CoinDesk Crypto

Hi, all. Today we look at the global perspective: Latin America’s booming crypto sector, Israeli’s DeFi scene and how whales from around the world drive market changes. 

Top shelf

Capear el temporal
Argentinian crypto exchange operations are booming in a year of economic and political uncertainty, CoinDesk’s Sandali Handagama reports. (Lea el artículo en español. Es el primer trabajo de CoinDesk traducido a la segunda lengua más hablada del mundo.) It’s part of a general trend across the South American region, driven by bitcoin’s bull market, national inflation and the increasing need for digital remittances during a pandemic year. Last week, Mexico City-based Bitso raised $62 million to fund its expansion to Brazil, it certainly won’t be the last.

DeFi darlings
Israel’s crypto scene has pivoted to decentralized finance, the intrepid CoinDesk contributor Leigh Cuen concisely and conveniently considers. At an epicenter of 2017’s Ethereum-based ICO bubble, Israeli startups, and attendant venture capitalists, are now engineering ways to bring bitcoin into the emerging DeFi economy, also primarily based on Ethereum.

Related: Blockchain Bites: Google Goes Down, Nexus CEO and US Treasury Get Hacked

Carbon future
The World Economic Forum and seven major mining companies are trialing blockchain to track CO2 emissions from mine to the end of the supply chain. Maybe it’ll finally answer the question: How did oil get into everything?

Quick bites

• CRYPTO CAPITULATION? SEC Chairman Jay Clayton is stepping down this year. Modern Consensus provides an overview of his tenure and asks how he might be remembered.
• DRAWN DOWN: The amount of ether (ETH) on exchanges is at its lowest point in two years after some five million tokens were withdrawn since March. (Trustnodes)
• STRICT LAWS: Estonia is known as a bastion of digital experimentation. Still, about 1,000 cryptocurrency companies lost licenses to operate in the country this year. (Decrypt)
• INSTITUTIONAL FLOOD: JPMorgan analysts say MassMutual’s recent $100 million BTC buy could presage a wave of institutional demand. (CoinDesk)
• OLD MEETS NEW: SatoshiPay, a cypherpunk favorite, will be the first company to integrate a euro-backed stablecoin developed by Bankhaus von der Heydt, a bank founded in the 18th century. (CoinDesk)
• PRIVATE DEALINGS: Pornhub added monero payments after Mastercard and Visa cut ties with the adult content site. (The Block)

Market intel

Sell pressure
Bitcoin’s rally above $19,500 was clipped early on Tuesday, with significant sell pressure at $20,000 ahead, according to CoinDesk markets reporter Omkar Godbole. These sell walls are no joke. In fact, one analyst told Godbole this morning’s market dip could likely be attributed to profit taking by large Asia-based investors. CryptoQuant data shows whales taking a dip around $19,500, bringing the market with them. Big picture: Pondering Durian provides four reasons a modest bitcoin allocation might make sense.

At stake

There has been a lot of hyperventilating in the press and on Twitter this week over the fact that cryptocurrency is now, by default, the only form of payment Pornhub accepts. 

Far less attention has been paid to the related news that the adult entertainment site is about to adopt its own version of know-your-customer rules, or KYC. Call it “Know Your Coomer” after the internet meme of a disheveled porn addict with poor impulse control and a hypertrophied right arm. (For those unfamiliar with online argot, it’s one of many derivatives of the epithet “boomer,” like “consoomer” for spendthrifts, “floomer” for those who insist COVID-19 is just the flu, or “coofer” for people exhibiting symptoms of the virus.)

Related: First Mover: Horrible 2020 Economy Proved Best Thing for Bitcoin

And, much like the know-your-customer policies of financial institutions including regulated crypto exchanges, Know Your Coomer raises difficult questions about privacy and data protection.

Rewinding the tape: In response to a harrowing New York Times article about the posting of child exploitation imagery on Pornhub, Visa and Mastercard booted the site from their card networks. This left crypto, which Pornhub has accepted for several years, as the sole remaining payment option for the site’s premium users.

Yes, I checked. 

No, I did not investigate further through this channel.

From the perspective of highlighting crypto’s value as a censorship-resistant form of money, this is all well and good. As disturbing as the revelations in the Times piece were, the use of financial infrastructure as an extrajudicial enforcement mechanism is creepy in its own way, just as it was in the Wikileaks banking blockade and Operation Choke Point.  

The Open Source Defense newsletter said it well:

“The second-order danger … is that you’re nearly certain to be able to find illegal content on any large platform for user-generated content. And no company at any level of technical expertise, from Google and Facebook on down, can fully prevent that. So when everybody’s guilty, getting shut down is only a matter of whether someone decides that it’s time to take a look at you. That’s not a world that’ll make anybody happy in the long run.”

An under-reported aspect of the story is the steps Pornhub is taking to prevent illegal content from being posted on this site. 

Last week, the site, owned by Canada-based MindGeek, disabled uploads by any users who were not verified through its revenue-generating programs. “In the new year, we will implement a verification process so that any user can upload content upon successful completion of identification protocol,” Pornhub said. (Content previously uploaded by unverified users was subsequently nuked.)

If this prevents monsters from using the site in abusive ways, all the better. But it will create risks for those who only post lawful content. The following remains to be seen:

• What information will be collected from users who want to upload content when the new protocol is implemented in 2021? 
• How will it be verified? 
• Will the information be stored with a third party or with MindGeek? 
• How long will the information be retained? 
• What steps will be taken to secure it? 
• Has MindGeek hired a vendor or vendors to handle ID collection, verification and/or storage? 
• Will the changes be limited to Pornhub or extended to other MindGeek adult sites as well.

I emailed these questions to MindGeek and its law firm last week but have not heard back (not surprising, given the company is managing a crisis situation). 

Five years ago, the Ashley Madison breach showed how a poorly guarded trove of data on people who do legal but embarrassing things online can easily become a blackmailer’s goldmine. Pornhub would do well to heed this lesson. Even coomers deserve privacy.

– Marc Hochstein

Who won #CryptoTwitter? Related Stories

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• Money Reimagined: Bitcoin’s Tug of War as Wall Street Moves In

Correction (Dec. 15, 18:49 UTC): Ruffer allocated 2.5% of its multi-strategies fund to bitcoin, not 2.5% of its total AUM, as was previously reported. The total allocation is worth roughly $15 million.

Ruffer Investment Company sent a short update to shareholders notifying them of the company’s allocation to bitcoin.

• In November, Ruffer allocated what is currently worth approximately 2.5% of its multi-strategies fund to bitcoin, per the memo, or roughly $15 million. The fund manages roughly $620 million.
• “We see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies,” the London-based firm wrote.
• “Bitcoin diversifies the company’s (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see.”
• The four-paragraph memo was sent to shareholders Tuesday.
• Bitcoin gained over 40% in November, closing the month by setting a new record high above $19,850.

Update (Dec. 15, 18:41 UTC): Updated to fix typographical error reflecting bitcoin gained 40% in November, not $40.

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• Bitcoin Chart Views Soared Along With Price in November, TradingView Says
• Secondary Mining Markets Surge Amid ASIC Manufacturing Delays
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Blockchain startup Spring Labs has put its first fraud-prevention tool into production using a permissioned version of Ethereum. The Los Angeles-based firm is now working with two lenders in the Property Assessed Clean Energy (PACE) financing space and onboarding two others, said co-founder John Sun.

Each lender now shares borrower and property data through the Spring Labs protocol, where it is either tokenized or sharded so that only the entity who contributed the data can view it. The lenders have been testing the platform since June and believe that it could save up to $10 million in fraud or 1% of the industry’s total loan transactions.

“They built a real-time database that I could ping to see if there are any other assessments on a property now or coming up,” Mike Schmidt, chief operating officer of PACE Funding, said in an interview. “None of us have done anything [with blockchain] before, but within a week it was paying dividends.” 

Related: World Economic Forum Wants to Standardize Ethical Data Collection

PACE loans are used to finance construction projects that make buildings more energy-efficient or provide new sources of renewable energy for commercial, industrial and private residential properties. Run by the U.S. Department of Energy, the residential PACE program allows local and state governments in California, Florida and Missouri to provide funding for energy improvements. 

Read more: California Agency Backs Green-Energy Pilot Using RSK’s Bitcoin Smart Contracts

Specifically, PACE loans create liens that are repaid by a homeowner’s property taxes. The consumers who seek PACE financing typically have lower-than-average FICO scores because they usually come to the program after getting denied an unsecured loan or home equity line of credit, Schmidt said.

“We are often their only hope of getting a new roof or an air conditioner,” Schmidt said. “We’re helping make solar mainstream and not just for the rich entitled people but for those in the working-class neighborhoods.” 

Why blockchain

Related: Apple Co-Founder Wozniak’s New Venture Lists Token to Help Fund Energy Efficiency Projects

Spring Labs’ blockchain solution was an attractive one for PACE lenders who were concerned a centralized hub for data exchange might be another target for contractors who are trying to game the system, Schmidt said.

The space is dominated by four lenders because the most natural financiers have an incentive not to be PACE lenders: Mortgage lenders have the necessary skills to enter the PACE loans sector, but PACE loans have a “super lien” on the property, meaning they get paid out before mortgage payments. 

For Spring Labs, this small number of participants made PACE an attractive space to test the Spring Protocol, said Sun. Because data is either tokenized or sharded, sharing financial data is no longer a competitive disadvantage. Spring Labs’ end goal is to replace credit rating bureaus and data aggregators by making data exchanges possible without centralized data hubs, which can be hacked and which also make data sharing more expensive.

Cutting out middlemen data exchangers is also the same logic Visa’s R&D arm had when quietly developing a blockchain that would allow banks to exchange customer data without data aggregators. 

Read more: Visa R&D Arm Develops a Blockchain System That Could Replace Financial Data Aggregators

Lien-stacking isn’t the most legally fraught type of fraud the PACE program faces, but it is a problem that customers have been pushing lenders to solve, Schmidt said. 

The most immediate pay-off for Schmidt’s business will be pitching other states on the idea of PACE lending. Currently, PACE Funding is a licensed lender under California’s Department of Financial Protection and Innovation.

“Now we can go in and say, ‘California took one on the chin for you, and we’ve learned a lot of lessons the hard way, but we have a lot of consumer protection now so we never have to worry about stacked assessments in your state,’” Schmidt said. 

In the future, Spring Labs is also aiming to give PACE lenders more data on bad contractors and more data on PACE borrowers to better determine creditworthiness, Sun said. 

“This is an interesting use case for us to apply our technology,” Sun said. “We spun up a bespoke data-sharing network quickly in an industry that hasn’t shared a lot of information before. We think this is a safe technology that is better for lenders and consumers and is at much less risk for data losses.” 

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• Desperation Among Filecoin Miners Creating a Big Market for FIL Borrowing

Never underestimate American ingenuity, especially when it comes to the Federal Reserve’s ability to invent monetary policy on the fly. 

The U.S. central bank’s top officials, led by Chair Jerome Powell, are expected this week to announce new “qualitative outcome-based” guidance to specify the conditions under which they might taper their stimulus-focused bond purchases, now proceeding at $120 billion a month. Such qualitative guidance would hinge on subjective criteria, such as a promise to keep buying bonds at the current pace until the pandemic is under control – which might be open to interpretation. 

Since no changes are expected to the level of benchmark interest rates, already cut to near zero, the guidance might be the most significant outcome from the two-day, closed-door meeting that culminates Wednesday. 

Related: New York’s Quontic Becomes First US Bank to Offer a Bitcoin Rewards Debit Card

The new approach would join a growing list of unprecedented monetary strategies hatched by the Fed since the financial crisis of 2008, from former Chair Ben Bernanke’s “quantitative easing,” known as QE, to the “average inflation targeting” adopted in September. These are considered unconventional policies since they come into play once the Fed can’t cut interest rates any further without pushing into negative territory.

The upshot is that Fed officials might be using the new guidance as a way to tamp down expectations the bond purchases would continue ad infinitum, while leaving ample flexibility to continue the program as long as they see fit.  

“The most important innovation for this meeting is likely to be an enhancement to their QE guidance by adopting qualitative outcome-based language,” Deutsche Bank Chief U.S. Economist Matthew Luzzetti told clients last week in a report. 

The Fed meeting is likely to be closely tracked in cryptocurrency markets, where bitcoin has been cast by investors from both digital-asset markets and traditional finance as a potential hedge against central-bank money printing and inflation. Bitcoin prices have shot up 170% this year as the U.S. central bank expanded its total assets by more than $3 trillion to $7.3 trillion. 

Risk of a new ‘taper tantrum?’

Related: DeFi on Bitcoin Gets a Boost as Sovryn Launches on RSK Sidechain

With the coronavirus still taking a devastating toll on the economy, there’s little expectation that officials would move anytime soon to end the ongoing bond purchases, which are designed to provide stimulus to the economy by keeping monetary conditions ultra loose. 

And, in fact, according to Michael Feroli, chief U.S. economist for JPMorgan Chase, the Fed officials might even move at this week’s meeting to ease conditions further by extending the average maturity of the bonds it purchases. Such a move would theoretically put downward market pressure on long-term interest rates that tend to be the highest, making it cheaper for businesses and households to take out loans. 

But Feroli noted the contrast between the new “qualitative” guidance and “quantitative” policies that might be tied to hard numerical metrics like inflation or unemployment goals.

“It could be as simple as noting that purchases would taper and cease before the first rate hike, though all this would say is they expect to cease purchases sometime before 2024, which isn’t very informative,” Feroli wrote. “A reasonable evolution of the statement language would predicate purchases on the course of the public health crisis.”

One “risk,” according to Feroli, is that traders start speculating on the timeline for broad distribution of a vaccine and perhaps then conclude bond purchases might wrap up sooner than most investors are currently anticipating.

“This sets up the risk that new guidance could spark another taper tantrum,” Feroli wrote, referring to the moment in May 2013 when bonds sold off on fear the Fed was going to taper its bond purchasing program. “A possible safeguard would be to pledge to purchase assets until ‘well after’ the public health crisis passes, or some similar wording.”

According to economists at Bank of America, the second-biggest U.S. lender after JPMorgan, thresholds for tapering the bond purchases might be “open to interpretation, however, which provides flexibility but also potentially some discomfort for market participants.”

“The Fed wants to make sure that asset purchases keep interest rates low enough and financial conditions supportive enough to help drive economic growth and deliver higher inflation,” according to the report. 

Qualitatively speaking, the Fed usually gets what it wants.

Related Stories

• Las criptomonedas surgen en la desafiante economía de Argentina
• First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls

Nasdaq-listed bitcoin mining company Riot Blockchain (RIOT) is piloting new liquid cooling technology for mining hardware in Texas to test solutions for effective mining in difficult temperature environments.

Riot is launching an 8-megawatt immersion technology testing initiative to “assess the potential for higher productivity and lower cost mining opportunities in Texas,” per a press release. Testing is scheduled to start in Q1 2021. 

If successful, CEO Jeff McGonegal told CoinDesk the company envisions “deploying immersion at a larger scale over time, particularly in warmer climates where cooling is a chief concern.”

Related: OKEx Bitcoin Mining Pool Shows Signs of Life After Precipitous Hashrate Drop

In high heat and humidity environments, cooling mining machines with liquid immersion instead of air cooling offer significant advantages for miners with razor-thin profit margins.

Not only does liquid cooling offer significant noise reduction compared with fan cooling. Immersion cooling can also increase usable hashrate per machine by up to 50% in some cases, prolong the lifespan of some machines and allow miners to install more machines per square foot than if the same facility used fan cooling. But maintenance can be difficult.

The mining industry is still standardized around air-cooled designs, which means air-cooled facilities are still the first choice for miners,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk. “But in areas of high temperature and low humidity, miners use evaporative cooling as a cost-effective strategy to mitigate the heat.”

In hot, humid regions like Texas, Vera said, liquid immersion is “the cooling method of choice as it eliminates heat, dust and humidity issues.”

Related: Bitfury to Sell at Least Part of Its 38% Stake in Bitcoin Miner Hut 8

In planning this pilot project, the Castle Rock, Colo.-based mining firm is “looking to observe improvements operating in difficult mining temperature environments, combined with the additional performance that can be achieved as a result,” McGonegal told CoinDesk.

Participating in Riot’s pilot program are two bitcoin mining hardware and energy software companies, Enigma and Lancium, that are providing the technology Riot plans to test.

In 2020, Riot shares have outperformed bitcoin year to date in 2020, gaining 660% since January and trading near $9.37 at last check. Over the same period, bitcoin gained 170%. The mining firm is now worth over $666 million.

Related Stories

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SBI Financial Services has acquired cryptocurrency trading platform B2C2, Reuters reported Monday.

• The Japanese firm said it will leverage B2C2’s crypto rails for mainstream financial institutions.
• Reuters reports that SBI Holdings is now the first major financial firm to own a crypto desk.
• SBI acquired a $30 million minority stake in B2C2 this summer. It has been offering clients access to B2C2’s trading portal ever since.
• SBI subsidiaries have shown a penchant for crypto projects including security token offerings and digital asset exchange partnerships. The group offers shareholder payouts in XRP.

Related Stories

• Bitcoin News Roundup for Dec. 8, 2020
• Grayscale Sees a New Group of Ethereum-First Investors
• Institutional Bitcoin Shop NYDIG Raises $150M for Twin Crypto Funds
• Why a $631B Asset Manager Just Changed Its Mind on Bitcoin

New York-based Quontic Bank has become the first FDIC-insured financial institution to launch a bitcoin rewards checking program.

Announced Tuesday, the program includes a bitcoin rewards debit card (1.5% back), mobile app, access to ATMs, and mobile payments options like Google Pay and Apple Pay. 

The bank had to receive approval from the U.S. Office of the Comptroller of the Currency (OCC). In July, the OCC issued a letter enabling nationally chartered banks in the U.S. to provide custody services for cryptocurrencies. Acting Comptroller Brian Brooks has hinted at more “good” actions on crypto by the end of Trump’s term. 

Related: New Federal Reserve ‘Qualitative’ Approach Could Push Further Into Experimental Realm

At Quontic, customers’ bitcoin will be custodied by crypto asset manager NYDIG, which just scooped Quontic’s former chief innovation officer to serve as its head of bank solutions. Major banking software and payments technology provider FIS will build a mobile app with Quontic to track bitcoin rewards in the second quarter of 2021. 

“This is the first time any bank or any core [banking system] has done anything with bitcoin that is consumer facing,” Quontic CEO Steve Schnall said in an interview.

Read more: MassMutual Buys $100M in Bitcoin, Bets on Institutional Adoption With $5M NYDIG Stake

Customers will be able to hold their bitcoin with NYDIG or redeem it in cash, Schnall said. At the moment, customers are not permitted to transfer the bitcoin to another wallet address. 

Related: DeFi on Bitcoin Gets a Boost as Sovryn Launches on RSK Sidechain

Quontic is a tiny bank with only $1.4 billion in assets, about 0.044% the size of JPMorgan. In 2019, it banked a couple crypto firms. Since then, the bank has pivoted from offering bank accounts to crypto firms to trying to bring bitcoin to the masses. 

“Right now we’re not banking crypto companies,” Schnall said. “For the foreseeable future, we’re just going to focus on the consumer.” 

The bitcoin rewards program is initially available to residents of Alabama, Arkansas, California, Maryland, Massachusetts, Missouri, Montana, New York, Pennsylvania, Utah, Wisconsin and Wyoming. Quontic does business in all 50 states, but these are the states that NYDIG currently operates in.

Update (Dec. 15, 17:18 UTC): Adds comments from Quontic CEO Steve Schnall.

Correction (Dec. 15, 17:30 UTC): Quontic is headquartered in Manhattan, not Queens. The bank moved across the East River in July 2019.

Related Stories

• First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls
• Bitcoin May Have Hit Wall of Profit Takers Around $19,500: Analyst

Estonia has withdrawn more than 1,000 licenses from cryptocurrency companies in 2020, apparently due to the burden of monitoring compliance.

• Veiko Tali, secretary-general of the Ministry of Finance, said in a post on Friday that many of the companies had “minimal” connections to Estonia and clientele in “remote countries.”
• The mass license revocation by the Financial Intelligence Unit still leaves around 400 virtual currency service providers (VASPs) licensed in Estonia, he added.
• The secretary-general explained that monitoring and regulation of virtual currency service providers (VASPs) are in “continuous need of heightened attention,” and that “important regulatory changes” are on the way for the industry.
• However, Estonia’s resources for monitoring compliance by VASPS are limited, Tali said.
• Estonia joined the European Union in May 2004, which means the country aligns with EU regulations concerning anti-money laundering and other measures.

See also: Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

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A new project built on the Bitcoin sidechain RSK is gunning to advance decentralized finance (DeFi) on Bitcoin’s ecosystem.

Sovryn, a self-billed “decentralized platform for trading and lending Bitcoin,” launched today with $2.1 million at its back – a symbolic number representing Bitcoin’s total supply. Crypto venture capital firm Greenfield One led the funding round, which also saw contributions from Collider Ventures and Monday Capital.

A 2-in-1 decentralized exchange and derivatives market, Sovryn will offer traders borrowing and lending service in bitcoin, USDT and RSK’s dollar on chain (DOC) stablecoin; they can also long or short bitcoin on the platform with up to 5x leverage.

Related: Secret Network Launches Bridge to Bring Transactional Privacy to Ethereum

“RSK was a natural fit for Sovryn,” said Edan Yago, Sovryn project lead. “The team behind it share our vision for a borderless and censorship resistant digital currency. This runs right to the core of the system where transactions are secured by bitcoin miners. Now, with the addition of a smart contract layer, deploying on RSK has meant we can provide the same or better functionality than centralized services, but in a decentralized way.”

The market is the second DeFi platform to come to RSK, a year behind the DAO-like stablecoin market Money on Chain. Cloning yet another DeFi product, Sovryn plans to launch a governance token which mimics Compound Finance’s model in Q1 of 2020 with its SOV token sale.

What is a Bitcoin sidechain?

A Bitcoin sidechain is a scaling solution for Bitcoin that offloads transactions onto a network that operates independently from the primary Bitcoin network, using a 1-for-1 tokenized version of bitcoin as a native currency. These systems are sometimes called “federated networks” because they sacrifice decentralization in favor of efficiency increases like transaction speed.

Read more: RSK Is Changing How It ‘Pegs’ Bitcoin to Its Sidechain

Related: First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls

For RSK, a group of signatories oversee the peg-in and peg-out process to convert BTC into RBTC, RSK’s tokenized version, though RSK is in the process of revamping this design. RSK processes transactions through a “merge mined” process, wherein Bitcoin miners also contribute hashrate to RSK in return for RBTC transaction fees.

DeFi on Bitcoin

Sovryn’s launch comes shortly after RSK’s MakerDAO-esque stablecoin market Money on Chain introduced liquidity mining last week. 

These software rollouts have RSK sinking its teeth further into the market designs that made DeFi so hot in the summer and early fall of 2020. These financial products, a mishmash of derivatives markets, lending markets and everything in between, have found a home on Ethereum, whose programming language can accommodate more flexible smart contracts than Bitcoin’s own. 

“Sovryn, Money on Chain and RIF Dollar only represent the beginning of the Bitcoin DeFi ecosystem,” said Diego Gutierrez Zaldivar, IOVlabs CEO and RSK co-founder.

“Other than the RSK-Ethereum bridge being utilized more often, by MakerDAO and Aave for example, 2020 showed the Bitcoin ecosystem is the strongest one and where users want to be. That has led to many developers and entrepreneurs to understand they should, at the very least, create interoperable solutions to Bitcoin’s open finance protocols like RSK. Bitcoin is the future of the Internet of Value, and we’re excited to participate and lead it.”

Read more: Forget Ethereum, DeFi Is Being Built on Bitcoin

Sidechains like RSK have often been billed as a way to bring Ethereum-like smart contract capabilities to Bitcoin. Greenfield One partner Jascha Samadi told CoinDesk that Sovryn is definitely a “short- to mid-term play” to capture some of the lending and derivative markets volume that occurs on Ethereum-native DeFi and even centralized exchanges.

But the long play is about more than active crypto users; it’s about the crop that doesn’t have skin in the game yet.

“The long term play for DeFi on Bitcoin could be significantly larger with users (both retail and institutional) that are not in crypto yet,” Samadi wrote over email.

“At some point obviously, all these users will want to interact with DeFi applications as well, and with products like Sovryn, this will be possible right where they entered the ecosystem,” meaning in Bitcoin, rather than “having to educate them [on how to move] their BTC to Ethereum or some other ecosystem.”

Related Stories

• Bitcoin May Have Hit Wall of Profit Takers Around $19,500: Analyst
• How Israeli VCs Are Doubling Down on DeFi Startups

Al inicio del 2020, Ripio, una de las casas de cambios más grandes de Argentina, tenía alrededor de 400.000 usuarios. Está terminando este 2020 con más de 1 millón. 

El director de marca de Ripio, Juan Mendez, dijo a CoinDesk que cerca del 70% de los usuarios de Ripio son de Argentina y el resto se concentra en Brasil. De acuerdo a Mendez, la plataforma ha presentado un aumento de hasta 10 veces en su volumen de intercambio, en comparación con el año pasado. 

Read this article in English.

Related: New Federal Reserve ‘Qualitative’ Approach Could Push Further Into Experimental Realm

“He estado con la casa de cambio desde sus inicios y nunca he visto este nivel de crecimiento. Este es mucho mayor que el pico del 2017, tanto en operaciones como de la demanda,” dijo Mendez. 

Los problemas económicos de Argentina van desde enormes obligaciones de deuda hasta una alta inflación, agravada por la pandemia del COVID-19. Estos han obligado a su población a buscar nuevas alternativas para resguardar sus riquezas este año. Pero, como el gobierno ha limitado la compra de dólares norteamericanos a sus ciudadanos, las criptomonedas, rápidamente, han demostrado ser la mejor alternativa. 

Además de Ripio, las casas de cambio de criptomonedas operando en Argentina han presentado récords de crecimiento en este 2020. Con algunas experimentando máximos históricos en volúmenes de intercambios en la última mitad del año.

La casa de cambio mexicana Bitso, que expandió sus operaciones a Argentina en febrero de este año, ha obtenido un 68% de incremento en sus volúmenes de comercio en el tercer trimestre, en comparación con el segundo de este 2020. La instalación de Bitso en Argentina también ayudó a que la plataforma alcanzara el millón de usuarios, al inicio de este año.    

Related: First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls

La plataforma de intercambios entre pares (P2P, por sus siglas en inglés) LocalBitcoins también presentó un incremento del 547% en sus volúmenes de intercambio entre agosto del 2019 y del 2020, con un máximo histórico de más de un millón de dólares en bitcoin intercambiados en la segunda semana de agosto de este año. Otra plataforma P2P, Paxful, mostraba casi cero volumen de intercambio en los últimos cinco años, pero el comercio empezó a crecer este año, registrando un aumento del 60.641% al compararse desde septiembre del 2019 hasta el 2020.

El crecimiento sin precedentes del comercio de criptomonedas en Argentina se refleja como una tendencia regional más amplia, ya que LocalBitcoins y Paxful también registraron máximos históricos en varios países de América del Sur, incluidos Chile, Colombia y Bolivia. Los negocios en la región son tan prósperos, que este miércoles CoinDesk reportó que Bitso recaudó la asombrosa cifra de $62 millones para financiar su expansión en Brasil. 

El aumento en el uso de las criptomonedas se está generando a pesar de un contexto de devastadoras consecuencias económicas producidas por la pandemia del COVID-19. Incluso, el Banco Mundial ha declarado a América Latina y el Caribe como la región más golpeada en el mundo. 

La combinación del aumento del precio de bitcoin, las economías inflacionarias (creadas desesperadamente por los países para intentar mitigar los efectos de la pandemia) y la necesidad de medios de pagos digitales más rápidos (particularmente para remesas transfronterizas) han impulsado la adopción de las criptomonedas en América del Sur este año. 

Dentro de este panorama, Argentina destaca. 

Comparado con economías hiperinflacionarias como Venezuela – se proyecta que para este 2020 su economía se va reducir un 6,8% – Argentina parece que enfrentará un peor desgaste, gracias en parte a una larga y complicada historia económica. En mayo, el gobierno falló el pago de $503 millones en intereses, de un bono en dólares emitidos bajo la ley de New York, colocando al país en su noveno default de deuda soberana en su historia.    

El producto interno bruto (PIB) se estima que se contraerá un 12% este año, con cerca de más de la mitad de la población viviendo en pobreza. 

“Las criptomonedas son, en cierta manera, aliados para los individuos, principalmente en países con un alto grado de incertidumbre política o económica,” comentó Andrés Ondarra, Gerente de Bitso Argentina, para Coindesk por correo electrónico. 

Catch-22

Los argentinos, nerviosos ante el deterioro de la economía de sus país, comenzaron a aumentar sus compras de dólares norteamericanos para resguardar su riqueza. Entonces, las reservas del país se redujeron, forzando al gobierno a devaluar su moneda y establecer restricciones en la cantidad de divisas que los ciudadanos pueden resguardar.

En septiembre, en un intento de resguardar las reducidas reservas nacionales, el banco central de Argentina limitó la cantidad de dólares norteamericanos que sus ciudadanos pueden comprar a $200 mensuales, con un impuesto del 35%.    

Esto generó más problemas: después de unas difíciles negociaciones con los acreedores, el gobierno logró manejar exitosamente la restructuración de $65 mil millones de deuda externa este agosto pasado, pero debido a las preocupaciones de los inversionistas sobre las restricciones en el mercado de divisas, los nuevos bonos internacionales recién emitidos cayeron abruptamente durante septiembre y las personas siguieron comprando dólares a pesar del impuesto. 

Cada vez que el peso es devaluado, las personas luchan para conseguir una manera de proteger el valor de sus salarios, agrega Mendez. Además de esto, a inicios de diciembre, el senado de Argentina aprobó un impuesto único sobre el patrimonio a los millonarios del país, para ayudar a financiar los esfuerzos de ayudas económicas ante la pandemia.

Ondarra declaró que Argentina es un mercado de criptomonedas peculiar, ya que sus usuarios siempre están la búsqueda de acceder a reservas de valor y diversas soluciones financieras. 

“Los argentinos siempre están tratando de encontrar una moneda más fuerte,” dijo Mendez. 

Entrando a las criptomonedas

De acuerdo a Mendez, existe una diferencia fundamental entre los usuarios de criptomonedas en Argentina y los de Brasil, donde también opera Ripio. Las dos naciones están separadas por las fallas económicas sistémicas de Argentina a lo largo de los años, explicó.

“Argentina ha tenido que superar muchos desastres económicos a lo largo de los años. Estamos bastante acostumbrados a que fracasen los gobiernos y la planificación económica estratégica, y estamos más dispuestos a probar cosas diferentes para mantener el país a flote” afirmó Mendez.

Por ejemplo, el gobierno usualmente anuncia nuevas restricciones financieras a horas de la tarde del fin de semana (con la intención de que sean implementadas el lunes siguiente), dice Mendez.

“Entonces, durante el fin de semana y el resto de esa semana, nosotros siempre esperamos una gran demanda de criptomonedas,” de acuerdo a Mendez. 

Los argentinos ven las criptomonedas como una gran alternativa para el resguardo de valor, aunque su plataforma alerta a sus usuarios que las monedas como bitcoin son activos digitales volátiles, según Mendez. 

Tanto Ondarra como Mendez están de acuerdo que la fuerte curiosidad de los argentinos sobre alternativas de reservas de valor y el aumento del conocimiento sobre criptomonedas han ayudado al crecimiento del espacio crypto local. 

Pero Ondarra también atribuye el rápido crecimiento, en este año, al reciente aumento del precio. 

“Un factor importante que explica el incremento en el volumen durante los últimos meses ha sido la tendencia alcista en el precio de bitcoin. Lo que indudablemente ha mantenido la atención de las personas en los movimientos del precio y ha promovido un mayor volumen de comercio,” declaró Ondarra. 

Él explica que los inversionistas de Argentina están mirando de cerca los movimientos de grandes inversionistas como MicroStrategy, quienes pasaron cerca de $500 millones de inversiones en efectivo a BTC. 

Este año, Argentina se posicionó en el puesto 28 entre 154 países en el índice de adopción de criptomonedas de Chainalysis, con otros países de América Latina donde Venezuela, Colombia, Brasil y Perú se posicionan delante de Argentina.

“Está prosperando. La atención de todos se encuentra en América Latina. Y está creciendo rápido,” dijo Méndez.

Traducido por José Rafael Peña Gholam.

Este artículo ha sido actualizado por claridad.

Related Stories

• First Mover: Horrible 2020 Economy Proved Best Thing for Bitcoin
• Crypto Is Booming in Economically Challenged Argentina

Al inicio del 2020, Ripio, una de las casas de cambios más grandes de Argentina, tenía alrededor de 400.000 usuarios. Está terminando este 2020 con más de 1 millón. 

El director de marca de Ripio, Juan Mendez, dijo a CoinDesk que cerca del 70% de los usuarios de Ripio son de Argentina y el resto se concentra en Brasil. De acuerdo a Mendez, la plataforma ha presentado un aumento de hasta 10 veces en su volumen de intercambio, en comparación con el año pasado. 

Read this article in English.

Related: New Federal Reserve ‘Qualitative’ Approach Could Push Further Into Experimental Realm

“He estado con la casa de cambio desde sus inicios y nunca he visto este nivel de crecimiento. Este es mucho mayor que el pico del 2017, tanto en operaciones como de la demanda,” dijo Mendez. 

Los problemas económicos de Argentina van desde enormes obligaciones de deuda hasta una alta inflación, agravada por la pandemia del COVID-19. Estos han obligado a su población a buscar nuevas alternativas para resguardar sus riquezas este año. Pero, como el gobierno ha limitado la compra de dólares norteamericanos a sus ciudadanos, las criptomonedas, rápidamente, han demostrado ser la mejor alternativa. 

Además de Ripio, las casas de cambio de criptomonedas operando en Argentina han presentado récords de crecimiento en este 2020. Con algunas experimentando máximos históricos en volúmenes de intercambios en la última mitad del año.

La casa de cambio mexicana Bitso, quienes expandieron sus operaciones a Argentina en febrero de este año, han obtenido un 68% de incremento en sus volúmenes de comercio en el tercer trimestre, en comparación con el segundo de este 2020. La instalación de Bitso en Argentina también ayudó a que la plataforma alcanzara el millón de usuarios, al inicio de este año.    

Related: First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls

La plataforma de intercambios entre pares (P2P, por sus siglas en inglés) LocalBitcoins también presentó un incremento del 547% en sus volúmenes de intercambio entre agosto del 2019 y del 2020, con un máximo histórico de más de un millón de dólares en bitcoin intercambiados en la segunda semana de agosto de este año. Otra plataforma P2P, Paxful, mostraba casi cero volumen de intercambio en los últimos cinco años, pero el comercio empezó a crecer este año, registrando un aumento del 60.641% al compararse desde septiembre del 2019 hasta el 2020.

El crecimiento sin precedentes del comercio de criptomonedas en Argentina se refleja como una tendencia regional más amplia, ya que LocalBitcoins y Paxful también registraron máximos históricos en varios países de América del Sur, incluidos Chile, Colombia y Bolivia. Los negocios en la región están con gran impulso. Una muestra, es que este miércoles CoinDesk reportó que Bitso recaudó la asombrosa cifra de $62 millones para financiar su expansión en Brasil. 

El aumento en el uso de las criptomonedas se está generando a pesar de un contexto de devastadoras consecuencias económicas producidas por la pandemia del COVID-19. Incluso, el Banco Mundial ha declarado a América Latina y el Caribe como la región más golpeada en el mundo. 

En cambio que el uso de criptomonedas se inhibiera, la combinación del aumento del precio de bitcoin, las economías inflacionarias creadas desesperadamente por los países para intentar mitigar los efectos de la pandemia y la necesidad de medios de pagos digitales más rápidos (particularmente para remesas transfronterizas) han impulsado la adopción en América del Sur este año. 

Dentro de este panorama, Argentina destaca. 

Comparado con economías hiperinflacionarias como Venezuela – se proyecta que para este 2020 su economía se va reducir un 6,8% – Argentina parece que enfrentará un peor desgaste, gracias en parte a una larga y complicada historia económica. En mayo, el gobierno falló el pago de $503 millones en intereses, de un bono en dólares emitidos bajo la ley de New York, colocando al país en su noveno default de deuda soberana en su historia.    

El producto interno bruto (PIB) se estima que se contraerá un 12% este año, con cerca de más de la mitad de la población viviendo en pobreza. 

“Las criptomonedas son, en cierta manera, aliados para los individuos, principalmente en países con un alto grado de incertidumbre política o económica,” comentó Andrés Ondarra, Gerente de Bitso Argentina, para Coindesk por correo electrónico. 

Catch-22

Como los argentinos, nerviosos ante el deterioro de la economía de sus país, comenzaron a aumentar sus compras de dólares norteamericanos para resguardar su riqueza, las reservas del país se reducían, forzando al gobierno a devaluar su moneda y agregar restricciones de cuanto en divisas los ciudadanos tienen permitido resguardar.

En un intento para resguardar las reducidas reservas, en septiembre el banco central de Argentina limitó la cantidad de dólares norteamericanos que sus ciudadanos pueden comprar a $200 mensuales, con un impuesto del 35%.    

Esto generó más problemas: después de unas difíciles negociaciones con los acreedores, el gobierno logró manejar exitosamente la restructuración de $65 mil millones de deuda externa este agosto pasado, pero debido a las preocupaciones de los inversionistas sobre las restricciones en el mercado de divisas, los nuevos bonos internacionales recién emitidos cayeron abruptamente durante septiembre y las personas siguieron comprando dólares a pesar del impuesto. 

Cada vez que el peso es devaluado, las personas luchan para conseguir una manera de proteger el valor de sus salarios, agrega Mendez. Además de esto, a inicios de diciembre, el senado de Argentina aprobó un impuesto único sobre el patrimonio a los millonarios del país, para ayudar a financiar los esfuerzos de ayudas económicas ante la pandemia.

Ondarra declaró que Argentina es un mercado de criptomonedas peculiar, ya que sus usuarios siempre están la búsqueda de acceder a reservas de valor y diversas soluciones financieras. 

“Los argentinos siempre están tratando de encontrar una moneda más fuerte,” dijo Mendez. 

Entrando a las criptomonedas

De acuerdo a Mendez, existe una diferencia fundamental entre los usuarios de criptomonedas en Argentina y los de Brasil, donde también opera Ripio. Las dos naciones están separadas por las fallas económicas sistémicas de Argentina a lo largo de los años, explicó.

“Argentina ha tenido que superar muchos desastres económicos a lo largo de los años. Estamos bastante acostumbrados a que fracasen los gobiernos y la planificación económica estratégica, y estamos más dispuestos a probar cosas diferentes para mantener el país a flote” afirmó Mendez.

Por ejemplo, el gobierno usualmente anuncia nuevas restricciones financieras a horas de la tarde del fin de semana (con la intención de que sean implementadas el lunes siguiente), dice Mendez.

“Entonces, durante el fin de semana y el resto de esa semana, nosotros siempre esperamos una gran demanda de criptomonedas,” de acuerdo a Mendez. 

Los argentinos ven las criptomonedas como una gran alternativa para el resguardo de valor, aunque su plataforma alerta a sus usuarios que las monedas como bitcoin son activos digitales volátiles, según Mendez. 

Tanto Ondarra como Mendez están de acuerdo que la fuerte curiosidad de los argentinos sobre alternativas de reservas de valor y el aumento del conocimiento sobre criptomonedas han ayudado al crecimiento del espacio crypto local. 

Pero Ondarra también atribuye el rápido crecimiento, en este año, al reciente aumento del precio. 

“Un factor importante que explica el incremento en el volumen durante los últimos meses ha sido la tendencia alcista en el precio de bitcoin. Lo que indudablemente ha mantenido la atención de las personas en los movimientos del precio y ha promovido un mayor volumen de comercio,” declaró Ondarra. 

Él explica que los inversionistas de Argentina están mirando de cerca los movimientos de grandes inversionistas como MicroStrategy, quienes pasaron cerca de $500 millones de inversiones en efectivo a BTC. 

Este año, Argentina se posicionó en el puesto 28 entre 154 países en el índice de adopción de criptomonedas de Chainalysis, con otros países de América Latina como Venezuela, Colombia, Brasil y Perú que se posicionan delante de Argentina, como muestra del continuo crecimiento de la adopción a un paso veloz en la región.   

“Está prosperando. La atención de todos se encuentra en América Latina. Y está creciendo rápido,” dijo Méndez.

Traducido por José Rafael Peña Gholam.

Related Stories

• First Mover: Horrible 2020 Economy Proved Best Thing for Bitcoin
• Crypto Is Booming in Economically Challenged Argentina

Al inicio del 2020, Ripio, una de las casas de cambios más grandes de Argentina, tenía alrededor de 400.000 usuarios. Está terminando este 2020 con más de 1 millón. 

El director de marca de Ripio, Juan Mendez, dijo a CoinDesk que cerca del 70% de los usuarios de Ripio son de Argentina y el resto se concentra en Brasil. De acuerdo a Mendez, la plataforma ha presentado un aumento de hasta 10 veces en su volumen de intercambio, en comparación con el año pasado. 

Read this article in English.

Related: First Mover: Reminiscing on Pre-Pandemic Bitcoin as Rally Stalls

“He estado con la casa de cambio desde sus inicios y nunca he visto este nivel de crecimiento. Este es mucho mayor que el pico del 2017, tanto en operaciones como de la demanda,” dijo Mendez. 

Los problemas económicos de Argentina van desde enormes obligaciones de deuda hasta una alta inflación, agravada por la pandemia del COVID-19. Estos han obligado a su población a buscar nuevas alternativas para resguardar sus riquezas este año. Pero, como el gobierno ha limitado la compra de dólares norteamericanos a sus ciudadanos, las criptomonedas, rápidamente, han demostrado ser la mejor alternativa. 

Además de Ripio, las casas de cambio de criptomonedas operando en Argentina han presentado récords de crecimiento en este 2020. Con algunas experimentando máximos históricos en volúmenes de intercambios en la última mitad del año.

La casa de cambio mexicana Bitso, quienes expandieron sus operaciones a Argentina en febrero de este año, han obtenido un 68% de incremento en sus volúmenes de comercio en el tercer trimestre, en comparación con el segundo de este 2020. La instalación de Bitso en Argentina también ayudó a que la plataforma alcanzara el millón de usuarios, al inicio de este año.    

Related: First Mover: Horrible 2020 Economy Proved Best Thing for Bitcoin

La plataforma de intercambios entre pares (P2P, por sus siglas en inglés) LocalBitcoins también presentó un incremento del 547% en sus volúmenes de intercambio entre agosto del 2019 y del 2020, con un máximo histórico de más de un millón de dólares en bitcoin intercambiados en la segunda semana de agosto de este año. Otra plataforma P2P, Paxful, mostraba casi cero volumen de intercambio en los últimos cinco años, pero el comercio empezó a crecer este año, registrando un aumento del 60.641% al compararse desde septiembre del 2019 hasta el 2020.

El crecimiento sin precedentes del comercio de criptomonedas en Argentina se refleja como una tendencia regional más amplia, ya que LocalBitcoins y Paxful también registraron máximos históricos en varios países de América del Sur, incluidos Chile, Colombia y Bolivia. Los negocios en la región están con gran impulso. Una muestra, es que este miércoles CoinDesk reportó que Bitso recaudó la asombrosa cifra de $62 millones para financiar su expansión en Brasil. 

El aumento en el uso de las criptomonedas se está generando a pesar de un contexto de devastadoras consecuencias económicas producidas por la pandemia del COVID-19. Incluso, el Banco Mundial ha declarado a América Latina y el Caribe como la región más golpeada en el mundo. 

En cambio que el uso de criptomonedas se inhibiera, la combinación del aumento del precio de bitcoin, las economías inflacionarias creadas desesperadamente por los países para intentar mitigar los efectos de la pandemia y la necesidad de medios de pagos digitales más rápidos (particularmente para remesas transfronterizas) han impulsado la adopción en América del Sur este año. 

Dentro de este panorama, Argentina destaca. 

Comparado con economías hiperinflacionarias como Venezuela – se proyecta que para este 2020 su economía se va reducir un 6,8% – Argentina parece que enfrentará un peor desgaste, gracias en parte a una larga y complicada historia económica. En mayo, el gobierno falló el pago de $503 millones en intereses, de un bono en dólares emitidos bajo la ley de New York, colocando al país en su noveno default de deuda soberana en su historia.    

El producto interno bruto (PIB) se estima que se contraerá un 12% este año, con cerca de más de la mitad de la población viviendo en pobreza. 

“Las criptomonedas son, en cierta manera, aliados para los individuos, principalmente en países con un alto grado de incertidumbre política o económica,” comentó Andrés Ondarra, Gerente de Bitso Argentina, para Coindesk por correo electrónico. 

Catch-22

Como los argentinos, nerviosos ante el deterioro de la economía de sus país, comenzaron a aumentar sus compras de dólares norteamericanos para resguardar su riqueza, las reservas del país se reducían, forzando al gobierno a devaluar su moneda y agregar restricciones de cuanto en divisas los ciudadanos tienen permitido resguardar.

En un intento para resguardar las reducidas reservas, en septiembre el banco central de Argentina limitó la cantidad de dólares norteamericanos que sus ciudadanos pueden comprar a $200 mensuales, con un impuesto del 35%.    

Esto generó más problemas: después de unas difíciles negociaciones con los acreedores, el gobierno logró manejar exitosamente la restructuración de $65 mil millones de deuda externa este agosto pasado, pero debido a las preocupaciones de los inversionistas sobre las restricciones en el mercado de divisas, los nuevos bonos internacionales recién emitidos cayeron abruptamente durante septiembre y las personas siguieron comprando dólares a pesar del impuesto. 

Cada vez que el peso es devaluado, las personas luchan para conseguir una manera de proteger el valor de sus salarios, agrega Mendez. Además de esto, a inicios de diciembre, el senado de Argentina aprobó un impuesto único sobre el patrimonio a los millonarios del país, para ayudar a financiar los esfuerzos de ayudas económicas ante la pandemia.

Ondarra declaró que Argentina es un mercado de criptomonedas peculiar, ya que sus usuarios siempre están la búsqueda de acceder a reservas de valor y diversas soluciones financieras. 

“Los argentinos siempre están tratando de encontrar una moneda más fuerte,” dijo Mendez. 

Entrando a las criptomonedas

De acuerdo a Mendez, existe una diferencia fundamental entre los usuarios de criptomonedas en Argentina y los de Brasil, donde también opera Ripio. Las dos naciones están separadas por las fallas económicas sistémicas de Argentina a lo largo de los años, explicó.

“Argentina ha tenido que superar muchos desastres económicos a lo largo de los años. Estamos bastante acostumbrados a que fracasen los gobiernos y la planificación económica estratégica, y estamos más dispuestos a probar cosas diferentes para mantener el país a flote” afirmó Mendez.

Por ejemplo, el gobierno usualmente anuncia nuevas restricciones financieras a horas de la tarde del fin de semana (con la intención de que sean implementadas el lunes siguiente), dice Mendez.

“Entonces, durante el fin de semana y el resto de esa semana, nosotros siempre esperamos una gran demanda de criptomonedas,” de acuerdo a Mendez. 

Los argentinos ven las criptomonedas como una gran alternativa para el resguardo de valor, aunque su plataforma alerta a sus usuarios que las monedas como bitcoin son activos digitales volátiles, según Mendez. 

Tanto Ondarra como Mendez están de acuerdo que la fuerte curiosidad de los argentinos sobre alternativas de reservas de valor y el aumento del conocimiento sobre criptomonedas han ayudado al crecimiento del espacio crypto local. 

Pero Ondarra también atribuye el rápido crecimiento, en este año, al reciente aumento del precio. 

“Un factor importante que explica el incremento en el volumen durante los últimos meses ha sido la tendencia alcista en el precio de bitcoin. Lo que indudablemente ha mantenido la atención de las personas en los movimientos del precio y ha promovido un mayor volumen de comercio,” declaró Ondarra. 

Él explica que los inversionistas de Argentina están mirando de cerca los movimientos de grandes inversionistas como MicroStrategy, quienes pasaron cerca de $500 millones de inversiones en efectivo a BTC. 

Este año, Argentina se posicionó en el puesto 28 entre 154 países en el índice de adopción de criptomonedas de Chainalysis, con otros países de América Latina como Venezuela, Colombia, Brasil y Perú que se posicionan delante de Argentina, como muestra del continuo crecimiento de la adopción a un paso veloz en la región.   

“Está prosperando. La atención de todos se encuentra en América Latina. Y está creciendo rápido,” dijo Méndez.

Traducido por José Rafael Peña Gholam.

Related Stories

• Crypto Is Booming in Economically Challenged Argentina
• Crypto Remittances Prove Their Worth in Latin America

Public chain projects Nervos and Cardano have jointly launched a research initiative to enhance the security of smart contracts by improving Unspent Transaction Outputs (UTXOs), one of the most common accounting methods first adopted by the Bitcoin network. 

Nervos and IOHK, the development team behind Cardano, will co-author research papers on how to improve UTXO models, open source future developments, and explore the creation of a universal standard for the accounting method. They will form an alliance with other UTXO-based blockchains to help collaboration across research, development and education in the industry. 

UTXO, which keeps track of a user’s unspent transactions across all their accounts and monitors every single transaction, is a more secure alternative to the account-based accounting method used by smart contract-based blockchains such as Ethereum, Nervos said in a statement shared with CoinDesk. 

Related: Market Wrap: Bitcoin Pushes Past $19.2K; Ether at 3% of BTC Price

The account-based accounting method is more vulnerable to hacks, particularly for decentralized finance (DeFi) protocols, as it simply keeps track of the overall balance of a user’s account but doesn’t monitor the individual transactions within it. 

Nervos and IOHK have adopted modified versions for their respective blockchains. The two projects will share proprietary information to improve the accounting method. 

“UTXOs are superior to account models in many ways and provide improved security, privacy, and scalability, all of which are critical for DeFi,” said Kevin Wang, co-founder at Nervos.

Many DeFi projects rely on unaudited smart contracts with vulnerabilities that bad actors can exploit, according to a report by crypto intelligence company CipherTrace. 

Related: Huobi’s HUSD Stablecoin to Run on Nervos Blockchain

Cardano launched a hard fork last week as part of the transition to its third major development phase, which will be focused on the blockchain’s smart contract functions, while Nervos unveiled its new token standard sUDT to compete with Ethereum’s ERC-20 standard. 

Related Stories

• Cardano to Launch Hard Fork Before Next Major Development Phase
• Market Wrap: Bitcoin Dips Below $19,000 as Ether Options Volume Drops

The Secret Network, a privacy-focused blockchain, has launched its Ethereum bridge, which lets assets be transferred between Ethereum and the Secret Network privately. A bridge essentially offers interoperability between the protocols. 

The Secret bridge, initially announced in December, will make privacy cheaper and more practical for Ethereum and Ethereum-based assets.

According to the blog post announcement, “it allows users to create synthetic (wrapped) ETH and ERC-20 tokens on Secret Network that can be used with full privacy, at lower cost.”  

Related: DeFi on Bitcoin Gets a Boost as Sovryn Launches on RSK Sidechain

Users will need Metamask or a Keplr Wallet to interact with the bridge. 

Read more: Community Behind Privacy-Focused Smart Contract Forges Ahead After Settlement

Tor Bair, the Secret Foundation’s executive director and chairman, said the biggest immediate benefit for users when it comes to this recent move is that they can gain transaction privacy. Users can turn Ethereum-based assets into Secret Tokens, which are “programmable like ERC-20s but privacy preserving like zcash or monero,” according to Bair.

Bair said the cost for ETH or ERC-20 holders using the Secret Network would be lower than using other privacy-preserving alternatives like TornadoCash, a tool for obfuscating the history of ether (ETH) transactions.

Related: How Israeli VCs Are Doubling Down on DeFi Startups

Tornado Cash uses zero-knowledge proofs (ZKP), a cryptographic tool that proves a transaction occurred without revealing the information within the payment itself.

Secret smart contracts

The Secret Network’s key offering is the secret contract, a type of smart contract that allows private data to be used in decentralized applications without revealing the raw data. The inputs, outputs and network state are encrypted in a secret contract, which means the data is hidden even on a public blockchain. It is also invisible to the nodes executing the contract.

Read more: Secret Network’s Privacy-Focused Smart Contracts Move a Step Closer to Going Live

“In addition, you’ll be able to access upcoming decentralized finance [DeFi]applications on Secret Network, such as a front-running resistant AMM [automated market maker],” said Bair. “After launch we also plan to introduce ‘bridge mining’ rewards, where users of the Secret Ethereum Bridge can earn Secret Tokens for providing bridge liquidity. These rewards are available for both ETH and ERC-20s.”

The bridge will also give users access to Secret DeFi, privacy-preserving decentralized finance apps built on the Secret Network. For example, OCEAN and Secret have partnered to provide “trustless and convenient access control for Ocean datatokens as well as decentralized private compute via Secret Network.”

The full list of ERC-20 assets that are currently supported are BAND, AAVE, SNX, MKR, LINK, OCEAN, TUSD, YFI, UNI, KNC, COMP and DAI.

“Our community will be continuing to launch Secret DeFi applications that utilize Secret Tokens, especially our upcoming Secret AMM,” said Bair. 

“We will also be exploring bridges and support for additional assets and ecosystems, including other Tendermint chains such as Cosmos. As a result, our AMM will feature cross-chain functionality and front-running resistance, and it will also allow you to trade Secret Tokens that are native to Secret Network.”

Related Stories

• Market Wrap: Bitcoin Pushes Past $19.2K; Ether at 3% of BTC Price
• Buterin Warns Followers Not to Take Out Personal Loans to Buy Crypto

Bitcoin (BTC) was rising for a fourth straight day, though in a repeat of last week’s action the cryptocurrency struggled to push above $20,000 after its months-long rally from a low around $5,000 in March. 

“The level of $20,000, which is commonly equated with bitcoin’s all-time high, represents a massive psychological barrier and could likely require a lot of force to break through,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency research firm Quantum Economics, wrote in his newsletter. 

In traditional markets, Asian stocks fell the most in two weeks but European equities were steady. U.S. stocks pointed to a higher open after a four-day slump. According to Bloomberg News, investors were pricing in optimism about a vaccine rollout while harboring doubts on the latest efforts by U.S. lawmakers to negotiate a new stimulus bill. The so-called third wave of the coronavirus is leading to new lockdown measures. Gold strengthened 1% to $1,846 an ounce. 

Market moves

Related: DeFi on Bitcoin Gets a Boost as Sovryn Launches on RSK Sidechain

(Editor’s note: This is the second installment of First Mover’s recap of how the bitcoin market evolved over the course of 2020 and what it means for the future. Today we cover January and February, just before the fast-spreading coronavirus began to take its toll on the global economy, sending markets into a tailspin and leading to an unprecedented financial response from governments and central banks around the world.) 

Trillions of dollars of money-printing this year by the Federal Reserve and other central banks have galvanized bitcoin’s use as a hedge against currency debasement by investors from both cryptocurrency markets and traditional finance. 

But even before the pandemic-related economic stimulus hit global markets, economists were already openly speculating whether the U.S. dollar could survive another decade as the world’s dominant currency for international payments and foreign reserves. 

Historically, after all, a catalyst always led to one currency supplanting another as the world’s most important medium of transaction, unit of accounting and store of value. The U.S. dollar had emerged as the world’s leading currency during the early 20th century when it took over from debt-strapped Britain’s pound; a century before that, Holland’s guilder was undone by the French Emperor Napoleon’s invasion.

Related: Las Criptomonedas Surgen en la Desafiante Economía de Argentina

In early 2020, China’s proposed digital currency was seen as a potential threat to the greenback, and former Bank of England Governor Mark Carney had gone so far as to propose a “synthetic hegemonic currency,” potentially provided “through a network of central bank digital currencies.” 

“There’s a lot of discussion of substitutes for the dollar as the global reserve currency,” Bill Adams, senior international economist for the U.S. bank PNC, told CoinDesk around the start of the year. 

But based on officials tallies of the dollar’s share of global foreign reserves, the U.S. currency looked as strong as ever.  

It didn’t take long for the bitcoin market to get a jolt – after a U.S. drone strike killed a top Iranian commander during the first week of January, fueling speculation that heightened geopolitical turmoil might spur demand for the cryptocurrency. Bitcoin jumped to $7,300, as analysts said it might serve as a safe-haven asset similar to gold, whose value is expected to hold in times of geopolitical or economic instability. 

The flap soon faded from the news and crypto traders turned to what they thought would be the bitcoin market’s marquee event of the year – the once-every-four-years “halving” that would take place in May, where the pace of new supply of cryptocurrency issued from the Bitcoin network gets cut by 50%. It’s stipulated in the 11-year-old blockchain’s underlying programming.

From December through February, Google searches on the term “bitcoin halving” doubled in a month to the highest levels since 2016, and some enthusiasts even created a dedicated website, bitcoinblockhalf.com, to count down the remaining days, hours, minutes and seconds until it happens.

Cryptocurrency lenders reported a quickening pace of customer activity, in some cases more than 10 times the loan growth reported by big banks like JPMorgan Chase. The traditional financial companies were tethered to the broad economy, where U.S. growth had slowed to a 2.3% expansion in 2019 from the 2.9% clip in 2018. (A newly launched futures contract focused on the U.S. presidential election, launched by the cryptocurrency exchange FTX in early February, suggested Donald Trump had a 62% chance of winning.)  

Crypto traders bandied about analyst predictions the halving could send prices skyrocketing to $90,000 or higher. 

They had no idea, of course, how dramatically the events of the ensuing months would reshape the global economic outlook. By late February, traders saw clearly just how far bitcoin was from being a safe haven – as prices tumbled alongside U.S. stocks as authorities globally struggled to stem the spread of the coronavirus beyond China. U.S. Treasury bonds, seen as a traditional safe-haven asset, rallied, as did gold. 

Bitcoin is “not the same as owning Treasury, and not the same as owning gold,” the cryptocurrency analyst Greg Cipolaro told CoinDesk on Feb. 24.   

Jeff Dorman, chief investment officer of the crypto-focused firm Arca Funds in Los Angeles, raised the prospect of a separate potential catalyst for higher bitcoin prices: Monetary-policy easing by the Federal Reserve to stimulate coronavirus-infected markets. 

“I don’t expect bitcoin to trade as risk-on or risk-off asset,” he said. “But over a longer period of time, anything that’s inflationary, or said another way devalues other currencies, strengthens the purchasing power of bitcoin.”

That view would take hold in the bitcoin market over the rest of the year, attracting the notice of mutual-fund companies like Fidelity Investments and BlackRock, hedge funds including Tudor Investment and more recently the 169-year-old insurance company MassMutual. 

Prices have nearly tripled in 2020 to near $20,000. 

Iran rarely came up again in bitcoiners’ conversations about the market, and these days, there’s barely any market talk about the halving. Now, it’s all about the money printing. Questions remain about the future of the dollar. 

Coming Wednesday: The coronavirus hits, and bitcoin prices tank – until the Federal Reserve arrives and embarks on the biggest money-printing episode of its 107-year history. 

– Bradley Keoun

Bitcoin watch

Bitcoin again failed to hold gains above $19,500 early Tuesday, possibly due to profit-taking by large Asia-based investors, according to one analyst.

In the two hours between 4 a.m. and 6 a.m. coordinated universal time (UTC), the cryptocurrency fell from about $19,500 to about $19,050. An increased inflow of coins onto the crypto exchange Huobi Global, which has a Hong Kong presence, was observed before prices began falling.

“A total of 2,013 coins were transferred to Huobi in blocks 661,425 to 661,430 just 15 minutes before the price dip,” said Ki Young Ju, CEO of CryptoQuant, adding that block number 661,425 carried 1,017 coins, the highest single-block inflow on Huobi since Nov. 30. Monday saw 8,836 BTC arrive on Huobi in total, with a mean transaction of 4.5 BTC, the highest since March 2018, according to CryptoQuant.

The uptick in the average size of exchange deposits indicates that larger investors were transferring their coins to Huobi and may have liquidated their holdings around $19,500, a level that has acted as stiff resistance of late.

At press time, bitcoin has rebounded to near $19,300, and the path of least resistance for the cryptocurrency remains to the upside, according to analysts. However, forcing a breakout above $20,000 in the short term may prove to be an uphill task for the bulls, since there are sizable sell orders open in the approach to a new record high spot price.

“There are still offers above $19,500 up to $20,000,” Patrick Heusser, head of trading at the Zurich-based Crypto Broker AG, told CoinDesk. “The US-based cryptocurrency exchange Coinbase shows 700 bitcoin for sale right at $20,000, but all other exchanges show some offers up there as well in the region of 200-300 coins.”

– Omkar Godbole

Read More: Bitcoin May Have Hit Wall of Profit Takers Around $19,500

What’s hot

Mt. Gox creditors’ wait nearly over as trustee announces draft rehabilitation plan (Cointelegraph) 

Charles Calomiris, chief economist for the U.S. Office of the Comptroller of the Currency, cites benefits of issuing bank charters to stablecoin providers (CoinDesk) 

Wall Street firm Evercore says PayPal’s crypto offering could bring big business boost (CoinDesk) 

Supermarket kiosk company Coinstar adds Coinme bitcoin ATM functionality to 5K change-sorting machines across U.S. (CoinDesk) 

Hybrid blockchain maker Kadena onboards Celo’s dollar stablecoin, plots January launch for decentralized exchange (CoinDesk)

Ethereum founder Vitalik Buterin takes to Twitter to warn followers not to take out personal loans to buy cryptocurrencies (CoinDesk)

Pornhub now accepting crypto only after being cut off by Mastercard and Visa (CoinDesk)

Analogs The latest on the economy and traditional finance

Google outage shows perils of centralization (CoinDesk)

Reckoning looms for commercial real estate (WSJ op-ed)

U.S. electoral college votes to formalize Joe Biden’s victory in November U.S. presidential election (WSJ)    

New home price increases slow in China as government pushes to deleverage heavily indebted residential real estate sector to curb financial risk (Nikkei Asia Review)

Australian prime minister says Chinese ban on coal imports likely breaches World Trade Organization rules (Bloomberg)

Chinese factory outputs up 7% from a year earlier, signaling recovery as consumer demand increases (Reuters)

Tweet of the day Related Stories

• Bitcoin May Have Hit Wall of Profit Takers Around $19,500: Analyst
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Swiss digital asset services firm Crypto Finance AG has appointed a new CEO of its brokerage business effective Dec. 15.

• The new hire, Rupertus Rothenhaeuser, was previously head of business and ecosystem development at SIX Group’s digital assets exchange, SDX, and before that worked at Boerse Stuttgart and BNP Paribas, among others.
• He takes over the role from company founder Jan Brzezek, who will remain CEO of Crypto Finance AG.
• Rothenhaeuser helped set up the SIX Digital Exchange as the “first regulated exchange and CSD” for digital assets, per the announcement. SIX Group also operates the primary stock exchange in Switzerland.
• “Rupertus Rothenhäuser brings a rare combination of financial sector and technology expertise with an outstanding track record in institutional customer relationship management,” said Brzezek.
• The firm has also appointed a new head of trading, Patrick Heusser, as it prepares for an expected license as a securities firm from the Swiss Financial Market Supervisory Authority.

See also: Swiss Crypto Firm Closes $14.5M Series B to Help Secure Brokerage License

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The World Economic Forum (WEF) and seven major mining companies have completed the initial stage of a blockchain platform that tracks carbon emissions along the mining value chain.

In a press statement on Monday, the Mining and Metals Blockchain Initiative (MMBI) from the WEF said its proof-of-concept carbon tracing platform COT was in development for over a year. The finalized platform will track embedded greenhouse gas emissions from the mine to the final product using distributed ledger technology.

The seven mining firms – Anglo American, Antofagasta Minerals, Eurasian Resources Group, Glencore, Klöckner & Co, Minsur and Tata Steel – launched the collaboration in 2019, aiming to develop a platform that would meet their corporate, social and environmental responsibilities.

Related: Ukraine Oligarch’s Troubled US Steel Plant Has Been Quietly Mining Bitcoin: Report

The effort is also supported by Dutch-based blockchain firm Kryha and MMBI project manager Susan Joseph. The developmental phase will progress to the next stage of accumulating and processing stakeholder feedback.

“MMBI’s Proof of Concept is a first practical step to create a solution facilitated by blockchain technology to reduce emissions and conserve the environment,” said Tata Steel CEO T.V. Narendran.

The initiative will test the “technical feasibility” of the tech, as well as exploring the “complexities of the supply chain dynamics” in order to set the requirements for data utilization in the future, according to the WEF statement.

See also: World Economic Forum Wants to Standardize Ethical Data Collection

Related: World Economic Forum Wants to Standardize Ethical Data Collection

“There is an increasing demand for metals and minerals, and an increasing demand for sustainable and responsible and traceable supply chains,” said Jorgen Sandstrom, head of Mining and Metals Industry at the WEF. “There is a potential to create a full value chain view with downstream visibility.”

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• Ride-Sharing Giant Cabify to Track and Offset Carbon Emissions Using Blockchain Platform
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Mt. Gox’s trustee Nobuaki Kobayashi has at last filed a draft plan for the rehabilitation of creditors including former users.

• Posted on the Mt. Gox website Tuesday, the trustee’s announcement states: “The Tokyo District Court and an examiner will review the draft rehabilitation plan and determine whether to proceed with the rehabilitation proceedings relevant to the draft rehabilitation plan.”
• While there are no details provided on the plan, the announcement marks the beginning of the end for users who have been waiting for refunds since 2014 when the exchange collapsed.
• As reported by CoinDesk, the submission deadline for the rehabilitation had previously been pushed back a number of times after opposition from some creditors.
• In 2014, Mt. Gox declared bankruptcy after hackers allegedly stole 850,000 bitcoins from its servers over a period of time.
• The Mt. Gox estate comes from 200,000 bitcoins found in an old wallet after the exchange collapsed, as well as bitcoin cash created in a fork of the bitcoin blockchain.
• At last count, it is estimated Mt. Gox still holds approximately 141,600 bitcoin and 142,800 bitcoin cash.

See also: Mt. Gox Deadline Extended Again After Creditors Criticize Refund Proposal

Related Stories

• Bitcoin Exchanges Flood London’s Metro With Adverts
• Privacy Coin Advocates Persevere Amid Multiple Crypto Exchange Delistings
• India’s Banks Are Once More Serving Crypto Traders and Exchanges
• DBS Bank’s Digital Exchange to Begin Trading Crypto ‘Next Week’

Mt. Gox’s trustee Nobuaki Kobayashi has at last filed a draft plan for the rehabilitation of creditors including former users.

• Posted on the Mt. Gox website Tuesday, the trustee’s announcement states: “The Tokyo District Court and an examiner will review the draft rehabilitation plan and determine whether to proceed with the rehabilitation proceedings relevant to the draft rehabilitation plan.”
• While there are no details provided on the plan, the announcement marks the beginning of the end for users who have been waiting for refunds since 2014 when the exchange collapsed.
• As reported by CoinDesk, the submission deadline for the rehabilitation had previously been pushed back a number of times after opposition from some creditors.
• In 2014, Mt. Gox declared bankruptcy after hackers stole 850,000 bitcoins from its servers over a period of time.
• The Mt. Gox estate comes from 200,000 bitcoins found in an old wallet after the exchange collapsed, as well as bitcoin cash created in a fork of the bitcoin blockchain.
• At last count, it is estimated Mt. Gox still holds approximately 141,600 bitcoin and 142,800 bitcoin cash.

See also: Mt. Gox Deadline Extended Again After Creditors Criticize Refund Proposal

Related Stories

• Bitcoin Exchanges Flood London’s Metro With Adverts
• Bitcoin Still on Track to Breach $20K in Coming Weeks: Analysts
• Privacy Coin Advocates Persevere Amid Multiple Crypto Exchange Delistings
• India’s Banks Are Once More Serving Crypto Traders and Exchanges

Cryptocurrency payments provider SatoshiPay has inked a deal with German bank Bankhaus von der Heydt to become the first user of its recently revealed euro-backed stablecoin (EURB).

• Announced Tuesday by SatoshiPay investor Blue Star Capital, the payments firm plans to integrate the regulatory complaint EURB into its cross border money transfer service called DTransfer.
• Bankhaus von der Heydt, an institution established in 1754, partnered with Bitbond to launch its euro-backed stablecoin on Stellar last week.
• Bitbond played a role in the development and integration of EURB, while Bankhaus von der Heydt provides its banking infrastructure and regulatory framework.
• U.K. based Blue Star, which has a 27.7% stake in the company, said the addition of EURB would be good for SatoshiPay users.
• Bankhaus von der Heydt brings “a stable on and off-ramp for EURB transactions with instant EUR-based bank transfers within the Single Euro Payments Area,” according to the announcement.

See also: Stellar Throws SatoshiPay a $550K Lifeline After Coronavirus Knocks Out Series A

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