Top Crypto News – 28/06/2018

Exclusive: Coinbase Will Add GBP Support to Ease Withdrawals in UK


The Coinbase UK CEO has confirmed that support for GBP withdrawals and deposits will be rolled out over the next few weeks. In an interview with NewsBTC, he also said that Coinbase Custody has had a ‘lot of interest’ and that they have had to restrict how many investors they can take on.

Support for GBP Payments Incoming

Coinbase UK CEO Zeeshan Feroz said that Coinbase will be supporting GBP wires in the next few weeks. At present, Coinbase use Estonian bank LHV to process payments which are all done in euros. UK users have to withdraw euros from Coinbase using SEPA transfers or via mobile banking apps such as Revolut.

In March, Coinbase partnered with UK bank Barclays which opened them up to both GBP payments and the Faster Payments Scheme. This is one of the first collaborations where a UK bank has agreed to accept money that was previously held as a cryptocurrency.

Feroz told NewsBTC: “The biggest thing for me is rolling out access to faster payments for UK consumers. It’s been a huge challenge for us and I think it was a good result for us to get access to that. Over the next few weeks, we’ll be rolling that out for all customers. UK users will be able to deposit Sterling and withdraw Sterling out into their bank accounts using faster payments.”

Huge Interest by Institutional Investors

Currently, 6% of Bitcoin transactions are made in GBP and the UK economy is the fifth largest by GDP. Feroz has previously pointed out that the UK market is the largest in Europe. However, Coinbase are not just looking to attract individuals but have recently launched a suite of products aimed at instituitonal investors.

On Coinbase Custody, he said: “We have had a lot of interest in custody. We have a pipeline of business, we selected a handful that we’re launching with and we will look to add more on. At the minute, we’re restricting the funnel as to how much we can take on until we feel the project is mature and we’ve taken on the first few customers and ironed out the initial kinks. Then we’ll open it up more.”

When asked if Coinbase will always support the same coins and tokens on both their consumer products and their instituional products, Feroz made reference to recently-acquired Paradex, an exchange based on the 0x protocol which offers support for ERC20 tokens. Coinbase also said recently that they plan to support ERC20 tokens.

Feroz said: “We will start to take a product-specific view in terms of the regulatory profiles of coins and the service they’re providing and if that allows us to extend it beyond the four coins we have, then that’s what we’ll do. You will see our businesses as they grow, the coins supported will maybe diverge. One example of that is Paradex which today is live in Europe with eight coins.”

Feroz also said that while they are looking for regulatory certainty, it is not getting in the way of adding new tokens. He said Coinbase will ‘continue to look into tokens that aren’t securites and add them in the future.’ Pointing out their new broken-dealer and ATS licences in the US, he said that they will be able to offer tokens that are registered with the SEC.

Written by News BTC


Decentralizing Popular Dapps Isn’t Just a Scaling Problem


It’s no secret that building large-scale, fully decentralized applications is a challenge, but it turns out the hurdles have to do with more than just scaling.

Decentralized application or “dapp” developers frequently hit roadblocks, since ethereum – the go-to platform so far in dapps’ short history – can process only around 25 transactions per second, and the more transactions the network is asked to handle, the more each one costs the user. These limitations on transaction throughput are commonly referred to as “scaling” limitations, and everyone from the casual dapp user to ethereum founder Vitalik Buterin is keenly aware of them.

So when a particular dapp turns out to be less-than-totally decentralized, with parts of the software running on centralized servers, say, the solution seems obvious – speed up transaction throughput and reduce costs, and pure, blissful decentralization will naturally follow.

Turns out, though, things aren’t that simple.

Some of the most popular dapps that currently live on ethereum – which right now fall into two categories, games and exchanges – often retain centralized features, but the reasons have little to do with throughput and instead, revolve around user experience.

Take games – for developers to be able to make updates to a blockchain-based game, they typically put backdoors into the smart contracts.

Otherwise, said James Duffy, a co-founder of Loom Network, which develops ethereum-based dapps including a Q&A site called DelegateCall, developers would only be able to deploy their dapp once and never be able to modify it.

“Obviously if you’re a player in the game you want the developers to be able to update it. You want them to be able to fix bugs, add new levels, add new features,” Duffy said.

On the other hand, decentralized exchanges (DEX) keep some centralization in their processes as it relates to their order books. The reasons for this approach have to do partly with security and partly with the difficulty of assembling a single, reliable order book across a large, distributed network of computers.

And while most of these dapp projects aim to decentralize further in the future, for now, they’re happy to work slowly through that process so that users have the best experience and don’t lose money.

Duffy told CoinDesk:

“No one’s ever built a complicated app and then launched it and it just worked perfectly on day one.”

The back door dilemma

CryptoKitties was the first decentralized application to gain widespread attention and a significant userbase.

It didn’t take long, however, for critics to notice that the game is not as decentralized as it initially seemed. Another Loom Network co-founder, Luke Zhang, wrote about the backdoors in the CryptoKitties code, which allows the company behind the game to pause it entirely or alter its closed-source breeding algorithm.

While the CryptoKitties team contends that keeping the breeding algorithm a secret makes the game more fun, this choice does mean users have to trust the company itself not to tweak the algorithm in a way that would undermine the market’s pricing of kitties (some of which are very rare and in turn very expensive).

Another piece of the Cryptokitties game that was under the company’s control, until very recently, was the art assets.

Without these, a player would still own that kitty they paid 250 ether for, but instead of being able to admire its green eyes and Himalayan, orange soda-colored fur, they’d have to admire the number sequence encoded in the non-fungible token that’s at the core of the game: 99ac5586a447g9gg44665775ddf71444488773384ccccdffc.

Cute, right?

But according to Duffy, without this centralized control of the art, developers and players might abuse the privilege.

“What happens if someone uploads something illegal, like child pornography or something?” he said. “The nodes would have to have a way of censoring that to remove that data, or it would just be a complete free-for-all.”

And yet, CryptoKitties seems to be ready to take somewhat of a chance on this – on June 26 the company, now known as Axion Zen, announced that it had updated its terms of service, making it possible for third-party applications to use CryptoKitties art. And not only that but it was open-sourcing the ownership rights of the non-fungible tokens.

Still, it’s a far cry from complete decentralization, and Duffy acknowledged that there are potential pitfalls in CryptoKitties’ approach to its business model. But he said that launching a semi-centralized dapp and decentralizing it over time is “pragmatic.”

Kyle Samani, the managing partner of Multicoin Capital, echoed Duffy’s statements, saying, “Decentralization is generally a spectrum.” He called criticism of CryptoKitties’ centralized aspects “nit-picky.”

Duffy held out hope for more complete decentralization, though.

For instance, he argues that Loom Network’s approach – building a dedicated, scalable sidechain for each dapp and pegging that chain to ethereum – would enable full decentralization without having to settle for fossilized games that never add new levels or features. Updates could be made through hard forks, assuming players could come to a collective agreement.

Making a prediction, Duffy said:

“We’re going to see actual, real, fun games that are normal games that people want to play, except that they’re actually owning the in-game assets and they can do this on a fully decentralized platform.”

Order book blues

Centralized exchanges have been cryptocurrencies’ Achilles’ heel since the early days of bitcoin – MtGox being the most famous example of what can go wrong when transparent, decentralized ledgers meet opaque, centralized intermediaries.

For this reason, advocates of decentralization have long tried to build distributed alternatives. Examples on ethereum include Idex and ForkDelta, which according to DappRadar are the first- and second-most trafficked dapps over the past 24 hours.

The only problem is that both of these exchanges use centralized order books, as do most of their peers, according to Taariq Lewis, a veteran cryptocurrency developer who is building DEX technology – codenamed Lyra Protocols for now.

These centralized order books, which collect “bids” (prices offered by buyers) and “asks” (prices offered by sellers) to facilitate trades, are the norm in traditional markets.

Despite strict regulation, however, shenanigans abound on traditional exchanges. Spoofing, front-running and layering are just a few of the (illegal) tricks traders use to take advantage of each other, and this behavior is prevalent – if not worse – on crypto exchanges.

“Unregulated centralized order books are manipulation havens,” said Lewis.

A person familiar with DEX operations, who asked not to be named, added that some exchanges see order book decentralization as a way to avoid regulatory interventions. Exchanges operating centralized order books must either register as Alternative Trading Systems or avoid listing securities – which, as is becoming increasingly clear, many crypto tokens are.

Decentralizing order books, however, is anything but simple. Traders need a main order book that is visible to everyone, Lewis said, and ensuring that everyone sees the same bids and asks without a central intermediary is “an unsolved problem.”

He continued, “It’s not trivial. A lot of these things folks have been working on for decades, well before blockchain.”

Adding to these technical difficulties, Lewis said, decentralized order books can be easy targets for Sybil attacks – whereby one user or group of users creates hundreds if not thousands of identities in an effort to spam the network with information.

Still, exchanges such as Idex and ForkDelta have said they plan to decentralize their order books when the technology enables them to.

Lewis did not want to reveal too much about Lyra Protocols, but said the project was “looking into” attack-resistant, distributed order books. And Duffy said that a number of DEXs have reached out to Loom Network wanting to take advantage of dedicated sidechains for the purpose of decentralizing more of their processes.

As such, Duffy expressed confidence, saying:

“Give it a couple years and I’d say it’ll definitely be the case, just because it’s possible and if users demand it, then someone’s going to fill that demand.”

Chalk drawing image via Shutterstock
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US House Unanimously Passes Bill to Help Fight Illicit Use of Cryptocurrencies


H.R. 6069 Bill Passed

US House Unanimously Passes Bill to Help Fight Illicit Use of CryptocurrenciesThe U.S. House of Representatives has passed Bill H.R. 6069, known as the “Fight Illicit Networks and Detect Trafficking Act.”

The bill was considered by the House on Monday, June 25, and “passed unanimously,” according to California Rep. Juan Vargas, the representative who jointly introduced the bill with Rep. Keith Rothfus, announced.

The Republican Policy Committee website describes:

H.R. 6069 would require the Government Accountability Office (GAO) to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking. The GAO study would also examine how virtual currencies can be used to detect and deter these illicit activities.

US House Unanimously Passes Bill to Help Fight Illicit Use of CryptocurrenciesAfter passage of the bill, Rep. Rothfus released a statement saying, “Illicit markets where drug and human trafficking take place are constantly evolving, especially on the dark web…Cryptocurrencies can mask traffickers’ transactions, affording them a level of anonymity when conducting illegal activities.” He added that “This bipartisan legislation will help the government expose new criminal methods to move illicit funds, and provide ways to stop them.”

Bill Aimed at Fighting Illicit Use of Crypto

US House Unanimously Passes Bill to Help Fight Illicit Use of CryptocurrenciesWhile acknowledging that “Virtual currencies, such as bitcoin, dash, zcash, and monero, can be used for legal purchases,” the Committee website noted, “It has also been reported that virtual currencies are being used to run illegal online marketplaces to sell drugs, including the opioid fentanyl, and contributing to the opioid crisis in America.”

The Republican Policy Committee further claims, “according to recent reports, transnational criminal organizations are increasingly using virtual currencies for illicit activities, including drug trafficking,” citing the US Drug Enforcement Administration’s 2017 National Drug Assessment.

According to Rep. Vargas:

The anonymity behind virtual currencies has made them a preferred payment method to carry out illegal activities…Congress must understand the full extent of how virtual currencies are being used to facilitate drug and sex trafficking and propose legislative solutions to fight these crimes.

After the passage of the bill, Vargas commented that “this bill is an important first step in helping Congress understand the full extent of how virtual currencies are being used to facilitate drug and sex trafficking and will help us propose effective legislative solutions to fight these crimes. I hope to see the same level of support for this legislation in the Senate.”

US House Unanimously Passes Bill to Help Fight Illicit Use of Cryptocurrencies
U.S. Department of Justice headquarters.

Deputy Assistant Director of the U.S. Secret Service’s Office of Investigations, Robert Novy, shared a similar sentiment in his testimony before the House of Representatives Financial Services Subcommittee on Terrorism and Illicit Finance last week. He called on Congress to “help in preventing cryptocurrencies like monero and zcash, which provide users with enhanced privacy and anonymity features, from being used for illicit purposes,” as previously reported.

On Tuesday, the Department of Justice also announced the arrests of more than 35 people selling illicit goods in a nationwide undercover operation targeting darknet vendors. According to the notice, “Nearly 2,000 bitcoins and other cryptocurrencies, with an approximate value of more than $20 million” were seized.

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