Top Crypto News – 06/04/2018

Hyperblock to Acquire Cryptoglobal for $106m and Create Mining Behemoth


Global Consolidator

Hyperblock to Acquire Cryptoglobal for $106m and Create Mining BehemothCanadian cryptocurrency mining firm Cryptoglobal (TSXV: CPTO) and the owners of one of the largest US-based mining farms Hyperblock have announced that they have reached an agreement that the latter will acquire the former. Under the terms of the deal, Hyperblock will acquire all of the issued and outstanding common shares of Cryptoglobal for consideration of $0.74 each, representing a total equity value of approximately $106 million.

“Combining HyperBlock’s large-scale Mining-as-a-Service model with Cryptoglobal’s existing mining, custodial storage and crypto trading businesses, creates a strong foundation for both organic growth and growth through acquisition. We are poised to become a global leader and consolidator in Cryptocurrency mining and asset management,” stated Hyperblock CEO Sean Walsh.

The acquisition is planned to be completed by the end of May 2018, subject to the satisfaction of customary conditions including approval by the shareholders of both companies, the Ontario Superior Court of Justice and the TSXV. The combined entity will operate under the name Hyperblock Technologies Corp., and list on the Canadian Securities Exchange.

Combined Power

Hyperblock to Acquire Cryptoglobal for $106m and Create Mining BehemothAccording to the announcement, the combined company will have a lineup of over 21,000 miners using 28 MW of power across multiple locations in North America. Hyperblock currently operates a 20 MW mining facility in the North West US, which has expansion capacity to 80 MW. Its existing facility is powered by hydro-electric energy that offers a very low electricity consumption rate at just under $0.04 per KW/h. Cryptoblobal currently operates across multiple facilities in Canada, totaling 8 MW of power.

The combined company also intends to generate cost and revenue synergies by leveraging Hyperblock’s relationship with (mining pool) to drive hashrate rental from Cryptoglobal’s mining operations, and by further increasing its consumer footprint through offering additional services by the company, including trading and custodial services.

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Imperfect Pictures: Bitcoin Lightning Images Aren’t What They Seem


There’s more to bitcoin’s lightning network than meets the eye.

That said, data visualizations have become a favorite tool for bitcoin users eager to tell the story of the steady adoption of the in-development payments technology. Already, a ton of visualizers have been launched to depict the network in novel ways – from 3D renderings and historical time series to family trees and experimental animations.

Like blossoming clusters of galaxies, watching the nodes and channels unfurl into complicated webs has become somewhat of a sport for lightning fans.

“I used to check the bitcoin price every day, but now I check the lightning network nodes every day,” a lightning enthusiast wrote on Reddit, adding that unlike the price charts, lightning is always on an upward trend.

But according to several developers that work on lightning implementations, the images don’t tell the whole story.

“Most of the snapshots will become increasingly irrelevant,” said Olaoluwa ‘Laolu’ Osuntokun, a developer at Lightning Labs, which recently launched its lightning network implementation into public beta.

For one, the pictures are based on views from a single node, which has limited access to the entire lightning network.

“It isn’t authoritative, not really indicative of the longer-term topology,” Osuntokun continued.

Nevertheless, the images right now play an important role, often deployed to solve unanswered questions about how the network is growing, namely whether lightning is fulfilling its (sometimes contested) promise of decentralization.

“It gives people something they can point to to say, ‘Look it’s lightning!'” Osuntokun said.

Pseudonymous developer “Intel,” who created the popular lightning mainnet explorer, #recksplorer, agreed, saying visualizers are the easiest way to observe the network growth at this point.

Intel continued:

“You can visually compare how they looked before and look now, making the network growth really noticeable. It’s much more eye candy than sharing raw numbers of network nodes.”

A complete picture?

Still, according to Osuntokun, as the network continues to grow, these visual depictions will become more problematic.

While users have at times complained about the lack of visibility across the whole network, thinking it was due to faulty code, the partial view of the nodes is a necessary characteristic, as it enhances privacy and cuts down on individual node storage costs.

Plus, because of certain implementation parameters, if a channel has been inactive for more than two weeks or it contains a very small amount of funds, the channels might not be visible to all nodes. And finally, there could be nodes and channels that don’t announce themselves at all.

“It’s actually optional for nodes to send out authenticated proofs attesting to the existence a channel,” Osuntokun said.

As such, even layering views from multiple nodes wouldn’t give you a complete picture.

Tyzbit, the pseudonymous author of several interactive lightning visualizers, compared this to a dark, crowded room, with groups of people hidden behind others.

“You don’t need to know about everyone in the room to send money to someone, you just need one working route,” tyzbit explained. “No one has a perfect picture of the network.”

But according to Osuntokun, while that could worry people that actually the lightning network isn’t growing as fast as some suggest, it actually displays the more positive opposite.

Because on lightning, there’s no need for consensus, or, a global agreement of what the network is, it’s even possible that several, unconnected lightning networks could exist at once. With this in mind, it’s likely that lightning could be much bigger than depicted in the images.

He told CoinDesk:

“An explorer should only be seen as a lower bound for the number of nodes or channels on the network.”

The end of visualizers

Still, visualizers may have a short shelf life anyway.

For one, Osuntokun said that as lightning adds more privacy features, visualizers will be unable to gather more specific data, like physical location, about the nodes. This is obviously a benefit for users since data about their location could expose them to attacks, but it’s at the expense of the visual tools.

“As the graph gets larger and larger, visualizations will probably start to collapse channels into one another in order to reduce the dimensionality of the rendering,” Osuntokun said, “otherwise, things may just end up looking like a ball of yarn pretty soon.”

Intel echoed this point, stating that visualization software will eventually not be able to handle the amount of overlaps in the network.

“[A] large lightning network becomes like a tangled mess, and there is no way that you can untangle it for visualization purposes,” he said.

And this might be coming sooner than later. For instance, despite being labelled reckless for users to transact on the lightning network before Lightning Lab’s March beta release, Intel’s explorer saw rapid growth, reaching 1,337 nodes and 3,798 channels in a matter of weeks.

Even at its current size, the developer’s explorer is already a bit unruly.

Because of that, Intel concluded:

“You can already see that happening on my explorer. The future of network visualizers is uncertain.”

Lightning network visualizer image via #recksplorer

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SEC Chief Touts Benefits of Crypto Regulation


The SEC’s highest-ranking official appears to be softening his stance toward ICOs.

At a Princeton University event Thursday, SEC chairman Jay Clayton went so far as to reject the idea that all ICOs are fraudulent, answering “absolutely not” to a question centered on whether his agency’s actions against the founders of blockchain projects amounts to such an admission.

Clayton’s remark came during a talk on “Cryptocurrency and Initial Coin Offerings,” one that was notable given his past statements, including his most famous issued in February, in which he said that he believes “every ICO” he’s seen qualifies as a security. Indeed, Clayton opened the talk by telling the assembled students he believes that “distributed ledger technology has incredible promise for the financial industry.”

The SEC chairman went on to argue that the steps taken by the agency in recent months could actually help the industry mature overall.

He told attendees:

“Is the approach taken in Washington by the SEC adversely affecting distributed ledger technology in other areas? My quick answer is that my hope is that it’s actually helping – because this technology is being used for fraud and to the extent that it’s being used for fraud, history shows that government comes down harshly on that technology later.”

Clayton continued: “I think if we don’t stop the fraudsters, there is a serious risk that the regulatory pendulum – the regulatory actions will be so severe that they will restrict the capacity of this new security.”

Utility token debate

Elsewhere, Clayton discussed the evolving terminology of the industry.

One of the issues with token sales, he remarked, is the attempt to classify them as so-called “utility tokens,” which would ostensibly free them from any kind of designation as a security. As such, he reiterated his view that almost all token sales purport to sell such products, despite the fact that they are actually securities.

If a startup is “offering something that depends on the efforts of others, it should be regulated as a security,” he told the gathering of students on Thursday.

Clayton used an analogy to describe the difference between a utility token and a security token.

“If I have a laundry token for washing my clothes, that’s not a security. But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I’m buying them because I can sell them to next year’s incoming class, that’s a security,” he explained.

Still, he suggested that such a definition can evolve over time.

“What we find in the regulatory world [is that] the use of a laundry token evolves over time,” he continued. “The use can evolve toward or away from a security.”

Further, nations may experiment with sovereign cryptocurrencies, while startups might develop different kinds applications with the underlying technology, he added.

Whether a token qualifies as a security could also change as the industry evolves, he said, adding:

“Just because it’s a security today doesn’t mean it’ll be a security tomorrow, and vice-versa.”

Jay Clayton photo by Mahishan Gnanaseharan for CoinDesk
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New Bitcoin-Only Shop Open in New Hampshire


Bitcoin Shoppe is Crypto-Only

Portsmouth, New Hampshire hasn’t been widely thought to be a hotbed of crypto activity. It just might be, and it probably has something to do with the Free State Project (FSP). Yale doctoral student Jason Sorens basically wrote about a secessionist movement of the most personal sort. It wound up evolving into asking 20,000 freedom-loving people to build a political force in the state of New Hampshire, the “Live Free or Die” state. “A large portion of the people who moved to New Hampshire in search of freedom are bitcoin users,” Derrick J. Freeman explained. “That’s because they know about the Federal Reserve. Once you know about that, and you know there’s an alternative, it’s pretty hard to reconcile your personal responsibility for its perpetuation.”

Free State Bitcoin Shoppe is Open in New Hampshire

Mr. Freeman, a well-known figure in the FSP, continues, “Cryptocurrencies affords us the opportunity to not just withdraw our support for values we detest, but to actively support coins whose communities actively embrace certain values we share. It’s amazing, and anyone not yet benefiting from participation in these communities is missing out.”

Founded in the Summer of last year, the Free State Bitcoin Shoppe is open seven days a week. Though it’s obviously a profit-making enterprise, Mr. Freeman notes it also serves as an educational platform. “The number one thing we sell is the ‘Bitcoin 101’ class at the Blockchain Institute where people learn how to get a bitcoin wallet, how to send and receive bitcoin, and how to backup their money safely. We also sell bitcoin watches, bitcoin mugs, bitcoin pint glasses, hardware wallets, bitcoin t-shirts, bitcoin socks, bitcoin books, silver rounds, dvds, enigma machines, books about programming and economics.”

Free State Bitcoin Shoppe is Open in New Hampshire

The importance of having a real-world, flesh and blood place where the curious can come and ask questions, take a test spin in this new space, is badly needed, Mr. Freeman urges. “They’ve all heard about it from the news, or a friend, coworker, or family member, and they’re curious. They want to know, ‘Is this thing real? Like, are people actually using it?’ And we get the pleasure of pointing them to our huge map on the wall with flags sticking out at every one of 22 locations that currently accept bitcoin in this town of 22,000. We designed and printed pamphlets that we encourage people to take from a box on our front door. It explains how to get a wallet (of course we recommend wallet right at the top), and a map of the World Famous Bitcoin Tour of Portsmouth (”

An Eager Bitcoin Evangelist

As an activist and content producer in the liberty world, Mr. Freeman received a tip in bitcoin after hosting a popular radio program, Free Talk Live. It was his introduction to the rabbit hole that is crypto. “I loved this new kind of money,” he stresses. “I loved that it was a digital balance on my screen. I liked that I had a record of all the transactions in the network. I liked that it ran like a bittorrent on my computer — always updating the ledger with all the other nodes on the network. I liked that I could participate in mining by buying some equipment and configuring it to join the network of miners. I liked that this new kind of money was being circulated among my friends. I liked that it afforded me the opportunity to use a money that wasn’t created and controlled by the Federal Reserve. I like that it empowers people like me to opt for a more peaceful world by withdrawing support for empire-building and endless wars.”

Free State Bitcoin Shoppe is Open in New Hampshire asked how the immediate community has received the Shoppe. “They love it. We’ve became fast friends with dozens of businesses who we’ve helped accept cryptocurrency. We’ve sponsored local theater on multiple occasions as patrons of the arts. One of our neighboring shoppes and one of Portsmouth’s most beloved stores, Pickwick’s Mercantile, gave us the idea to coin Portsmouth as ‘Bitcoin Village.’ We regularly host popular meetups where people come to level up their bitcoin knowledge and grow the network of bitcoin users and businesses. Even the local government has been warm and welcoming: a city councillor was one of our earliest customers, the police have politely checked in when they saw us moving store furniture at night, and just yesterday the parking enforcer popped into the Shoppe to let me know I’d forgotten to put my ticket on the dash. It’s that kind of quaint New England town. We love our neighbors and aim to make them proud,” Mr. Freeman responded eagerly.

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