Canadian Securities Exchange Taps Blockchain for New Clearinghouse
The Canadian Securities Exchange (CSE) plans to launch a blockchain-based clearing and settlement platform for token sales, it announced today.
The initiative will see the CSE move to list so-called “Security Token Offerings,” through which blockchain-based assets which are explicitly securities would be offered and sold. The blockchain-powered platform represents a new service area for the exchange, which has been operating since 2003.
Companies will be able to use the platform to issue traditional equity and debt through tokenized securities, which would then be offered to investors through fully regulated offerings, which stand in contrast to initial coin offerings (ICOs) that more often than not operate in a regulatory gray area.
“Our platform represents an intersection between blockchain and the capital markets that delivers on blockchain’s promise to disrupt conventional transaction and record-keeping mechanisms, thereby providing tangible benefits for market stakeholders,” Richard Carleton, chief executive officer of the CSE, said in a statement.
“By harnessing this technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings,” Carleton added.
The CSE has licensed the platform’s technology from Fundamental Interactions Inc., a New York-based firm that designs “multi-asset trading appliance products.”
In the meantime, the exchange operator has also signed a “memorandum of understanding” with Kabuni, a 3-D printing company in British Columbia that plans to file with the British Columbia Securities Commission (BCSC) to issue tokens to investors via a security token offering. If successful, Kabuni will become the first company to list a tokenized security on the existing CSE platform.
Trading image via Shutterstock
Written by CoinDesk.com
How to Send A Lightning Transaction (Even If You May Not Want To)
It’s like the early days of bitcoin all over again.
Comprised of invite-only chat channels, alien terminology and warning signs at every turn, the nascent ecosystem springing up around Lightning Network, the scaling technology that could end up having the greatest impact yet on bitcoin’s capacity, is to date, hopelessly difficult to operate.
“Going to be blunt,” one developer wrote, “if you don’t know how to compile something, you probably will have a lot more struggles and a lot less coins.”
Simply put, Lightning in its current state is dangerous to interact with today. But given the network’s big promises – instant transactions and fees that are next to nothing – risk isn’t diminishing the appeal.
Companies like Blockstream are already launching Lightning-powered stores that send stickers to bitcoin users who successfully pass funds across the network, while so-called “early Lightning adopters” are being celebrated online for their “bravery” on the blockchain.
“Show the world that you were one the first people to use Lightning on mainnet for a legitimate purchase, if it works,” Blockstream’s website reads.
It’s a sentiment that, given the risks, has garnered criticism by some who feel it mistakenly encourages users to risk real money. That said, there are ways to contribute to the early network without putting your own funds at risk.
This includes hanging out in the testing environment (where the majority of Lightning developers are today) or venturing onto the mainnet (where there’s a budding set of best practices, even if pitfalls remain).
Below, we offer our guide for early adopters who want to get their hands on the bleeding-edge tech before it’s recommended.
Of the available options, connecting to the testnet isn’t exactly intuitive, but it’s easier to access than the alternative, with clients that are built to run on most operating systems.
It also has the added benefit of not requiring the use of real bitcoin. Instead, you’ll be using test bitcoin, which you can find for free at an online faucet and send to your Lightning wallet.
In total, using the testnet takes about five or so steps to navigate:
- To start, there’s a number of wallets that you can download, Zap, Lightning Labs for desktop, an Eclair wallet for android, and one option that doesn’t require a download at all. If you chose to download a desktop wallet, remember that it will need to sync the bitcoin testnet, which can take several hours.
- Having sent the test bitcoin to a wallet address of your choice, you’ll need to set up a channel, which is where testing gets slightly unfamiliar. Select a testnet store that you’d like to make a purchase on. There’s a variety of these, including a blogging site named yalls, developed by Lightning Lab’s Alex Bosworth, a Starbucks-inspired cafe run by Lightning development team ECLAIR and an ice cream parlor.
- Next, navigate to the website of your choice and seek out a payment address. Notice that two addresses are given, a payment address and a “peer address.” (You need to add the store as a peer before you can send it payment.)
- Copy the peer address, navigate to your wallet and add the address as a contact. You’ll need to send a small fee in order to open this channel, which on the testnet is something like 0.1 test bitcoin.
- Once you’ve successfully opened a channel, you can then paste the payment address in to your wallet along with the desired amount, and send your test bitcoin (instantly).
Using the above process, CoinDesk was able to send a transaction, only running into trouble at times when a majority of test nodes were offline.
Risking it on the mainnet
To restate, this is ill-advised – if you try to send bitcoin, you can lose it.
Not only will this hurt your wallet, but it will upset Lightning’s developers, because the more people active on the mainnet the more complicated it becomes to administer updates.
While a bit more complicated (the process described below can take a few days), the seven steps below approximate a rough guide to getting started:
- The easiest way to access the mainnet is using Blockstream’s c-lightning. Blockstream have published a useful guide that breaks down the various command lines necessary to purchase a sticker in their store, and for a more detailed breakdown of the following steps, visit their website. Other development teams, Lightning Labs and ECLAIR, have yet to publish mainnet clients, however, developers have assured that it is still possible with a little tweaking to the code.
- C-lightning requires ubuntu operating system and a variety of code toolkits that will need to be downloaded before you can begin. Lightning also requires you to sync the bitcoin blockchain in its entirety, a process which can take several days, and needs about 170 gigabytes in storage.
- Once those steps are out of the way, install the necessary tools, as listed on Blockstream’s breakdown.
- Next, download bitcoind, a bitcoin full node software that’s perhaps the easiest to download – bitcoin.org offers a list of steps in order to do this securely. Remember that it takes a really long time to sync the bitcoin blockchain, so leave it syncing overnight – though depending on your connection it could a number of days.
- Once you’re happily synced up with the chain, you’re then ready to clone the c-lightning code from its GitHub repository. Once that’s successfully installed, you can use the command line to connect to Blockstream’s peer and sync the channel graph. You’ll also need some bitcoin to work with, so use lightning-cli, the internal lightning client, to generate a bitcoin address that you can send some funds to from your normal wallet.
- Once you’ve done this (and confirmed that the payment occurred successfully), you can then open a payment channel with Blockstream’s peer. First, use the command line to locate Blockstream’s public key to open the channel. Just like on testnet, this will require a small fee, around 500 satoshis.You’ll then need to confirm the transaction has gone ahead by monitoring the logs. Wait for three in total to occur before you can open a channel.
- Once the three confirmations have passed, you can use lightning-cli to list a new payment channel, which you can then you to make payments to the Blockstream store.
If the laundry list of actions above shocks you, that’s okay, developers are working on methods to make the network easier to interact with. Remember, Lightning is still in alpha phase, and as development progresses, a wide variety of simplified interfaces are expected to be released.
Easy to use wallets are also likely to be released for mainnet access, so there will be less of a requirement for lightning users to be familiar with the command line. Similarly, other interfaces that make the micropayments easier to integrate by providing a third-party processing service.
Eclair have released an early version of their lightning API. Rather than businesses opening their own channels, Eclair will handle the back-end, process payments and send on-chain bitcoin.
Developers such as Alex Bosworth are also working on ways for users to send Lightning payments without setting up a channel at al, by creating methods for bitcoin and other cryptocurrencies to interact with the Lightning network.
Ultimately, while the network is now difficult and dangerous for the average user, ongoing development work hints that soon, Lightning could be as simple to use as existing payment interfaces.
Welding sparks via Shutterstock
Written by CoinDesk.com
U.S. Corporate Customers Barred From Bitfinex’s Margin Markets
Bitfinex Restricts U.S. Corporate Account Holders From Accessing Margin Markets
In recent days, several Redditors claiming to be U.S.-based corporate customers of Bitfinex have complained that they have suddenly found themselves unable to access the exchange’s margin services.
Last year, Bitfinex announced that it would terminate its services to U.S. retail customers in November. However, the company assured corporate customers that “the restriction affects individuals accounts only” – as currently stated by the FAQ section of Bitfinex’s support portal.
Margin Traders Left Unable to Close Positions
One Redditor posted “We’ve had a corporate account with Bitfinex since early 2017 and [are] approved for both exchange, margin, and funding. […] We’ve been making 6-figure trades on margin and currently have 2 margin positions open. On Feb 7th, […] we were locked out of margin trading. No explanation or warning of why our account can’t trade on margin. Worst yet, we can’t manage our margin positions. Not good in this very volatile market. We’ve received a couple of liquidation warning emails as the market dived down yesterday. We sent a support ticket […] and probably over 7 emails. No response from Bitfinex. It appears that they haven’t even opened any of the emails.”
Later that day, a Bitfinex representative called “bill_bfx” contacted the Redditor, stating that the issue had been “forwarded to the team to resolve for you.” Bill_bfx stated that “a US corporate customer […] should not be using margin trading,” however, noted that “if you have open positions it is not acceptable to block you from closing them.”
The Redditor acknowledged the response and stated he would update the thread if his issue was resolved. As of this writing, no indication has been made that the situation has been resolved, despite bill_bfx responding to the Redditor four days ago.
Corporate Customers Seemingly Caught Unaware
Another Redditor posted “I’ve been lending on Bitfinex for a while. Earlier today, the API responded that US users are no longer allowed to take or lend any currency denomination […] I understand that US retail customers cannot use it but I believe the policy did not apply to corporate customers. Has there been a recent change in policy? Will it be permanent or is this a temporary measure?”
As of this writing, the second Redditor has not received a response from Bitfinex, despite directly questioning bill_bfx about the matter on a different thread. Though Bill_bfx did not respond to the Redditor’s query, however, a day later, Bill_bfx did find time to post a sarcastic response to a trollish comment on the same thread.
Written by Bitcoin.com
Bad Code Has Lost $500 Million of Cryptocurrency in Under a Year
Bitgrail Gets Railed for Dodgy Code
Last week, news.Bitcoin.com reported on the demise of Bitgrail, which contrived to lose $170 million of nano cryptocurrency. While the precise sequence of events that caused the catastrophic collapse of the exchange with the assets of thousands of customers is still being confirmed, poor code is being blamed. As reported at the time:
There are rumors that Bitgrail became insolvent following a withdrawal bug that was discovered by some users and then shared in Discord and other chat groups, causing the wallet balance to gradually diminish. One user explained: “There was a bug on Bitgrail where if you placed two orders you got double balance added to your account. You could then withdraw while the orders were up and steal the coins. You had negative balance in the end but you could just make a new account.”
In the aftermath of the incident, this theory has been bolstered by allegations that a bug was indeed responsible, and not in nano’s code, but in Bitgrail’s. One source asserted: “There was a bug, on the withdraw page. But this check was only on java-script client side, you find the js which is sending the request, then you inspect element – console, and run the java-script manually, to send a request for withdrawal of a higher amount than in your balance. Bitgrail delivered this withdrawal. How many people did this? Who knows.”
There was another bug, you could request a withdrawal to your address – from another user-id, from another user-account. That would cause the other users balance to have “missing funds” or “negative balance”. Bitgrail bomber solved this bug by manually entering the “correct” numbers in his database. This is what you get for using a PHP website coded by same skill-level as CfB of IDIOTA.
Even the Best Cryptocurrencies Aren’t Immune to Poor Code
The cryptocurrency most commonly associated with catastrophic bugs is ethereum. That’s not due to its underlying code, but on account of the smart contracts that can be built on top of the ethereum framework. First there was the DAO, which led to ethereum being forked right out the gate, and then there was the Parity bug that caused 150,000 ETH to be stolen, followed by the other Parity bug that caused $168 million of ETH to be locked up.
In the past couple of weeks, ethereum bugs have surfaced once more, albeit on a smaller scale. Proof of Weak Hands (PoWH) was a joke scamcoin which turned into an actual scamcoin after a bug led to the loss of 900 ether worth $1 million that had been sent to the contract address. The developer then disappeared after receiving death threats from investors aggrieved to discover that the joke Ponzi they were buying into was even less legitimate than it had seemed.
Written by Bitcoin.com
Dubai Issues License to Cryptocurrency Firm
Attracting Crypto Businesses
The Dubai Multi Commodities Centre (DMCC) is a government entity established in 2002 to enhance commodity trade flows through Dubai. DMCC Free Zone is the largest and fastest growing free economic zone in the UAE.
“We perform a range of roles which continue to position Dubai as the preferred destination for global commodities trade and DMCC as the world’s No.1 Free Zone,” offering zero percent personal and corporate income tax, the center’s website states. Today, more than 14,100 multinational corporations and startups call DMCC home, with almost 90,000 people living and working there.
The Centre has started issuing licenses to allow firms trading in cryptocurrencies to operate from its free zone, Thomson Reuters Zawya reported on Monday.
DMCC’s executive director for commodities, Sanjeev Dutta, told the publication that the Centre is “beginning to facilitate” a market in cryptocurrencies which, he acknowledged, is unregulated. Citing that firms looking to set up in the zone would be considered on a “case-by-case” basis, he elaborated:
To me, what is important is the fact that you are still evaluating it as part of your innovation strategy. You are not saying ‘no’ to something. You are not saying ‘yes’ either, but you are exploring, so you are clearly ahead of the others when the time to make a decision comes.
Cryptocurrencies as Commodities
DMCC is a member of the Global Blockchain Council, which began as a Dubai Smart City project and has 46 member organizations globally today. The Centre’s director of innovation hub, Franco Bosoni, said that a global consensus is emerging which favors classifying cryptocurrencies as commodities, the news outlet detailed and quoted him explaining:
DMCC’s view is that these [cryptocurrencies] meet the test of a commodity. They’re priced based on supply and demand, produced and sold globally at a uniform quality and (are) indistinguishable between products.
Wai Lum Kwok, head of capital markets for Abu Dhabi Global Markets Regulatory Authority, told the publication on Sunday that the regulator is “reviewing and considering the development of a robust, risk-appropriate regulatory framework” for crypto exchanges and intermediaries. Emphasizing that no timeframe has been set, he added:
As we develop our framework, we will also want to check in and have the conversations with, for example, US regulators, Japanese regulators and so on and so forth, so that there is some alignment of approach to avoid any regulatory arbitrage.
First License Issued
The first license for the Free Zone reportedly went to Regal Assets, a gold trader and storage provider with offices in the US, Canada, and the UAE. The company added cryptocurrencies to its product line at the end of last year, offering brokerage services and an insured, high-security cold storage service for bitcoin, ether, bitcoin cash, ethereum classic, ripple, and dash.
According to Bloomberg, “Dubai gold trader Regal RA DMCC is the first company in the Middle East to get a license to trade cryptocurrencies.” The news outlet quoted DMCC acknowledging in a statement, “The company will offer storage of bitcoin, ethereum and other cryptocurrencies in a vault located in DMCC headquarters in Almas Tower in Dubai.”
DMCC Executive Chairman Ahmed Bin Sulayem was quoted by the publication, “At the heart of DMCC’s long-term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers,” adding that “the announcement today embodies this approach.”