India's Cryptocurrency Infrastructure is Catching Up - But User Experience for Newcomers is Critical
Until March last year, India had become something of a barren wasteland for cryptocurrency enthusiasts.
CoinDesk Crypto
Coinbase Buys Blockchain Infrastructure Startup Bison Trails
Cryptocurrency exchange Coinbase announced it’s buying blockchain infrastructure company Bison Trails.
Bison Trials, which builds cross-blockchain integration tools that link disparate protocols, will become a “foundational element” of the Coinbase product suite, the top U.S. cryptocurrency exchange said in a Tuesday blog post. Terms of the deal were not disclosed.
Bison Trails did not immediately respond to a request for comment.
Related: Huobi Global Connects to European Banking System via UK’s BCB Group
This story will be updated.
Related StoriesBlockchain Bites: ‘Crowded’ Crypto Traders, Ether All-Time High, the Bitcoin Battery Proposal
Ether reached new highs, more people than ever are “long bitcoin” and a debate over bitcoin’s energy consumption is raging.
Top shelfOut of the ether?
Ether (ETH), the native cryptocurrency of the Ethereum blockchain network, hit a fresh high of $1,439.33, up $19 from a previous record level of $1,420 in 2018. The currency is up well over 1000% since the initial public sale of ETH in 2015, according to Messari. CoinDesk’s Will Foxley reports ETH has a different value proposition from bitcoin, which has also been on a tear in recent months, due to its programmability, developer-friendly community and legacy of serving as the foundation of some of crypto’s biggest trends including ICOs and DeFi.
Crowds trade
Bank of America found that “long bitcoin” is now the most crowded trade among fund managers, finally unseating “long tech.” Essentially this means investors are placing bullish bets on bitcoin – for what I assume is a variety of reasons including bitcoin’s deflationary attributes amid record money printing as well as herd mentality. The survey found that shorting the dollar is now the third most popular trade. Meanwhile, JPMorgan thinks bitcoin needs to cross $40,000 again to keep from bleeding investors while South Korean fintech firm Dunamu has revealed a “fear and greed” digital asset index.
Related: Market Wrap: Bitcoin Hangs at $36.4K While Ether Flies to Over $1.4K
Supply the chain
The U.K. National Health Service tapped distributed ledger Hedera Hashgraph and software firm Everyware to track the temperature of COVID-19 vaccines in cold storage. NHS facilities in the U.K.’s South Warwickshire, Stratford Upon Avon, and Warwick hospitals region will be using the technology initially, with a wider rollout planned as vaccine distribution progresses.
ANOTHER BTC ETP: Is launching on Switzerland’s SIX exchange, this time developed by CoinShares. (CoinDesk)
WHITELISTED: ENJ is the first gaming token to receive (self)-regulatory approval in Japan. (CoinDesk)
UNISWAP UNIVERSITY: Harvard Law Blockchain & FinTech Initiative, a student organization, is the latest “Uni” delegate. (Twitter)
Related: Bitcoin Is Aiding the Ransomware Industry
LAST DAY: OCC’s Brooks steps down. (Twitter)
FORGOTTEN MILLIONS: Binance unlocked 16 million BNB meant to be released for staff in July 2020. (Decrypt)
666,666: A biblical message was encoded at a recent bitcoin block height corresponding with “the mark of the beast.” (Decrypt)
Market intelConsolidation and rotation
With all eyes on ether, which crossed a new all-time high, market analysts are still confident in their assertion that traders are allocating to altcoins. Bitcoin notched two straight days of gains, but is still trapped in the $34,000 and $40,000 range – hovering near $37,000 at press time. “This period of consolidation is building a solid base, giving those who wish to sell bitcoin plenty of time,” according to the cryptocurrency exchange firm Diginex.
Bitcoin battery
With bitcoin at record levels, a number of critics have come out of the woodwork to present counter-narratives of the recent market rally or reasons why the cryptocurrency should be banned. Of all the age-old critiques of the cryptocurrency, the one that is most damaging, and perhaps most sympathetic to outsiders, is bitcoin’s intense energy consumption.
On Sunday, London-based software engineer Stephen Deihl composed a tweet thread discussing the environmental impact of bitcoin mining. Citing WolframAlpha data, Diehl claims that the “bitcoin network annually wastes 78 TWh (terrawatt hours),” said to be enough to power “several million U.S. households.”
This is a “giant smoldering Chernobyl sitting at the heart of Silicon Valley,” Diehl writes. He’s not alone. Apple engineer Fredrick Jacobs joined the fracas saying the financial incentives of bitcoin can lead to wasted, “often not green,” energy.
It’s indisputable that bitcoin is a consumptive good. Just as mining gold has a range of externalities, so does bitcoin. In 2018, the World Economic Forum (WEF) estimated that the global bitcoin network consumes as much energy as Ireland. I’ve also heard Austria and Venezuela as points of comparison. For those who see little value of a distributed, un-censorable currency, this is unconscionable. It’s enough to turn any sane observer into a crypto Kaczynski.
As ever, bitcoin’s supporters have come out to counter these claims. The Schelling point bitcoin champions have landed on this time around is the idea that “bitcoin is a battery.” Not only is bitcoin a store of value, but it could be seen as a useful store of energy.
As CoinShares Chief Strategy Officer Meltem Demirors writes, bitcoin “makes energy mutable, portable, storable and transferable by turning it into money.” In other words, bitcoin is a “battery” because it takes energy and turns it into a currency that can be used to pay for energy later.
There are a boatload of ideological and material assumptions baked into this battery idea. But is it wrong?
At the most basic level, this is precisely the business model of bitcoin miners. The owners and operators of bitcoin’s specialized mining equipment deploy their systems wherever there is cheap, readily available power. These machines solve complex mathematical problems that secure the ~$700 billion network and are rewarded with a bitcoin subsidy.
This payout is then often cashed out to pay the power bills. Complicating this idea slightly, Bitcoin advocate and author Knut Svanholm, an early promulgator of the “bitcoin battery” concept, said: “It is important to remember that it does not convert energy into value directly but rather electricity into digital scarcity. Digital scarcity which then can be programmed to express value.”
This doesn’t address the issue of bitcoin’s energy draw directly, but is a defense of bitcoin as a scarce, valuable asset worth powering. A similar line of defense is to compare bitcoin to other energy-intensive goods or services. What about Netflix? What about Twitter? Are not most internet-based platforms major draws on the power grid with arguably limited usability?
I was born at the tail end of the millennial generation, and as such am painfully aware of the environmental catastrophe humanity is staring down. I turn off the lights when I exit a room. I buy nuts and grains in bulk. In elementary school, I gave a report on recycling and have kept up the habit. I am committed to the idea of using less and preserving more.
It’s for this reason that I want to take bitcoin’s environmental footprint seriously.
The last line of defense (that I’ll cover) is the idea that bitcoin is green, to an extent. It’s frequently claimed that the majority of bitcoin mining is powered by renewable sources. CoinShares estimated, in 2019, that 73% of bitcoin’s “energy mix” is from renewables. Others say that a fair amount of bitcoin is mined using energy that would have been otherwise wasted – such as from natural gas flaring.
“Bitcoin thrives on the margins, where energy is lost or curtailed,” Nic Carter wrote in a CoinDesk op-ed titled “Last Word on Bitcoin’s Energy Consumption.”
Along these lines, WEF argued in 2018 that renewables providers, like wind or solar farms, should consider turning on crypto miners whenever there is a surplus of energy when the sun is shining and the skies a’blowing. “[I]f the grids are overloaded, clean energy is abundantly wasted,” they write. “For every block added to the chain by this method, there will be no accompanying carbon emissions.”
This isn’t a bad idea. But I think there is a blindspot that could also explain one of the weakest claims that bitcoin is green. In short, a block subsidy that’s won by an eco-friendly miner isn’t carbon free, there’s a whole network of miners competing for the same subsidy that may not be plugged into a hydroelectric port.
Bitcoin is wasteful by design. No matter what percentage of hash power is green is besides the point. Proof-of-work is wasteful, and there will always be people that are offended by that. And ideas of coordinating the bitcoin network to turn on and off depending on energy production will never work. Right now, coordinating a network of bitcoin miners is easy, because there is no coordination – people plug in their miners and let them rip.
Underlying the environmental discussion is a presumption of whether bitcoin has any value, and whether that value is worth the cost. Unchained Capital framed bitcoin’s energy-value in near-apocalyptic terms:
“Future economic stability is fundamentally why there can be no more important source of demand for the consumption of energy than the security of bitcoin’s monetary system, especially when the alternatives (fiat and gold) are structurally flawed.”
It doesn’t have to be so black and white. But when it comes to bitcoin’s future, it’s worth asking what powers bitcoin could disrupt.
Who won Crypto Twitter? Related StoriesJanet Yellen Says Cryptocurrencies Are a ‘Concern’ in Terrorist Financing
Cryptocurrencies are “a particular concern” when it comes to terrorist financing, potential Treasury Secretary Janet Yellen said Tuesday.
Speaking at a Senate Finance Committee hearing on her anticipated nomination after President-elect Joe Biden takes office tomorrow, Yellen said the U.S. should be aware of emerging tools for terrorist financing.
“The technologies to accomplish this change over time and we need to make sure that our methods for dealing with these matters, with tech terrorist financing, change along with changing technology, cryptocurrencies are a particular concern,” she said in response to a question by Sen. Maggie Hassan (D-N.H.), who called crypto use in terrorist financing a “growing concern.”
Related: US Lawmakers Tell Mnuchin to Back Off From Potential Crypto Wallet Regs
Hassan was asking about last year’s National Defense Authorization Act, which includes a provision for examining how terrorists might use new financial technologies to raise funds. Sen. Mark Warner (D-Va.) led the provision’s inclusion.
“I think many [cryptocurrencies] are used, at least in transactions sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering doesn’t occur through those channels,” Yellen said Tuesday.
Federal authorities are currently investigating whether there is a link between a December transaction of 13.5 bitcoin by now-deceased French computer programmer Laurent Bachelier to right-wing figures and the attempted insurrection at the U.S. Capitol earlier this month. Several of the recipients of the transaction appear to have been at the Capitol on Jan. 6.
As Fed Chair, Yellen said she didn’t want to over-regulate the crypto space, though she’s also dismissed bitcoin at various points during her term and immediately after. When she takes office, she’ll oversee a number of proposed regulations through the Financial Crimes Enforcement Network, including a controversial rule that would require exchanges to collect and store counterparty information for unhosted wallets.
Related: What Janet Yellen as Treasury Secretary Means for Bitcoin and Markets
Sen. Ron Wyden (D-Ore.) hopes a confirmation vote will occur Thursday.
UPDATE (Jan. 19, 2021, 18:55 UTC): Updated with additional context.
Related Stories3 Key Takeaways From Last Year's Biggest Crypto Hacks
2020 will be remembered as the year institutions, everyday investors, and business giants began to take cryptocurrency seriously
French Central Bank Trials Digital Currency for Interbank Settlement
Banque de France has successfully conducted a central bank digital currency (CBDC) experiment using a blockchain platform for interbank settlement.
- According to a Banque de France statement, the pilot involved the settlement on a private blockchain, provided by U.K. blockchain startup SETL, of around €2 million (US$2.43 million).
- The French bank used SETL’s fund management platform Iznes, along with Citi, CACEIS, Groupama AM, OFI AM, and DXC, as part of the process for the first settlement of funds using CBDC.
- More experiments of the pilot program are underway through mid-year and the process will be an important contribution to research around the interest of a CBDC, said the bank.
- Francois Villeroy de Galhau, governor of the Banque de France, has spoken openly of the potential benefits in the development and issuance of the CBDC.
- In 2020, the French bank published a request for proposals for CBDC “experiment” applications. The project’s aim was to help France’s central bank understand the risks and mechanisms of CBDCs and also contribute to the eurozone’s digital cash conversation.
Read more: French Central Bank Puts Out Call for Digital Currency Experiments
Related StoriesBrave Becomes First Browser to Offer Native IPFS Integration
The InterPlanetary File System (IPFS), a decentralized peer-to-peer protocol designed to make the web less centralized and to avoid censorship, has been integrated into the desktop web browser Brave, making it the first browser to have a native IPFS integration.
The move continues to add accessibility to IPFS, allowing Brave users to access content on the protocol by “resolving ipfs:// URIs via a gateway or installing a full IPFS node in one click,” according to a statement accompanying the announcement.
“IPFS is important for blockchain and for self-described data integrity,” said Brian Bondy, CTO and co-founder of Brave, in an email to CoinDesk. “Previously viewed content can even be accessed offline with IPFS. The IPFS network gives access to content even if it has been censored by corporations and nation-states, such as for example, parts of Wikipedia.”
What truly decentralized access to information can look likeRelated: Cloudflare Unveils Gateway to Distributed Web With ENS, IPFS Integration
According to Dietrich Ayala, technical product manager of browser integrations at IPFS, while the protocol is still in development, making it easily and directly available is important for users who have real problems in their daily online lives around internet access, trust of data, censorship and addressing data from blockchains for Web 3.0 apps.
One goal of this integration is to provide an early look at what truly decentralized access to information can look like and get feedback from developers and users so IPFS can start layering on more features and functionality in Brave, according to Ayala.
Read more: Cloudflare Unveils Gateway to Distributed Web With ENS, IPFS Integration
Brave users who enable the IPFS node will have a network that still functions during internet outages and shutdowns and, for example, can access critical information such as COVID-19 news which is censored in some countries.
Related: Helium Wireless Network Approves New Hard Cap for HNT Token Emissions
IPFS keeps what you browse so it can be used while offline, which is key in places with expensive internet access or spotty networks.
“IPFS also provides the ability to share and collaborate in offline or disconnected environments – nodes can discover each other over local networks even when not connected to the internet,” said Ayala. “Easy and direct availability of IPFS through the Brave browser radically lowers the bar for developers to take advantage of these features in the applications.”
IPFS: How it worksAs CoinDesk reporter Daniel Kuhn wrote last year, IPFS is “a radical redesign of how people navigate and use the internet.”
Read more: InterPlanetary File System Is Uncensorable During Coronavirus News Fog
“The current paradigm of web-search runs HTTP, which sends requests for online content to a single server that stores information, meaning that if anything is changed or blocked there is no reliable way to access it again,” he wrote.
“IPFS, a peer-to-peer protocol, instead allows users to download webpages and content stored across multiple servers and provides “historical versioning” that shows how documents have been manipulated. “
With this new integration, Brave users will have easier access to the protocol, while also offloading server costs from the content publisher and improving the overall resilience of the internet. There are currently over 4,000 IPFS contributors worldwide; the Brave browser is used by 24 million people, potentially expanding the reach of IPFS.
A Uniform Resource Identifier (URI) is a unique web identifier made up of a Uniform Resource Locator (URL) or a Uniform Resource Name and is used to retrieve information on a network.
“Brave users will be able to load ipfs:// and ipns:// URIs, which gives users the ability to load a lot of new content which they can’t access in other browsers,” said Bondy. “Dapps are ideal candidates to be hosted on IPFS, and some dapps make use of referencing IPFS content.”
The news comes less than a week after internet hosting behemoth Cloudflare announced that it will be able to connect to domains hosted on the Ethereum Name Service (ENS) and IPFS, further expanding IPFS’ reach.
“At Cloudflare Research, we have been exploring alternative ways to resolve queries to responses that align with these attributes. We are proud to announce a new resolver for the Distributed Web, where IPFS content indexed by the Ethereum Name Service (ENS) can be accessed,” the blog states.
Related StoriesCriminal Activity in Crypto Transactions Fell Sharply in 2020, Says Chainalysis
Cryptocurrency investigation firm Chainalysis said cryptocurrency-related crime fell significantly in 2020 but remains appealing for criminals due to its anonymous nature.
- Chainalysis reports in 2020, cryptocurrency criminal activity fell to 0.34%, or $10.0 billion in transaction volume, compared with 2019, when criminal activity represented 2.1% of all transaction volume or roughly $21.4 billion worth of transfers.
- One of the reasons for the decline is due to overall economic activity nearly tripling between 2019 and 2020, but the overall amount of cryptocurrency-related crime is falling and is an even smaller part of the cryptocurrency economy, said the firm.
- Chainalysis highlighted scams were much smaller in 2020 compared to the enormous PlusToken Ponzi scheme in 2019, which took in over $2 billion from millions of victims.
- The majority of the cryptocurrency-related scams, around 54%, were made up of illicit activity followed by darknet markets which was the second-largest crime category, accounting for $1.7 billion worth of activity, up from $1.3 billion in 2019.
- Chainalysis said the “big story” for cryptocurrency-based crime in 2020 is the rise of ransomware which, while only accounting for 7% of all funds received by criminal addresses at just under $350 million worth of cryptocurrency, was up 311% from 2019. The number of ransomware incidents could even be higher due to the low reporting rate, the firm said.
- The COVID-19 pandemic has forced more people to work-from-home and in turn this has opened up new vulnerabilities to ransomware attacks for many organizations, said the firm.
Read more: Alt-Right Groups Received $500K in BTC Month Before Capitol Riot: Chainalysis
Related StoriesBitcoin Theft In 2020 Was Near Zero, Down 92 Percent from 2019
A recent report on the amount of bitcoin stolen through a variety of scams over the years has confirmed that theft of this digital asset is down significantly across the board, suggesting that security around the highest-performing cryptocurrency has tightened significantly.
Saddle Raises $4.3M for Slippage-Free DeFi Trading
Saddle, the latest decentralized finance (DeFi) system to come out of Silicon Valley, has raised $4.3 million in seed funding from Framework Ventures, Polychain Capital and Electric Capital.
Announced Tuesday, the new automated market maker (AMM), which has just gone live, is focused on preventing slippage in value between different types of pegged-value assets like stablecoins and tokenized bitcoin. The startup, which now has four full-time coders, was recently spun out of Thesis, the a16z-backed firm behind projects like Fold, tBTC and Keep.
Slippage refers to the difference between the expected price of a trade and the executed price of that trade. Crypto being highly volatile and reactive, means even stablecoins and pegged tokens get hit with a large amount of slippage when traded on-chain.
Related: Offline Travel App Maps.Me Raises $50M in Funding Round Led by Alameda Research
“If you’re trading $100 USDC for USDT, you’d expect to get pretty close to $100 USDT,” Saddle founder Sunil Srivatsa said in an interview. “For the longest time, that wasn’t possible. You would trade $100 of USDC, and maybe get out like $97 or $98 [in USDT].”
Read more: Bitcoin-on-Ethereum Token tBTC Relaunches Following Buggy Debut in May
AMMs like Uniswap and others, which pool capital together and set rules for how you trade against the pool, have tolerance settings where users can set the maximum percentage of price movement they can live with.
“So one of the problems that we’re setting out to solve is to basically unlock deep on-chain liquidity for pegged value crypto assets,” said Srivatsa, a former Uber engineer also known as @devops199fan to those in the DeFi community. “That means you’re able to make trades and lose a very minimal amount to slippage and transaction fees.”
Related: Optimism ‘Soft Launches’ Ethereum Throughput Solution With DeFi’s Synthetix
Saddle plans to use Synthetix’s virtual synths. (Synthetix makes synthetic assets where instead of trading ETH for USD, users trade sETH for sUSD.)
Srivatsa said there is currently a limitation with the Synthetix system, since trades between “synths” come with a five-minute settlement delay before a trader gets the underlying assets (this is to prevent front running).
Read more: Optimism ‘Soft Launches’ Ethereum Throughput Solution With DeFi’s Synthetix
However, this breaks composability, said Srivatsa, such as when executing a single trade between different tokens like sBTC and wrapped bitcoin (WBTC), for example. Virtual synths fix this by introducing a new token that basically represents a claim on that unsettled trade, Srivatsa said.
“So you can use that as a placeholder, atomically, and then settle after the fact,” he said. “The reason you want to do this is because synths also have this pretty exciting property where you can trade between them with no slippage – at any size, up to the size of Synthetix’s global pool.”
Starting today, Saddle offers a choice between four tokenized bitcoin options in its first liquidity pool: renBTC, WBTC, sBTC and tBTC, Srivatsa said, and in the near term, will introduce new pools for stablecoins and ETH-based tokens.
Related StoriesFirst Mover: Ethereum Steals Limelight With New All-Time High Price as Bitcoiners HODL
Bitcoin (BTC) was higher for a second day, staying in the past two weeks’ range of between roughly $34,000 and $40,000.
“This period of consolidation is building a solid base, giving those who wish to sell bitcoin plenty of time,” according to the cryptocurrency exchange firm Diginex.
Ether (ETH), the Ethereum blockchain’s main cryptocurrency, rose Tuesday to a new all-time high of $1,439.33, reaching price levels not seen since early 2018. The LINK token from Chainlink, which provides price feeds to decentralized trading and lending systems built atop blockchain networks, also set a record price.
Related: Market Wrap: Bitcoin Hangs at $36.4K While Ether Flies to Over $1.4K
Read More: Ethereum’s Ether Cryptocurrency Sets New Price Record on Major Exchanges
With the bitcoin market trading sideways, some investors might be rotating into so-called alternative cryptocurrencies for faster returns, Edward Moya, a senior market analyst for the foreign-exchange broker Oanda, said in emailed comments.
“The cryptoverse is growing again, and right now many cryptocurrency traders are diversifying into other coins,” Moya said.
In traditional markets, Asian and European shares rose and U.S. stock futures pointed to a higher open ahead of Treasury Secretary nominee Janet Yellen’s confirmation hearing. The former Federal Reserve chair is expected to call for the government to “act big” on stimulus borrowing and spending, to aid the economic recovery.
Related: Bitcoin Is Aiding the Ransomware Industry
Gold strengthened 0.2% to $1,845 an ounce.
CORRECTION: (17:42 UTC, Jan. 20, 2021): An earlier version of this article incorrectly stated the new all-time high price for ether. The piece has been updated to reflect the record price of $1,439.33 reached early Tuesday.)
Market movesWith bitcoin prices up 26% so far in January after quadrupling in 2020 and doubling the year before that, a trader might be forgiven for looking to take some profits.
But based on data extracted from the underlying blockchain network, investors appear content to sit tight, apparently betting a new rally could quickly take the cryptocurrency to fresh all-time highs.
Delphi Digital, a cryptocurrency analysis firm, noted last week in a report that bitcoin balances on cryptocurrency exchanges had decreased to about 2.3 million from 2.4 million over the past month as prices rose. Often, when prices rise the balances increase as more investors transfer bitcoins to the exchange to be liquidated.
“The net outflow this time around is potentially indicative of the long-term focused nature of recent investors,” according to the Delphi analysts, Yan Liberman and Kevin Kelly.
The exchange outflows dovetail with other blockchain data showing more bitcoin being held by investors for the long term, known in crypto-industry jargon as HODLing.
Analysts for Glassnode, a blockchain-data firm, noted Monday that the number of bitcoins held in “accumulation addresses” has climbed by 17% over the past year to more than 2.7 million. These are addresses that have only ever received bitcoin and never spent them.
“This increase highlights the massive supply restriction that is occurring in the BTC market, with almost 15% of the total supply held in these addresses,” according to the firm.
Some 14.6 million out of the 18.6 million bitcoins mined over the blockchain network’s 12-year history are “either lost or being HODLed long term,” Glassnode says. That means new buyers coming in, such as big investors or companies looking to use the cryptocurrency as a hedge against potential inflation, would have to compete for the remaining 4 million or so bitcoins still circulating.
“When combined with the general decrease in bitcoin’s liquid supply and the number of lost coins, this leads to an even more limited supply, which is helping BTC maintain the highest prices it has ever seen,” the analysts wrote.
– Bradley Keoun
Bitcoin watchBitcoin remains locked in a narrowing price range despite resurgent institutional demand.
The top cryptocurrency has charted a symmetrical triangle over the past few days, as seen on the hourly chart. It’s a sign both buyers and sellers are unwilling to lead the price action.
Grayscale Bitcoin Trust (GBTC), the biggest publicly traded crypto investment trust, purchased a total of 16,244 BTC ($607 million) on Monday, taking out 18 times more supply from the market than what miners added. This was after the trust reopened last week following a month-long pause and quickly accumulated another 4,700 BTC. (Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.)
Even so, the cryptocurrency is struggling to gather upside traction. The bulls look to be taking a hiatus, having engineered a rally of more than 200% over the past three months.
Digital-asset traders appear to have shifted toward alternative cryptocurrencies such as ether, the second-largest cryptocurrency, which rose to a new record high early Tuesday.
The focus could move back to bitcoin if the largest cryptocurrency breaks out of its hourly chart triangle pattern. That would imply a resumption of the broader trend and put $50,000 on the map, as noted by Vinny Lingham, investor and founder of crypto wallet and identity verification firm Civic.
– Omkar Godbole
Read More: Bitcoin Becomes Most-Crowded Trade in Bank of America Survey After Passing ‘Long Tech’
Token watchEnjin (ENJ): Enjin Coin becomes first gaming cryptocurrency whitelisted for use in Japan (CoinDesk)
Tether (USDT): Anonymous columnist questions whether Tether’s true peg is distorted by promotional awards (Medium)
Celsius (CEL): Alex Mashinsky, CEO of crypto lender Celsius, says in interview that company filed SEC exemption form on CEL tokens “because the regulations are not clear” (CoinDesk)
XRP (XRP): Kraken exchange becomes latest to halt XRP trading for U.S. residents after SEC suit against Ripple Labs (CoinDesk)
What’s HotGoldman Sachs reportedly planning to enter crypto market soon with custody play (CoinDesk)
Huobi Global connects to European banking system via UK’s BCB Group (CoinDesk)
Coinbase cryptocurrency exchange, hounded by snarky social-media comments about reliability, plans improvements to infrastructure (CoinDesk)
CoinShares starts exchange-traded bitcoin product (Bloomberg)
MetLife’s investment arm predicts “true central bank digital-currency launch among Western countries seems unlikely to occur anytime soon” (CoinDesk)
Bitcoin takes over as “most-crowded trade” in Bank of America survey after passing “long tech” (CoinDesk)
“No, bitcoin is not in a bubble,” CoinDesk Research Director Noelle Acheson writes in Crypto Long & Short newsletter (CoinDesk)
JPMorgan analysts see $40,000 as a key bitcoin price threshold before bullish uptrend continues, Bloomberg reports (CoinDesk)
Former Canadian Prime Minister Stephen Harper, in interview, lists bitcoin among U.S. dollar alternatives that could make inroads as an international reserve asset (CoinDesk)
Wall Street chief financial officers (CFO) are more wary of putting company funds into bitcoin after last week’s 30% price plunge (CoinDesk)
Bitcoin is “two bets in one: a sound, unimpeachable monetary protocol and the reserve asset for a rapidly expanding crypto-financial network,” Castle Island Ventures’ Nic Carter writes (New York Magazine)
South Korea’s Dunamu launches its own bitcoin “fear and greed” index (CoinDesk):
Analogs The latest on the economy and traditional financeBiden Treasury secretary nominee (and former Federal Reserve Chair) Janet Yellen says in prepared remarks for Tuesday’s confirmation hearing that “with interest rates at historic lows, the smartest thing we can do is act big” (FT)
Jamie Dimon says JPMorgan Chase should absolutely be “scared s—less” about threat from fintech rivals, names PayPal, Square, Stripe, Ant Financial, Amazon, Apple, Google (CNBC)
Beleaguered U.S. bank Wells Fargo targets $8B in cost savings over three years, including job cuts, and considers options for exiting asset-management and corporate-trust businesses (Pensions & Investments)
Foreign investors expect U.S. dollar to remain weak under Biden (WSJ)
U.S. corporate bond spreads shrink to 0.93 percentage point, narrowest since January 2020, at least partly reflecting investor confidence in ongoing economic stimulus and easy money from the Federal Reserve (WSJ)
Reserve Bank of Australia could shut down quantitative easing program in April (Australian Financial Review)
China’s GDP grew 2.3% in 2020, lowest lowest in 44 years (Nikkei Asia Review)
Taiwanese chip maker startup Kneron eyes global expansion, aims for 8x growth in 2021 as U.S. blacklists hit Chinese rivals (Nikkei Asia Review)
Southeast Asian ride-hailing company Grab considers U.S. IPO estimated at $2B (Reuters)
Tweet of the day Related StoriesBlockchain Bites: Goldman Sachs Investigates Crypto Custody, Solving the Blockchain ‘Trilemma’
Happy Martin Luther King Jr. Day to our U.S. readers! A former Canadian prime minister said bitcoin could become a global reserve currency, Goldman Sachs is reportedly looking to get into the crypto custody business and MetLife is bullish on CBDCs.
Top shelfGoldman Sachs jumping in?
Its crypto custody plans will be “evident soon,” according to an internal source. CoinDesk’s Ian Allison reported the major investment bank has issued a request for information to explore digital asset custody, though it is not interested in becoming a prime broker. Last week crypto-native Anchorage attained conditional approval from the Office of the Comptroller of the Currency to become a national digital bank.
Updating the base
Coinbase, a bellwether for bull runs because the exchange is likely to go down during periods of heavy volatility, is updating its infrastructure to prevent outages. It will also bring on more customer support. Coinbase has sent smoke signals about going public this year, though it has not yet filed.
Related: Crypto Long & Short: No, Bitcoin Is Not in a Bubble
Digital “belt and road”
China’s Blockchain-based Service Network (BSN) – a permissioned blockchain network for building decentralized applications and tokens – will test a central bank digital currency (CBDC) as early as the second half of 2021, according to a Jan. 15 blog post. Moreover, the network looks to become a blockchain of blockchains with a total of 30 public blockchain integrations slated for this year.
- NFTs & DEFI: Cointelegraph’s Andrew Thurman speaks to with Aavegotchi’s Jesse Johnson. (Cointelegraph)
- BITCOIN BUBBLE? Nope! (CoinDesk opinion)
- RESERVE CURRENCY: Former Canadian prime minister lists bitcoin as possible reserve currency. (CoinDesk)
- VOLATILITY FEARS: Bloomberg reports bitcoin price swings are keeping CFOs from the market. (CoinDesk)
- WHAT’S MONEY? Not CBDCs, IMF survey respondents seem to think. (Decrypt)
- BITCOIN RESURGENCE: Nic Carter explains. (New York)
Linked to bitcoin?
LINK, the native token of the Chainlink oracle system, has hit a fresh all-time high as bitcoin trades sideways. CoinDesk’s Omkar Godbole called LINK’s new high at $23.68 (the previous lifetime high of $19.90 was reached in August,) set in overnight trading. Link is just one of many altcoins that are benefiting from consolidation in bitcoin markets and a rotation of capital into more speculative bets, Godbole reports.
Trilemma dilemma?
MetLife is the latest legacy financial institution to take a hard look at crypto. In a primer titled “The Blockchain Blockbuster,” MetLife Investment Management (MIM), the life insurance giant’s investment wing, examined the nature of money from “Yapese stones to central bank digital currencies.”
My colleague Will Foxley reported that MIM thinks CBDCs are anything but “a passing fad,” (MIM’s words) and represent the “logical progression of money and technology” (Foxley’s words). “[J]ust as the dreams of cryptocurrency developers tend to be rather lofty, so are those of various CBDC initiatives,” the document states.
Related: Blockchain Bites: Coinbase Wants to Crowdsource Asset Listings; What’s Up With Tether’s Bank?
The 18-page report, published Jan. 8, honestly didn’t say much more than that. It argued that interest in CBDC development was spurred by the explosion of digital assets unleashed after Bitcoin came on the scene. And concluded by saying “western countries” could potentially look towards China’s digital yuan experiment as a guide. Neither points are really debatable, but debate we must!
There is one smaller point worth examining. While Alexander Villacampa and Jun Jiang, the paper’s authors, appear to think CBDCs and cryptocurrencies can (and will) exist side-by-side, there was a moment of existential conflict. I quote:
“Bitcoin and its ilk are constantly battling to maintain a balance between three key concerns known as the ‘Blockchain Trilemma.’ The trilemma, often visualized as a triangle, consists of three issues related to sustainable public blockchain development: scalability, decentralization, and security. It is assumed in the trilemma that by strengthening any one of the triangle’s vertices, at least one of the others must weaken.”
The “scalability trilemma,” attributed to Ethereum co-founder Vitalik Buterin, is a (often constructive) criticism of blockchain networks. Although it’s fallen out of “the discourse” in recent years – a quick Google search showed that the problem was often used as a marketing tool for blockchains that supposedly solved the issue in 2018 – plenty of smart people are still thinking about it.
Called the trilemma, the concept can actually be reduced even further to a sliding scale of decentralization and centralization, with pros and cons of moving between the two. It posits developers can’t have everything when it comes to efficiency and security. Optimizing for decentralization naturally makes the network slower, though more secure. Centralization reduces security, by introducing a single entity that can be attacked, but improves transaction throughput. Simple enough!
But is it right? In 2018, in the heyday of the trilemma, most people cited Bitcoin and Ethereum’s proof-of-work consensus algorithm (the networks’ security design) as prime examples of how decentralization reduces transaction throughput. Thousands of miners create a secure, but slow, network.
Bitcoin developers are looking at layer 2 solutions, like Lightning, to create a usable payments system out of a secure base, while Ethereum developers are exploring layer 2s and a network overhaul. In many of these instances the solution is moving and processing some transactions off-chain, limiting how much a decentralized blockchain can get in the way.
While it’s clear that the contours of the trilemma are real and should be addressed, the real solution is probably to ignore the framing. The tradeoff between scalability and security is a problem that exists across the payments universe. Bitcoin is cumbersome though accessible to anyone, and Visa is lightning-fast but entirely prone to “financial censorship.”
This isn’t to take the Bitcoin Maximalist view that bitcoin is a store of value and doesn’t need to be a payments system, but it is an admission that there’s room in the world for multiple types of systems that all optimize for different things.
Circling back to CBDCs, as Villacampa and Jiang note, the “expansion of electronic payment systems via blockchain technology that has captured the interest of central banks who believe they are uniquely capable of providing not only a better alternative but also able to lay the foundation for an officially-sanctioned global electronic payments regime.” If that includes researchers that think they’ve solved the “scalability trilemma,” more power to them.
Who won Crypto Twitter? Related StoriesNvidia May Restart Production of Crypto Mining GPUs if Demand Sufficient
Chip-making giant Nvidia could potentially restart production of dedicated graphics processing units (GPUs) for cryptocurrency miners, according to its executive vice president and chief financial officer, Colette Kress.
- Speaking at an event on Jan. 12, Kress said if demand in the cryptocurrency market picks up to a “meaningful” level, the company could again start selling the specialized cards called CMPs, according to a SeekingAlpha transcription.
- CMPs are GPUs with the video outputs removed, allowing them to be made and sold more cheaply.
- Currently, Nvidia’s RTX 30-Series GPUs are popular with miners, though Kress said, “We don’t believe [mining demand is] a big part of our business today.”
- However, “gaming demand is very strong, and we think that’s larger than our current supply,” she said.
- With the RTX 30-Series supply to stay tight until at least the end of Q1 2021, relaunching CMPs could alleviate pressure on the consumer product line.
- While bitcoin miners use specialized and more costly processors called ASICs, other cryptocurrencies like Ethereum’s ether can be mined with GPUs.
Read more: Nvidia Accused of Trying to Discredit Ex-Employee in Crypto Mining Revenue Trial
Related StoriesGary Gensler Named as Joe Biden’s SEC Chair Pick
President-elect Joe Biden named Gary Gensler as his pick for chairman of the U.S. Securities and Exchange Commission (SEC) on Monday.
- Gensler is the former chairman of the Commodity Futures Trading Commission (CFTC), and a Wall Street veteran who has closely studied the cryptocurrency field.
- Gensler has also been a part of Biden’s transition team, overseeing financial policy work.
- Former SEC chairman Jay Clayton left the role on Dec. 23. Elad Roisman was appointed acting SEC chairman by outgoing President Donald Trump for the remainder of his administration.
- Also on Monday, the Biden administration announced Rohit Chopra as the director of the Consumer Financial Protection Bureau. Chopra currently holds the commissioner position at the Federal Trade Commission.
- Chopra has publicly criticized Libra, the Facebook-led cryptocurrency project which has since been renamed Diem.
Huobi Global Connects to European Banking System via UK’s BCB Group
Regulated crypto payment services firm BCB Group has partnered with Huobi Global to help the Seychelles-based exchange giant connect its trading desks to the banking system in the U.K. and Europe.
Announced Tuesday, customers of Huobi’s over-the-counter (OTC) platform will be able to settle transactions instantly in euros and pounds (GBP) via BCB’s BLINC network.
Cryptocurrency exchanges have struggled in recent years to secure banking relationships and establish an interface with the fiat currency world, with some large exchanges having massive daily volume in closed systems of crypto-to-crypto trading. Prior to partnering with BCB, Huobi did not have a European fiat gateway, said Oliver von Landsberg-Sadie, founder and CEO of BCB Group.
Related: Coinbase Joins $6M Funding Round for Licensed Middle-East Exchange Rain Financial
“We’re here to provide that robust infrastructure so that these guys can just get on with trading and know that trades are happening in a way that’s properly monitored, that’s regulatory-friendly,” Landsberg-Sadie said in an interview.
The bar is high and Huobi had to jump through a few significant hoops; the whole process took some time to complete, he added.
“We understand the importance of both a compliant and streamlined service,” Ciara Sun, Huobi’s head of global business, said in a statement. “Partnering with BCB allows us to offer a European fiat on- and off-ramping service that we know is in line with the laws of that area, but it also allows our customers in Europe to experience a smooth and hassle-free user experience.”
BCB, which started out as an OTC desk, partnered with U.K.-based Clearbank, as well as some other European banks, to facilitate crypto-to-fiat on/off ramps. The BLINC real-time settlement system, which is a bit like SWIFT for crypto in that users are legally identifiable entities, is supported by R3’s Corda platform and the Digital Asset Shared Ledger (DASL).
Related: Coinbase Redoing Infrastructure to Prevent Outages During Peak Times
Huobi joins Bitstamp, the other large exchange taking advantage of BCB’s BLINC payment network. BCB also works with Coinbase and Kraken, but those exchanges are not part of BLINC.
Huobi is the latest large, reputable exchange that BCB has managed to bank, with a few more “kind of in-flight” to be announced soon, said BCB Group partner Ben Sebley.
Related StoriesFormer Canadian Prime Minister Lists Bitcoin as Possible Future Reserve Currency
Stephen Harper, an economist and the former prime minister of Canada, said bitcoin could potentially see use as a reserve currency, but it isn’t going to supplant the U.S. dollar’s international role.
In an interview with Cambridge House’s Jay Martin on Sunday, Harper acknowledged that the dollar had been on a downtrend, but said there were few viable international alternatives, even when looking at the euro and the yuan.
“Unless the U.S. becomes a catastrophe, it’s hard to see what the alternative is to the U.S. dollar as the world’s major reserve currency. Other than you know gold, bitcoin, … a whole basket of things, right?” said Harper. “I think you’ll see that the number of things that people use as reserves will expand, but the U.S. dollar will still be the bulk of it.”
Related: 3iQ’s Canadian Bitcoin Fund Hits C$1B in Market Cap
Harper stressed he is not an expert when it comes to digital currencies, but said it is hard to see how they operate as a store of value – something “pretty critical” for a currency.
The former Conservative prime minister explained that every currency has three purposes: as a medium of exchange, as a unit of account and as a store of value. He acknowledged a digital currency is certainly a medium of exchange and can be a unit of account, but it is difficult to see how bitcoin can act as a store of value.
That’s because “I, as an investor, have no idea what this investment represents,” he said.
Harper also addressed the trend for central banks to be considering the launch of their own digital currencies.
Related: Jerome Powell on CBDCs: ‘We Don’t Feel a Need to Be First’
“Ultimately, if you have a digital currency and the purpose of the central bank is to control inflation and create a stable currency and price stability, then digital currency is just kind of an evolution of the marketplace,” he said. “But if it is part of a series of what I think are wild experiments as to the role of central banking, then that worries me a lot.”
Related StoriesChainlink Hits Record High, Altcoins Rally Amid Bitcoin Consolidation
Decentralized oracle network Chainlink’s LINK token and other prominent alternative cryptocurrencies (dubbed altcoins) are charting solid gains as the crypto market leader bitcoin takes a bull breather.
LINK set a new record price of $23.68 overnight and is changing hands near $21.73 at press time, a 7.3% gain on a 24-hour basis. The previous lifetime high of $19.90 was reached in August, according to CoinDesk 20 data.
The cryptocurrency has nearly doubled in the first two weeks of the year in a strong follow-through to last year’s 530% rise. Chainlink’s oracles act as a bridge between cryptocurrency smart contracts and off-chain data feeds.
Related: Bitcoin Struggles to Recover After Biggest Weekly Price Loss Since September
Some altcoins such as OMG and OXT are up over 10% in the past 24 hours, while others including ether, litecoin and bitcoin cash have gained at least 2–8% each.
Bitcoin is currently trading near $36,900, representing a 5% gain in 24 hours, but remains trapped in a week-long tightening range of $30,000 to $40,000. The period of consolidation looks to be paving the way for the rotation of money into the relatively cheap altcoins.
The switch to alts began last week with Polkadot blockchain’s DOT token rallying sharply to become the fourth-largest cryptocurrency by market capitalization, according to Alex Melikhov, CEO and founder of cryptocurrency framework Equilibrium and the EOSDT stablecoin. “Other coins now seem to be following Polkadot higher,” he said.
The record ether-bitcoin implied volatility spread seen earlier this month had suggested a rally in ether and alternative cryptocurrencies in general may be on the way.
Related: Bitcoin’s Massive Swings Give Pause to CFOs Mulling Reserve Investment: Bloomberg
Altcoins could continue to “pop hard” while bitcoin is held in a narrowing price range, said market analyst Lark Davis on Twitter.
LINK may receive an additional boost from Ethereum’s impending switch to the staking model, which would allow node operators to stake their collateral in order to gain access to certain data jobs that require collateral.
The altcoin rally may pause if bitcoin’s recent narrowing price range ends with a bullish breakout, opening doors for stronger gains. “If bitcoin breaks $42,000, it’s going to run to test $50,000 pretty quickly,” Vinny Lingham, investor and founder of crypto wallet and identity verification firm Civic, tweeted Thursday.
Also read: Bitcoin Struggles to Recover After Biggest Weekly Price Loss Since September
Related StoriesLivecoin Exchange Announces Closure After December Hack
Cryptocurrency exchange Livecoin announced Saturday it will shut down after a claimed attack on the platform last month.
- The Russia-based exchange said in a website notice on an alternative domain that it had made a “hard decision to close the business” and will be refunding any remaining funds to users.
- No amount for losses arising from the breach was disclosed. The firm said: “Our service and team bear hard losses as well as our clients.”
- Livecoin said it will accept claims for refunds until March 17, after which no new requests will be accepted.
- Users will need to email the exchange and pass verification procedures before they can be awarded refunds, the post said.
- In December, Livecoin claimed to have suffered what it called a “carefully planned attack in which it had “lost control” of its servers, backend and nodes.
Read more: Crypto Exchange Livecoin Begs Users to Stop Trading After Losing Control of Servers
Related StoriesAustralian Bitcoin Trader Takes Banks to Tribunal After Sudden Account Closures
A cryptocurrency trader in Australia is seeking $250,000 AUD ($192,000 USD) in compensation from two banks claiming he was the victim of unlawful discrimination when his accounts were closed with little warning.
- Allan Flynn has started proceedings against Westpac and ANZ banks at the ACT Civil and Administrative Tribunal, which closed his accounts soon after they had been opened, reports the Australian Financial Review.
- Flynn had operated a digital currency exchange registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), but said he was unable to continue operating without banking services.
- The trader said he purchased bitcoin on behalf of 450 customers via his business, but over three years had around 20 accounts closed by banks, including CBA, NAB, ING and Bendigo Bank.
- Westpac reportedly told Flynn his account was closed because it was “under investigation for cryptocurrency fraud.”
- “How am I supposed to run a lawful business if I can’t get a bank account?” Flynn told the Australian Financial Review.
- According to the report, he also claimed an ANZ employee had informed other banks and his customers that he was involved in fraud.
- The trader said he is considering raising his compensation request above $250,000 with the recent jump in the price of cryptocurrencies.
Read more: Australian Central Bank Sees ‘No Strong Public Policy Case’ for CBDC
Related StoriesPublisher of ‘Infinite Fleet’ Game Kicks Off Token Offering With $1M Tether Investment
The publisher of the upcoming online space strategy game “Infinite Fleet” is providing a chance to buy into equity and share in future profits through the launch of a public security token offering (STO).
Announced Monday, Luxembourg-based Exordium has just launched the token-based funding round in select European countries. The tokens are priced at $0.50 per EXOeu token and are being issued by tokenization platform Blockstream AMP.
Tether International Limited, an arm of the stablecoin issuer, is leading the round, having already invested $1 million in Exordium’s tokens. The funding model is aimed to democratize venture capital by making the investment accessible to the general public, Exordium said.
Related: Blockchain Bites: Coinbase Wants to Crowdsource Asset Listings; What’s Up With Tether’s Bank?
The raise, said to be in accordance with EU capital market laws, is being conducted via digital marketplace STOKR, which provides turnkey solutions for small-to-medium-sized ventures requiring access to capital markets.
According to the announcement, investors will be able to invest via STOKR using currencies such as the euro, and digital assets including bitcoin (BTC) and tether (USDT), with a minimum investment of $100.
“Unlike Kickstarter, investors in security tokens receive real financial rights in the company in which they are investing,” said STOKR co-founder Arnab Naskar.
MMO meets STOThe humans vs. aliens massively multiplayer online (MMO) space game is being developed by a team of game designers who have worked on franchises such as Age of Empires, Homeworld, Company of Heroes and Dawn of War. The game will use a different digital token to drive its in-game economy
Related: Bitcoin ETP Trading at Levels Seen by Top European ETFs: FT
“As a former … game developer myself, I see great potential in the application of crypto assets to multiplayer online games,” said Tether CTO Paolo Ardoino.
The MMO, developed by Pixelmatic, previously raised $3.1 million through its own private STO in August last year backed by Litecoin creator Charlie Lee, Blockstream CEO Adam Back, Heisenberg Capital founder Max Keiser among others.
See also: DeFi Game Aavegotchi Preps for Jan. 4 Mainnet Launch With NFT Auctions
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