CoinDesk Crypto

Researchers in Australia have identified a bug that caused that country’s contact tracing app to malfunction, it was announced Monday. 

Governments around the world have introduced contact tracing apps to track the spread of the coronavirus. But, as in Australia, so far it’s unclear how much of a benefit these systems are having. Critics complain about risks to privacy and centralization of sensitive data, and note that intrusive technologies rarely work as expected. 

COVIDSafe, Australia’s contact tracing app, was rolled out in April. But its latest version has not been working properly due to a bug, Richard Nelson, a software engineer, announced. 

Related: Crypto Long & Short: Cryptocurrency Markets May Be Decentralized but They’re Still Accountable

See also: Europe Debates COVID-19 Contact Tracing That Respects Privacy

The bug causes iPhones that are locked to stop creating a new temporary ID, which is a key feature of Bluetooth-based contact tracing. This method uses the Bluetooth signal of other phones to identify with whom you’ve been in close contact. If a person with a phone you’ve come into contact with contracts COVID-19, you will be alerted because your temporary IDs were communicated to each via Bluetooth when you were close. 

To protect user privacy, these temporary IDs regularly change. Without the ability to create a new temporary ID, though, a person’s phone will recognize and log other devices around it, but cannot be recognized by other devices, rendering it effectively invisible. 

“The bug has a material impact on the number of encounters logged, particularly at an event, say, where people will tend to not have their devices out and in use, for example at a concert or movie theater,” Nelson told CoinDesk. “This is exactly the type of scenario where you’d want the application to be working in an optimal manner.”

Related: ‘Radical Indifference’: How Surveillance Capitalism Conquered Our Lives

In the report, Nelson laid out a scenario in which a woman named Alice packed her bag, put her iPhone in it, and went out for the day to a football (soccer) game. “With her device in this state, nobody else will record her presence, and if anyone around her tested positive she would not be contacted,” he wrote. 

Contact tracing is the process by which countries and health departments track with whom an infected person has come into contact so they can let those people know they should quarantine. Apps have been proposed and implemented around the world to aid in this process. The results have been mixed at best.

For example, the state of Utah launched an app called HealthyTogether in an effort to help the state reopen from lockdown. As of late May, the only features available in the app were a symptom checker and testing center map, despite assurances there would also be tools to help human contact tracers, and a maps function that would allow users to determine which areas were at high or low risk in their communities, according to reporting by Buzzfeed News. Today, the New York Attorney General is calling on tech giants Google and Apple to crack down on shady contact tracing apps in their app stores that aren’t transparent about how they’re using or storing user data. 

Ironically, an effort to better protect users’ privacy is what caused this bug in the first place.

“As businesses open back up and Americans venture outdoors, technology can be an invaluable tool in helping us battle the coronavirus,” said Attorney General Letitia James in the announcement. “But some companies may seek to take advantage of consumers and use personal information to advertise, mine data and unethically profit off this pandemic.”

Meanwhile, Norway has suspended its contact tracing app after its own data protection agency said it was too invasive when it came to user privacy.

Back in Australia, nearly one month after the COVIDSafe app launched, the Guardian reported the app was barely used, and only one person had been reported to have been identified as positive for COVID-19 using data from it.

Ironically, an effort to better protect users’ privacy is what caused this bug in the first place, according to one cryptographer. 

“The Australian government had recently overhauled the cryptographic protocol for their app, adding encryption to the payload in a way which, when it worked, mostly improved users’ privacy,” said Vanessa Teague, a cryptographer with a focus on privacy and election security, and an associate professor at Australian National University.

She has also been researching the app. “Unfortunately, because they seem to have rushed it out without adequate testing or peer review, they seem to have completely broken its operation on iPhones in background mode.”

See also: For Contact Tracing That Preserves Privacy, Focus on Incentives

Steve Wilson, the managing director of Lockstep Group, a consulting firm that focuses on digital identity and privacy, saw the report and said the app has been terribly disappointing in terms of software quality.

“There are some surprising bugs, indicative of poor software processes,” said Wilson. “The app is turning out to be both pretty impotent and innocuous.” 

Wilson said he was sad because he’s sympathetic to contact tracing technology as a general proposition, and the app is well intentioned, if a bit clumsy. Wilson said some of the privacy criticisms are overblown when you compare it to the very real impact of the virus, and especially if you don’t consider the government an adversary in the privacy-safety trade-off the world is currently navigating. 

“COVIDSafe is nowhere near the worst thing a government has ever done to privacy,” said Wilson. 

In a statement to CoinDesk, the Data Transformation Agency (DTA) for Australia said it continues to welcome feedback on COVIDSafe from the developer community, with previous feedback helping us to improve the app.

“The DTA will continue to release updates to the COVIDSafe app to deliver a range of performance, security and accessibility improvements as required,” said a spokesperson for the DTA. “The Australian community can have confidence the app is working securely and effectively.”

Nelson said he had reported the issue to the DTA. 

“I’m sure they’ll fix it in a timely manner so, hopefully, going forward the issue is resolved,” said Nelson.

• Human Rights Foundation Funds Bitcoin Privacy Tools Despite ‘Coin Mixing’ Legal Stigma
• Microsoft Releases Bitcoin-Based ID Tool as COVID-19 ‘Passports’ Draw Criticism

One of the newer entrants to the decentralized finance (DeFi) space, Curve, is riding the wave of demand for the freshly issued Compound governance token, COMP, which has surged to a $774.3 million market cap since first being distributed on Monday.

Curve is an automated market maker devoted exclusively to stablecoins. On Sunday, it saw $3.5 million in daily trading volume, according to its self-reported stats. On Monday that shot up to $12.6 million; as of this writing on Tuesday, it’s at $23.3 million in trading volume over the last 24 hours, a roughly 7X gain.

According to Curve founder Michael Egorov (also a co-founder of encryption company NuCypher), this is largely driven by demand for COMP.

Related: In the Wildcat Era of Stablecoins, Commercial Banks Have New Rails to Ride

“People started putting USDC as collateral on Compound, taking USDT, swapping on Curve to USDC to put as collateral on Compound [and] doing that up to 30 times to earn COMP with leverage,” Egorov wrote CoinDesk in an email. 

That’s because Compound gives the most COMP each day to the markets with the most interest. Right now, among stablecoins, those are USDC and USDT. In other words, users put in USDC, borrow as much USDT as they can, switch it on Curve for more USDC, put that in Compound as well so they can borrow more, take out additional USDT and repeat until they have capped out their leverage. This allows them to absolutely maximize their activity on Compound as both a borrower and lender, which earns COMP on both sides.

Egorov said that many users can actually automate this operation on InstaDapp.

Compound announced its plans for COMP on CoinDesk. On June 10, the company announced that distribution would begin on June 15. 

Related: Ethereum Logged Its Busiest Week on Record

COMP is currently trading at $78.33 as of press time, according to Uniswap.Curve currently has $16.2 million in deposits, down from a high of $17.2 million reached this weekend. Deposits on Compound have gone from $97.7 million on Sunday to $159.5 million at press time, according to DeFi Pulse.

• Business Is Booming for DeFi Insurer Nexus Mutual Ahead of Ethereum 2.0
• With Token Uptick and Israeli Election Work, It’s Been a Busy Year for Bancor’s Founders

Stocks are up on fresh government stimulus expectations but when it comes to bitcoin, things are uncertainty in the near term.

Bitcoin (BTC) was trading around $9,500 as of 20:00 UTC (4 p.m. ET), gaining less than a percent over the previous 24 hours. 

At 00:00 UTC on Tuesday (8:00 p.m. Monday ET), bitcoin was changing hands around $9,414 on spot exchanges such as Coinbase. It then climbed 2% to as high as $9,591 before sell volumes pushed bitcoin back down. The price is now above the 50-day moving averages but below the 10-day moving average. For technicians, this signals prices are expected to move sideways for a bit. 

Related: Ex-Bitcoin Dev Settles Defamation Suit Over Sex Assault Claims

Stocks were the real movers on Tuesday. The possibility of another fresh fiscal stimulus proposal in the United States, to the tune of $1 trillion for infrastructure projects like wireless networks and roads, helped fuel an equities rally. The U.S. S&P 500 index gained 1.9%. Since the start of June, bitcoin has underperformed the equities markets. 

Read More: Bitcoin Rises to $9.6K as Stocks Cheer Additional US Stimulus Plans

In Asia, the Nikkei 225 index of publicly traded companies in Japan ended trading up 4.8%, buoyant on stocks in the industrial and transportation sectors. In Europe, the FTSE 100 index closed in the green 2.9% as stocks in the travel sector surged. 

Traders in the crypto sector continue to talk about “weakness” in the market as spot exchanges like Coinbase see a dip in volume. “Our prop [proprietary trading] desk is seeing a significantly weaker flow in bitcoin pairs on centralized exchanges lately,” said Peter Chan, a trader at Hong Kong-based OneBit Quant.

Related: WisdomTree Proposes ETF With 5% Bitcoin Exposure Despite SEC’s Long-Standing Blockade

Over the past six months, average volumes on Coinbase have been $133 million. In the past week, the average has been $116 million, a 12% drop, according to data from aggregator Skew. 

“I think there’s a general loss of interest, mostly due to how volatile the external environment has become on the margin,” said Vishal Shah, an options trader and founder of derivatives exchange Alpha5. “The aggregate open interest across derivatives exchanges is now the same as it was at the beginning of June and implied volatility is hitting cyclical lows.”

Read More: Bitcoin Mining Difficulty Makes Biggest Jump in 29 Months

Indeed, after total bitcoin futures open interest on the 11 biggest exchanges spiked to almost $4 billion June 1, it has hovered around $3.5 billion for most of the month. 

Sell pressure on bitcoin is expected to continue in this lower-volume environment, according to Neil Van Huis, director of sales and institutional trading at liquidity provider Blockfills.

“The whole sector is really sitting watching mining, in my opinion,” Van Huis told CoinDesk Tuesday. “Miners may need to sell a bit to raise cash for new machines, unless they can secure financing from firms like ours – and we are not financing anyone in China.”

China dominates the bitcoin mining market with 65% of machines located there, according to data from the Cambridge Centre for Alternative Finance. 

Digital assets on CoinDesk’s big board are mostly in the green Tuesday. The second-largest cryptocurrency by market capitalization, ether (ETH), is trading around $233 and climbed less than a percent in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ethereum Logged Its Busiest Week on Record

The decentralized exchange (DEX) Curve has taken over Uniswap for the top spot in terms of 24 hour volume on the Ethereum network. In the past day, Curve had over $21 million in volume compared to Uniswap’s $11 million, giving it over 40% of the DEX trading market. 

The biggest cryptocurrency winners on the day include lisk (LSK) climbing 2.4%, qtum (QTUM) up 2.1% and stellar (XLM) in the green 1.6%. The biggest loser on the day was iota (IOTA) in the red 1%. All price changes were as of 20:00 UTC (4:00 p.m. ET).

Read More: Coda Protocol Sets Aside $2.1M in Tokens for Development Grants

In commodities, oil is gaining 2.9% as a barrel of crude was priced at $38 as of press time. 

Gold is trading flat as the yellow metal climbed less than a percent, trading around $1,726 for the day. 

Read More: Negative Rates or More Money Printing – Bitcoin May Benefit Either Way

U.S. Treasury bonds all climbed Tuesday. Yields, which move in the opposite direction as price, were up most on the 30-year, in the green 4.8%.

• If Crypto Is Anything Like Fixed-Income, It’s Going to Need a Fatter Textbook
• Bitcoin Rises to $9.6K as Stocks Cheer Additional US Stimulus Plans

The co-founder of the Centra Tech crypto project that at one time garnered A-list celebrity endorsements but was later called a scam in court, pleaded guilty Tuesday for conspiring to commit securities and wire fraud.

Robert Farkas, 33, admitted he and co-founders Sohrab Sharma and Raymond Trapani misrepresented Centra Tech’s true purpose as they worked to dupe investors out of more than $25 million, the Justice Department said in a press release. 

The three pitched investors on a “Centra Card” crypto debit card purportedly issued by Visa or Mastercard, claimed to have 38 state money transmitter licenses and concocted a CEO who they said attended Harvard to bolster their credibility. Prosecutors said that none of those claims were true. 

Related: Crypto Exchange Owner Admits Laundering $1.8M in Online Auctions Fraud

The three also got influential celebrities including boxer Floyd Mayweather and music producer DJ Khaled to promote Centra Tech’s initial coin offering (ICO) “Centra Tokens,” which ultimately raised $25 million from unwitting investors, prosecutors said.

(Mayweather and Khaled later settled with the U.S. Securities and Exchange Commission for failing to disclose their financial ties to Centra Tech. Neither admitted or denied guilt in that settlement and later evaded the civil suit.)

Farkas, Trapani and Sharma’s scheme ran from July through October 2017, but by December 2017 a project investor filed suit alleging that Centra Tech had violated securities laws when it raised over $30 million from the Centra Token ICO. 

The SEC followed with an April 2018 lawsuit arguing much the same. It ordered Centra Tech to cease its ICO and alleged in court that the project was a multi-million dollar unregistered securities pumped by celebrity endorsements. 

Related: Crypto Criminals Have Already Stolen $1.4B in 2020, Says CipherTrace

The founders of Centra Tech continued to face a mounting onslaught in the courts. In May 2018 they were indicted on federal charges of conspiracy and the commission of securities and wire fraud in the case that Farkas pleaded guilty to Tuesday.

In pleading guilty on two counts, Farkas could face a maximum of 10 years in prison.

• Bitcoin News Roundup for May 29, 2020
• Blockchain ID Solution Aims to Tackle Spike in Delivery Fraud Amid Coronavirus Measures

It’s costing more to use Ethereum and that may be because more users are flocking to the platform than ever before, according to one key on-chain metric. Analysts say the growth of both transactions and the cost to process them is being driven by an increase in stablecoin usage and DeFi applications. 

The seven-day moving average of the total amount of “gas” used in transactions on Ethereum’s blockchain rose to a record high of 61.12 billion on Monday, having surpassed the previous high of 60.07 billion reached in September 2019, according to data provided by the blockchain analytics firm CoinMetrics. 

Gas is a token that powers Ethereum’s blockchain. It is the unit used to calculate the amount of fees a user needs to pay in order to transfer smart contract data or payments on Ethereum’s blockchain. Meanwhile, ether is the reward paid to miners and is equivalent to the amount of gas needed to execute a transaction. 

Related: Business Is Booming for DeFi Insurer Nexus Mutual Ahead of Ethereum 2.0

Read more: Stablecoins Push Ethereum’s Transaction Count to Highest Since July 2019

“The increase in gas usage indicates a continuous growth in the use of Ethereum’s platform, as measured by the number of transactions, as well as demand for block space, as measured via gas per transaction,” said Wilson Withiam, research analyst at data provider Messari.

Ethereum’s transaction count recently hit a 27-month high of 938,265 and was up nearly 45% from lows seen in January as of Monday, according to Glassnode. 

“As both tether and Decentralized Finance (DeFi) on Ethereum have exhibited phenomenal growth, Ethereum gas usage has skyrocketed to all-time highs,” Kyle Davies, co-founder and chairman at Three Arrows Capital.

Related: Mining Pools Distribute $2.4M Transaction Fee After Flood of Phoney Refund Claims [Updated]

Indeed, the use of the U.S. dollar-backed stablecoin tether (USDT) on Ethereum has increased sharply this year. 

The number of daily USDT transactions on Ethereum have surged by 450% on a year-to-date basis, as per CoinMetrics.

Tether has been issued on Ethereum since November 2017 and the platform now holds 65% of tether’s total supply. “Almost $6 billion of USDT’s total supply is now on Ethereum, up from $1.5 billion in the beginning of 2020,” Bendik Norheim Schei, research analyst at Arcane Research, told CoinDesk.

Further, tether has 10 times more transactions on Ethereum than any other ERC-20 token. Meanwhile, as per Ether Gas Station, tether transactions have paid over $2.5 million worth of fees on Ethereum in the last 30 days. That makes USDT the largest “gas payer” on Ethereum.

Read more: First Mover: Cardano’s No Ethereum Killer Yet, but It’s Winning in Crypto Markets

Tether and stablecoins in general have witnessed phenomenal growth this year amid the coronavirus-induced volatility in traditional markets. Total supply of all stablecoins has surpassed the $11 billion mark this week, doubling its value since February, according to Messari data. 

Even so, the increase in the gas usage is not entirely due to tether. Ethereum-based Decentralized Exchanges (DEXs) such as Kyber, Uniswap and IDEX have all experienced solid growth in transaction volumes this year. 

Kyber Network registered a transaction volume of $609 million in the first five months of this year. That’s 1.5 times more than the volume of $388 million seen in 2019, according to the official blog.

“Another factor responsible for the increase in gas usage may be people gaming the network by paying more in gas fees in order to beat other transactions into a block to gain profit,” said Connor Abendschein, analyst at Digital Assets Data.

Miners prioritize transactions offering higher fees when the network faces congestion; that is, the number of transactions waiting to get confirmed by miners rises to high levels. That forces other users to offer higher fees. 

Ethereum’s network has been facing congestion since early March, possibly due to increased price volatility and the surge in tether transactions. As of June 8, there were 19,922,385 unconfirmed transactions – up 225% from the March 1 tally of 611,872, according to blockchain data company Amberdata. 

Validating the argument that network congestion could have led to increased gas usage is the fact that gas fees in general have been higher this year. “Gas per transaction recently reached its highest level since early 2018,” Messari’s Withiam noted. 

Read more: ConsenSys Spins Up Staking Service in Anticipation of Ethereum 2.0

Nonetheless, the seven-day average of the daily Ethereum transaction count stood at 886,882 on Monday – well short of the record high of 1,244,335 reached in January 2018. 

Also, more transactions could be coming from complex DeFi products, which involve higher computational expenses and therefore require bigger gas payments. “People are either paying more expensive computations or willingly paying more to beat other transactions,” said Abendschein. 

Looking forward, the usage is likely to continue rising ahead of Ethereum’s much-anticipated switch from the proof-of-work mechanism to the proof-of-stake protocol. “Scalability on Ethereum will continue to be tested as we head into Phase 0 Eth 2.0 and beyond,” said Three Arrow Capital’s Davis. 

• Why This Dev Built a ‘Centralized Ethereum’ on Top of Bitcoin’s Lightning Network
• With Token Uptick and Israeli Election Work, It’s Been a Busy Year for Bancor’s Founders

After years of research, the Bank of Canada is preparing to design its own central bank digital currency (CDBC).

Revealing its plans in a June 11 job posting, the central bank said it was “reinventing central banking” and radically rethinking the nature of Canada’s cash.

“The Bank of Canada is embarking on a program of major social significance to design a contingent system for a CBDC, which can be thought of as a banknote, but in digital form,” the bank wrote.

Related: In the Wildcat Era of Stablecoins, Commercial Banks Have New Rails to Ride

CoinDesk’s request for comment was not returned by press time.

Still, the job posting said as much about the new role – CBDC Project Manager – as it did about the project itself, going into detail on some of the features of a digital banknote.

According to the job posting, Canada’s CBDC should protect user privacy (though not to the degree that cash does), remain accessible to those without bank accounts or mobile phones, work when the power is out and rival banknotes in their security, so as to gain confidence among the cash-wielding public.

Read more: ‘Anonymity Vouchers’ Could Bring Limited Privacy to CBDCs: ECB Report

Related: S. Korea’s Central Bank Forms Legal Panel to Advise on Possible Digital Currency Launch

Further, the bank wants its CBDC to live on an architecture “with a potentially multi-decade evolving lifespan” that can grow in tandem with policy goals. 

Other technical details remain undetermined, however. The bank did not state what technology its CBDC might run on, whether it would follow a token-based or account-based model, or how it could create a digital currency that works where electricity does not. 

Those details will take shape over the project manager’s three-year tenure. During that time, the bank also wants to build out a “CBDC pilot system.”

The move casts Canada as a serious contender in the race to develop CBDCs. Many nations have begun mulling the issue of national digital currencies and some, including China, appear to be on the verge of issuing their own. But only a handful have actualized their findings to the extent that the Bank of Canada is doing now. 

To be clear, the bank has not committed to issuing a CBDC just yet. Officials downplayed the need for one as recently as February, arguing there was no ”compelling case” for a Canadian CBDC unless a private digital currency such as Libra took off.

“While the Bank is ramping up contingency planning for this eventuality, there is not a compelling case at this time to issue a CBDC,” a Bank of Canada spokesperson told CoinDesk after publication of this article. “While the use of cash at points of sale may have decreased during the pandemic, we have not seen a material change in demand for bank notes.”

Update (June 16, 19:15 UTC): Added comment from a Bank of Canada spokesperson.

• Custody Provider Copper Joins Think Tank to Bridge Gap Between Traditional Finance and Crypto
• Libra Is Ready for the Digital Money ‘Space Race’: Dante Disparte

Bitcoin has just posted its biggest mining difficulty increase in nearly 2.5 years.

At around 17:00 UTC on Tuesday, the network adjusted its difficulty level – a measure of how hard it is for miners to compete for block rewards on the blockchain – to 15.78 trillion.

The 14.95% rise is the biggest difficulty jump since January 2018, which saw a larger spike on the back of the 2017 crypto market bull run, data compiled by BTC.com shows.

Related: Hut 8 Plans $7.5M Offering to Upgrade Bitcoin Mining Rigs

As a result, miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history.

The latest increase comes after two consecutive declines in difficulty following the network’s quadrennial halving event on May 11, 2020, which reduced block rewards from 12.5 bitcoin per block to the current 6.25 bitcoin.

The reduction in block rewards initially forced some miners with inefficient hardware and/or more costly electricity resources to halt operations. That led to a decline in Bitcoin’s total hashrate and difficulty until earlier this month.

The difficulty drops on May 20 and June 4, and the sudden reduction in competition, meant that those miners able to continue operating could receive a bigger slice of the pie.

Related: Why Miner Maker Ebang’s US IPO Raises More Questions Than Answers

Read more: Bitcoin Miner Maker Canaan’s Stock Hits Record Low 1 Month After Halving

However, the lower difficulty also meant that some who had shut down older mining equipment immediately after the halving could once more turn a profit in the past two weeks. Meanwhile, major miner manufacturers in China have been delivering new, top-of-the-line equipment since May.

These factors have pushed up the average 14-day hash rate on Bitcoin from 98 million terahashes per second (TH/s) earlier this month to now around 113 EH/s.

All that said, the fact that Bitcoin’s mining difficulty has quickly bounced back to the pre-halving levels may bring pain for some existing players.

Bitcoin adjusts its mining difficulty every 2,016 blocks, roughly every 14 days, to ensure an average block interval of 10 minutes. When more people choose to plug in during a two-week cycle, the network will see a hash rate increase that will shorten the block interval and will subsequently increase the difficulty for the next cycle.

The current difficulty level of 15.78 trillion follows closely behind the highest three figures ever of 16.55, 16.1 and 15.95 trillion, respectively – all recorded in the two months prior the halving. In other words, miners are facing competitiveness close to that seen prior to the halving, but the daily block subsidies are now down from 1,800 bitcoin to 900.

As a result, each TH/s of computing power is now generating around 0.000008 bitcoin in 24 hours, worth around $0.08 at bitcoin’s current price.

“With the value of hashrate set to decrease to $0.075 cents per TH/s, not many of the existing, old-gen equipment will turn back on,” said Ethan Vera, co-founder and CFO of the Luxor mining pool. “New hashrate coming onto the market will likely be driven by new-gen and high-efficiency machines.”

Kevin Zhang, director of blockchain strategies at New York-based bitcoin mining-power plant hybrid Greenidge Generation, offered a similar view, saying the firm’s strategy is to stay competitive by procuring and running the latest-generation equipment.

“Despite limited price action, we expect the hash rate to continue rising in the near term as more older generation miners go offline and newer generation ones come online,” he said.

As a comparison, the most recent mining devices, like Bitmain’s AntMiner S19, can deliver computing power that’s nearly 10 times that of an older model like the AntMiner S9, but only consumes two times more power.

Read more: Bitmain’s Power Struggle Takes Toll on Customers as Co-Founder Halts Shipments

An on-going power struggle at Bitmain, the world’s largest bitcoin miner maker, will most likely cause delays to delivery of new mining equipment, said Vera, though he thinks the network’s hashrate could still reach 140 million TH/s by the year’s end.

“This is roughly in line with what the market is pricing in for FTX’s Q4 2020 Difficulty Futures,” Vera said.

Crypto derivative exchange FTX rolled out a bitcoin difficulty quarterly futures trading pair last month. Currently, the 2020 Q3 and Q4 futures are trading at around $18, reflecting an expectation that the average hash rate and mining difficulty could further go up by another 20% in the second half of the year.

• Bitcoin Mining Difficulty Drops 9% to January Levels
• Iranian Lawmaker Says Bitcoin Should Be Central Bank’s Turf

Canaan Creative’s stock dipped below $2, its lowest price since the firm went public in November. Experts say demand for new mining equipment may have weakened after the Bitcoin network’s halving event in May.

Meanwhile, the U.S. Air Force is using a blockchain startup to monitor its supply chain logistics, and an IT professional released a Bitcoin and Lightning node tool kit to spread the technology throughout Africa. Here’s the story:

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

Related: Blockchain Bites: JPMorgan on Bitcoin, South Korea on CBDCs and the Porn Industry on Crypto

Emerging Markets
BlockSpace Technologies Africa Inc., run by IT guru Chimezie Chuta, has released a kit for a Bitcoin and Lightning node, including all the hardware pieces for assembly, called SpaceBox, in the hopes of expanding the technology’s use across the continent. According to Lightning Network Explorer, there are eight nodes total in the second most populous continent. Meanwhile, WhatsApp rolled out a Facebook Pay feature in Brazil, two years after it beta tested the feature in India, which makes sending and receiving money “as easy as sharing photos.” It’s unknown how this will affect the development of Libra, the stablecoin also bolstered by Facebook. (TechCrunch)

Equities
Tokensoft, a digital securities platform for enterprises and financial institutions, has partnered with New York-based Signature Bank in a bid to make security tokens click for real estate investors. Most of Tokensoft’s customers are mid-sized funds, meaning the platform will be handling larger transactions with lower volumes. Meanwhile, shares of Canaan Creative, one of the few publicly traded crypto miner manufacturers, plummeted below $2, its lowest price since going public in November. The Nasdaq-listed stock has been steadily falling since the bitcoin halving on May 11, which likely softened demand for new bitcoin mining machines.

Crypto Trading
Revolut, a FinTech bank, said it will cede its status as the “legal owner” of the five cryptos it offers to clients who purchase them next month. There’s a catch: Users “can’t transfer cryptocurrency to anyone who is not a Revolut customer,” the updated terms and conditions read, detailing that while users “have complete control” of their crypto, they “will not be able to carry out transactions” themselves. Meanwhile, Capital One Services, a subsidiary of U.S banking group Capital One, said its newly patented artificial intelligence (AI) system would save human crypto traders from potential pitfalls by “analyzing [the] credibility of cryptocurrency-related information.”

Blockchain Services
SIMBA Chain, a blockchain-as-a-service company with ties to the Department of Defense, has two years and $1.5 million to research and develop a blockchain for supply chain logistics for the U.S. Air Force. The firm will stand up a Hyperledger Fabric node at Oklahoma’s Tinker Air Force Base as part of the agency’s risk management strategy. Separately, blockchain payments provider Bitpay has launched a prepaid debit card enabling U.S. customers to spend their crypto holdings as fiat currency. Elsewhere, Alex Masmej unveiled “control my life,” a way for holders of his personal cryptocurrency, $ALEX, to vote on what he does with his time. (Decrypt)

Related: First Mover: Cardano’s No Ethereum Killer Yet, but It’s Winning in Crypto Markets

Institutional Interest
Over a recent 30-day period, the total open interest for CME bitcoin options increased more than tenfold, from $35 million on May 11 to $373 million on June 10. Moreover, open interest made a new all-time high on six consecutive days from June 5-10. Significant growth in CME futures points to rapidly growing interest by institutional investors in trading regulated bitcoin derivatives products. Elsewhere, MakerDAO and Lightning Labs are in World Economic Forum’s list of tech pioneers for 2020 (The Block)

US Supreme Court’s Computer Fraud Ruling Has Big Implications for Crypto
Andrew Hinkes, attorney with Carlton Fields, spells out how the U.S. Supreme Court’s hearing this summer on a key interpretation of the 1986 Computer Fraud and Abuse Act will affect the crypto industry. This law bars “accessing a computer without authorization.” A broad or narrow interpretation could criminalize common conduct or lead to increased protections for crypto users in cases of insider theft. “The outcome could have big implications for the cryptocurrency industry, which increasingly relies on legally enforceable privacy rights and the power of the law to ensure that intermediaries properly secure their customer’s digital assets,” Hinkes said. 

Going Negative Could Be Positive 
Whether or not the Federal Reserve eventually cuts interest rates to negative levels, it might be a case of heads, bitcoin wins; tails, bitcoin wins. Cryptocurrency analysts have said negative rates are a form of ultra-loose monetary policy, which should push inflation higher, potentially catalyzing interest in bitcoin, seen as an inflation hedge. But bitcoin might trade higher even if the Fed rejects negative rates outright because the U.S. central bank would instead probably just inject trillions more of freshly-created dollars into the financial system. Get the full First Mover report in your inbox.

Tracking Stocks
Bitcoin clocked highs near $9,600 this morning, having trapped bears on the wrong side of the market with a brief dip below $9,000 on Monday. Analysts say a risk reset in the traditional markets fueled bitcoin’s rise from $8,900 to $9,580 in the last 24 hours, as traditional equities also turned green. “Bitcoin has regained poise, possibly tracking the recovery in global stock markets,” said Asim Ahmad, co-chief investment officer at London-based Eterna Capital.

Dormant Coins
In other news, more than 60% of all bitcoins have not moved in at least a year. This suggests bitcoin ownership is consolidating, and investors who bought at the cycle bottom in 2018 have been reluctant to take profits and relinquish their bitcoin holdings. It’s been over four years since a percentage of supply this large has been inactive. 

Sorry, Bloomberg: Here Are 6 Reasons Why 2020 Is a Great Year for Bitcoin
Yesterday, a Bloomberg senior editor examined the “six reasons why 2020 was bad for bitcoin.” NLW responds with his own reasons why a year that saw economic uncertainty and new industry entrants has proven bitcoin’s resilience. 

• Blockchain Bites: Designing Digital Dollars and Following the Quadriga Trail
• First Mover: Bitcoin Recouples With Wall Street as Stocks Tumble, Fear Trade Returns

Stocks keep crypto down while Africa gets Lightning Nodes. It’s CoinDesk’s Markets Daily Podcast.

This episode is sponsored by Bitstamp and Ciphertrace

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

Related: From Moral Hazard to Business as Usual, Feat. Jesse Felder

Today’s stories:

Bitcoin Rises to $9.6K as Stocks Cheer Additional US Stimulus Plans

A fresh stimulus “bazooka” from the Fed Reserve and the U.S. government lifted prices for both stocks and bitcoin.

One Man’s Mission to Deploy Solar-Powered Bitcoin Nodes Across Africa

Related: Sorry, Bloomberg: Here Are 6 Reasons Why 2020 Is a Great Year for Bitcoin

A Nigerian entrepreneur has released a $500 kit for building solar-powered Lightning nodes in hopes of expanding bitcoin adoption across Africa.

Bitcoin Miner Maker Canaan’s Stock Hits Record Low 1 Month After Halving

Shares of Canaan Creative, one of the few publicly traded crypto miner manufacturers, fell below $2 Monday, their lowest after going public last year.

Mining Pools Distribute $2.4M Transaction Fee After Flood of Phoney Refund Claims [Updated]

Mining pool Ethermine said it would never freeze transaction fees again. 

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

• Bitcoin News Roundup for June 15, 2020
• Bootstrapping Mobile Mesh Networks With Bitcoin Lightning

Ethereum development house ConsenSys is being backed by heavy hitters like Binance and Huobi to test its new “staking-as-a-service” offering, designed to make it easy for institutions to earn income from the next iteration of the second-largest public blockchain.

Announced Tuesday, the Eth 2.0 staking pilot from ConsenSys Codefi includes Binance, Huobi Wallet, Matrixport, Crypto.com, DARMA Capital and Trustology.

This first batch of participants will provide feedback and feature requests to Codefi as it builds out its Eth 2.0 staking API, which is targeted at large exchanges, wallet providers, custodians and crypto hedge funds. Existing Proof-of-Stake (PoS) blockchains such as Tezos, Cosmos and  Algorand won’t be supported.

Related: ConsenSys

However, as this year’s official starting point for the transition to Eth 2.0 nears, there has been interest in staking from across the board, said Tim Lowe, the product manager of Codefi Staking.

“We have also been talking to some of the newer banks, the kind of challenger banks in the space, and they are definitely interested,” said Lowe. “I think anybody who is holding any crypto assets and is aware of Ethereum generally is starting to look at Eth 2.0 and staking. It’s still early but the interest is there across the board.”

Read more: ConsenSys Announces Codefi Project to Boost DeFi Adoption

Ethereum’s gradual upgrade to Eth 2.0 moves the network from its more energy-hungry Proof-of-Work (PoW) consensus algorithm to PoS, a method of locking-in cryptocurrency in order to keep the network afloat. The upgrade also aims to shard the blockchain and massively scale up its transaction volume capabilities. 

Related: ConsenSys Muscles Into Compliance With New Regulatory Product for DeFi

This gradual process, starting with an intermediate beacon chain, will result in two parallel chains – the existing Eth 1.x and Eth 2.0 – which will finally be merged together about two years from now.  

Typically, the sort of feedback Codefi expects from the staking pilot participants will include variations around API integration, how to custody Eth 2.0 withdrawal keys, or preferences for a rewards-based fee or a flat fee based on the amount staked, said Lowe.

“With staking on Binance, users can receive staking rewards without needing to set up nodes, or worrying about minimum staking amounts, time lengths or any catches,” Binance CEO “CZ” Changpeng Zhao said in a statement. “Users deserve the rewards that their coins can earn them. With the eventual launch of Ethereum 2.0, we are excited to support staking for all of our ETH holders on Binance.”

Mirko Schmiedl, founder and CEO of Staking Rewards (a kind of CoinMarketCap for staking and DeFi), welcomed professional white-label solutions that exchanges and custodians can adopt and said the ConsenSys offerings seem to be open for everyone. 

There are benefits and drawbacks when it comes to staking by exchanges and custodians, said Schmiedl.

“An exchange can allow trading of staked assets and effectively remove the impact of lock-up periods for their users through efficient liquidity management,” Schmiedl said. “Exchanges can also allow usage of staked assets as collateral for other applications as long as they happen within the confines of the exchanges. This could include things like margin trading, lending and supplying collateral for derivative trading. An exchange can also offer insurance for slashing events with relative ease.”

On the other hand, when users stake through a custodial entity, they delegate control over all rights associated with the asset, and there is always the risk that a large-scale hack could happen to an exchange. 

“Even if the entity is regulated and instituted schemes that enable greater decentralization, for example, by enabling customers to choose validators they are staking with, the entity ultimately is in control and theoretically able to change rules or to abuse its power,” said Schmiedl. 

Read more: Why Crypto Should Care About Justin Sun’s Steem Drama

Another downside is that assets on such a custodial platform will largely be limited to using that platform’s services. “It’s not possible to store a staked asset on Binance and then use it as collateral in BlockFi or Maker to take out a loan, for example. This dynamic might lead to increasing concentration among exchanges and reinforce the network effects of large exchanges,” added Schmiedl.

As such, a number of non-custodial staking solutions are emerging such as Stakewise, Rocketpool and StakerDAO. Meanwhile, solutions are becoming more sophisticated with the likes of Staked offering a kind of “robo advisor” for staking tokens on PoS networks such as Tezos. 

Codefi Staking was built using Teku, an Eth 2.0 client written in Java by PegaSys, a Consensys engineering team with a sharp focus on enterprise (the PegaSys team are also behind the Besu enterprise client, which joined Hyperldger earlier this year).

“We chose Java because it’s just easy for enterprises and not scary for them to adopt,“ said  PegaSys researcher Ben Edgington. “The licensing is liberal Apache 2, which is easy for the enterprise to adopt. We also offer SLA [service-level agreement] support to respond swiftly to incidents.”

Read more: Staked Automates the Best DeFi Returns With Launch of Robo Advisor

It will be possible to start earning staking rewards on the Ethereum beacon chain in the latter half of this year, said Edgington, but you won’t get access to those rewards until the eventual merger of 1.x and 2.0.

Lowe explained Codefi has yet to finalize what sort of cut it will take from institutions for supplying them with the necessary infrastructure and hand-holding to set up a staking operation.

“We hope over the coming weeks that we will finalize exactly what the infrastructure costs are going to be and from that work out the fees off the back of it,” said Lowe. “From a staking point of view, we are not going to be the cheapest, but we’re also not going to be the most expensive.”

To say ConsenSys is invested in Ethereum is an understatement. But as Lowe pointed out, the whole point of the yearslong move to PoS is the democratization of mining.

“The goal is to lower the barrier of entry and [countering] these kinds of centralization pressures whereby only people who can afford to put up a massive data farm somewhere with cheap power and cheap cooling can participate,” he said.

• A Digital Art Project Might Have an Answer to the Woes of Staking Centralization
• Media Startup Civil Shuts Down, Team Absorbed Into Decentralized ID Efforts at ConsenSys

Cryptocurrency lending platform BlockFi has hired a veteran of the U.S. Department of Defense and Microsoft to take charge of the firm’s security.

The New York-based company announced Monday that Adam Healy will be coming aboard as chief security officer, charged with fortifying the firm’s defenses to protect client data, digital assets and proprietary information. Healy will oversee areas including information security, cybersecurity and physical security at the crypto startup.

“While the past couple of years have yielded tremendous progress to legitimize cryptocurrency, there remains significant opportunity to standardize and normalize security approaches industrywide, which I look forward to continuing to contribute to as part of the BlockFi team,” Healy said in a press release.

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

See also: Bitcoin Lender BlockFi Raises $30M in Series B Led by Peter Thiel’s Valar Ventures

The new hire brings 15 years of security experience built on prior roles within the U.S. intelligence community and the Department of Defense (DoD). During his tenure at the DoD, Healy was charged with designing and implementing the department’s cybersecurity programs. He’s also managed security systems for Fortune 100 companies including Microsoft and Palantir Technologies.

Most recently, Healy was the chief information security officer at Bakkt, the bitcoin warehouse subsidiary of Intercontinental Exchange (ICE), where he secured the digital assets of institutional clients, as well as the firm’s cloud technology.

“Adam will be instrumental in helping bolster BlockFi’s security-first approach, not only technically speaking for our retail and institutional products, but also across our employees and company culture,” said BlockFi CEO Zac Prince.

Related: Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions

See also: Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions

BlockFi’s latest addition to its executive lineup comes at a time when the firm has been ramping up efforts to acquire professionals with impressive resumes.

Last month, BlockFi added two traditional finance executives to help the firm roll out new products and expand into new markets. Those two hires offered 20 years experience in finance at big-name companies including Credit Suisse, American Express, Prudential Financial, Bank of America and Merrill Lynch.

• BlockFi
• Bitcoin Mining Pool Poolin Partners With BlockFi to Expand Crypto Lending Service

Coda Protocol has allocated funds worth $2.1 million to incentivize development on its lightweight blockchain.

In a press statement emailed to CoinDesk, Coda Protocol said the new grant program, which would be paid out using Coda’s tokens, would be open to any project that helps develop the protocol, build tooling, organize meetups or create content. 

“Coda’s tech unlocks many new possibilities, and we’re excited to see those built out while expanding ownership in the protocol,” said Evan Shapiro, CEO and co-founder of O(1) Labs, the startup supporting Coda Protocol. 

Related: AVA Labs Will Splash Millions to ‘Brain Merge’ DeFi and Traditional Finance

The firm claims its blockchain is the world’s lightest and always stays the same size, about 20 kilobytes (a few tweets). It can be accessed on any device including mobile phones and web browsers. In its statement, Coda Protocol said it hopes to encourage more people to participate in building its decentralized system. 

See also: Compound’s Approach to DeFi Governance Starts With Giving Away COMP Tokens

One of the recipients of Coda’s previous round of token grants, John Morrow, said collaborating with Coda was a great fit for his firm. Morrow, a COO at blockchain financial modeling firm Gauntlet, added, “Coda’s great documentation and developer resources have helped us make progress quickly on the technical front as well.” 

Last April, Coda Protocol raised $15 million in fresh funding for its lightweight blockchain project from investors including Coinbase Ventures, Paradigm and General Catalyst.

• Algorand Foundation Sets Aside $50M in Tokens to Spur Development
• BitMEX Operator Ups Grant for Bitcoin Development to $100K
• European Commission Defense Program Offers Grants for Blockchain Solutions

Bitcoin clocked highs near $9,600 this morning, having trapped bears on the wrong side of the market with a brief dip below $9,000 on Monday. 

Analysts say a risk reset in the traditional markets fueled bitcoin’s rise from $8,900 to $9,580 in the last 24 hours. “Bitcoin has regained poise, possibly tracking the recovery in global stock markets,” said Asim Ahmad, co-chief investment officer at London-based Eterna Capital.

Major European equity markets are reporting gains of over 2% at press time, while futures tied to the S&P 500 are up 1.2%, according to Investing.com. The situation was different 24 hours ago when S&P 500 futures were down 2% due to renewed fears over the economic effects of the coronavirus pandemic.

Related: First Mover: Negative Rates or More Money Printing – Bitcoin May Benefit Either Way

Sentiment on Wall Street turned positive during yesterday’s U.S. trading hours after the Federal Reserve announced it would start buying yet more corporate bonds. The S&P 500 ended the day with a 0.83% gain. The risk appetite improved further during Tuesday’s Asian hours after Bloomberg reported that the Trump administration is preparing a near $1 trillion infrastructure proposal.

The turnaround in the global equities likely helped bitcoin rise back to $9,600. In the past, the cryptocurrency has closely followed traditional markets during bouts of coronavirus-induced panic.

Most notably, the cryptocurrency crashed from $10,000 to $3,867 in the first half of March, as stock markets cratered at the prospect of a coronavirus-induced recession. In the following five weeks, both stocks and bitcoin witnessed solid recovery rallies. 

At press time, bitcoin is changing hands near $9,550, representing a 1% gain on the day. While the unprecedented stimulus programs are widely expected to bode well for bitcoin in the long run, in the short-run, the cryptocurrency remains vulnerable to losses in stock markets. 

Related: One Man’s Mission to Deploy Solar-Powered Bitcoin Nodes Across Africa

Prices may fall again fall back to $9,000 in the next 24 hours if the stock markets lead the way lower. Fed Reserve President Jerome Powell is likely to present a dour outlook on the economy during his semi-annual policy report on Tuesday and Wednesday. 

The Fed said last Wednesday that the economy would take years to normalize, dashing hopes for a V-shaped recovery.

From a technical analysis perspective, a clear break above $10,000 is needed to confirm a bullish breakout. The bulls have persistently failed to keep gains above that level over the past three months.

“Bitcoin has been flirting with the $10,000 mark since May but has since been coming back down,” said Vijay Ayyar, Asia head at cryptocurrency exchange Luno. “This is what is typically known as ‘distribution’, where a lot of the gains made in the past few months by large traders are sold into weaker hands.”

The psychological $10K barrier, however, may soon be breached as larger investors seem to be accumulating bitcoin.

As of Monday, there were 2,151 addresses with balance more than 1,000 BTC, the highest since mid-March, according to data from Glassnode. The so-called bitcoin “rich list” has increased by nearly 3% over the past two months.

A convincing move above $10,000 would likely yield a stronger rally to resistance lined up at $11,950 (September 2019 high). Meanwhile, on the downside, $8,500 is a key support. “If that level is breached, prices could decline to the levels we saw in the crash in March: $7,700, and then $7,100,” said Ayyar.

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

• Market Wrap: Bitcoin Drops, Then Pops as Traders See Weaker Markets Coming
• Sorry, Bloomberg: Here Are 6 Reasons Why 2020 Is a Great Year for Bitcoin

Whether or not the Federal Reserve eventually cuts interest rates to negative levels, it might be a case of heads: bitcoin wins, tails: bitcoin wins. 

So far this year, the Fed has created about $3 trillion of new money, an amount equivalent to more than 70% of the total assets created since its founding in 1913. The question now is what the Fed will do next if the economy fails to recover quickly from the devastation of the coronavirus, and markets enter a new tailspin. 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: Bitcoin Rises to $9.6K as Stocks Cheer Additional US Stimulus Plans

One strategy Fed officials led by Chair Jerome Powell say they won’t pursue? Cutting benchmark interest rates below zero. In a summary of economic projections published by the Fed last week, not a single official projected negative rates.

Cryptocurrency analysts have said that negative rates are merely a form of ultra-loose monetary policy, which should eventually push inflation higher. And that could be a catalyst for higher prices for bitcoin, seen as a hedge against inflation, similar to gold. 

But bitcoin might trade higher even if the Fed rejects negative rates outright – since the U.S. central bank would instead probably just inject trillions more of freshly-created dollars into the financial system. “Reluctance to go negative means more QE reliance,” said Marc Ostwald, chief economist at London-based ADM Investor Services. 

The Fed’s money injections in response to the coronavirus crisis have helped push up bitcoin prices by 30% so far this year, on speculation that inflation will eventually arrive.

“Extremely accommodative policy is bullish for bitcoin,” said Rich Rosenblum, founder of cryptocurrency trading firm GSR.

Related: One Man’s Mission to Deploy Solar-Powered Bitcoin Nodes Across Africa

The Fed is already injecting about $120 billion a month into the financial system by purchasing U.S. Treasuries and mortgage-backed securities, and the pace would likely increase if markets suddenly turned lower.

Former Fed Chair Ben Bernanke, who pushed the central bank into the money printing exercise known as quantitative easing, or QE, in the wake of the 2008 financial crisis, has argued that the practice can substitute for further rate cuts. 

“Quantitative easing and forward guidance can provide the equivalent of about 3 additional percentage points of short-term rate cuts,” Bernanke said in January. 

Federal Reserve officials have faced questions about the potential for going negative after they slashed benchmark rates close to zero in March. 

As recently as this month, according to Bank of America economists, traders in the market for futures contracts on the Fed’s main interest rate were betting that the central bank might go negative as soon as 2021. 

Negative rates have attracted increasing attention among foreign central banks, including the Bank of England and European Central Bank. The Bank of Japan’s main short-term lending rate is already negative, at -0.1%. 

An economist with the Federal Reserve’s St. Louis branch even said recently that U.S. monetary policy officials should consider negative rates, to help bring about a sharper and broader economic recovery.

One concern over negative interest rates is that they might squeeze commercial banks’ profit margins, since lenders would likely have to reduce rates on loans while struggling to convince depositors to pay banks to hold their savings. 

A negative interest rate policy also might force banks to pay interest to the Fed for parking spare cash at the central bank. 

“The objection is that financial market plumbing becomes more troublesome with negative rates,” said Michael Englund, principal director and chief economist at Action Economics LLC. 

Yet another concern is that the convoluted incentives of negative rates might be counterproductive, such as whittling down the monthly incomes of elderly savers who depend on fixed incomes from their retirement savings. That might lead them to spend less, slowing the economic recovery.  

“Low rates have winners and losers,” Englund said, such as “punishing senior citizens.” 

Ostwald says the Fed might instead adopt a policy known as yield-curve control – where officials establish caps for yields on bonds of varying maturities. 

The practice, which typically involves purchasing bonds to keep the yields from rising too quickly, is considered yet another form of monetary policy accommodation. Analysts in the market for gold, seen as a traditional inflation hedge, have speculated that yield-curve control could be bullish for the yellow metal.  

Rosenblum, at GSR, says that negative rates would likely be even more bullish for bitcoin – simply because they’re so unusual, and would be seen by many people as a “strong beacon for something being broken.”

“Printing new money via QE is not as palpable as seeing a negative interest rate,” Rosenblum said. “Seeing your savings literally drop by X% each month would be something completely new.” 

For bitcoin investors already enjoying gains from the Fed’s ongoing QE, negative rates might just represent an additional source of upside. 

BTC: Price: $9,540 (BPI) | 24-Hr High: $9,579 | 24-Hr Low: $9,044

Trend: Bitcoin is taking a pause after Monday’s sharp reversal higher from $8,900 to $9,500. 

The top cryptocurrency by market value is currently trading near $9,540, having logged a session high of $9,579 during the early European trading hours, according to CoinDesk’s Bitcoin Price Index. 

While the recovery has been impressive, the resistance of the trendline connecting the June 1 and 10 highs is still intact. A violation there would imply an end of the pullback from recent highs above $10,400 and open the doors once more to $10,000.

Konstantin Anissimov, executive director at the cryptocurrency exchange CEX.IO, believes strong resistance at $10,000 will not let the bulls through without a fight. The cryptocurrency has failed multiple times in the last two months to keep gains above $10,000. 

A notable pullback may be needed to recharge bulls’ engines for a clear move above $10,000. “Without new fundamental growth drivers it will be much easier for Bitcoin’s prices to return to $8,100 levels, build up a foundation for further growth, and only then take another shot at getting past $10,000,” Anissimov said. 

The probability of a drop to $8,100 would increase if prices find acceptance under $8,900. That would invalidate the strong dip demand signaled by Monday’s long-tailed bullish hammer candle.

Prices may also fall if the global equity markets again drop sharply on coronavirus fears. Bitcoin’s positive correlation with stocks has strengthened in the last few days. 

From a technical analysis standpoint, Monday’s bullish hammer candle has established $8,900 as the level to beat for the bears.

• Market Wrap: Bitcoin Drops, Then Pops as Traders See Weaker Markets Coming
• Sorry, Bloomberg: Here Are 6 Reasons Why 2020 Is a Great Year for Bitcoin

Tokensoft, a digital securities platform for enterprises and financial institutions, has partnered with New York-based Signature Bank in a bid to make security tokens click for real estate investors.

Most platforms for trading security tokens consist of alternative trading systems that are geared toward general investors, said Tokensoft CEO Mason Borda. However, Tokensoft’s is a private label platform, meaning tokens can be branded according to client needs. 

Borda said he hopes to allow investors to increase their real estate holdings or find easier exits. Most of Tokensoft’s customers are mid-sized funds – meaning the platform will be handling larger transactions with lower volumes.

Related: Tokensoft Distributes $4M in Equity to Investors Using Ethereum Blockchain

“We’ve had an influx of real estate asset managers start working with us,” Borda said. “This marketplace can be for different target verticals. It just so happens that our largest customer base is real estate.”

It’s a more conservative platform in a sector of the crypto economy that has seen slow uptick in investor adoption. Through a series of partnerships, Tokensoft can offer FDIC-insured accounts, appraisal reports and broker-dealer services for asset managers in a bid to bring real estate investors to the tokenization table. 

Tokensoft has also integrated with New York-based Signature Bank to provide custody of U.S. dollars and the real-time transfer of dollars through the bank’s blockchain-based payments platform, Signet. This allows customers on the platform to fund their accounts before making trades. Tokensoft’s transfer agent subsidiary DTAC LLC will also move funds. 

Read more: TokenSoft Scores Transfer Agent Registration to Build ‘Automated Investment Bank’

Related: DTCC Considers DLT Use in Securities Trading With 2 New Studies

Tokensoft has also integrated with Inveniam Capital Partners to offer investors easy access to appraisal reports and broker-dealer Tritaurian Capital to buy and sell shares, Borda said. 

“If you look at how many entities and parties are involved here, this is definitely the most that we’ve had to plug into our platform,” he said. “Asset managers, fund administrators, broker dealers, the bank and our transfer agent … just a series of technical integrations and configurations that are by far one of the most complex things we’ve put together.”

• Polymath Eyes June Testnet Launch for New Blockchain Designed for Security Tokens
• Overstock Files to Dismiss ‘Meritless’ Fraud Lawsuit Over Its Digital Dividend

Digital asset storage and transaction firm Fireblocks will start tracking cryptocurrency transactions to help enterprise clients align with anti-money laundering (AML) best practices.

Announced Monday, the Fidelity-backed company is integrating with a tracing tool from crypto forensics firm Chainalysis to ensure that crypto assets transferred to or form the platform are not in conflict with AML regulations.

Fireblock’s platform will leverage Chainalysis’ Know Your Transaction (KYT) product to monitor cryptos passing through it services in real time. KYT enables both institutional and retail clients to identify high-risk transactions by monitoring large volumes of crypto-related activity.

Related: Tezos and Algorand Latest to Integrate Tech for Anti-Money Laundering Compliance

The system will “automatically log AML transaction reports to share with regulatory authorities,” Chainalysis said.

See also: FireBlocks CEO Pours Cold Water on Libra Excitement

Chainalysis provides solutions that allow for the tracking of digital assets across multiple blockchains. It recently added tracing support for the privacy coins zcash and dash, claiming it could trace 99% of transactions related to the two cryptocurrencies.

“Both security and compliance are integral to building trust in the cryptocurrency industry,” according to Jason Bonds, chief revenue officer at Chainalysis. “By bundling product offerings with our integration partners through the Chainalysis Partner Program, we are ensuring our customers adhere to security and AML best practices.”

Related: Crypto Forensics Firm Chainalysis Adds Tracing Support for Zcash, Dash

Israel-based Fireblocks passed an audit from professional services firm EY in December of last year demonstrating its compliance with industry data security standards.

• Binance Korea Deploys Anti-Money Laundering Tool from Regtech Company Coinfirm
• ‘Financial Surveillance’ or ‘Blockchain Analysis’? Human Rights Foundation Debates Elliptic

Blockchain payments provider Bitpay has launched a prepaid debit card enabling U.S. customers to spend their crypto holdings as fiat currency.

Known as BitPay Card and provided through Mastercard, the offering enables U.S. users to spend bitcoin or other cryptocurrencies in stores accepting Mastercard debit cards globally, according to a June 11 announcement.

Claimed as the first in the U.S. market, the service allows “instant reloads” into U.S. dollars, drawing from users’ BitPay crypto accounts. It can also be used for online purchases or withdrawing cash from ATMs.

Related: National Science Foundation Funds Research Into Crypto Dollars

BitPay says it will not take any fee for crypto to fiat conversions, though it doesn’t state how much any card transaction fees might be. Users will pay $2.50 to take cash out of an ATM, and 3% on foreign currency exchange, according to its product page.

In much the same way a normal credit or debit card works, the card utilizes an EMV chip for contactless payments as well as providing additional security.

See also: BitPay Launches In-Store Crypto Payments With New POS Partnership

BitPay Card can also function as a virtual card linked to the BitPay app with support for bitcoin, bitcoin cash, ether, XRP and stablecoins such as GUSD, USDC, PAX and BUSD.

Related: Coca-Cola Distributor Offers Bitcoin Payment Options for Aussie Vending Machines

A $10,000 daily load and spending limit is applied for the BitPay Card with a $25,000 maximum balance.

The card is now available in the U.S., with the firm’s website allowing users across Europe to sign up on a waiting list for presumed later launches to come.

• Japan’s Biggest Banks Are Talking About Building a Digital Payments System
• New York Man Charged With Trafficking Credit Card Info, Using Bitcoin to Launder Proceeds

A subsidiary of U.S banking group Capital One said its newly patented artificial intelligence (AI) system would save human crypto traders from potential pitfalls.

Capital One Services, which deals in credit cards and auto loans, says its system uses AI technology for “analyzing [the] credibility of cryptocurrency-related information.”

Humans face barely surmountable obstacles and pressures when they trade crypto, the filing states.

Related: Spanish Researchers Working to Curb Coronavirus Spread With Blockchain App

The market runs 24/7 and it requires investors to know the intricacies and nuances of very distinct protocols as well as watch out for events such as airdrops, forks or hacks that come streaming in from multiple sources including Twitter, Medium posts and crypto news sites, the content of which cannot always be readily verified.

“It would be impossible for human traders to track all of the above-mentioned cryptocurrency-related data and respond to that data in real-time,” the patent reads. “Further, it would also be difficult to verify the credibility of the cryptocurrency-related information in real time. In particular, it is difficult to verify the credibility of speculation, rumors, opinions and other information posted on social media and elsewhere.”

See also: JPMorgan Analysts: Bitcoin Is Likely to Survive (as a Speculative Asset)

Awarded by the U.S. Patent and Trademark Office last week (patent no. 10,679,229), Capital One’s AI verification system can be split into three crucial components.

Related: Why High-Profile Defections Aren’t Libra’s Biggest Challenge

First, the system has a specific AI program that looks out for one kind of information such as tweets. After finding a potentially noteworthy event, it feeds it back to a “credibility analysis engine,” which cross-references and determines whether the event is credible based on historical examples and, if so, how the market has responded in previous instances.

It then collects all the information, processes it and uses it to make quick trading decisions.

Capital One said the AI engine could become nuanced and sophisticated at interpreting information. The system might be able to detect fake volumes and evaluate the speed by which news, such as an exchange hack, goes viral across various social media platforms and news sites.

“The machine-learning algorithm,” the patent reads, “can also determine the reach … and how quickly the news spreads out, what investors said and felt … on social media as the news was spreading out, how long it took for the initial fear, if any, to fade out, for the “buy-the-bottom” mood to arise, as well as for the market to bounce back up.”

But Capital One says its patent will need further nuance before it can be launched as a new service (and generally, the filing of a patent does not necessarily indicate intention to launch a product). It’s unclear as it stands whether the system could execute trades autonomously or whether they would have to be okay’d by a human first.

See also: AI for Everyone: Super-Smart Systems That Reward Data Creators

Like the rest of the U.S. banking sector, the broader Capital One group blocked account holders from purchasing crypto using their credit cards in early 2018. The bank has defended its decision, saying it wants to shield clients from the high levels of fraud, loss and inherent volatility in crypto.

This same sentiment is reflected in the patent filing: “As with many nascent markets, many cryptocurrency investors rushed into the market without adequate knowledge and experience in either trading or cryptocurrencies. In fact, many of the cryptocurrency investors were trapped by short-term market movement and lost money quickly.”

TBut then again, Capital One knows the traps and pitfalls of crypto firsthand. Last year, an ex-Amazon employee hacked into the bank’s internal systems, exposed the personal and financial data of over 100 million customers and used the company servers to covertly mine for cryptocurrencies.

• Fake News on Steroids: Deepfakes Are Coming – Are World Leaders Prepared?
• Myths and Realities: Sentiment Analysis for Crypto Assets

Shares of Canaan Creative, one of the few publicly traded crypto miner manufacturers, plummeted below $2, their lowest after going public in November. 

The Nasdaq-listed stock has been steadily falling since the bitcoin halving on May 11, according to data from Yahoo Finance. It closed at $1.98 at the end of the trading session Monday, down 3.9%. 

The China-based crypto miner maker is trying to make a comeback after the halving damped demand for its machines and logistics disruptions caused by coronavirus hurt first-quarter sales. 

Related: Illegal Miners in Russia Stole $6.6M Worth of Electricity, Power Grid Firm Says

Demand for crypto mining machines from some Chinese miners may have begun to soften a few months before the halving in May, Aries Wang, co-founder of crypto exchange Bibox, said. 

As early as last July, “Some of the earliest Chinese miners started to raise funding from institutional investors and buy new models and phase out old machines so that they would be prepared for the halving,” said Wang, whose company has invested in crypto mining businesses. “Many had already completed the update on infrastructure such as mining sites and miners before the end of February.”

Canaan tried to spur sales earlier this year by cutting prices in half, compared with 2019 average prices. However, it still suffered a $5.6 million net loss for the period, according to the latest quarterly report. 

First-quarter sales were also affected by the coronavirus outbreak in China, according to the report. Logistics in mainland China had stopped around the Chinese new year on Feb 10. The firm couldn’t deliver machines to customers even as demand surged due to a price rally in bitcoin, Nangeng Zhang, CEO and chairman of Canaan, said on its first-quarter earnings call. 

Related: Argo’s Mining Revenue Dips After Bitcoin’s Halving

The firm enjoyed a rebound in April after China declared it had contained the spread of coronavirus and the logistics issues subsided. The stock reached $5.99 per share on May 13, two days after the halving, and has tumbled since then.  

The halving, a preprogrammed event that cuts mining revenue by half every four years, previously had been considered bullish for miner makers.

The Chinese crypto miner manufacturer’s Nov. 20 initial public offering (IPO) priced the stock at $9 per share, but a month afterward the shares were down by half. It was briefly back above $8 on Feb. 12 after a surge of more than 80% from $4.40 from the previous day. The price started to fall again as China rolled out coronavirus quarantine measures. 

Canaan’s cash and cash equivalents on hand decreased by 48% in the first quarter, from $71 million as of the end of last year. The firm said the drop was partly due to $24.5 million in short-term investments including its partnership with Semiconductor Manufacturing International Corporation (SMIC), one of the largest computer chip makers from mainland China.

• Market Wrap: Bitcoin Can’t Stick to $9,000 While Stocks Rally
• Canaan Reports $5.6M Loss in Q1 Despite Bitcoin Miner Price Cut

SIMBA Chain, a blockchain-as-a-service company with deep ties to the Department of Defense, has two years and $1.5 million to research and develop a blockchain for supply chain logistics for the U.S. Air Force.

The South Bend, Ind., firm said on Monday it has entered Phase II of its Small Business Innovation Research (SBIR) USAF project with a renewed mandate to investigate blockchain’s military supply chain value propositions. It has also gained a new partner: Boeing. 

SIMBA CEO Joel Neidig said his firm will “stand up” a node running Hyperledger Fabric at Oklahoma’s Tinker Air Force Base – a hub for Air Force supply chain logistics – with a special focus on risk management: knowing the what, where, who and how of parts that may one day go through the USAF’s $62 billion procurement machine. 

Related: Nonprofit Energy Consortium Trials Blockchain Management for Wastewater Tracking

That means anticipating and identifying areas in the supply chain that could one day break down. Neidig declined to state what Boeing parts the USAF will track in Phase II but did reiterate that it will use “real data.” A Boeing spokesperson did not respond to a request for comment. 

Read more: Pentagon War Game Envisioned a Generation-Z Rebellion Funded by Bitcoin

Neidig offered Chinese-sourced computer chips as a future example for which the USAF could use the SIMBA Chain. 

“There might be transistors or microprocessors and we’re looking at how we mitigate that risk and see where the items are coming from,” he said. 

Related: Amazon Patents Blockchain-Based Product Authenticator

The blockchain could help secure parts by documenting every relevant datapoint, a critical feature for the Armed Forces’ procurement gurus, according to Neidig. He said they think out their supply chains in ways civilians “don’t even take into consideration.”

“Within the military they’re also thinking about how people are sharing data, where it is coming from, where else is it connected to. They think out all the things that can go wrong, and that’s where blockchain can come in,” he said.

A USAF press officer did not immediately respond to CoinDesk’s request for comment.

SIMBA Chain has been investigating blockchain on the military’s behalf since receiving seed funding for a crypto chat app from the Defense Advanced Research Projects Agency in 2017. Since then, the platform, a project of Indiana Technology and Manufacturing Companies, has entered into multiple SBIR contracts with the Navy as well as the Air Force. 

The company has become an advocate for blockchain utilization in the military supply chain, an expansive network of thousands of parts worth billions of dollars moving across tens of borders every day. Last month, SIMBA Chain co-wrote a private sector white paper hailing blockchain-enhanced supply chains.

Read more: US Military Is Falling Behind China, Russia in Blockchain Arms Race: IBM, Accenture

The USAF’s need to securely track its billion-dollar parts network has only gotten more complex with the introduction of additive manufacturing. Commonly known as 3D printing, the process promises to allow warfighters to print whatever they may need while deployed, according to Jeffrey Slayton, director of Special Programs, Strategy and Policy for the USAF.

“Emerging technologies like SIMBA Chain’s blockchain platform have the potential to achieve the reliable exchange of information over an unreliable network where not all participants can be trusted, and in so doing, continue to advance the technological supremacy of America’s air, space and cyber forces,” Slayton said in the press statement. 

SIMBA Chain could also help the military get ahead of problems that may arise with the proliferation of new technologies, like artificial intelligence and machine learning, which can draw analysis from reams of data – assuming that data is legitimate, Neidigl said. That’s where blockchain can come in. 

“We’re supplying that trust layer, the data integrity,” Neidigl said. “We need to have a great foundation of trusted transactions before we start ingesting data into AI.”

• TradeLens to Digitize India’s Largest Private Port Operator
• Tradeshift Proposes Plan to Protect Denmark’s Supply Chains From COVID-19 Crisis