Top Crypto News -03/08/2018

UBS: Bitcoin Is Too ‘Unstable and Limited’ to Function as Money


Investment bank UBS thinks bitcoin is neither money nor a viable asset class – not yet at least.

The Switzerland-based company’s assessment was featured in a research report on the world’s largest crypto by market capitalization, which was circulated to clients and released on Thursday.

Published by UBS strategists, the report concludes that bitcoin “falls short of criteria that need to be satisfied to be considered money.” It explains,

“Fixed supply and unusual demand dynamics make the system susceptible to high price volatility, in turn making it difficult for bitcoin to step into the role of money or to be a viable new asset class.”

However, the authors don’t rule out the possibility that bitcoin could one day become these things.

They argue that if bitcoin can achieve scalability and regulatory support, it could one day become “a viable payment mechanism and/or a legitimate asset class in which even the most conservative and traditional investors can participate.”

Likewise, they note their plans to “keep on top of these developments,” as “many” see promise in cryptocurrency’s underlying blockchain technology.

According to the report, the research was the banking giant’s answer to its investors, who are becoming increasingly interested in the cryptocurrency space.

“We have received many questions on the subject, which we hope to address in this educational piece,” the authors wrote in the publication.

The authors’ findings were based on comparisons of bitcoin with “macro variables and its performance against various asset classes.” They frequently draw parallels between bitcoin and online payments provider PayPal, and conclude that bitcoin “diffusion” could follow trends in online payments.

This is not the first time UBS has expressed a cautious view on cryptocurrency. In 2017, it declared cryptocurrencies a “speculative bubble” in a report due to sharp rises in price at the time. Nonetheless, the bank has consistently been bullish on blockchain, and advised investors in the same report that “blockchain is likely to have a significant impact” on a variety of industries.

UBS image via Shutterstock
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SBI Plans Derivatives Platform, Huobi Eyes 30% Korean Market, Thai Four-Crypto ATM Unveiled


SBI Plans Derivatives Platform

SBI Plans Derivatives Platform, Huobi Eyes 30% Korean Market, Thai Four-Crypto ATM UnveiledSBI Crypto Investment, a subsidiary of Japanese financial services group SBI Holdings, has acquired a 12% stake in North Carolina-based Clear Markets, Nikkei reported Tuesday.

While the acquisition price was not disclosed, the news outlet estimates that the stake “is likely worth about 1 billion yen ($9 million),” elaborating:

Although digital currencies are more volatile than other asset classes, a derivatives market for them that can hedge against risk remains undeveloped. SBI Crypto therefore wants to build a platform that will allow institutional investors to smoothly trade these instruments.

Last month, SBI Virtual Currencies, the crypto exchange unit of SBI Holdings, opened its Vtrade service to the public following a limited launch in June. The exchange currently supports XRP, BCH, and BTC, but plans to add ETH in the near future.

Thai Multi-Crypto ATM

SBI Plans Derivatives Platform, Huobi Eyes 30% Korean Market, Thai Four-Crypto ATM UnveiledThai cryptocurrency exchange Coin Asset unveiled its crypto ATM at the Hybrid Summit on July 28 and 29, according to Prachachat Turakij newspaper.

CEO Sivanus Yamdee explained that the ATM allows customers to purchase and sell BTC, ETH, LTC, and BCH in amounts as low as 100 baht (~US$3). The company plans to add more coins in the future based on demand from customers. The ATM also allows withdrawals in Thai baht.

The machine has a large touch screen and prints out a receipt after each transaction.

Coin Asset has reportedly applied for a license with Thai Securities and Exchange Commission; the agency began accepting applications last week.

Huobi Plans to Achieve 30% Korean Market Share

SBI Plans Derivatives Platform, Huobi Eyes 30% Korean Market, Thai Four-Crypto ATM UnveiledChinese exchange Huobi is planning to aggressively pursue the Korean market, according to Asia Economic news outlet. The exchange launched its trading platform in Korea in March.

At the Huobi Carnival 2018 event on August 2 in Seoul, Kim Young-chul, head of the Strategic Planning Division of Huobi Korea, announced the company’s long-term strategy. He said:

The number of members has grown rapidly to 200,000 members within two months after the opening of the virtual currency exchange…We aim to achieve 30% market share in the next year.

In addition, Kim revealed that Huobi Korea will conduct various blockchain-based businesses alongside its exchange business. It will also actively recruit talented people. In February, Huobi Korea announced that it was looking for an “Innovation Business Team Leader,” a position with a minimum annual salary of 100 million won (~$88,596). “This policy will continue…We will hire more talented people in the industry,” Kim detailed.

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Philippine SEC Approves Draft Rules for ICOs and Crypto


All Entities Embarking on ICOs to Register With the SEC First

In February, reported that the Philippine SEC was developing a regulatory framework to govern cryptocurrency transactions. At the time, the financial regulator emphasized the need for legislation focused on ICOs in particular. SEC Chairman Emilio Aquino told reporters on August 2, in Manila, regulations will be set for the sale of tokens or cryptocurrencies issued by companies for the purpose of raising funds, the news wire reported.

Philippine SEC Approves Draft Rules for ICOs and Crypto

The SEC stated 12 points in the proposed rules released on August 2. “Under the draft rules, the tokens issued by the startups or companies conducting the ICO may follow the nature of a security under Section 3.1 of the Securities Regulation Code, and therefore, these should be registered with the Commission and necessary disclosures need to be made for the protection of the investing public.” The SEC press release mentioned.

Study of the white papers of various ICOs that have been conducted within the Philippines shows that the proponents of such ICOs claim that the tokens being issued are not securities and are therefore not under the jurisdiction of the SEC, the regulator said.  “Allowing this practice is proven dangerous to the investing public who are left with no clear recourse once the said ICOs are proven to be scams. Therefore, the SEC will put the burden of proving that the tokens issued through an ICO in the hands of the proponents by presuming that the tokens are securities unless proven otherwise,” the SEC stated in a press release. “The proposed rules are benchmarked from the rules in various jurisdictions and markets,” it concluded.

“The bottom line is we are looking at whether we would allow retail investors to participate,” Emilio Aquino told reporters on July 30. He also said the SEC requires all entities embarking on ICOs to register with the SEC first, the Philippine Star reported.

Aquino, who was appointed in June, is facing a new regulatory environment with the proliferation of cryptocurrencies, the newspaper outlined. But as former commissioner, he has been at the forefront of the SEC’s crackdown on investment scams. Aquino said the principle of scamming always involves the promise of investment returns that are too good to be true. In tightening the rules on ICOs, the SEC determined that cryptocurrencies are securities because they include an investment contract whereby a person invests his money and is led to expect profits.

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Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

Follow us on Twitter:

Visit our website:

Email us:



Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

Follow us on Twitter:

Visit our website:

Email us:


Top Crypto News – 01/08/2018

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish


Digital Asset Prices Turn Bearish as the Entire Cryptocurrency Economy Loses $25 Billion USD

Markets Update: Cryptocurrency Price Trends Turn from Bullish to BearishBearish sentiment is starting to haunt cryptocurrency markets once again as many digital assets saw prices tumble today. Bitcoin Core (BTC)prices dropped to a low of $7,503 on July 31 as the currency’s trade volume had started to drift a bit lower after the price hovered around $8,125 the day prior. A large portion of other cryptocurrency markets followed suit with BTC as the top ten virtual currencies are seeing losses across the board of course except for tether (USDT).

Ethereum (ETH) continues to hold the second highest market valuation with a market capitalization that’s around $42.28Bn. One ETH is being traded for $418 and the market is down 7.6 percent today. ETH markets are followed by ripple (XRP) which is down 2.8 percent over the last 24-hours as one XRP is trading for $0.42 cents. Lastly, the fifth highest market capitalization held by EOS is also down 6.6 percent and the currency is trading at $7.13 per coin.

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish

Bitcoin Cash Market Action

This Tuesday bitcoin cash (BCH) markets are seeing losses as well as BCH is down 8 percent over the last 24-hours. Bitcoin cash markets are also down 13.2 percent for the last seven days. One BCH is trading for $741, and the decentralized cryptocurrency has a market valuation of around $12.8Bn. The last 24 hours show BCH trade volumes are around $432Mn at the time of publication. The top exchanges swapping the most BCH today include Coinex ($106.53Mn), Huobi Pro ($69.38Mn), Okex ($64.81Mn), Binance ($46.80Mn) and Hitbtc ($34.79Mn).

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish

The top currency traded with BCH on July 31 is tether (USDT) with 55.2 percent of swaps. This is followed by BTC (28.5%), USD (7.6%), QC (2.8), ETH (2.4%) and the KRW (1.2%). Bitcoin cash holds the fifth highest volume over the past 24-hours among all 1,600+ other cryptocurrencies.

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish

BCH/USD Technical Indicators

Looking at the daily and 4-hour charts on Bitfinex and Bitstamp shows bears have grabbed the reins and still have a good portion of control. RSI levels are screaming oversold conditions (33), while the MACd has swooped down to -85. The SMA 100 is far higher now above the longer-term 200 SMA trendline which means BCH bulls may lose a bit more grip over the short term. Many traders can see looking at charts that the price was rolling sideways for close to three days and many were convinced of a bull flag after the inverse head & shoulders. But just before the dip sell orders on popular exchanges worldwide began stacking up. Looking at order books from the current vantage point BCH bulls have some high walls up until $775 but if they can manage to break that resistance we could return to previous levels. On the back side there’s solid support between now and $710 but unfortunately, books are thinner until $650.

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish   The Verdict: Flat Volumes and Bearish Sentiment Brings Market Skepticism

Overall skeptics and bearish cheerleaders are hoping for some stronger dips and they just may get them. Volumes across the board for many cryptocurrencies has been getting flatter as each day passes. Traders and enthusiasts are now unsure the upcoming ETF decision will pull prices up until then for two reasons: One the Winklevoss Twins fund was denied again, putting a black cloud over positive vibes toward the Cboe ETF, and secondly everyone is unsure exactly when the Securities and Exchange Commission (SEC) will make their ultimate decision. This week the current market sentiment, and our price verdict, point to far more skepticism and shade towards bullish prices returning soon.

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One Year Later, A Wave of Apps Is Emerging on Bitcoin Cash


Happy birthday, bitcoin cash.

Tuesday marks the one year anniversary of the first block on the crypto protocol that split from the bitcoin network, now the fourth largest by total value, after a years-long disagreement about the course the cryptocurrency should take.

For supporters, the main goal for the competing protocol was increasing the block size to allow more transactions, and in turn more users, all in an effort to make cryptocurrency competitive with more traditional payment rails. But whether or not that plan would work was very unclear, if not highly criticized.

Yet, over the course of the last few months, around the same time developers raised its block size parameter from 8 MB to 32 MB (bitcoin’s limit is ~1 MB), bitcoin cash has seen an influx of new projects, including social media and tipping methods, taking advantage of its blockchain.

And since many of bitcoin’s most active developers were adamantly against the tweaks bitcoin cash stood for, the developers behind the alternative protocol see these apps as proof their offering is competitive.

Looking through the applications that have sprung up, it’s clear that those drawn to bitcoin cash are trying to carve out a unique role for the cryptocurrency – one that aligns with the initial value proposition touted.

Many of the applications target users with cheaper, faster payments, like Blockpress, a social media platform, and Centbee, a wallet that uniquely integrates a user’s phone list.

But there’s also some work being done to make bitcoin cash a more complex blockchain, able to handle smart contracts and token launches.

“The tremendous accomplishments that the bitcoin cash community has managed to garner in a year of existence with a new ticker, wallets and an all-around ecosystem has been phenomenal, and we hope to continue and increase on this trajectory,” Eli Afram, founder of Bitcoin Cash Australia, an advocacy group for the software, told CoinDesk.

He added:

“There’s a lot happening. We truly have an app explosion in full effect.”

Space and fees

For many app developers, the lure to bitcoin cash is all about the protocol’s unique selling proposition – basically, more space.

Take for instance, a social media platform resembling Twitter, where users can post short messages that get stored on the bitcoin cash blockchain never to be erased. Since bitcoin cash allows for more data to be stored in each transaction, supporters argue bitcoin isn’t capable of supporting an app like

“Many of these apps cannot work on the bitcoin network, simply because of certain limiting changes that have been made to the codebase. For example, the OP_RETURN function on bitcoin cannot take the same size payload as bitcoin cash, meaning an app like Memo would have a restrictive message size limit,” Afram explained.

On top of that, more space within blocks also means reduced fees for users sending transactions.

For GitCash, which launched just last month, this is integral since it allows users to tip – no matter how small the amount – developers for their work on Github. The project emphasizes that bitcoin cash’s model allows fees to stay low even if usage increase dramatically.

And for developers that work on open-source projects generally on a volunteer basis, this app will likely be a welcome development.

Yet, the timing for these apps that focus on fees could be off.

Many of these developers compare the fees on bitcoin cash to those of bitcoin during the latter’s most popular time period, whereby fees eclipsed $20 per transaction. But right now, bitcoin fees are rather low – sometimes even lower than those on bitcoin cash today.

Still, supporters say it’s still worth it to build on bitcoin cash since it’s future-proofed, meaning ready for a day when usage of the protocols picks up again.

Alejandro de la Torre, vice president of business operations at, a mining and wallet provider focusing on the cryptocurrency, told CoinDesk:

“We think these community-driven networks can be very effective at moving the needle in the adoption of bitcoin cash as a medium-of-exchange, which is the primary reason it was forked and developed.”

Scalability concerns

But even while all this innovation happens, there’s a big downside to increasing the amount of data kept on a blockchain – namely, it could make it much harder for users to run the underlying infrastructure that makes bitcoin cash tick.

That’s why in bitcoin, many developers are heads down working on the lightning network, an in-progress layer for pushing transactions off-chain.

Despite these alternatives, bitcoin cash supporters think raising the block size is a better and easier solution.

“[Bitcoin cash’s] last hard fork increased the block-size to 32 MB, virtually eliminating the risk for any network congestion due to scaling and paved the way for a low-cost transaction super-highway,” de la Torre said.

He believes that by making that one small change, bitcoin cash will avoid scaling problems other blockchains have faced.

Referring to the crypto cat app that went viral and caused high fees and transaction backlogs late last year, de la Torre said: “I don’t think we’ll see the bitcoin cash network get clogged by CryptoKitties anytime soon.”

And for de la Torre, the fact that there’s so much space within bitcoin cash means that plenty of other long-heralded use cases for cryptocurrency might finally see some pickup.

“In countries such as Venezuela where monetary inflation is estimated above 40,000 percent, the utility of this new block space to open up fast, low-cost transactions as an alternative payment system to local fiat has been more than salient,” de la Torre added.

Yet, that hasn’t necessarily happened in practice so far – not for bitcoin cash, which only sees a fraction of the transactions the main bitcoin network sees and is worth about a tenth of bitcoin by market cap, but also not for bitcoin either.

The ‘wormhole’

And not only are developers thinking about high-value payments use cases, but the use case that garnered incredible attention last year – the initial coin offering (ICO) – is also being considered for bitcoin cash as well.

Pointing to a long-standing upgrade proposed by Bitcoin Unlimited developer Andrew Stone, Afram told CoinDesk: “There are teams racing to produce a token protocol that will enable countless new use cases, which I’m very much looking forward to.”

And a couple weeks ago, cryptocurrency mining giant Bitmain released a proposal for adding a token mechanism to bitcoin cash, perhaps eerily dubbed “Wormhole.”

The idea with behind these proposals is to make it possible to spin up new tokens on bitcoin cash.

But just as ICOs broadly have taken vast amounts of criticism, the idea is sparking controversyamong bitcoin cash users and developers too. Some have argued that the birth of tokens on the network will poorly impact the protocol and even worse, could introduce vulnerabilities that could put users at risk.

Still, that isn’t stopping several developers from trying to implement the upgrade into bitcoin cash’s next hard fork, coming in the fall.

As such, crypto tokens could be the next step towards differentiating bitcoin cash from its rival, bitcoin, and adding features that allow it to compete with even more protocols.

Birthday candle image via Shutterstock


South Korea Plans to End Major Tax Benefits for Bitcoin Exchanges


Stripping Away Tax Benefits

The South Korean government has announced its proposed Revised Tax Law 2018. In the official statement published Monday, the government wrote, “from next year, virtual currency handling businesses will be excluded from the industries eligible for the tax reduction for SMEs [small and medium-sized enterprises].”

South Korea Plans to End Major Tax Benefits for Bitcoin Exchanges
The South Korean government announcing 2018 tax amendments.

News1 explained that crypto exchanges “have been considered as venture companies or small and medium-sized businesses for tax purposes until now,” allowing them to benefit from considerable income tax deduction. Citing other favorable tax treatments such as depreciation of assets acquired during the first four years, the publication elaborated:

Under the current tax exemption rules, income tax and corporation tax are reduced by 50% to 100% for five years for business startups, SMEs and venture companies.

Crypto Exchanges to Pay Higher Taxes

South Korea Plans to End Major Tax Benefits for Bitcoin ExchangesAccording to the news outlet, the government has decided to exclude crypto exchanges from the list of entities eligible for SME tax deduction “because the cryptocurrency trading business lacks the effect of creating added value.” The revised tax law will be submitted to the National Assembly and, if passed, will go into effect next year.

Crypto exchanges are currently liable to pay corporation tax of up to 22%, Seoul Finance described, adding that “considering that virtual currency exchanges earned huge amounts of money in the last year and earlier this year, it is estimated that the amount of exemption would be considerably large.” The publication conveyed that under the current setup:

Bitsum exchange, which is estimated to have net profit of over 250 billion won [~US$223 million] last year, should pay 54.4 billion won [~$48.6 million] in corporate tax but it is expected to save 27.2 billion won [~$24.3 million] since it receives 50% reduction.

However, “taxation on the sale of cryptocurrency was not included in the amendment bill…based on the judgment that more research is needed,” the publication emphasized. “The government has been considering imposing capital gains tax virtual currency trading profits since early this year, but no specific taxation bill has come out.”

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Welcome to the SVK Crypto, 15 Minutes of Crypto Fame, brought to you by your host, Charles Storry. We provide daily cryptocurrency content and analysis on topics such as Bitcoin, Ethereum, Altcoins and ICO’s.

We not only produce our daily content we feature CEO’s of all exciting ICO’s! Stay tuned to find out more!

If you’d like to stay in touch or get more info from me, please SUBSCRIBE to the channel and spread the good word!

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Top Crypto News – 31/07/2018

Bitcoin ETF Rejection Sparks Firm’s Public Protest


Bitcoin EFT Rejected Firm Van Eck Protests Publically to SEC

In a letter to Dalia Blass, the SEC’s go-to on investment management and someone well familiar with the Bitcoin ETF quest prior to her tenure at the agency, Van Eck, one of the firms impacted by rejection, issued a public protest. It was written just prior to the latest SEC denial of the Winklevoss Bitcoin Trust.

Van Eck’s detailed response was recently published on the SEC’s website, and it pains in detail over issues often cited by agency leaders such as Ms. Blass, five in particular. “For the reasons stated above,” Van Eck concluded in the 13-page missive complete with graphs and charts, “we believe that our proposed ETF will operate consistent with the rules and requirements of the 1940 Act. Further, by offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

Bitcoin ETF Rejection Sparks Firm’s Public Protest

Ms. Blass was appointed by Chair Jay Clayton, himself new to the job earlier that same year (2017), having been tapped by President Trump. Though with the agency during a previous stint, Ms. Blass re-emerged from the private sector.

In fact, she was counsel to the Winklevoss’ first failed ETF attempt at the hands of the SEC. Notice of her appointment in December caused at least one media outlet to dub her an “ETF specialist.” She would go on to have quite an impact on the current discussion, especially her Staff Letter: Engaging on Fund Innovation and Cryptocurrency-related Holdings of 18 January 2018, as it is the document Van Eck is addressing.

Bitcoin ETF Rejection Sparks Firm’s Public Protest
Ms. Dalia Blass

Valuation, Liquidity, Custody, Arbitrage, Manipulation

Van Eck takes on essentially five main issues in its response to the SEC. Regarding valuation, regulators really fear Bitcoin ETF prices will be screwy if, say, more forks of the digital asset continue. To that end, Van Eck explains, “Some rules that should be employed are using meaningful liquidity and infrastructure tests to assess forks and pricing issues. If prices are just displayed on a website but do not reflect sufficient volume, then those prices can be de-emphasized for valuation purposes. Forks that do not trade with sufficient volume or have adequate infrastructure (wallet or exchange support) can be excluded from indices that are meant to be investable.”

Liquidity is yet another worry for the SEC. Here, Van Eck relies on a steady increase in futures markets. The firm details, “We expect that the futures market will grow proportionally to our proposed ETF and that such growth will fuel additional interest by other investors, thereby adding additional liquidity. Additionally, since the launch of the U.S. bitcoin futures contracts, unregistered futures contracts have traded on Bitmex, a non-U.S. exchange, with a consistent volume of greater than $2 billion per day. Moreover, to the extent other futures-based bitcoin ETFs follow our proposed ETF into the market, we anticipate that such other ETFs would have a similar impact on the futures market, thus increasing liquidity in the market and benefiting fellow market participants.”

Bitcoin ETF Rejection Sparks Firm’s Public Protest

The issue of custody is a serious one both for regulators and institutional investors, and it seems to be already addressed by the current market. Coinbase is just the latest example, and so Van Eck doesn’t really dwell on the issue too much. Arbitrage, however, is a serious concern as well for regulators. Using stoppages in recent contract history, Van Eck notes, “To date, there have been 7% and 13% halts for the CME contracts and 10% halts for the CBOE contracts. Each halt lasted for 2 minutes; markets then re-opened trading in an orderly fashion. During a halt, ETF market makers will continue to have access to underlying real-time futures reference prices as well as prices in the underlying physical markets. These prices are publicly available. Furthermore, because bitcoin trades globally, the closure of a single bitcoin exchange should not affect the arbitrage process, although the market price may be affected for a number of reasons based on the nature of the closure,” the firm readily concedes.

For Van Eck, price manipulation is almost nulled by the definition of an ETF. “While one cannot rule out manipulation in the underlying spot market,” they soberly remind regulators, “we believe that, due to the diversified ownership and volume of trading, the market does not have major, structural vulnerabilities. Therefore, the Commission’s increased enforcement and regulatory actions can reduce the number of bad actors in a basically sound market.” As of this writing the SEC has not responded.

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TRON (TRX) Chrome Extension Beta Arrives, Project Marks First Anniversary


Compiling a Lightning Network Node

The Lightning Network is a second layer payment protocol that many people believe can solve Bitcoin Core’s (BTC) scalability problem. The reason for this is because the LN system works on top of the BTC chain and because of this factor there would be fewer on-chain transactions. Essentially the system comprises a great number of participating nodes that can send transactions through bidirectional payment channels. Alongside this, there’s been a ferocious debate over the years because people have touted LN as the solution for BTC’s congested mempool, even though the network is very much in its infancy.

Just recently we reported on the owner of, Andreas Brekken, when he initially freaked everyone out with a couple hundred grand worth of BTC sitting within his LN node. Both the BTC and Bitcoin Cash (BCH) communities had discussed the subject heavily during the first few days, and Brekken’s story made headlines in multiple news publications and podcasts. Since then Brekken wrote four reviews about his experience being the largest node on the Lightning Network. In Brekken’s first review “Lightning Network #1 Can I Compile and Run a Node,” the review gives some comprehensive insight to successfully installing and configuring the ‘lnd’ protocol. The author notes that the ‘autopilot’ feature helps establish a connection and provides funding to the payment channels.

A Look at What Its Like to Operate the Lightning Network's Largest Node
Brekken compiling lnd, bitcoind, and bitcoin core.

A Look at What Its Like to Operate the Lightning Network's Largest Node

Brekken explains there are a few reviews online that detail the Lightning Network’s probability of finding routes, but people who experience issues may be making a simple error. Furthermore, even though the installation process took a lot of time because it requires compiling a BTC full node installation, Brekken details the process was fairly simple to configure.

“Writers critical of Lightning Network claim the probability of finding routes between two random nodes is very low for amounts over $10. I suspect this is because they are choosing random nodes and not peering properly,” Brekken explains.

Compiling, installing, and running Lightning Network Daemon, lnd, was straight forward. I look forward to using payment channels for sending and receiving bitcoin.  

A Look at What Its Like to Operate the Lightning Network's Largest Node
Brekken makes headlines for being the largest LN node. Becomes the Lightning Network

In part two of Brekken’s review, he says maintaining a payment hub is becoming stressful and routing doesn’t make that much money. “When I started writing the review the total capacity of the Lightning Network was slightly over 20 BTC (around $130,000) — I decide to shake things up,” Brekken notes. “Reactions to my experiment on social media are mixed. The increase in capacity of the Lightning Network is celebrated by some.”

A Look at What Its Like to Operate the Lightning Network's Largest Node
Brekken’s node held 35.24 BTC.

“My Lightning Network node has established over 200 payment channels with 250 peers. The node capacity is exceeding 40 bitcoin. The month_fee_sum comes to 4289 satoshis, or 0.00004289 bitcoin ($0.31). I also wonder how any payments have been routed,” he adds.

The node has routed 260 payments for other users, averaging a profit of $0.0012 USD per transaction. I doubt that this will cover the costs of running the node, but leave the node running for now.

LN Impractical Even for Highly Technical Users

Brekken’s third review, called “Lightning Network #3 Paying for Goods and Services,” shows his experiences sending payments through the network. First Brekken heads over to a website called Satoshitweet to pay a small microtransaction for a posted tweet on the platform. However, after clicking the ‘Pay 2020 satoshis’ to tweet button he gets an error. “I click the button a few more times — The error remains the same — I look in the Google Chrome network inspector and SatoshiTweet is returning a generic 500 Internal Server Error response.”

The review then discusses trying to use an LN-based dice game called ‘Lightning Spin’ but Brekken has issues with the site glitching and invoices changing rapidly. After resetting his browser and getting a stable invoice Brekken sends some funds. “The payment will be sent through two hops and pay 1800 msats (0.00000002 BTC or 0.000135 USD). Back in the web browser the spin has been detected and I have won 400,000 sats (0.004 BTC or $30 USD).”

A Look at What Its Like to Operate the Lightning Network's Largest Node
Brekken wins $30 bucks on Lightning Spin.

After playing around with Lightning Spin, Brekken tests out various other LN web portals like the Blockstream store, Bitrefill and Satoshi’s Place while experimenting with both the Eclair and Zap wallets. Minus an order for Reddit Gold on the website Bitrefill and Brekken’s win on Lightning Spin, most of the attempts had errors. Brekken concludes in his third review:

Sending payments using the Lightning Network is cheaper than the regular Bitcoin network, but suffers from routing errors and wallet bugs that make it impractical even for highly technical users.

A Look at What Its Like to Operate the Lightning Network's Largest Node makes its mark on the pixel site Satoshi’s Place.

Stressing Out About a Possible Lightning Network Exploit

Brekken wraps up his final review in his Medium article called, “Lightning Network #4 What Happens When You Close Down Half of the Lightning Network Capacity?” Brekken says operating the largest nodes within LN was fun, but also “terrifying” at times. Brekken’s node has routed 389 payments in total which added up to a profit of USD$0.34 cents. But a portion of the funds didn’t come from routing as Brekken notes, “I suspect the increase is mostly from the recent increase in bitcoin’s price.” Brekken also tries to close the connected channels manually but ran into some more errors making some channels unable to close.

A Look at What Its Like to Operate the Lightning Network's Largest Node

So Brekken ‘force closed’ all his channels unilaterally which locks up his funds until a predetermined amount of time ends. “The amount of time the funds are locked up depends on the channel policy — This policy is negotiated when the channel opens. Most channels will release the funds to me in between 1440 and 20180 minutes,” Brekken emphasizes.

The owner concludes his fourth review by saying he looks forward to trying LN when it matures more and says that leaving funds on the network can be trying.

“Running a large Lightning Network node has been quite stressful — An exploit such as we saw with heartbleed could allow an attacker to drain all funds from the node while I’m sleeping. It’s time to end the experiment,” Brekken concludes.

Operating the largest node on the Bitcoin Lightning Network has been educational, frustrating, fun, and at times terrifying. I look forward to trying it again once the technology matures.

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Bitcoin’s Second-Ever Developer Is Back (With a Big Vision for Crypto)


There are early adopters, then there are early early adopters.

Revealed exclusively to CoinDesk, the first coder to work alongside bitcoin’s pseudonymous creator Satoshi Nakamoto, Martti ‘Sirius’ Malmi, is joining a team of developers launching a new cryptocurrency called AXE. The project, which is combining Malmi’s Identifi online reputation system with decentralized database system GUN, is taking on the long-desired mission of decentralizing the Web.

And Malmi’s history in the cryptocurrency space should pique the interest of plenty of enthusiasts.

An amateur college developer in 2009, Malmi played a crucial role in bitcoin’s early days as the only active developer working alongside Satoshi – and even striking up a bit of a friendship. He earned Satoshi’s trust enough to be given admin access to the website, and most of the changes in bitcoin’s second code release are attributed to him.

But a couple years in, Malmi followed Satoshi’s lead and left the project, thinking bitcoin didn’t really need him anymore.

“I felt like bitcoin had already gone from zero to one, so to say. It was already up and running with a growing community and had lots of great developers working on it,” he told CoinDesk.

In 2014, then, he started Identifi, with a decentralized architecture that didn’t include a cryptocurrency at first.

But as he built – with his eyes on reducing the control web companies like Google and Facebook have – he decided something else was needed that hadn’t been tried before and that a crypto token could incentivize its use.

Malmi told CoinDesk:

“Most of the giant online businesses, such as Google, Facebook, eBay or Airbnb are basically centralized indexes – searchable lists of stuff. If we want to disrupt them, we need decentralized indexing.”

And that’s where GUN, which has been in the works since 2014 as well, comes in.

Two projects as one

To tie it all together, the decision was made to launch a new company called ERA.

“Martti and I were discussing how governments can still blacklist bitcoin miners’ IP addresses. Telecom companies, Google, Amazon or others can throttle or reroute our traffic without net neutrality,” ERA CEO Mark Nadal (also the CEO of GUN) told CoinDesk.

“This is a huge vulnerability that could affect everyone, thus why we’re building AXE,” he continued.

GUN, which is known for using simple stick-figure comics to explain how its tech works, scored a $1.5 million round led by Draper Associates earlier this year, and has already built a decentralized Reddit and YouTube.

While those services are a bit slower than their centralized counterparts, Nadal argues both have been taking off “like crazy.” And according to Malmi, Identifi can help decentralize the system further by offering a censorship-resistant identity layer.

While digital reputation systems can conjure up images from the “Black Mirror” episode “Nosedive,” whereby a mobile reputation system goes awry, Malmi says he’s been careful to improve on older attempts and keep these unintended consequences in mind.

In the context of ERA, Identifi provides a crucial role.

“You could have users digitally sign all their posts and use Identifi to fetch the identity profile (name, avatar, feedback etc.) that corresponds to the public key,” Malmi said. “You could use your Identifi web of trust to filter out spam, trolls and other kinds of unwanted content without resorting to centralized censorship. That is useful for decentralized social media.”

But to be truly decentralized, ERA needs people from around the world running the database systems – which is where the new crypto token comes in.

Reminiscent of older blockchain storage projects like Filecoin and Storj, ERA with AXE is supposed to incentivize users on the network to store data. But it takes a slightly different approach by paying servers to move encrypted data around (instead of paying them to store data).

Since the data is encrypted, the data won’t be readable by the servers moving it around.

Practical decentralization

Although Malmi is about to head a new cryptocurrency project, he’s still skeptical of the promise of blockchain tech as it’s been advertised recently.

“Blockchain technology is overhyped and pushed for applications where it is not useful,” he said. “If you don’t need a distributed ledger with no trusted parties, you don’t need a blockchain.”

Yet, he thinks ERA is going about incorporating cryptocurrency into a decentralized web in the “right” way. “Crypto should be given credit for incentivizing the decentralization of infrastructure,” Malmi continued.

Indeed, he and Nadal make a big deal about this tech being more “scalable” than other tech.

“The missing piece [to a decentralized web] was a decentralized database that could handle CryptoKitties scale traffic,” Nadal said, pointing to the blockchain-based cat app that earlier this year clogged the ethereum network to the point users were having trouble using other decentralized apps on the network.

To create that scalable system, ERA is only using its cryptocurrency as a decentralized money, and will not be using a blockchain to store people’s data.

In this way, they argue they’re on a better track to building something that people might actually want to use.

Though, admittedly, the apps built using GUN today are not nearly as large as the companies they hope to replace. Yet, they have big hopes the project will go beyond that, since like so many others in the industry they believe decentralization is the way of the future.

“One of the things I learned is that it is better to do what is meaningful, not what is expedient,” Malmi said, adding:

“I believe that decentralization of digital identity and other basic infrastructure of our society are the some of the most meaningful things a developer can work on these days.”

Martti Malmi image from ERA
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