A slight pullback could be even in the cards in the next couple of weeks but without any special bearish event, this shouldn’t be worrisome and the next major move from here should be up,” he added. 

The bitcoin options market appears to agree with Lifchitz. Options with August 20 maturity show trader’s are giving bitcoin a 75% probability of being over $11,000, while only a 21% chance of hitting $13,000 by next Thursday, according to data aggregator Skew. 

Traders may be temporarily distracted by more shiny objects at the moment. Alessandro Andreotti, an over-the-counter market cryptocurrency trader, says decentralized finance, or DeFi, is taking the spotlight from bitcoin – but that it won’t last. “Where I see opportunities right now is in DeFi tokens, which are performing incredibly well,” he told CoinDesk. “I feel the bulls will be coming back soon for bitcoin, though.” 

Related: CME Rises in Bitcoin Futures Rankings as Institutional Interest Grows

Read More: CME Rises in Bitcoin Futures Rankings as Institutional Interest Grows

Ether options bearish

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Friday trading around $442 and climbing 12.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: How DeFi ‘Degens’ Are Gaming Ethereum’s Money Legos

The ether options market has more open interest (open positions) than ever before, to the tune of $463 million on platforms Deribit and OKex, according to Skew. But that’s not necessarily bullish for ether. Trader sentiment appears to view ether’s valuation as unsustainable. An overwhelming number of options bets are on sub-$410 ether. 

Chris Thomas, head of digital assets for Swissquote Bank, said some traders are probably concerned the current Ethereum-powered DeFi frenzy won’t be able to keep going for the rest of 2020. That contributes to the bearish sentiment. “Perhaps some traders are feeling that Ethereum has come too far this year,” he said. “With high gas fees, will it result in a problem for the DeFi ecosystem in the weeks ahead?”

Other markets

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

• tron (TRX) + 10.4%
• xrp (XRP) + 9.5%
• zcash (ZEC) + 5%

Read More: Crypto Exchange INX Plans $117M US IPO With Small Israeli Underwriter

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

• chainlink (LINK) – 7.4%
• tezos (XTY) – 4.7%

Read More: BitMEX to Mandate ID Verification for All Traders

Equities:

• In Asia the Nikkei 225 closed flat, in the green 0.17% as investors took profits amid uncertainty over U.S.-China relations.
• In Europe the FTSE 100 ended the day slipping 1.2% as poor Chinese economic data signaled a slower-than-expected recovery.
• The United States’ S&P 500 was flat, in the red 0.02% as tech stocks suffered losses while the travel sector made modest gains.

Read More: Mining Firm Hut 8 Reports 28% Drop in Q2 Revenue Following Halving

Commodities:

• Oil is down 0.46%. Price per barrel of West Texas Intermediate crude: $42.14
• Gold was in the red 0.50% and at $1,942 as of press time.

Read More: Singapore’s Central Bank Backs New Code of Practice for Crypto Companies

Treasurys:

• U.S. Treasury bonds were mixed Friday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 12.6%.

Read More: US Prosecutors Seize Bitcoin Allegedly Tied to Al Qaeda, ISIS, Hamas

Related Stories

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On Thursday, an anonymous DeFi user deployed Curve Finance’s Decentralized Autonomous Organization (DAO) and token smart contracts without the team’s permission, but the Curve team is adopting it anyway.

• Since launching, the token contract already has roughly 3,500 active addresses and has seen some 31,000 transactions.
• Following the deployment, Curve Finance tweeted it had “no choice but to adopt it,” saying in another tweet it appears “to be an acceptable deployment with the correct code.”
• The abruptness of the launch and the team’s willingness to go along with the premature activation has raised eyebrows in the DeFi community.
• Curve Finance is a decentralized exchange for stablecoin trading and has been live since February. The CRV token is designed to work with the Curve DAO. 
• 0xc4ad signaled the premature launch of Curve’s DAO and governance token on Twitter.

Curve did not respond to CoinDesk’s request for comment at the time of publication.

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People from the world’s two largest economies could soon have a much harder time communicating with each other. Literally. 

The U.S. may soon ban WeChat, the multi-purpose messaging app for more than 1 billion Chinese users, in addition to shutting down TikTok’s American operations. The ban could be disruptive for 19 million active WeChat users in the U.S., including Americans who regularly communicate with China. Popular messaging apps such as Telegram and Facebook’s WhatsApp are blocked in China, further limiting communication channels. 

President Donald Trump’s threat highlights how governments can, by targeting centralized companies, disrupt the communication of millions of people. This should be the perfect moment for borderless, decentralized apps that can’t be easily shut down. But it’s not. 

Related: China to Launch Major Expansion of Digital Currency Trials

Decentralized apps use blockchain technology to store data in a distributed manner, rather than having it be controlled by a single company. But technical immaturity, legal limitations and ambiguous regulatory frameworks prevent decentralized apps from becoming serious competition for centralized platforms such as WeChat and Facebook’s Messenger, industry watchers said. 

“The daily chat activities are still happening in the Web 2.0 world,” Mable Jiang, a Beijing-based principal at Multicoin Capital, a U.S. investment firm with a focus on cryptocurrencies and blockchain technology, said in an email. “The User Interface/User Experience needs to be as good as the Web 2.0-based ones, and this point in fact is the universal hurdle for any decentralized applications to be adopted.” 

Decentralized technology experienced exponential growth with large investments through Initial Coin Offerings (ICOs), in which tech companies raise capital through token sales. Status, an Ethereum-based messaging company that aimed to be the answer to WhatsApp, raised over $100 million in June 2017, while Telegram, which aimed to launch Telegram Open Network (TON), a public blockchain project that could be applied to its messaging app, managed to raise a staggering $1.7 billion. Telegram later had to abort the project due to a legal dispute with the Securities and Exchange Commission (SEC). 

“Decentralized technology has improved tremendously over the past three years in terms of performance and user experience,” said Jonathan Zerah, head of marketing at Status. “However, much of the technology is still in its infancy and requires much improvement to be compared to legacy systems and web2 messaging apps.”

Related: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China

Blockchain-based messaging apps currently have only the most basic functions such as text messaging and audio chatting, and that might not satisfy all the needs of users, said Jason Wu, CEO of Definer, a decentralized financial services startup. 

“If people want to video chat, they would probably use Skype or Zoom via a Virtual Private Network (VPN), which is otherwise unavailable on decentralized messaging apps,” Wu said. 

Read More: TikTok and the Great Firewall of America

Another reason why it is difficult for decentralized messaging apps to reach large-scale adoption is that many users on WeChat and Messenger might not view privacy, which is a top priority for decentralized apps, as their biggest concern. 

Centralized messaging apps might store and analyze their users’ data to come up with new features that make the user experience more convenient. Facebook has long attracted controversy for using personal data to sell ads, and it’s well-known that WeChat messages could be accessed by Chinese authorities. But concerns about privacy have not caused users to abandon these platforms en masse. 

“Many of the issues of decentralization lie in the tradeoff of security and privacy for convenience,” Zera said. “I think there needs to be better systems in place for identities and growing one’s network without sacrificing personal privacy and the privacy of their contacts.”  

Popular encrypted messaging apps such as Signal and Telegram have better privacy protection, but they are not decentralized. While these companies claim they can’t read your encrypted texts, user data is stored in a centralized system and the companies have the ability to shut off their services. 

Downloads of Signal and WeChat have spiked since the ban. WeChat users in the U.S. scrambled to install the latest version of the app before it is removed from the app stores, while people in China sought alternatives like Signal in case they can’t use WeChat to connect with people in the U.S.

The U.S. has not yet released specific guidelines on how to implement a WeChat ban. Some possibilities might include removal from apps stores in Apple’s IOS and Google’s Android operating system, or barring these two companies from providing access or updates to users in the U.S. 

Government control

One argument for decentralized messaging apps is their technical resistance to government surveillance and censorship, as user data is encrypted and stored in a multitude of private servers. 

“Centralized technology creates choke points and attack vectors for third parties to exploit,” Zera said. “They become susceptible to financial exploitation and even blatant censorship.” 

However, a government can still retain a certain degree of control over decentralized apps, at least for now.  

“With the current internet infrastructure available and general reliance on internet service providers (ISP), decentralized applications are not actually free from government control,” Zera said. “Oftentimes, an internet connection is still required to access decentralized applications, which are ultimately operated by centralized corporations or even governments – this has been proven in eastern Europe and other parts of the world.” 

Following Belarus’ controversial presidential election result on Sunday, the country experienced a national internet outage. Major social networks and message sites including Viber, Telegram, Facebook, Twitter and Instagram were down, as were local news outlets. 

A decentralized mesh network is one way to resist dapps’ reliance on the Internet.

Read More: GoTenna Launches a Bitcoin Wallet That Works Without the Internet

In a general sense, a mesh network is a local network topology that enables infrastructure devices to connect to many other nodes in which data can be routed between users in the network. 

A New York-based startup, GoTenna, aims to build a mesh network of bitcoin micropayment devices that can also relay mobile communications such as text messages. The device, which resembles a cylinder-shaped game controller, can function as a bitcoin hardware wallet that transacts bitcoin without an Internet connection. The base technology for this network is the Bitcoin Lightning Network, and the app in the device is based on the Android operating system. 

While it remains to be seen whether a meshnet can be adopted in a transnational scope, crypto payment technology has already been used for censorship and surveillance-resistant communications.

Some decentralized messaging apps are based on crypto payment systems, where people can use their built-in digital wallet to transact major cryptocurrencies such as bitcoin or ether. Status has an ethereum-based wallet and another decentralized messaging app Juggernaut uses the Lightning Network as its base technology and has a built-in bitcoin wallet. 

These crypto-native messaging apps are partly designed to help crypto holders make transfers and payments more smoothly while securing their communications in the apps. But mass adoption will require scalable base blockchain technology.

National security

Borderless decentralized technology still has organizations behind it, and these organizations must be incorporated in a particular country. That means a government can exercise its legal power to surveil and control these organizations, according to James Cooper, an international law professor at California Western School of Law in San Diego.

ICOs, which were a common way for decentralized tech companies to raise capital, have been heavily scrutinized by financial authorities across the globe. 

The encrypted messaging company Telegram raised $1.7 billion from its ICO in late February 2018, in part to build a more decentralized messaging system. Since then the Russia-originated company has battled the SEC in the U.S.. The SEC believes most tokens are essentially securities and companies that launch ICOs have a legal obligation to register with the commission and disclose how exactly they are going to use the investment to develop their technology. 

Telegram refused to disclose the information out of concern that the disclosure could potentially lead to government regulation and surveillance of its system. Telegram eventually agreed in June to stop its TON project and return money to investors, as well as pay a $18.5 million penalty to the SEC. 

Read More: Inside The Hype Machine- Behind The Scenes Of The Ico Boom

From a legal perspective, decentralized messaging apps are no less vulnerable to a country’s national security law than popular apps such as WeChat and TikTok.

“Decentralization in the end is trying to skirt much of state regulation, but I would encourage people to pay attention to the rules and the laws because national security trumps all,” Cooper said. 

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Decentralized money market Aave has released specifications for version two of its protocol as the project eyes $1 billion locked under contract, according to DeFi Pulse.

• Aave will partner with real estate tokenization firm RealT to bring home mortgages to DeFi. RealT did not return questions for comment by press time.
• v2 will also include transaction fee optimizations such as native support for smart contract GasToken. 
• As reported by CoinDesk, Aave announced plans to transition to a fully autonomous and decentralized protocol through its “genesis governance” and Aave Improvement Proposals (AIP) scheme.
• “V2 takes DeFi composability beyond what we have seen,” Aave founder Stani Kulechov told CoinDesk in an email. For example, v2 will “introduce the ability to swap debt from one currency to another and the ability to swap collateral without returning the loan,” he said.

This article was updated to include a comment from Stani Kulechov.

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The long-existing, U.S. dollar-ruled financial system could come to an end amid challenges from a potential multiple-currency system, which includes digital currencies, according to an Aug. 14 research note by Dick Bove, noted senior research analyst at Odeon Capital Group LLC, a New York City-based investment bank.

• “The new currencies might be paper, metal or digital impulses,” Bove wrote. “The possibility of this happening can only be described as frightening, yet the probability is quite high.”
• This possible change to the world’s financial system was brought up after prices on gold and other precious metals moved higher.  
• The U.S. dollar has also been under attack from a number of flanks, such as China and Russia pushing for the renminbi to replace the dollar in international trade, as well as the rapid growth of the U.S. money supply. 
• Bove, who’s been a Wall Street analyst for five decades, noted the recent bitcoin rally while discussing cryptocurrencies as an alternative to the dollar, saying,  “Anything can be used as a currency as long as enough people will accept it.”
• Yet, Bove concluded that, for now, gold is “a clear option” for investors to consider to protect themselves from the rising risks to the dollar system.

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The long-existing, U.S. dollar-ruled financial system could come to an end amid challenges from a potential multiple-currency system, which includes digital currencies, according to an Aug. 14 research note by Dick Bove, noted senior research analyst at Odeon Capital Group LLC, a New York City-based investment bank.

• “The new currencies might be paper, metal or digital impulses,” Bove wrote. “The possibility of this happening can only be described as frightening, yet the probability is quite high.”
• This possible change to the world’s financial system was brought up after prices on gold and other precious metals moved higher.  
• The U.S. dollar has also been under attack from a number of flanks, such as China and Russia pushing for the renminbi to replace the dollar in international trade, as well as the rapid growth of the U.S. money supply. 
• Bove, who’s been a Wall Street analyst for five decades, noted the recent bitcoin rally while discussing cryptocurrencies as an alternative to the dollar, saying,  “Anything can be used as a currency as long as enough people will accept it.”
• Yet, Bove concluded that, for now, gold is “a clear option” for investors to consider to protect themselves from the rising risks to the dollar system.

Related Stories

• Newest DAO Project Was Thrown a Curve, but the Team Is Rolling With It Anyway
• Lending Protocol Aave Eyes Tokenized Mortgages With Launch of V2
• Crypto Exchange INX Plans $117M US IPO With Small Israeli Underwriter
• Marathon Signs New $23M Contract With Bitmain for 10,500 Bitcoin Mining Rigs

The long-existing, U.S. dollar-ruled financial system could come to an end amid challenges from a potential multiple-currency system, which includes digital currencies, according to an Aug. 14 research note by Dick Bove, noted senior research analyst at Odeon Capital Group LLC, a New York City-based investment bank.

• “The new currencies might be paper, metal or digital impulses,” Bove wrote. “The possibility of this happening can only be described as frightening, yet the probability is quite high.”
• This possible change to the world’s financial system was brought up after prices on gold and other precious metals moved higher.  
• The U.S. dollar has also been under attack from a number of flanks, such as China and Russia pushing for the renminbi to replace the dollar in international trade, as well as the rapid growth of the U.S. money supply. 
• Bove, who’s been a Wall Street analyst for five decades, noted the recent bitcoin rally while discussing cryptocurrencies as an alternative to the dollar, saying,  “Anything can be used as a currency as long as enough people will accept it.”
• Yet, Bove concluded that, for now, gold is “a clear option” for investors to consider to protect themselves from the rising risks to the dollar system.

Related Stories

• Lending Protocol Aave Eyes Tokenized Mortgages With Launch of V2
• Crypto Exchange INX Plans $117M US IPO With Small Israeli Underwriter
• Marathon Signs New $23M Contract With Bitmain for 10,500 Bitcoin Mining Rigs
• Singapore’s Central Bank Backs New Code of Practice for Crypto Companies

Both the U.S. and China are advancing on their central bank digital currency (CBDC) designs, there’s a new smart contract language for Bitcoin and the Department of Justice (DOJ) seized millions worth of crypto from addresses linked to terrorist organizations.

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

Digital Dollars
The U.S. Federal Reserve is actively investigating distributed ledger technologies for use in digitizing the dollar, CoinDesk regulatory reporter Nikhilesh De said. “To enhance the Federal Reserve’s understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at the Massachusetts Institute of Technology in a multiyear effort to build and test a hypothetical digital currency oriented to central bank uses,” Federal Reserve Board Governor Lael Brainard said Thursday. While the monetary authority was long looking into a digital dollar, the coronavirus crisis and China’s ongoing experiments with a CBDC have provided impetus to “remain on the frontier of research and policy development.”

Related: Money Reimagined: How a Dangerous Idea Could Work

Trial Expansion
China is planning a major expansion of testing for its digital yuan. The Ministry of Commerce announced new trial sites for the digital currency/electric payment (DC/EP) including in Hebei province, the Yangtze river delta, Guangdong province and the cities of Beijing, Tianjin, Hong Kong and Macau. When the new trials might start was not disclosed, but the ministry reportedly said that the project design is hoped to be wrapped up by the end of this year.

Dark Markets
The U.S. DOJ announced the “largest ever seizure of terrorist organizations’ cryptocurrency accounts” on Thursday, including “millions of dollars” and 300 crypto accounts. In a press release Thursday, the DOJ announced it had investigated and dismantled “three terrorist financing cyber-enabled campaigns” involving al-Qaeda, Hamas and the Islamic State of Iraq and the Levant (ISIS). In al-Queda’s case, the organization maintained a network of Telegram channels and 155 wallets intended to solicit bitcoin to fund terroristic acts. 

Ripple Reset?
The CEO of Ripple has pushed back against a Financial Times report saying the firm was moving away from using XRP for cross-border payments. CEO Brad Garlinghouse tweeted late Thursday, “Ripple has absolutely no plans to ‘reset’ our strategy” and that banks around the world were already using the XRP token as a cross-border payment solution.” The FT reported earlier that day Ripple was diversifying its approach, quoting Garlinghouse as saying his company aimed to be “Amazon of the cryptocurrency world,” or a platform for everyday consumers not just an interbank settlement layer. 

Identity Integration
BitMEX will instate mandatory identification protocols for exchange users. Ben Radclyffe, commercial director for BitMEX’s parent company, said the changes are set to remove barriers to entry for some of its target users, improve the security of the platform, and “get ahead of evolving regulation.” Easy registration, high leverage, and bitcoin-only account balances helped BitMEX bootstrap liquidity from all directions and give rise to its reputation as the destination trading platform for unorthodox cryptocurrency traders, CoinDesk’s Zack Voell reports. 

Quick bites

• Belarus is back online, with lessons about censorship resistance (CoinDesk)
• U.S. Postal Service envisions blockchain-backed mail-in voting (CoinDesk)
• Ethereum futures open interest reaches $1.5 billion (Decrypt)
• Congressman Tom Emmer to lead the first crypto town hall (CoinDesk)
• Doctor Who enters the cryptoverse (CoinDesk)

At stake

Related: Blockchain Bites: Coinbase’s Loans, Ethereum’s Fees, YAM’s Bug

The developer team behind Curve DAO was as surprised as anyone when it learned its open-source project went live Thursday. 

The anticipated protocol and associated CRV token were deployed on the Ethereum blockchain Thursday at 22:25 UTC, ahead of schedule, when a pseudonymous community member took the liberty of publishing the contracts found on Github.

This premature move cost 19.9 ETH (approximately $8,000), and was an attempt for the developer, who goes by 0xc4ad, to get ahead of trading. “Yo, @CurveFinance ! Saw your DAO is ready to rock and I gots to MAXIMIZE MY ALPHA ! So I went ahead and deployed it for you,” they wrote. 

The Curve team members initially told users not to deposit funds on the platform, but quickly announced they had accepted the contract as legitimate. 

While the pseudonymous developer was christened “chad” for his gusto, accusations of a pre-mine were leveled at early stakers after it was discovered roughly 20,000 CRV tokens were doled out before Curve’s official announcement, Decrypt reports. 

Developed by one of the most respected DeFi projects, Curve Finance, this exploit has some asking whether crypto is becoming too reckless.

Adam Cochran, a partner with Cinneamhain Ventures, said on Twitter this move has shattered trust in the Curve team. “So we have a team that either makes bad impulse choices to validate a front-runner and reward pre-mining, stores keys incorrectly, wanted a pay day (sic) for them and their friends, or let people get a pay day for bad legal advice,” he wrote.

The rise and fall of YAM, the memetic BASED and Tendies projects, and now the unilateral deployment of a legitimate monetary experiment are all part of a growing exuberance in crypto not seen since the last bull run. 

But it doesn’t have to be all doom and gloom. As my colleague Will Foxley Smith wrote Thursday in a story exploring this theme: 

“These new projects are about leveraging Ethereum’s tech for unintended uses. They’re about making crypto fun again.

“They’re about making money.”

Market intel

Crypto’s Edge?
U.S. jobless claims fell to 963,000 last week, according to the latest report, the first weekly figure below 1 million since March. Financial markets saw this as a neutral or negative move, “since it might relieve pressure on authorities to speed up more trillion-dollar stimulus packages,” CoinDesk’s First Mover reports. Crypto, too, seems unconcerned with the larger macro-environment. Lennard Neo, head of research at Stack Funds, wrote Thursday, “Bitcoin could be a ‘risk-on hedging-type asset,’ where it performs relatively well in thriving markets, yet acting as a hedge to global uncertainties, displaying financial attributes that fall in between that of equity and gold.”

Post-Halving 
Publicly traded bitcoin miner Hut 8 announced a sharp drop in Q2 revenue. Closing the quarter with a C$6.4 million gross loss, the rising value of its bitcoin holdings pushed the firm’s net income into the black. The company mined 795 BTC last quarter, a 29% decrease from the 1,116 BTC mined during the prior quarter. Hut 8 has 2,954 BTC on its balance sheet as of the end of Q2 2020. The company also noted it raised C$8.3 million in gross proceeds from its public offering, which will be deployed to upgrade its existing mining equipment. Meanwhile, rival firm Marathon Patent Group will buy 10,500 new Antminer S-19 rigs for $23 million from Bitmain.

Tech pod

Simplified Language
Minsc, created by Bitcoin developer Nadav Ivgi, is a new programming language that makes it easier for developers to write smart contracts on Bitcoin. The protocol’s go-to language, Bitcoin Script, is unwieldy and overly complicated, according to CoinDesk contributor Alyssa Hertig. Minsc builds on another alternative Miniscript, unveiled in 2019, to create a simplified and secure programming language. 

Op-ed

Staying Clean
J.P. Koning, a CoinDesk columnist and writer for a prominent Canadian bank, weighs in on bitcoin’s proposition as digital gold – and found the precious metal can teach the industry about “staying clean.” “Bitcoin suffers from neither a purity problem nor a counterfeiting problem,” he writes. “But it does have its own unique quirk. [T]rackability means some bitcoin addresses may not be as good as others – they may hold funds that were stolen from an exchange, or used to pay ransom, or have been mixed by an anonymizer. These aren’t the sorts of bitcoin addresses that a sophisticated investor wants to be associated with.”

Podcast corner

Pysh’s Dish
The prominent podcaster and bitcoin advocate Preston Pysh joins The Breakdown to discuss Bitcoin’s stock-to-flow model, the inevitability of negative interest rates and the significance of MicroStrategy’s $250 million bet on Bitcoin. 

Who won #CryptoTwitter? Related Stories

• First Mover: Ethereum Faces Inflation Problem as Gas Fees Soar
• Blockchain Bites: Avanti’s New Money, DeFi Deepens and ‘How Much Ether?’

INX has named a low-profile Israeli outfit to underwrite its reported $117 million initial public offering (IPO) later this year.

• In an amended filing to the Securities and Exchange Commission (SEC) this week, the Gibraltar-based crypto and security token exchange confirmed it had chosen A-Labs Finance and Advisory to underwrite its IPO.
• A private company based outside of Tel Aviv, INX’s website names digital asset manager Silver Castle as another of its clients.
• A-Labs has received a $500,000 fee to underwrite the offering and will receive an additional $500,000 should the IPO take more than $10 million in investment. Should the sale reach the $117 million hard cap, A-Labs can expect to take home a total of $8 million.
• A-Labs is only able to promote the sale to non-U.S. investors.
• INX's filing with the Securities and Exchange Commission earlier this month – which put the expected IPO price in the middle of its previous target range to raise $117 million in proceeds – didn’t name A-Labs as the underwriters.
• INX’s executive managing director, Alan Silbert, is the brother of Barry Silbert, the founder and CEO of Digital Currency Group, CoinDesk’s parent company.
• Per this week’s filing, A-Labs had agreed to manage INX’s IPO in September 2017 and has slowly accumulated more than 10% of INX’s common stock.
• A definite IPO date, as well as the venue, have yet to be confirmed.

UPDATE: (Aug. 14, 16:47 UTC): Changes sixth paragraph to note the most recent IPO target is within the prior range.

See also: First Mover: Crypto’s $35T Moment Could Come From Analog-World Stock Listings

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Crypto payments startup Wyre is offering white-labeled savings accounts that dole out interest on crypto, the company announced Friday. 

Wyre’s client list includes startups including crypto custody firm Casa, wallet provider BRD and traditional enterprises such as banks.

“Partners of Wyre are able to offer their users a crypto savings account by simply creating a new savings sub-wallet via the Wyre API,” the company wrote.

Related: Epic Games Blasts Apple’s ‘Anti-Competitive’ Payments Practices in Lawsuit

The new product’s interest rates are meant to be more stable than interest rates at crypto lenders because Wyre will manage funds between MakerDAO, Compound and two centralized crypto lenders, said Jack Jia, Wyre’s vice president of business.

Like most things in crypto, the interest rates at crypto lenders are vulnerable to market drops or borrower supply. With Wyre’s new savings product, called Wyre Savings API, the company is aiming “to offer stable yield that has the least counterparty risk,” Jia said. 

Read more: BRD Partners With Wyre to Build Bank Transfer Wallet Feature

For the new product, Wyre is only working with crypto lenders that have lending licenses, SOC1 and SOC2 audits and work with licensed custodians.

Related: Facebook Taps David Marcus to Lead Payments Initiatives

“In the traditional markets we’re seeing a lot of instability and Treasury yields are down,” Jia said. “There are a lot more traditional financial institutions looking for yield.”

In the initial stages of the product’s development, Jia’s team had envisioned releasing the product as a smart contract but chose an application programming interface (API) instead to make it more accessible to businesses unfamiliar with crypto, he added.

As of Aug. 12, interest rates were 2.4% on bitcoin (BTC), 2.4% on wrapped bitcoin (WBTC), 3.3% on ether (ETH), 5.8% on USDC and 5.7% on dai. Wyre has plans to roll out more tokens in the future.

Funds can be pulled out any time, and interest is accrued instantly and paid out weekly on the product, Jia said. 

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