Top Crypto News – 18/06/2017

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Metropolitan Bank Is Handling Millions for Crypto Clients (And It Wants More)

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To most banks in the U.S., cryptocurrency businesses are pariahs. To Metropolitan Commercial Bank, they’re “pioneers.”

At least, that’s how the New York financial institution’s chief technology officer, Nick Rosenberg, describes them.

“We’re certainly very interested in growing this vertical,” Rosenberg told CoinDesk of the bank’s crypto clientele. “We’ve learned that it’s a serious industry. There are some very smart people involved. There are some very interesting ideas coming out that could really change the way people do business.”

While most banks cling to the adage “blockchain not bitcoin,” Metropolitan stands out simply by being one of the very few to enthusiastically court deposit business from crypto firms.

These clients include a few exchanges, as well as hedge funds and other crypto investors that bank at Metropolitan because it’s easier to quickly move their money to those exchanges. (To be clear: the bank only handles fiat for customers and does not touch crypto itself.)

So far, it’s proven a lucrative niche for Metropolitan. In the first quarter, cash management and foreign exchange conversion fees from cryptocurrency clients totaled $3.4 million, the bank disclosed in an investor presentation. This helped drive a more than 300 percent increase from a year earlier in Metropolitan’s total non-interest income, to $5.4 million, according to a Securities and Exchange Commission filing.

If that doesn’t sound like a lot of money, keep in mind that Metropolitan is a community bank. With just $1.9 billion in total assets, it’s less than one-1,000th the size of JPMorgan.

What’s more, that triple-digit rate of growth is astronomical for the U.S. banking industry, where non-interest income for all institutions climbed a measly 7.9 percent during the same period, according to data from the Federal Deposit Insurance Corp.

Yet despite the lucrative demand from crypto companies for banks to provide fiat liquidity and other traditional services, bitcoin-friendly banks like Metropolitan are still as rare as they were three years ago.

“It’s extremely challenging,” said Joe Ciccolo, president of the compliance service provider BitAML Inc. Referring to another sector that banks have famously shunned, he added:

“The legalized cannabis industry are having a much easier time than our cryptocurrency clients.”

‘High-touch relationship’

One reason Metropolitan Bank is an outlier in embracing the crypto industry is that most banks can’t stomach the risks. Chief among them is the regulatory risk.

Anti-money-laundering regulations require banks to identify their customers and even their customers’ customers, plus track the flow of funds. While public blockchains can help banks and law enforcement trace the movement of money, the pseudonymous nature of crypto addresses makes it hard to determine who is ultimately sending and receiving funds.

Bitcoin’s historical association with underground drug markets certainly doesn’t help.

“It’s very difficult for a bank to maintain a pro-bitcoin stance,” said Ciccolo, citing the high turnover among compliance officers. “If you have a new officer come into a financial institution, they may take the opportunity to put a different stance on high-risk customers such as crypto companies.”

As bullish as they may be, Metropolitan’s bankers still recognize the risks of working with crypto clients. “It’s a high-touch relationship,” Rosenberg said, meaning one requiring extra diligence.

With regard to risk management, Rosenberg said there are two crucial keys to serving crypto clients.

The first is being extremely selective about client acquisition, only working with companies that take compliance as seriously as the bank does. The second is maintaining an open dialogue with regulators.

“Law enforcement departments, in general, are understanding that cryptocurrency is not all about illicit payments, it has a value and it has a legitimate purpose,” Rosenberg said. “It’s just a matter of spending time explaining it, understanding what their concerns are, making them feel comfortable that we are mitigating those concerns, and that we have the right controls in place.”

Other risks

Compliance aside, Metropolitan also has to insulate itself from the volatility its cryptocurrency customers live with every day. As noted above, the bank only works with fiat currency like dollars, never touching cryptocurrency directly.

But more subtly, it’s minimized the risk to its own balance sheet in the event crypto depositors’ balances suddenly shrink. To illustrate why this would be a concern, the settlement accounts it maintains for exchanges totaled $281.2 million on March 31, representing 17.4 percent of the bank’s total deposits, according to the SEC filing.

Such a high concentration might normally be worrisome.

However, Metropolitan isn’t using these accounts to fund long-term assets like mortgages, just cash and equivalents. So, even if they were drained at once, it’s far from a run on the bank.

“They do not utilize a lot of these deposits in their everyday operations, just because they do know there is significant volatility there,” said Collyn Gilbert, an analyst and managing director at the investment banking firm Keefe, Bruyette & Woods.

To be sure, Metropolitan held another $100.8 million in corporate accounts for cryptocurrency firms, making up 6.2 percent of total deposits as of March 31. And these accounts do fund assets on the balance sheet.

But corporate accounts, which clients use for normal business activities like payroll, are less volatile than settlement accounts, which hold money only temporarily until a transaction is completed, Gilbert said.

Yet there’s one more risk Metropolitan has encountered in the crypto space: what finance types call “headline risk.”

In January, the bank sent its customers a reminder of what it said was a longstanding policy of not accepting crypto-related wire transfers from entities outside the U.S. Word leaked out to the press, which reported this was a new policy prompted by fraud. Metropolitan had to issue a public denial of that claim to quell backlash.

Reaping rewards

Setting aside the fee income and interest-free funding on deposits, there’s a more intangible benefit Metropolitan gains from banking cryptocurrency firms, one that arguably compensates for all the risks.

Namely, it gets a front-row seat to the revolution and is learning about how cryptocurrencies perform in the wild.

“I think Metropolitan was intrigued by the structure, more than just bitcoin, but the structure of that currency market in general,” Gilbert said. “The technology behind it is what has really been intriguing to this management team.”

Ciccolo agreed that serving this sector has given Metropolitan a competitive advantage.

“There’s a dual benefit for those banks that are willing to step out there,” he said. “Not only does it present a new book of business their competitors don’t have, so they can grow their customer base and reach, at the same time, it also gives them a sneak peek at some of the technology that might be impacting their world in traditional finance.”

Indeed, the bank’s director of new products, Kyle Hingher, said Metropolitan hopes to someday be one of the leading banks serving the emerging token economy, once the opaque regulatory landscape clears up.

“We’re looking at this market as a new asset class,” Hingher said. “We’d like to do more for the new asset class.”

For now, of course, even companies with cypherpunk ideals benefit from working with traditional banks to tap into audiences and services that utilize fiat currencies. Liquidity lends any crypto startup greater usability.

“If something is really going to succeed, it’s going to require a banking partnership,” Hingher said.

Looking ahead, the Metropolitan banker is keeping close tabs on the emergence of security tokens and blockchain-based settlement systems.

“The opportunity is to merge technologies and that potential for something brand new that could be earth-shattering and change everything. The potential for that, I think, outweighs all the crash-and-burn scenarios,” Hingher told CoinDesk, concluding:

“We call ourselves the entrepreneurial bank. We want to work with this new space rather than butting heads.”

Image via Metropolitan Commercial Bank
Written by CoinDesk.com

EOS May Be Live But It’s Still Got Crypto Critics Debating

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After a messy weeks-long process, CoinDesk broke the news yesterday that the EOS blockchain is officially live.

To some, it’s already an event for the cryptocurrency history books.


Still, if you haven’t been following the event closely, it might beg the question, ‘What is EOS anyway?’

When we talk about EOS, think about a cloud computing service like Amazon Web Service. It’s a platform for the storing or hosting of data, except rather than using a centralized server, EOS is attempting to distribute the data in a distributed system using blockchain technology.

It was created by blockchain startup, Block.one, and was able to gather over $4 billion to develop its open-source software over a year-long initial coin offering (ICO).

Last week, however, Block.one turned its code over to the world, or more specifically, to developers willing to work on the software as well as 21 block producers who will approve its transactions. The idea is that, in order to be more efficient than your average blockchain, EOS reduces the number of individuals or companies that can validate transactions.

Rather than competing in a global open market like bitcoin’s, users who own tokens are constantly voting for block producers.

The votes

Sounds pretty ideal right? Well, the trick is getting a global network no one is supposed to control off the ground.

Some questioned the set-up, as it ensured the voting process went on for some time while all the distributed users of the network struggled to coordinate. In this way, the more damaging criticisms might come from those who were eager to point out this has been done before (with varying results).


Overall, it’s safe to say this voting process looked a bit confusing from the outside, and other market observers were perhaps a bit too quick to cast judgement.

Some even went so far as to blame the plan of action for the token’s poor market performance over the last few weeks.


Education to come

These comments point to a central issue – EOS operates differently than other blockchains.

This means it’s still taking the industry a while to see what EOS is trying to create and that this vision actually adds value to the users it wants to reach.

As long-time industry observers point out, it’s still not really clear who would want a blockchain that’s not that decentralized. After all, blockchain believers cite decentralization as a key advantage of blockchains over the existing financial system.

As these tweets show, some already have their minds made up about how EOS will work.

Some even go so far as to argue past investments are influencing current opinions on the project.

But with EOS is ranked as the number five cryptocurrency on CoinMarketCap, there are those who remain eager to defend its vision.

As the tweet below shows, crypto Twitter might be divided on this view for some time to come.

EOS money image via Shutterstock
Written by CoinDesk.com

An Inside Look at the Electron Cash Wallet Coming to iOS

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Electron Cash Is Coming to iOS

An Inside Look at the Electron Cash Wallet Coming to iOSThe Electron Cash wallet is a reputable bitcoin cash (BCH) wallet that’s been around for quite some time. At the moment the client is available for Mac, Linux, Windows, and Android for mobile phones. However, the wallet’s development team and lead developer Jonald Fyookball are in the midst of building the Electron Cash application for iOS users. Fyookball has allowed news.Bitcoin.com access to the beta testing using Apple’s Testflight system so we could experiment with the wallet, and share our experience with our readers.

Experimenting With Beta Version 3.2.0 on Testflight

When opening the wallet users are greeted by a neon-blue like screen that says Electron Cash, from here the user can choose a few options when they launch the app for the first time. The choices given are the usual create new wallet, import an existing seed, or use existing public or private keys. We created a new wallet and the Electron Cash iOS interface gave us a new twelve-word mnemonic phrase to write down. After finishing writing the seed down, the wallet asks you to re-type all twelve words, but it doesn’t take too long because words are predicted and easily-tappable after a few letters are typed. You also encrypt the wallet with a password, and are given the option to name it as well. Remember your password and mnemonic phrase give you access to your funds, and keeping them a secret is a top priority.

An Inside Look at the Electron Cash Wallet Coming to iOS

The Electron Cash iOS app always asks you for your password whenever you open it or if you want to sign an outgoing transaction. In the wallet interface there are five main settings which include wallets, addresses, coins, contacts, and the settings section. The wallet section is basically the main page you are greeted with after entering your password. It shows the name of the wallet(s) and you can toggle to different wallets in the first field on the top of the page. The page will also show you all the transactions that have occurred for that specific wallet. On the very top, there is a blue banner with a green light indicating the client is synced up and online. If it was red this would indicate the wallet is not online and synced to the BCH network.

Moving on to the addresses page it will show a bunch of addresses both used and unused. You can toggle between funded addresses and unfunded addresses, alongside if they are receiving or change addresses as well. The Electron Cash wallet allows users to create contacts by utilizing an individual or organizations’ address so you can easily send funds to any recurring contact. The coins area shows BCH transactions that have been sent or received but are not yet confirmed.

An Inside Look at the Electron Cash Wallet Coming to iOS

The Electron Cash Wallet Has Numerous Adjustable Settings

The wallet’s settings section is where you can make a bunch of changes to the wallet, like change your password, and view your mnemonic phrase if you needed to see it again. In the settings, the Electron Cash iOS client has an address converter so a person can change a legacy address into the Cashaddr format. This section also offers a variety of features like the ability to change the fee to max static or the user can choose a custom fee. Below that where it says transactions, you can choose to utilize change addresses, multiple change addresses, and whether or not the wallet will spend only confirmed coins. Following this section, you can change the appearance, choose what block explorer you want to use. From here users can also set the fiat settings so you can view the value of coins in USD, EUR, and many other monetary units.

An Inside Look at the Electron Cash Wallet Coming to iOS

The wallet works very well for being in its beta (3.2.0) testing phase and Electron Cash users will be sure to enjoy this wallet. There were a few occasions where it was difficult to remove the keyboard and view the lower fields on the screen in the earlier versions we tried prior to the 3.2.0 upgrade released just the other day. Since then we’ve found the app works like a charm, and haven’t found any difficulties using it. The Electron Cash developers have also been looking for testers on the subreddit /r/BTC over the past few weeks in order to get feedback.

Written by Bitcoin.com

 

 

Top Crypto News – 15/06/2018

The EOS Blockchain Is Now Officially Live

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The EOS blockchain is now live.

At press time, the blockchain has received more than the 150 million votes needed to determine the individuals or entities that will maintain the distributed network, the world’s fifth largest by total value, thus ending a weeks-long process that had been among the most complex the evolving cryptocurrency market has perhaps ever seen.

As such, the news effectively ensures that the software for which a company called Block.one raised more than $4 billion during an almost year-long initial coin offering (ICO) will now be accessible. According to best estimates, the blockchain began operations at 17:46 UTC.

This happened after a roughly a week of deliberation and testing by block producer candidates – those groups vying for one of 21 validator node spots in which they will receive rewards for verifying transactions – from all around the world. While that testing phase uncovered several vulnerabilities that caused two groups to go head-to-head on the correct implementation and delays for the launch, on June 9, block producer candidates voted unanimously in favor of launching the blockchain.

As per the project’s process, that percentage was the two-thirds +1 of the candidate community to initiate the launch, but also per the plan, the blockchain wasn’t officially live until further validation had been completed, an appointed block producer launched the chain and then 15 percent of EOS holdings had voted.

And once 15 percent of token holders had voted to establish the set of 21 elected block producers, the chain became active. This took longer than many had anticipated for many reasons, including security concerns with the voting process.

Following the launch, tokens were trading at $10.45.

Written by CoinDesk.com

 

Despite Court Order Tokyo Exchange Says It’s ‘Technically Difficult’ to Close Accounts

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Tokyo Exchange Can’t Comply with Court Ordered Crypto-Account Closure Due to Technical Difficulties

The regional news outlet Nikkei has reported that a woman in her 70s requested a cryptocurrency account foreclosure. According to her lawyer, Yuko Fujii, the lady got caught in trouble in May 2016, as a trader in Saitama Prefecture convinced her that she could make a profit with virtual currencies. The lady allegedly was advised to purchase cryptocurrencies at 30% above the market price. She purchased the amount of about JPY 500,000 (~US$4,525) worth of crypto with JPY 150 million (~$1,357,500).

The lady later reconciled with the trader and was being repaid at the purchase price, but suddenly the payment stopped. She then requested the foreclosure of the account under the name of the trader to get the remaining JPY 13 million (~$117,650). Her claim was approved and the Saitama District Court ordered the exchange to foreclose the wallet linked to the trader’s ripple account twice, once in July 2017 and the other in April 2018.

But the cryptocurrency exchange replied that the wallet was technically not managed by them and that they could not refund the victim. They added that if they reimbursed the lady on behalf of the wallet company, they would not be able to get refunded by the trader, and they would suffer losses themselves.

Despite Court Order Tokyo Exchange Says It’s 'Technically Difficult' to Close Accounts
The exchange later revealed that it had withdrawn its application to enter the cryptocurrency industry, based on the revised fund settlement law.

Exchange Has Yet to Refund the Victim

As a result, because the wallet of the trader was not foreclosed, there is alleged evidence that the trader had moved his crypto out, and the victim still has not recovered her funds. Fujii, the attorney, commented that if the cryptocurrency exchange did not comply with the court order, the victim could “hardly” be relieved from the damage she suffered.

The cryptocurrency exchange told Nikkei that they consulted an advisory lawyer and recognized that there was a legal problem regarding the payment. “We have not yet refunded the victim,” the exchange’s official replied. The exchange had received a business improvement order from the Fukuoka Financial Office in March and later revealed that it had withdrawn its application to enter the cryptocurrency industry based on the revised fund settlement law.

Professor Masashi Nakajima, a financial expert familiar with crypto, said that a cryptocurrency that doesn’t have an administrator cannot be seized by a public authority. It is also impossible to technically guarantee a secure execution of the refund. This practice could become the hotbed for money laundering and concealment if not tackled properly.

Written by Bitcoin.com

 

A Look at a Few Exchanges That Use Bitcoin Cash as a Base Currency

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Coinex: The Exchange That Uses Bitcoin Cash as Its Base Currency

A Look at a Few Exchanges That Use Bitcoin Cash as a Base CurrencyMost cryptocurrency exchanges use bitcoin core (BTC) as the base currency that is traded against various other digital assets. At the moment bitcoin cash (BCH) only has three exchanges that use the decentralized cryptocurrency as a base currency and one of them just launched its beta release this past May. At the moment the most popular exchange that offers BCH base currency pairs is Coinex. The firm Viabtc announced the launch of Coinex back in December of 2017 and the trading platform offers BCH pairs with the most popular digital assets in the crypto space.

Viabtc’s chief operating officer, Sara Ouyang, explained that because BCH network fees were so low it prompted the firm to create the markets with bitcoin cash as the base currency.

“The reason we chose [BCH] over [BTC] is that it has much faster transactions with low fees and better performance in terms of usability,” Ouyang detailed at the time.

A Look at a Few Exchanges That Use Bitcoin Cash as a Base Currency
Coinex Bitcoin Cash markets.

Coinex is also available on mobile operating systems like Android and iOS and provides global trading services in nearly 100 countries. Further, Coinex offers HTTPS and two-factor authentication and claims its cold storage funds are held by using a multi-signature strategy.

Panda Exchange Provides Traders With Bitcoin Cash Trading Pairs

Another trading platform that offers BCH pairs is the Panda Exchange — a cryptocurrency exchange that provides bitcoin cash pairs with ETH, ZEN, XRP, LTC, BTG, and others. The Panda Exchange is open to residents in the U.S., South America, Canada, and Portugal. The exchange recently announced that it has added a slew of new pairs and more will be added in the future.

A Look at a Few Exchanges That Use Bitcoin Cash as a Base Currency
The Panda Exchange offers BCH pairs traded against various cryptocurrencies such as LTC, ETH, and XRP.

   The Recently Launched BOA Exchange and Hello Group’s Upcoming Bitcoincash.io Trading Platform

Recently another exchange called BOA Exchange has launched a set of crypto-markets that use bitcoin cash as the base currency. The exchange is very new as the trading platform explains that it recently finished its beta phase this May and is now opening signups to the public.

A Look at a Few Exchanges That Use Bitcoin Cash as a Base Currency
BOA Exchange BCH markets. This platform just recently launched.

Lastly, Bitcoin Cash supporters will soon see another exchange that uses BCH as the base currency from the Cyprus-based company Hello Group. In February the firm announced it had purchased the domain Bitcoincash.io to host its BCH trading platform. When visiting the URL Bitcoincash.io, visitors are greeted by a picture that says ‘Bitcoin Cash — Coming Soon.”

A Look at a Few Exchanges That Use Bitcoin Cash as a Base Currency
The Cyprus-based firm Hello Group is launching an exchange that uses BCH as the base currency. When people visit the website Bitcoincash.io this banner comes up.

The BCH community believes there is a significant need for more of these exchanges in order to decouple the digital asset’s price from BTC. Many of them believe BCH is a perfect choice for a trading platform’s base currency, as its speed and low fees would make deposits and withdrawals much faster and cheaper. For now, BCH traders have Coinex, Panda Exchange, the newly launched BOA Exchange, and the upcoming launch of Hello Group’s BCH trading engine.

Written by Bitcoin.com

 

 

Top Crypto News – 14/06/2018

Crypto Exchange Approved for Regulatory Sandbox License in Bahrain

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Crypto Exchange Received Sandbox License

The Central Bank of Bahrain (CBB) has reportedly granted a regulatory sandbox license to the operator of Palmex, a Dubai-based cryptocurrency exchange. The Dubai International Financial Center (CPI Financial) elaborated on Tuesday:

Palmex, a professional digital asset exchange powered by Arabianchain Technology, has become the first cryptocurrency exchange in the Middle East and North Africa (MENA) to receive a regulatory sandbox licence.

Crypto Exchange Approved for Regulatory Sandbox License in BahrainAccording to its website, the exchange offers “multiple trading pairs including bitcoin and Dubaicoin DBIX, the first decentralized cryptocurrency in the region,” in addition to ETH, LTC, and XRP. Fees are divided into three tiers based on monthly trading volume.

Venture company Arabianchain Technology is also based in Dubai. “Arabianchain is the first public, decentralized and consensus-driven blockchain in the MENA region,” the company claims.

Crypto Exchange Approved for Regulatory Sandbox License in Bahrain

License Effective June 15

The sandbox creates a virtual safe space for businesses to “trial and refine innovative products, services, platforms and business models in a live but controlled environment…giving regulators time to adapt legislation as needed,” CPI Financial explained. “Companies will also be able to apply to list their tokens and coins with Palmex and benefit from the compliance of the exchange.”

Crypto Exchange Approved for Regulatory Sandbox License in Bahrain

According to Arabianchain’s founder and CEO, Mohammed Alsehli, the company “will start with a limited number of select users to test and optimize the process and then expand to the rest.” CPI Financial wrote:

The licence goes into effect on 15 July as part of a rigorous application process that verified its security systems, policies, processes and controls to protect customers. Whilst in the regulatory sandbox, companies are required to adhere to CBB regulations.

The CEO believes that “a significant rise in awareness and adoption [of cryptocurrency] could be expected, driving a huge spike in the number of trades and token-based fundraising across the region while maintaining the safety of the financial system,” CPI Financial conveyed.

Written by Bitcoin.com

 

Dennis Rodman and Potcoin: How Crypto Gatecrashed a Historic Summit

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With all eyes on Singapore this week, was it any surprise crypto would make an appearance?

The historic summit between U.S. President Donald Trump and North Korea’s Supreme Leader Kim Jong Un got the crypto community’s attention – and held it – thanks to Dennis Rodman and the notorious cryptocurrency that funded his travel to Singapore, potcoin.

CoinDesk reported on June 7 that retired basketball star Dennis Rodman was headed to Singapore for the Summit with the help of the marijuana-themed cryptocurrency. As a celebrity who have visited North Korea several times, Rodman’s trip was considered as “a celebrity twist” to the historical geopolitical event.

According to The Washington Post, Rodman was “in discussions with” the team behind potcoin last week to get financial support for the trip. He later officially confirmed the news on Twitter highlighting the fact his trip was sponsored by the group:

In fact, it is not the first time that potcoin has helped Rodman with his travels.

Just last year in June, the former Chicago Bulls star went back North Korea through potcoin’s sponsorship. At the time, the price of cryptocurrency spiked as Rod announced the news on Twitter in a “potcoin” t-shirt and a baseball cap.


Launched in 2014, potcoin claims it is “the first digital currency created to facilitate transactions within the legalized cannabis industry” on its website. By which, it means that it gives marijuana dispensaries and farmers an alternative to other financial institutions like a bank when they trade.

And that leads us to the day when we have Rodman, crying, on CNN from Singapore wearing a “Make America Great Again” hat, and it makes the crypto world look no worse than ever.


Oh yeah, he was also wearing a potcoin shirt.

Good for potcoin?

Shawn Perez, a potcoin spokesman, told The Post that the trip would be a “peace mission,” but many suspected it was purely a trip to promote potcoin’s brand.

ESPN reporter Darren Rovell tweeted that the advertising Rodman garnered for potcoin in the moment was worth $4.1 million.


Though Virginia Heffernan, editor at WIRED, thinks the advertising would only have counterproductive effect. Potcoin is, after all, trying to disrupt payments (a real industry).

2018 jumps the shark?

For most of Twitter users, though, it was just a weird moment that is really, really, really hard to digest.

As it is now, the price of potcoin, which is ranked No. 315 on CoinMarketCap, spiked in the last 24 hours, according to ConMarketCap’s data.

Written by CoinDesk.com

Coinbase’s New Index Fund for Investors Is Now Live

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Coinbase has formally launched a new index fund product aimed at large investors.

Announced Wednesday in a blog post by product lead Rueben Bramanathan, the Coinbase Index Fund is now “open for investments” with a minimum required investment of $250,000.

The fund will give investors access to all of the assets currently listed on Coinbase, which at present include bitcoin, bitcoin cash, ethereum, litecoin and now ethereum classic. The assets will be weighted by their market capitalization, according to the post.

Further, more assets can be added if Coinbase lists them at a future date.

Bramanathan wrote:

“We’ve seen overwhelming interest from investors since we announced the fund earlier this year. At this stage, we have opened the fund to those who wish to invest $250,000 to $20 [million].”

The fund was first announced in March. At the time Coinbase noted that it would offer exposure to any assets listed on GDAX, which is now being deprecated in favor of the firm’s new Coinbase Pro service.

However, the fund is not yet open to everyone – Bramanathan noted that, “At this stage, Coinbase Index Fund is only open to US-resident accredited investors.”

While he said that Coinbase is “working on launching more funds which are accessible to all investors and cover a broader range of digital assets,” no timeline has yet been provided.

Coinbase app image via Pe3k / Shutterstock
Written by CoinDesk.com

 

 

Top Crypto Stories – 13/06/2018

What People Are Saying About Coinbase’s Surprise ETC Listing

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Surprise?

That might sum up the reaction among some members of the crypto community Tuesday when U.S.-based exchange startup Coinbase suddenly announced its plans to list ethereum classic (ETC).

Ranking just inside the top 20 cryptocurrencies, ETC traces its origins to 2016 and the collapse of the DAO, an ethereum-based funding vehicle that fell apart following a code exploit. As such, the network is known by some as “a continuation of the original ethereum blockchain,” a name bestowed after a code change on ethereum reversed losses stemming from the failed project.

Still, it might be the small size of the market that is grabbing most of the attention.

As of the time of writing, ethereum classic is the eighteenth largest cryptocurrency by market capitalization – valued at more than $1.5 billion – according to data from CoinMarketCap, which tracks price developments in the market. However, it’s important to note, it’s one of the largest by volume (ranking in the top five).

But despite that boost from traders, a scan of reactions on Twitter suggests that a number of market observers were taken aback by the listing announcement, which sparked a 25 percent price increase following the revelation.

In one case, the response was pretty blunt:

This observer took criticism to the next level, suggesting that the listing had more to do with spurring user activity, to put it lightly, than anything specifically to do with ETC.

Ripple effect?

Amidst the social conversation, some tried to draw a connection between the ETC listing and the fact that, to date, the exchange hasn’t added support for the cryptocurrency XRP. As XRP is the third-largest crypto by market capitalization, much of the surprise stemmed from the fact that Coinbase would move to list a “lower value” coin.

Yet the lack of a listing is perhaps unsurprising, given past reports. Back in April, Bloomberg reported that distributed ledger startup Ripple tried unsuccessfully to get the token listed on Coinbase.

On the other hand, those supportive of the token and Ripple’s efforts struck optimistic tones as the story spread.

Glass half-full

While much of the discussion today centered around what the listing might mean for ETC in the long-term, others rode the social waves by taking a more humorous approach to their commentary.

For example, several observers tied the development to this week’s summit between U.S. president Donald Trump and North Korean dictator Kim Jong-un.

Still, a (small) portion of people in the crypto community decided to stay positive after the announcement.

Coinbase image via Shutterstock
Written by Coindesk.com

 

South Korean Banking Group to Launch Blockchain-Powered ID Verification Platform

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A group of South Korean commercial banks will launch a blockchain-powered customer ID verification platform in July 2018, local news outlet Korea JoongAng Daily reports today, June 12.

According the report, the Korea Federation of Banks (KFB) will launch their “BankSign” identity verification system to be used in both online computer-based and mobile banking.  According to Korea JoongAng Daily, the move is intended to replace the 20-year old public verification system that is reportedly notorious for its complexity and inefficiency.

Park Chang-ok, a manager at the department of deposit services and payment systems at KFB, explained that banks’ new blockchain application would offer a range of options to verify clients IDs, “not just the public certification system.”

According the report, development of the BankSign initiative was started immediately after the KFB launched a consortium exploring blockchain applications opportunities at the local banking sector in November 2017.

The BankSign platform is based on Nexledger, a private enterprise transaction management tool developed by Samsung’s subsidiary, Samsung SDS.

Last week, Samsung SDS announced the launch of its own enterprise blockchain platform Nexfinance aimed at finance-related businesses.

Written by CoinTelegraph

 

CBDC Could Have “Severely Negative Consequences” for “Bank-Dominated Payments System” – Former FDIC Chair

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Sheila Bair Authors Article Advocating Central Bank-Issued Digital Currency

CBDC Could Have “Severely Negative Consequences” for “Bank-Dominated Payments System” - Former FDIC ChairThe former FDIC chair begins the article by discussing the increasing proliferation of financial crises across major economies, such as the “Europe[an] sovereign debt crisis” and national crises recently felt in “Portugal, Venezuela, Russia, Ukraine, [and] Brazil.”

The article describes “Lack of confidence in [the] banking system” as the principal catalyst for Satoshi Nakamoto’s choice to develop bitcoin, asserting that “He (she, they?) originally intended it as a widely accepted method of payment that could function completely outside of the banking system.” However, Mrs. Bair states that “Unfortunately […], bitcoin has failed miserably as a method of payment” – blaming such on the “extreme volatility [that] has made it popular as a speculative investment and store of value.”

The former FDIC chair advocates that central banks issue their own digital money, describing such as “a radical idea that […] is gaining credibility among an increasing number of mainstream economists and central bankers themselves.” Mrs. Bair describes central bank-issued digital currency as “presumably […] be[ing] as stable as traditional fiat currency, while reducing the risks of financial crises and improving monetary tools.”

Benefits of CBDCs

CBDC Could Have “Severely Negative Consequences” for “Bank-Dominated Payments System” - Former FDIC ChairMrs. Bair asserts that the development and issuance of CBDC could provide greater financial stability in times of economic crisis, stating that “in times of extreme stress, people lose confidence in their banks. So they pull their uninsured money out of the banking system, disrupting the free flow of payments. […] However, suppose consumers could convert their bank deposits into a digital currency that would be issued and backed by the Fed? […] They would no longer need to worry about bank instability.”

The former FDIC chair also states that “the Fed would have much more effective tools for conducting monetary policy to address economic cycles.”

“The Fed now manipulates the money supply through buying and selling securities with a select group of big banks and by paying them interest on the reserves they deposit at the Fed — currently a tidy 1.75%,” Mrs. Bair continued. “When the Fed wants to stimulate the economy — as it did after the crisis — it buys securities from these banks and reduces the rates it pays them on reserves, inducing them to lend the proceeds to the real economy to get a better return. When it wants to raise rates — as it is doing now — it reduces its holdings of securities and increases the rates it pays on reserves. This is a nice deal for the banks, but hasn’t done a whole lot to help the rest of us. The past 10 years are proof positive that current monetary tools are woefully inadequate to stimulate broad-based economic growth. The super rich have gotten a lot richer, while the middle class has struggled.”

CBDCs May Bring “Severely Negative Consequences” for “Current Bank-Dominated Payments System”

CBDC Could Have “Severely Negative Consequences” for “Bank-Dominated Payments System” - Former FDIC ChairThe former FDIC chair emphasizes the creative destruction that a “wholesale shift from bank accounts to CBDC” would have on the “current bank-dominated payments system,” stating that such “could have severely negative consequences for credit availability given banks’ reliance on deposits to funds loans.”

Mrs. Bair asserts that “the costs and inefficiencies in the current payments system would be greatly reduced.” The former FDIC chair claims that consumers would benefit from “no longer need[ing] to maintain checking accounts, with their expensive maintenance and overdraft fees, to effectuate payments,” whilst businesses accepting CBDC “could avoid the interchange fees charged by banks and their card networks – fees that are particularly burdensome to small firms.”

Written by Bitcoin.com

Top Crypto News – 12/06/2018

What Would Happen to Crypto In a Global Market Meltdown?

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Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

A common thought experiment in the crypto community is to ponder how cryptocurrencies would fare in the event of another global financial meltdown.

It is not an idle question. There is a host of troubling developments in the global economy: the threat of a trade war, jitters in Italian debt markets, problems at Deutsche Bank and new emerging market crises in Turkey and Argentina.

Meanwhile, central banks, led by the U.S. Federal Reserve, are tightening or signaling tighter monetary policy. That’s putting a brake on the huge gains that low interest rates and quantitative easing had bestowed on global markets in the eight years since the end of the last crisis.

With this combination of risk factors already in play, there’s always a chance that some unforeseen trigger could set off another terrified rush for the exits among global investors.

What would the impact be on bitcoin and other cryptocurrencies? Would their reputation as independent assets see them benefit from safe-haven inflows? Or would the market-wide reduction in risk appetite spread wide enough that crypto assets get caught up in the selloff?

Opposing scenarios

Some crypto hodlers salivate at the idea of market panic.

They contend that, unlike the 2008-2009 collapse, when Satoshi Nakamoto’s newly launched cryptocurrency was essentially out of sight and unavailable to the hordes seeking a haven from the fiat world’s chaos, bitcoin is now widely recognized as a more versatile alternative to traditional flight-to-safety assets such as gold.

In a crisis, they say, bitcoin could shine – as might other cryptocurrencies designed as alternatives to fiat cash such as monero and zcash. Unaffected by future monetary policy responses, immune from draconian interventions such as the Cypriot bank deposit freeze of 2013, and easily acquired, they could prove their value as digital havens for the digital age in such a moment. Accordingly, the bulls’ argument goes, their prices would surge.

On the other hand, if there’s enough of a market-wide departure from risky investments, it’s hard not to see this sector being swept up in it.

Just as the most extreme gains in crypto prices in the latter part of 2017 were inextricably linked to the rapid “risk on” uptrend seen in stocks, commodities and emerging-market assets, so too a major selloff could easily infect these new markets.

Cryptocurrencies and tokens are perceived by most ordinary investors as high-risk assets – you buy them with money you can afford to lose when you’re feeling upbeat about market prospects. When the mood sours, this class of investment is typically the first to be retrenched as investors scramble to get cash.

At $300 billion, according to Coinmarketcap’s undoubtedly inflated estimates, the market cap of the overall crypto token market is more than three times its value of a year ago (even though it’s down more than half from its peak in early January).

But it’s less than 1 percent of the end-2017 market cap of $54.8 trillion for the S&P Global Broad Market Index, which includes most stocks from 48 countries. If risk-hungry investors are panicking and looking for things to dump – or for that matter if they’re looking for something safe to buy – it won’t take much of their funds to move the crypto markets, one way or another.

Low correlations

Backing the bitcoin bulls’ argument is the fact that correlations between cryptocurrency and mainstream risk assets – the degree to which prices move in tandem with each other – are quite low.

A 90-day correlation matrix compiled by analytics firm Sifr put bitcoin’s correlation with the S&P 500 index of U.S. equities at minus-0.14. That’s a statistically neutral position since 1 represents a perfect positive correlation while -1 is a perfectly negative relationship.

But they say that in a crisis “all correlations go to 1.” The panicked state of the crowd, with investors selling whatever they can offload to cover debts and margin calls, means that everything could go out with the flood.

Intellectually, too, that sort of wholesale downturn would comfortably stand as a logical counterpoint to the conditions seen last year when market valuations reached excessive levels. We cannot separate the flood of money that flew into crypto at the end of the year from the fact that eight years of quantitative easing had driven a “hunt for yield” in once-obscure markets as the return shrank on now pricey mainstream investments such as corporate bonds.

With bond funds paying little more than, say, 2 percent for years, bitcoin looked attractive to mainstream investors. When that artificially-stoked liquidity disappears, the reverse could happen.

Despite all of this, I do believe a global financial crisis could be an important testing moment for crypto assets.

Perhaps there’ll be a two-phase effect. In the immediate aftermath of the panic, there would be a selloff as every market is hit by the liquidity squeeze.

But after things settle, one can imagine that the narrative around bitcoin’s uncorrelated returns and its status as a hedge against government and banking risk would gain more attention.

Just like the mid-2013 surge in bitcoin that accompanied the Cypriot crisis’ lesson that “they can come for your bank account but not for your private keys,” so too a wider financial crunch could spur conversation around bitcoin’s immutable, decentralized qualities and help build the case for buying it.

The wider point here is that, whether it’s as an aligned element that rises and falls in sync with the broader marketplace or as a contrasting alternative to it, cryptocurrencies can’t be viewed in isolation from the rest of the world.

Image via Shutterstock
Written by CoinDesk.com

 

Ethereum Classic Spikes 25% on Coinbase Listing News

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The price of ethereum classic, the cryptocurrency that was forked off the ethereum blockchain in July 2016, surged by 25 percent on Tuesday, following the news that it is being added to Coinbase’s trading options.

The U.S. cryptocurrency exchange announced on Tuesday morning in a blog post that it is has started the engineering work to integrate ethereum classic with its platform and expects the service to be live in the “coming months.”

Data from CoinMarketCap shows that the price of ethereum classic started to jump around 01:30 UTC on Tuesday, after Coinbase first tweeted out the announcement at 01:18. It later surged as high as $16.15 at around 2:00 UTC, reflecting a 25 percent gain in just half an hour.

The news comes soon after Coinbase reiterated in March that it had not made any decisions on adding new assets, following a similar note made in January.

“The internal asset selection committee has been assessing assets using our Digital Asset Framework, but no assets have been recommended to the Coinbase executive team,” the company said at the time. Coinbase has not yet explained what has led to the change of the thinking of its asset selection committee that led to the support for ethereum classic.

Also notably, the decision to add ethereum classic arrives after some in the industry had questioned Coinbase’s asset selection process as “random, if not altogether dubious.”

As previously reported by CoinDesk, the reason for such comments partially stemmed from the fact that Coinbase added support for bitcoin cash, just months after the cryptocurrency was created out of a hard fork from the bitcoin blockchain. However, at that time, the firm had not embraced ethereum classic a year after the cryptocurrency was hard forked off the ethereum network.

Coinbase image via Shutterstock
Written by CoinDesk.com

 

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

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Upbit Paid Users for Reporting Fraud

One of South Korea’s largest cryptocurrency exchanges, the Kakao Corp-backed Upbit, has paid six individuals for reporting fraudulent crypto-related schemes.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe exchange implemented a bounty system in March to reward users for identifying fraudulent schemes related to cryptocurrencies. The system is focused on identifying multi-level, illegal scams posing as cryptocurrencies or initial coin offering (ICO) tokens. “To the original complainant, Upbit pays a reward of 1 million won [~USD$931],” the exchange’s operator Dunamu Inc announced at the time.

Upbit said last week:

Since the implementation of the system, a total of 10 cases have been received and 6 of them have been selected. On June 6, we sent a reward of KRW 1 million with appreciation to the applicants.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes
Lee Seok-woo, the representative of Dunamu Inc (middle), and four out of the six winners.

“We provide reward money to users who have reported fraudulent acts that impersonate [an] ICO to the investigating agency (police, prosecutors) and submit the necessary evidence documents to prove the declaration,” the exchange clarified. While Upbit indicated that proper reporting procedures were not followed “such as the lack of evidence of investigation agency reports,” it decided to pay out regardless, to reward users for participating in the system and “to create a sound cryptocurrency ecosystem.”

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe Kakao Corp-backed Upbit used to command the number one spot in the South Korean market in terms of overall trading volume. However, at the time of this writing, Upbit is the world’s eighth largest crypto exchange with a 24-hour trading volume of $201,594,215, according to Coinmaketcap. It is the second largest exchange in South Korea, after allowing Bithumb to retake the number one spot with $239,054,683 of trading volume over the same time period. Last month, news.Bitcoin.com wrote about the Korean authorities launching an investigation into Upbit.

World-Check in Partnership with Thomson Reuters

In addition to the aforementioned fraud notification system, Upbit has also recently created a system called World-Check. The system is part of a collaboration with Thomson Reuters, a multinational mass media and information firm.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

The system is meant to support transparent cryptocurrency transactions and strengthen the company’s KYC (Know-Your-Customer) program. It aims to be “the trusted and accurate source of risk intelligence made available to help you meet your regulatory obligations, make informed decisions, and help prevent your business from inadvertently being used to launder the proceeds of crime or association with corrupt business practices,” the company described.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesWhen a user joins Upbit, their membership information is checked against the World Check data. If the security risk is determined to be high in relation to crime and terrorism, the registration process is immediately terminated. The system also checks daily for criminal records of members against the World-Check database. The company believes that this will help prevent money laundering and terrorism financing activities using cryptocurrencies.

In an unrelated event, a small South Korean crypto exchange, Coinrail, claimed it was hacked over the weekend. The police are now investigating the case.

Written by Bitcoin.com

 

Top Crypto News – 11/06/2018

CFTC Subpoenas Leading Exchanges for Trading Data

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CFTC Purportedly Conducting Criminal Investigation Into Bitcoin Price Manipulation

CFTC Subpoenas Leading Exchanges for Trading DataLast month, it was reported that the U.S Justice Department had launched a criminal probe into whether the bitcoin and cryptocurrency markets the subject of manipulation and misconduct, citing “four people familiar with the matter.”

According to a report recently published by The Wall Street Journal, again citing “people familiar with the matter,” the CFTC has “open[ed] an investigation into whether traders have colluded to manipulate bitcoin prices.

The report adds that “The CFTC is coordinating with the U.S Justice Department” in its investigations.

CFTC Investigation Spurred by Lack of Trading Data Provided to CME by Exchanges

CFTC Subpoenas Leading Exchanges for Trading DataThe Wall Street Journal claims that the CFTC’s investigation was spurred by a lack of responsiveness to requests from CME that Bitstamp, Coinbase, Itbit, and Kraken to provide trading data back in January. In response to the requests, several exchanges reportedly initially “declined to comply,” before “provid[ing] some data” after CME reduced the request to just several hours of trading activity, rather than a full day. The report adds that the data provided only included information “restricted to “a few market participants.”

The CFTC, the regulatory authority tasked with overseeing CME’s bitcoin futures markets, reportedly subpoenaed the exchanges for the data in response to the dispute. The report describes the “fight over access to bitcoin trading data” as having comprised a significant factor in the CFTC’s decision to launch an investigation into price manipulation in the BTC markets.

Regulated Futures Markets Grants CFTC Oversight of Underlying Spot BTC Markets

CFTC Subpoenas Leading Exchanges for Trading DataThe investigation is legitimated by bitcoin’s designation as a commodity, juridically granting the CFTC jurisdiction over the commodity markets underscoring derivative markets overseen by the regulator. CME spokeswoman, Laurie Bischel, stated: “All participating exchanges are required to share information, including cooperation with inquiries and investigations.”

Jesse Powell, the chief executive officer of Kraken, has criticised the subpoena, stating that the “newly declared oversight” of the CFTC “has the spot exchanges questioning the value and cost of their index participation.” Charles Cascarilla, the chief executive officer of Paxos, the company that operates Itbit, stated: “We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.” As of this writing, Bitstamp and Coinbase are yet to address the alleged subpoenas.

Written by Bitcoin.com

 

The Top 5 Ethereum Dapps By Daily Active Users

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From the mists of ideation, a first wave of ethereum dapps is starting to emerge.

Launched in 2015 with the promise that developers could use its technology as a “secure backbone” for a new kind of software application, ethereum has long held the promise of enabling such innovations, all “without any possibility of downtime, censorship or third-party interference.”

So far, however, this vision has largely fueled an explosion of fundraising through initial coin offerings (ICOs), in which ethereum-based tokens were sold as the native currency for applications that were ostensibly being built, but in many cases have yet to see a real launch.

In other words, there is plenty of fodder for the narrative that while ICOs will welcome your money right now, real, working dapps are always a day away. And yet a few dapps are starting to attract active daily users in the hundreds and thousands.

These dapps have a few things in common. The top five – Idex, ForkDelta, Bancor, CryptoKitties and LocalEthereum – all facilitate trades of crypto assets in one way or another, though they have a range of business models, from exchange to game to market maker.

Successful projects also tend to have a relatively intuitive user experience, something dapps in general struggle with. Michael Foster, co-founder of LocalEthereum, said, “We deliberately designed LocalEthereum to look and feel like an ordinary website.”

Bancor’s director of communications Nate Hindman echoed that sentiment, saying the dapp was “built with simplicity in mind.” And Bryce Bladon, a co-founder of CryptoKitties, attributed that dapp’s success to the fact that it “managed to introduce consumers to the blockchain in a way that was fun, interesting, and accessible.” (He mentioned cat puns as a specific example.)

Contributing to their ease of use, none of these dapps requires the use a native token. Bancor and Aurora Labs – Idex’s parent company – have conducted ICOs, but owning these tokens isn’t required.

For all these dapps’ relative success, it must be said: daily userbases of a few hundred or a few thousand are laughably small compared to those of the biggest centralized apps – Facebook has well over a billion daily active users.

Asked to explain this disparity, Hindman remarked, “Building apps that are not only decentralized but run like popular consumer web apps is no small feat and requires underlying infrastructure that is still in its infancy.”

Bladon said something similar: “centralized solutions are difficult to outperform in terms of convenience. They’re faster, familiar, and entrenched.”

He continued:

“Compared to Amazon Web Services, processing on ethereum is 150 million times more expensive.”

Not that dapp-lovers should despair. That decentralized applications have even modest userbases, Bladon suggested, shows “the incredible value people place on trustless computation.”

And dapps are still in their infancy, after all. “The blockchain world is quickly catching up to its aspirations,” said Hindman, at the same time as consumers are “awakening to the power of decentralization.”

As data breaches and centralized parties’ other lapses pile up, he predicted, users “will flock to decentralized services in droves.”

Until then, below are the top five ethereum dapps by number of daily active users, with data sourced from DappRadar. (Editor’s note: The ranking can be volatile, so this list is based on a snapshot taken Tuesday afternoon.)

1. Idex

Idex had 6,479 users in the 24 hours prior to our snapshot, making it the most-used ethereum dapp in that period.

Idex is a decentralized exchange offered by Aurora, a firm that has developed a series of financial services dapps. The exchange went live in October and experienced rapid growth in January, Aurora CEO Alex Wearn told Craig Cobb’s Trader Cobb Crypto Podcast in May. It offers trades between ether and ERC-20 tokens.

Wearn explained on the podcast that “you’ve got these digital assets that can move in a peer-to-peer fashion,” but added that users of centralized exchanges such as Binance, GDAX and Kraken, have “given control of the cryptocurrency over to the exchange operator.” The practical implications of that decision, he added, are “the risk of hacking and theft.”

Idex, by contrast, uses a “publicly verifiable” ethereum smart contract, Wearn continued. In its current form, however, Idex is not entirely decentralized, as Aurora’s white paper explains. Idex’s centralized server is used at various steps of the process, such as queueing transactions in the order book.  The white paper references a planned “fully decentralized version” of the platform.

2. ForkDelta

ForkDelta had 2,221 users in the 24 hours prior to our snapshot, making it the second most-used ethereum dapp in that period.

Similar to Idex, ForkDelta is a decentralized exchange offering trading in ether and ERC-20 tokens. Arseniy Ivanov started the project in January as a fork EtherDelta, another decentralized exchange. He cited the departure of EtherDelta founder Zack Coburn and “the fact that EtherDelta has strayed from the original spirit of the project.”

As with Idex, ForkDelta’s order book is centralized, although decentralizing that aspect of the exchange, as well as its hosting, is listed on the project’s roadmap. ForkDelta continues to use EtherDelta’s smart contract for now, meaning that fees on the ForkDelta platform still go to EtherDelta.

3. Bancor

Bancor had 560 users in the 24 hours prior to our snapshot, making it the third most-used ethereum dapp in that period.

Hindman disputed that number, however, telling CoinDesk that the daily active userbase is “significantly larger” than what DappRadar shows; he declined to reveal Bancor’s estimate. (DappRadar founder Skirmantas Januskas said that he is in contact with Bancor and “will see what we can do to make sure the data is 100 percent accurate.”)

Bancor is a market maker that allows users to exchange ether and a growing number of ERC-20 tokens – 100 as of this week – but unlike a traditional exchange, it does not match buyers and sellers. Instead, Bancor’s protocol aims to provide liquidity between different ethereum-based assets using “smart tokens,” which Bancor says create a “built-in liquidity mechanism” through smart contracts.

Bancor raised $150 million last year selling the first of these smart tokens, BNT, in an ICO.

4. CryptoKitties

cat, crypto

CryptoKitties had 408 users in the 24 hours prior to our snapshot, making it the fourth most-used ethereum dapp in that period.

CryptoKitties, which spun out of Axiom Zen in March, has arguably attracted more attention than any other dapp: from players, media, investors, imitators, and non-users who felt the effects of CryptoKitties’ popularity due to increased congestion on the ethereum network. According to estimates by Bloxy, CryptoKitties’ daily userbase (measured by distinct senders) has fallen by around 97 percent since its peak in December.

The game allows users to collect, trade and breed unique, non-replicable cats. These are in fact ERC-721 tokens, ethereum-based assets that, according to CryptoKitties co-founder Arthur Camara, could eventually be used to tokenize real-world assets such as art and real estate.

Bladon told CoinDesk that CryptoKitties receives far more users on its site than directly through its smart contract, which is the only source DappRadar references. The fact that only a portion of CryptoKitties players interact with the game through the smart contract itself hints at something larger: CryptoKitties is not as decentralized as the “dapp” label suggests.

As CoinDesk reported in December, “the game is run within a centralized database, and mostly operates from one internet portal – the CryptoKitties website itself.”

5. LocalEthereum

LocalEthereum had 236 users in the 24 hours prior to our snapshot, making it the fifth most-used ethereum dapp in that period.

LocalEthereum facilitates trades of ether between individuals, much as LocalBitcoins did for bitcoin. The similar name is not a coincidence: “People have been asking, ‘is there a LocalEthereum?’ even before we announced ourselves last year,” Foster told CoinDesk.

LocalEthereum functions via an escrow smart contract, which locks up the seller’s ether until the seller certifies that they’ve received the money from the buyer – whether through an in-person cash handoff, a bank transfer, or another method.

In the event of a dispute, the smart contract specifies an arbitrator (for now, only LocalEthereum, but perhaps eventually other reputable parties). The arbitrator can award the ether to one of those two parties, but not to anyone else – for example, themselves.

5 image via Shutterstock
Written by CoinDesk.com

 

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts ‘Naive’

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Before Weirdly Turning, Bitmex Praises BTC’s Deflationary Aspects

In conclusion, Bitmex researchers lukewarmly laud bitcoin core’s merits, arguing how “to many, Bitcoin’s ability to decouple debt from money and thereby result in a deflationary climate without the deflationary debt spiral problem is the point, rather than a bug.” Still, Bitcoin Economics – Deflationary Debt Spiral, published recently by the exchange for its VIPs, refers to those who believe bitcoin “would result in a more prosperous economic system” as being “naive.” Piling on in this manner, they continue, “Bitcoin is a new and unique system, which is likely to cause more economic problems, perhaps unexpected or new ones.”

Bitcoin Economics – Deflationary Debt Spiral, is the final in a three part series by the Hong Kong-based Bitcoin Mercantile Exchange (Bitmex). Hot shot, risk enticed futures traders are emboldened by the exchange’s shorting ability and 100x leveraged contracts. Contracts can only be purchased and settled in bitcoin core (BTC), all without the bother of holding actual coins. Bitcoin cash, bitcoin core, ripple, ether, litecoin, cardano round out possible contract choices.

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

The report was initially released by a cranky Twitter polemicist who claimed it to be an exclusive get, designed for Bitmex’s VIPs. Days later, the exchange would publish it on their site for all to see. The report’s focus was to “examine the deflationary nature of Bitcoin and consider why this deflation may be necessary due to some of Bitcoin’s weaknesses.”

Deflation, as a matter of course, occurs when the value of money increases. In the modern West, at least, this concept has largely been only theoretically known. And then crypto. And then bitcoin. Cursory surveys, and perhaps the reader’s own experience, revealed during 2017 the tension many bitcoiners faced. Used to government tickets eventually and methodically losing value through inflation, a bargain cut between court economists and the first to receive newly printed paper meant every incentive in the average person’s experience pointed to spending. Spend those tickets before they lose more value.

Fundamentally Different

The opposite was evident for most of last year. And this third report by Bitmex takes into consideration long held beliefs about money in this respect. “Critics have argued that history has taught us that a finite monetary supply can be a poor economic policy, resulting in or exacerbating, economic crashes. Either because people are unwilling to spend appreciating money or because the real value of debt increases, resulting in a highly indebted economy. Bitcoin proponents are often called ‘economically naive,’ for failing to have learnt these economic lessons of the past,” researchers explain.

Bitmex believes economics, when it comes to bitcoin core, are “fundamentally different” from anything preceding. “There may be unique characteristics about Bitcoin, which make it more suited to a deflationary policy,” they argue. “Alternatively, limitations or weaknesses in Bitcoin could exist, which mean that too much inflation could have negative consequences not applicable to traditional forms of money.” Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

Deflation’s bad rap in the United States, for example, can be attributed to Irving Fisher’s appraisal of causes and exacerbation of the Great Depression of 1929. And the Bitmex part three meditation presents his arguments well as a chain of consequences where hoarding, or as crypto enthusiasts understand, hodling, only served to severely worsen the problem, according to Fisher. Yet, “maybe Fisher’s view on inflation was correct for the economy in the 20th century, however by 2150 technology may have fundamentally changed to such an extent that another inflation policy may be more appropriate for society,” they contend.

Turning from mere description, Bitmex researchers hit upon a rather novel concept: bitcoin is not a debt based currency, the kind government paper all over the world is. That is a fundamental difference, and it follows economies would behave differently should something like bitcoin core take hold. In a bitcoin based, deflationary economy, an economic downturn’s “impact of increases in the real value of debt could be less significant than one may think. This could make the deflationary debt spiral argument less relevant in a Bitcoin based economy,” they note.

A Cynical, Dismissive Way to View Bitcoin’s Potential

Given BTC’s deflationary aspects, its being so fundamentally different, and how traditional economic theory is at a loss to grapple with it, Bitmex would seem to hold the coin in high esteem. No, not really. Not at all, in fact. Very near the report’s end, VIPs are given the candid, unvarnished truth as the exchange sees it. Bitcoin core is a speculative plaything, an interesting project to perhaps make some interim profit if one is positioned well.

“Much of this discussion focuses on the economics of Bitcoin, assuming Bitcoin is widely adopted, such that the inflationary dynamics have an impact on society,” the report tantelizes. Curiously, the report doesn’t account for BTC’s notorious problems as a functioning currency in terms of block size, mempool congestion, and transaction fees – a debate lived out along side BTC by bitcoin cash (BCH). Researchers do not believe BTC will be widely adopted.

Bitmex to VIPs: Bitcoin Won’t Replace Fiat, Just a ‘Useful Niche,’ Enthusiasts 'Naive'

“In our view [wide BTC adoption] is an unlikely outcome and perhaps should be considered even more unlikely by Bitcoin’s critics. In our view, Bitcoin may satisfy a useful niche, that of making both censorship resistant and digital payments, but it’s unlikely to become the main currency in the economy. Therefore the debate about Bitcoin’s deflationary nature should be considered as largely irrelevant anyway. Hence, it is therefore somewhat odd that some critics use this as an argument against Bitcoin,” thereby negating almost the entirety of the previous report findings.

The last thought left with readers is a cynical, just-in-case principle: “if one thinks these economic problems associated with deflation have a remote chance of being relevant, like the critics indirectly imply, that would mean Bitcoin has a significant chance of becoming widely adopted and hugely successful. In that case, perhaps the sensible thing to do is buy and ‘HODL’.”

Written by Bitcoin.com

 

Top Crypto News – 08/06/2018

NYDFS Chief Defends State Regulator’s Crypto Approach

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New York Department of Financial Services superintendent Maria Vullo defended her office’s approach to regulating cryptocurrencies on Thursday.

Speaking at the Council on Foreign Relation’s “Legal Tender? The Regulation of Cryptocurrencies” panel in New York on Wednesday, Vullo said that her view is “regulation in this space, just like any space where you have money transmission, [is necessary],” making a point she often revisited during the discussion.

While some state and federal regulars are taking time to create rules for the industry, “it certainly hasn’t taken New York long to establish a framework” for regulating cryptocurrencies, Vullo said in her opening statement, referring to the state’s controversial BitLicense.

The role of regulation in the cryptocurrency space was a contentious topic, with Blockchain president and chief legal officer Marco Santori claiming regulators should ease up on the over-regulation.

That said, he did acknowledge that “a lot of token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together.”

In particular, he argued that New York’s laws “have been an abject failure.”

However, Vullo derided developers who claim that their work should allow them to launch token sales free of disclosure or other requirements, saying:

“I think regulators absolutely need to be in the space, I know they’re saying ‘we’re innovative, we’re startups, we need to be left alone and put in a sandbox.’ Toddlers play in the sandbox. Adults play by the rules.”

In another rapid exchange, CNN investigative journalist and panelist Jose Pagliery expressed concern about the idea that “code is law,” saying that while this may be true, coders can modify certain protocols:

“If you’re the executive at a bank, you have people to answer to … if you’re one of a dozen coders around the world whose name no one knows and you’re the one at the controls changing how this cryptocurrency works … we have to figure out how these people are held accountable.”

Santori disagreed with this premise, saying “that is not only a bad question, you should feel bad for asking it.”

In turn, Vullo said: “I didn’t know this was about feelings.”

Seema Mody, Jose Pagliery, Marco Santori and Maria Vullo image by Nikhilesh De for CoinDesk
Written by CoinDesk.com

 

Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities Laws

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In recent regulatory news, the United States Commodity Futures Trading Commission (CFTC) has rejected a Freedom of Information Act (FOIA) request regarding the subpoenas recently received by Bitfinex and Tether; the United States Securities and Exchanges (SEC) Chairman, Jay Clayton, has indicated that the regulator will not alter existing securities legislation to cater to cryptocurrencies. Maria Vullo, the Superintendent of Financial Services for the State of New York, has praised the regulatory efforts made by the CFTC and SEC in the arena of initial coin offerings, and the SEC has announced Valerie Szczepanik as the commission’s new Senior Advisor for Digital Assets and Innovation.

CFTC Rejects Freedom of Information Request

Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities LawsIt has been reported by media that the U.S Commodity Futures Trading Commission has rejected a request under the Freedom of Information Act for access to the subpoenas delivered to Bitfinex and Tether on the 6th of December.

The FOIA request, dated June 5th, requested “subpoenas issued to Ifinex inc. also known as Bitfinex and its subsidiary companies, as well as subpoenas issued Tether Limited and its subsidiary companies.”

The anonymous individual who submitted the request claims that the CFTC responded stating that it had discovered “thousands of responsive records, all of which are exempt from the FOIA’s disclosure requirement,” adding that “Some records are exempt from disclosure under FOIA Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), because disclosure of that material could reasonably be expected to interfere with the conduct of the Commission’s law enforcement activities.”

The CFTC also reportely stated that “Some records were obtained on the condition that the agency keep the source of the information confidential. Those records are exempt from disclosure under FOIA Exemption 7(0), 5 U.S.C. § 552(b)(7)(D). That exemption is intended to ensure that “confidential sources are not lost because of retaliation against the sources for past disclosures or because of the sources’ fear of future disclosures.”

SEC Will Not Modify Securities Regulations to Cater to Cryptocurrencies

Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities LawsIn a recent interview with CNBC, the chairman of the U.S Securities and Exchange Commission, Jay Clayton, firmly rejected the suggestion of modifying existing securities legislation in order to adapt regulations to cryptocurrencies. Mr. Clayton stated “We are not going to do any violence to the traditional definition of a security that has worked for a long time. We’ve been doing this a long time, there’s no need to change the definition.”

The SEC chairman also sought to clarify the regulator’s jurisdiction regarding virtual currencies. “Crypto-currencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin. That type of currency is not a security. A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’ that is a security and we regulate that. We regulate the offering of that security and regulate the trading of that security.”

New York Officials Praise U.S. Authorities for ICO Regulations

Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities LawsAt a recent event organized by the Council on Foreign Relations titled “Legal Tender? The Regulation of Cryptocurrencies,” Maria Vullo, the Superintendent of Financial Services for the State of New York, praised the efforts of U.S authorities to regulate initial coin offerings (ICOs).

Mrs. Vullo stated “I think the SEC has done the best job possible in its efforts to regulate token sales,” adding, “in many ways, this is no different than other types of banking-related services where you have the state regulators, you have the public companies that are also regulated by the SEC and the CFTC.”

Mrs. Vullo added “I think a lot of these token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together.”

Valerie Szczepanik Named SEC’s Senior Advisor for Digital Assets

Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities LawsThe SEC has announced Valerie Szczepanik as the regulator’s new Senior Advisor for Digital Assets, and Associate Director of the Division of Corporation Finance. Mrs. Szczepanik has worked with the SEC since 1997, most recently serving as an Assistant Director in the Division of Enforcement’s Cyber Unit.

Chairman Jay Clayton stated “Valerie’s thought leadership in this area is recognized both within the Commission and across financial regulators in the United States and abroad. With her demonstrated skill, experience, and keen awareness of the importance of fostering innovation while ensuring investor protection, Val is the right person to coordinate our efforts in this dynamic area that has both promise and risk.”

Ms. Szczepanik stated “I am excited to take on this new role in support of the SEC’s efforts to address digital assets and innovation as it carries out its mission to facilitate capital formation, promote fair, orderly, and efficient markets, and protect investors, particularly Main Street investors. I look forward to working closely with staff across the agency, our regulatory partners, and the public as we provide a coordinated and strategic response to developments.”

Written by Bitcoin.com

Crypto Auction: $5.6 Million Andy Warhol Art to be Sold via Ethereum Blockchain

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From bond issuances to educational certificates, blockchain technology is increasingly finding new use-cases every day. Stepping aside from its use in financial and industrial sectors, the ethereum blockchain will be utilized in June 2018 to facilitate the auction of Andy Warhol’s 1980 work 14 Small Electric Chairs for cryptocurrencies.

The auction will be carried out by Dadiani Fine Art in London’s Mayfair district, in partnership with blockchain platform Maecenas Fine Art. Overall, 49 percent of Warhol’s works will be up available for sale on June 20, and the auction house will accept bitcoin and ethereum as payment.

Regarding price, the piece is valued at 732 BTC or $5.6 million at the time of writing, and would undoubtedly change as per market conditions on the day of the auction. Reportedly, the reserve price is 25 BTC or $4 million. The auction house strictly requires potential buyers to comply with local regulations.

While will not be the first time an art piece is bought using cryptocurrency, it is thought to be the most expensive and high most high profile. In January 2018,  the Art Stage Singapore witnessed the sale of four paintings in exchange of cryptocurrencies.

The founder of Dadiani Syndicate, Eleesa Dadiani, explained the development:

“We aim to render the future of fine art investments to global reach. The cryptocurrency will broaden the market, bringing a new type of buyer to art and luxury.”

Dadiani fancies herself as the “Queen of Crypto,” and earlier told The Times that the “world’s wealthy are looking for new ways to invest and the millionaire is changing.” Echoing her thoughts is Maecenas Chief Executive, Marcelo García Casil, who believes the sale “would help transform the art market.”

“We’re making history. This Warhol is the first artwork of many more to come,” Casil added.

The auction will be conducted on the Ethereum blockchain, and a smart contract will determine the final price for Warhol’s painting.

While whispers have previously been heard in the art world about blockchain making an impact in their sector, not much of a fruition has been witnessed yet. Undoubtedly, blockchain’s immutable properties can be of great help in the art domain – an industry mired with fakes and unregulated pricing.

At a recent convention in London, the co-founder of blockchain identify company Codex Protocol, Jess Houlgrave, stated that over 40 percent of all art pieces on the market are fraudulent. In this regard, blockchain’s benefits immediately come to mind – specifically the maintenance of traceable records on a public database that art collectors can view to verify their pieces.

Andy Warhol art image from Shutterstock.
Written by CCN.com

 

FOAM and the Dream to Map the World on Ethereum

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Even Pokemon Go might need a blockchain.

While an augmented reality mobile app used to collect funny-looking, digital critters might sound like a silly (or useless) service to re-architect with blockchain, the developers at ethereum startup FOAM make a compelling case.

“The problem is that people lie about their location,” said Ryan John King, the co-founder and CEO of FOAM. Using a range of tutorials across the web, a tech-savvy Pokemon Go player could easily trick the game into thinking they’re in Hong Kong, catching all the unique Pokemon there when really they’re sitting in their apartment in Brooklyn, New York, he said.

That’ll be news to many since most people use GPS (the Global Positioning System) flawlessly on a daily basis.

King told CoinDesk:

“People think location is a solved problem.”

But it goes beyond the fact that shrewd Pokemon Go users could manipulate the system; King believes today’s GPS system, in its centralized form provided by the U.S. government, is insecure and prone to failure.

As such, FOAM developers want to build a technology that mirrors GPS but is instead an open technology that anyone can contribute to. And to do this, the team needs a particularly resilient map of the entire world, which they plan to devise with the help of ethereum smart contracts.

During Ethereal, an artsy ethereum conference in New York City in May, the FOAM team demoed their beta product, Spatial Index, which the website calls “a cross between a Bloomberg trading terminal and Google Maps.” The map shows all the locations of radio beacons deployed by users, which are represented as smart contracts on the Rinkeby testnet, a copy of the ethereum blockchain used for testing purposes.

And with that, FOAM then has joined the likes of Golem and Augur as a project arousing excitement in the community for its unique use of the ethereum blockchain.

Coinbase engineer Jacob Horne is so enthusiastic he called the FOAM product “the base layer for entire new economies.” And ConsenSys developer Simon de la Rouviere said that re-reading the whitepaper “just blows my mind again.”

Games and beyond

The secret behind FOAM’s work is the company’s “proof of location,” a cryptographic method for proving that a user has actually been at a certain location.

This technique will be used to build a secure location-based collection game, something that mixes the gameplay of Pokemon Go with that of CryptoKitties, the popular ethereum-based application for buying, trading and breeding digital cats – and where no one can cheat.

Speaking to this, King said, “We need something open source and horizontal and for anyone to plug into. With FOAM, you can build an app where you unlock a CryptoKitty only when you visit a particular location.”

And this idea is tantalizing to many, including Matt Condon, lead maintainer of ethereum library OpenZeppelin, who tweeted:

“I’m so, so excited for tokenized assets plus a proof-of-location protocol like FOAM. The real Pokemon Go will be possible.”

And while FOAM is starting with games, the team thinks the technology has potential far beyond this use case.

For instance, King believes the technology could be beneficial for supply chain management as well. Whether for food or jewelry, developers and entrepreneurs are looking to disrupt the global system of tracking consumer goods throughout its life cycle with blockchains.

As such, FOAM has begun working with ethereum-based supply chain startup, Viant, which recently demoed its product in tracking tuna from the waters of Fiji to the plates of Ethereal conference goers.

Technology and tokens

So how will all this work in practice? With low power wide area networks (LPWAN), a new type of emerging network used in many internet-of-things devices.

LPWAN technology, which costs between $10 and $30, allows anyone to contribute to FOAM’s map, beaming location information to the ethereum blockchain. And a significant number of people have already begun participating, although it’s far from covering the whole world just yet. But the Spatial Index beta does show that the idea works in practice.

“Deploying a LPWAN, just like a blockchain, is permissionless,” the FOAM blog post explaining the Spatial Index says.

Still, decentralizing location data has been on the minds of many for some time.

As such, FOAM believes its key differentiator will be its crypto token – to be released through a token sale later this summer. To King, the token will incentivize people to deploy LPWAN and contribute location data to its service, moving existing location protocols, which have not succeeded in attracting many users, forward.

According to FOAM co-founder and CTO Kristoffer Josefsson, though, the product is still quite far from the team’s grand vision. So far, the platform is up and running on the ethereum testnet, and the team is stress-testing the radio technology in an effort to come up with the final specification.

Once that’s done, they’ll run the token sale, and then push FOAM to the ethereum mainnet.

King told CoinDesk:

“Then, anyone can be a cartographer and help come up with a consensus-driven map of the world.”

Featured image via CoinDesk
Written by CoinDesk.com