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CoinDesk Crypto

Staking on Ethereum 2.0 Takes First Step With Test System for Validators

CoinDesk Crypto
6 years 2 months ago

The transition to Ethereum 2.0 and its proof-of-stake consensus mechanism is finally underway.

  • Announced Monday, Ethereum developers have released a “validator launchpad” on the Medalla testnet to educate and prepare future validators as part of a multi-year, multi-stage roll out of the Ethereum network’s most important upgrade to date.
  • Eth 2 will radically transform the world’s largest smart contract platform as it shifts from proof-of-work (PoW) to proof-of-stake (PoS).
  • In PoW, miners do the job of validating transactions through complex math solved by computer hardware and then adding them to a data block in a series, or chain, that is cryptographically secured.
  • PoS, on the other hand, lets entities known as validators lock up holdings of a network’s cryptocurrency as collateral for the right to validate a transaction without the need for computer hardware. Validators are rewarded based on how much crypto they initially stake.
  • The transition to PoS is aimed to improve Ethereum’s scalability issues that arise from its inability to handle a large quantity of transactions under PoW. PoS also expected to be more cost-effective than mining.
  • Three phases of the roll out are planned, with the first, phase 0, focusing on the underlying tech behind staking by tracking validators and their balances.
  • The launchpad, which comes before phase 0, will enable validators to track and deposit test stakes on the upcoming Medalla multi-client testnet.
  • When phase 0 arrives, validators will start securing Ethereum 2’s network with real stakes.
  • Phases 2 and 3 will revolve around adding and storing Eth 2 data and enabling programs to be run on the network, respectively.
  • The legacy Ethereum platform will exist for some time as its own independent PoW chain, but the developers stressed the “transition toward PoS starts now” in yesterday’s announcement.

See also: Everything You Need to Know About Ethereum 2.0

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Firm Uses Ethereum to Tokenize Sustainable Infrastructure in Fight Against Climate Change

CoinDesk Crypto
6 years 2 months ago

Fasset, a fintech company headquartered in the U.K., has launched what it claims is the world’s first operating system built on the Ethereum blockchain dedicated to the ethical financing of sustainable infrastructure.

  • Announced Tuesday, the system is aimed to democratize investments in sustainable infrastructure including the construction of solar power plants, wind farms and fiber optic networks by tokenizing, or creating digital representations of, those assets to make them accessible to a global pool of investors. 
  • Mohammad Raafi Hossain, Fasset’s CEO and a former technology adviser to the UAE prime minister, told CoinDesk that infrastructure assets are some of the most resilient and long-yielding financial assets, continuing to provide dividends long after the project is complete, because they provide important utilities to the public.
  • These infrastructural assets are useful and accessible to anyone, he said, irrespective of where they come from, just like a decentralized blockchain.
  • In a press release, Hossain also said that climate change is expected to cost the world economy $7.9 trillion by 2050 and that the need for sustainable infrastructure has never been more urgent.
  • The Fasset Enterprise Platform (FEP) enables hard asset owners in sustainable infrastructure to tokenize their assets for fundraising purposes. 
  • By moving the entire sustainable infrastructure financing process to the blockchain, the firm intends to improve liquidity in the sector and lower barriers to entry that will enable asset owners to avoid costly middlemen and directly list their assets on exchanges.
  • The initiative, inspired by the UN Sustainable Development Goals, is a response to rapid climate degradation and the lack of capital entering the sustainable infrastructure sector, which is moving toward a $15 trillion deficit by 2040.
  • Fasset’s primary objective is to bridge that deficit with blockchain-backed investments, Hossain said.
  • Founded in early 2019, the firm has already won the support of the UAE, Saudi Arabia, Singapore, Kuwait and Bahrain, and has raised over $4.7 million.
  • It also plans to launch a regulated exchange for hard assets in the near future. 

Also read: EU-Based Universities Say Blockchain Could Help Meet Paris Agreement Carbon Goals

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P2P Exchange LocalBitcoins Adds Crypto Surveillance Tools From Elliptic

CoinDesk Crypto
6 years 2 months ago

Longtime peer-to-peer exchange LocalBitcoins, a former hub for anonymous bitcoin swaps, has added two blockchain-tracing tools from analytics company Elliptic as it continues to chip away at criminal crypto cashouts.

  • LocalBitcoins announced Tuesday it’s using Elliptic’s Navigator risk analysis tool and Lens wallet screener to crack down on illicit crypto. Blockchain analysis firms have previously claimed that LocalBitcoins receives the bulk of Finland’s criminal coin.
  • The Helsinki-based platform has been bolstering its anti-money laundering (AML) safeguards in response to the European Union’s AMLD5 and tough new Finnish business regulations, both of which turned up the heat on regional crypto businesses.
  • In the run-up to Finland’s enforcement deadlines, LocalBitcoins ditched cash-for-crypto trading and added mandatory identity verification. It also banned Iranian users from trading bitcoin, likely in response to U.S. sanctions.
  • Elliptic Chief Scientist Tom Robinson told CoinDesk that such policy shifts have contributed to a 50% drop in darknet crypto inflows for the year.  
  • “The reduction in flows from dark markets to peer-to-peer exchanges is a clear consequence of these businesses introducing strong KYC and AML controls,” he said. “Criminals are now thinking twice before trying to cash-out through the major peer-to-peer exchanges.”
  • LocalBitcoins did not respond to requests for additional comment.

Ian Allison contributed reporting.

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CoinDesk Live Recap: Ethereum Culture, Explained

CoinDesk Crypto
6 years 2 months ago

What makes Ethereum culture click?

Maker Foundation board member Tonya Evans and former ConsenSys chief marketing officer Amanda Cassatt joined CoinDesk senior reporter Leigh Cuen on Monday to discuss Ethereum’s ethos in an hourlong conversation streamed to the CoinDesk homepage.

“In terms of its structure and what it accomplishes in the world, it’s by default a global movement,” Cassat said of the world’s leading smart-contract blockchain.

Related: Market Wrap: Bitcoin Blasts Past $10,000; Ethereum Fees Up 550% in 2020

Read more: Ethereum as Lifestyle Brand: What Unicorns and Rainbows Are Really About

Evans, also a law professor at Penn State’s Dickinson Law School, said Ethereum can yield a more equitable version of global finance. Inclusion is baked into the platform but shouldn’t be taken for granted, she said.

“We have a better chance with this system than we do with the existing infrastructure. But will this end up being a microcosm of tech and finance? In many ways, it looks like that now but there is promise.”

The CoinDesk Live session was the first in a five-day series of live-streamed conversations. It comes as part of CoinDesk’s Ethereum at Five package.

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Tetras Capital Shuts Down Crypto Hedge Fund After 75% Loss

CoinDesk Crypto
6 years 2 months ago

Cryptocurrency hedge fund Tetras Capital is calling it quits.

  • The New York-based fund is shutting down and returning investors’ money after quarters of low returns, according to a person with direct knowledge of the matter who spoke to CoinDesk on condition of anonymity.
  • The fund struggled to perform and posted about a 75% loss life-to-date since opening in 2017, the source said. 
  • Tetras Capital managed upwards of $33 million at one point for more than 60 investors who pitched in at least $100,000 apiece, according to financial filings.

Tetras Capital’s closure adds to a growing line of cryptocurrency hedge funds folding after crypto prices slid from peak highs in 2017. 

  • According to a Crypto Fund Research report, at least 68 crypto hedge funds closed last year internationally, almost double the number – 35 – in 2018.

The fund launched in 2017 with a focus on altcoins, Tetras Capital co-founder Alex Sunnarborg said in a 2019 Forbes interview. 

  • Alternative cryptocurrencies, or altcoins, are digital assets other than bitcoin.
  • One altcoin trade Tetras claimed to have made was a short position on the cryptocurrency ether at a price of $700 in May 2018, according to the interview and a fund investment report.
  • The short view appears to have been the right call, as ether tumbled below $100 last year and has lately been trading in the $200 range.
  • Sunnarborg, a former Raymond James and CoinDesk analyst who sold crypto-asset market research app Lawnmower to this news publication, managed Tetras Capital with partners Brendan Bernstein and Thomas Garrambone. 
  • Bernstein and Garrambone have worked as analysts for a number of investment banks, including Goldman Sachs, JPMorgan, Deutsche Bank and Torreya Partners.

Related: Whale Alert: $27M From 2016 Bitfinex Hack Is on the Move

Requests for comment from Tetras Capital, Sunnarborg, Bernstein and Garrambone were not returned by press time.

See also: Prime Factor Capital Is Shutting Down: Lack of Capital Cited as Prime Factor

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CoinDesk

Digital Bank Revolut Adds Stellar to List of Supported Cryptocurrencies

CoinDesk Crypto
6 years 2 months ago

U.K.-based fintech firm Revolut announced Tuesday it has added Stellar lumens (XLM) to its list of supported cryptocurrencies. 

  • In a press statement emailed to Coindesk, Revolut said customers will now be able to trade and hold XLM on its platform.
  • According to the statement, Stellar’s addition was in response to “overwhelming demand” from users. Revolut currently supports a total of six cryptocurrencies including bitcoin, ether, XRP and bitcoin cash.
  • Earlier this month, Revolut announced its customers in all U.S. states except Tennessee could buy, sell or hold bitcoin and ether on its platform. While Revolut had started operating in the U.S. in March, it then partnered with Paxos to gain regulatory permission required to offer crypto banking services. 
  • “Adding Stellar and passing ownership of cryptocurrencies to our customers are the first in a series of steps we are taking to seriously overhaul our crypto product,” Ed Cooper, the company’s head of crypto, said in the statement.
  • In an email sent to its customers last month, Revolut said it would give users legal control over their cryptocurrencies starting July 27. Although the firm said it would cease to be the “legal owner” of the available cryptos, users would still be unable to transfer the funds outside of Revolut’s ecosystem. 
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Gold Reaches All-Time High as Bitcoin Breaks Above $11k

CoinDesk Crypto
6 years 2 months ago

The price of gold reached a new all-time intraday high of $1,942 Monday, extending a rally that started in 2019.

  • A record high for the yellow metal comes during an approximately 28% rally since January.
  • Gold’s previous record high of $1,924 was reached on September 6, 2011.
  • Bitcoin, often viewed as digital gold, soared to $11,400 as the stalwart cryptocurrency keeps pace with gold. 
  • Bitcoin gained more than 13% over the past 24 hours, according to OnChainFX. 
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Polkadot Raises $43M in 72-Hour Private Sale: Source

CoinDesk Crypto
6 years 2 months ago

A second private sale of the Polkadot token (DOT) netted the Web3 Foundation and Parity Technologies some 3,982.07 bitcoin (BTC) worth an estimated $43.3 million at press time, according to sources.

A bitcoin address shared with CoinDesk saw 1,059 transactions beginning July 24 at 5:22 UTC.

The token offering was not available in certain jurisdictions such as the United States, according to the sale’s website. DOTs were listed for $125 per token, according to Reddit users claiming to be involved in the sale. The Web3 Foundation did not return requests for comment.

Related: Polkadot’s Inaugural Vote Could Expand DOT Supply by 1,000x

Additionally, the Polkadot community voted to redenominate the smallest subunit of the DOT token, the Planck, this past weekend for a “simpler, smoother user experience when using DOTs within the network,” the Web3 Foundation said in a tweet.

“The community vastly favours a New DOT denomination which is defined as 10,000,000,000 Planck or, put alternatively, a ‘stock-split’ of the original, old DOT by one hundred,” Polkadot and Parity Technologies founder Gavin Wood said in a July 26 blog post.

Read more: Polkadot’s Inaugural Vote Could Expand DOT Supply by 1,000x

Polkadot raised $145 million in 2017, selling 50% of the network’s then 10 million DOTs, according to Messari. (The number of DOT tokens has since risen, following the redenomination vote.)

Related: Bitcoin News Roundup for June 19, 2020

Polkadot’s raise comes on the heels of last week’s $42 million public sale of the Avalanche blockchain’s AVAX token.

Zack Voell contributed reporting.

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Whale Alert: $27M From 2016 Bitfinex Hack Is on the Move

CoinDesk Crypto
6 years 2 months ago

Whale Alert said on Monday that Bitfinex hackers are shuffling around millions of dollars in bitcoin stolen during the massive Bitfinex exchange hack in 2016.

  • The market-tracking and market-moving Twitter account documented nine transactions on Monday that saw about 2,550 total bitcoin (~$27 million) move from wallets associated with the 2016 hack into new unknown addresses.
  • In 2016, a Bitfinex security breach resulted in the theft of nearly 120,000 bitcoin from the exchange. It is one of the costliest bitcoin hacks of all time and one of the single-largest by coin count, though it pales in comparison to the infamous Mt. Gox hack of 2014.
  • Monday’s transactions came in two volleys: four at 16:41 UTC worth nearly $5.8 million, and five worth almost $22 million an hour later.

See the first tweet below:

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Market Wrap: Bitcoin Blasts Past $10,000; Ethereum Fees Up 550% in 2020

CoinDesk Crypto
6 years 2 months ago

High spot bitcoin volume not seen since June is helping price while Ethereum’s DeFi expansion continues to include costly network fees.

  • Bitcoin (BTC) trading around $10,829 as of 20:00 UTC (4 p.m. ET). Gaining 9.7% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $9,849-$10,964
  • BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin hit $10,964 on spot exchange Coinbase Monday, a price level not seen since August 2019. “The bitcoin breakout seemed to finally have happened as we lifted off from $9,800,” said Jack Tan, of Taiwan-based quantitative trading firm Kronos Research. “The trend is clear and we are headed higher.” 

Read More: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up

Related: Leading Austrian Telecom Provider Adds Cryptocurrencies to Its Cashless Payment Network

Bitcoin trading volume on Coinbase Monday was at $292 million. This was the highest since June 11, when volumes hit $255 million. 

Traders have long discussed the $10,500 price range as a level to stay above to fuel a lengthy bull run, said Neil Van Huis, director of institutional trading at Chicago-based crypto liquidity provider Blockfills. “We need to stay over $10,500, so I would probably want to see a sharp interest in demand above that and to stay over it for more than 24 hours to see if the bullishness has legs,” Van Huis said.  

Despite the excitement Monday, bitcoin’s jump might compel selling in the alternative cryptocurrency, or altcoin, market, said Kronos’ Tan. “Unfortunately, this might actually suck the energy out of the altcoins and high-flying DeFi tokens.” 

One dynamic to watch: The ETH/BTC pair Monday is down 4% on Coinbase as traders are selling ether for bitcoin on the spot market.

Related: Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter

Regardless of the rebalancing, Chris Thomas, head of digital assets for broker Swissquote, says DeFi is the main reason for the cryptocurrency markets’ move up overall. “It’s purely DeFi driven,” said Chris Thomas. “We will likely see a lot more of this, resulting in ether driving higher and pulling everything else with it.”

Ethereum fees jump 550% in 2020

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Monday trading around $323 and climbing 5.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ethereum Miners’ Income Soars by 60% in a Month

In January, the average fee on the Ethereum network was 0.000542 ETH. So far in July, average fees on Ethereum are at 0.003532 ETH, a 550% increase in the cost to conduct transactions on the second-largest blockchain by market cap, according to data aggregator Blockchair. 

“The recent rise of ether’s price could be explained by the fact that large users and investors in the DeFi ecosystem are buying ETH now in order to pay less gas fees for each transaction,” said Jean-Baptiste Pavageau partner at Paris-based quant firm ExoAlpha. 

Some traders may be taking advantage of this rise in fees, stockpiling ether as the situation may only exacerbate as 2020 continues. “Speculators are actively monitoring the DeFi ecosystem and are anticipating growth of the Ethereum network over the coming months, increasing the demand in ether to pay for the gas fee of each transaction,” added Pavageau. 

Read More: MakerDAO Passes $1B Milestone in DeFi First

Other markets

Digital assets on the CoinDesk 20 are mixed Monday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

Read More: FTX to Launch ‘Scalable’ Decentralized Exchange in Weeks

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

Read More: You Can Now Buy Hedera Hashgraph’s HBAR Token via Simplex

Equities:

Read More: Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter

Commodities: 

  • Gold is up 2% at $1,938.40 as of press time. The yellow metal’s price hit an all-time high of $1,945.72 Monday. Its previous high of $1,921.18 occurred in 2011.
  • Oil is up 0.86%. Price per barrel of West Texas Intermediate crude: $41.60

Read More: 85% of Italian Banks Are Exchanging Interbank Transfer Data on Corda

Treasurys:

  • U.S. Treasury bonds were mixed Monday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 3.2%.
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Bitmain Spin-Off Launches Crypto Exchange to Go After Booming Options Market

CoinDesk Crypto
6 years 2 months ago

Crypto services provider Matrixport has launched its own derivatives exchange to go after surging activity in the options space.

  • The Singapore-based company said the new derivatives exchange, dubbed Bit.com, would first list a BTC/USD perpetual swap on Aug. 3, before adding a series of options contracts on Aug. 17, according to a report by The Block.
  • Monthly options volumes have increased sharply from $1 billion in January to $2.5 billion by June; it spiked to over $3 billion in May’s halving event.
  • Bit.com said it wants to rival Deribit, the Panama-based exchange that constitutes 88% of market share, according to data site Skew.
  • That Matrixport opted to launch a bitcoin/U.S. dollar perpetual swap could be seen as a bid to challenge market leader BitMEX – its “perp” has nearly $800 million in open interest at press time.
  • Matrixport also provides over-the-counter trading, lending and custodial services; it was spun out of Bitmain in 2019 and both the chipmaker and co-founder Jihan Wu remain major shareholders.
  • Earlier this year, Bloomberg said Matrixport was seeking to nearly triple its valuation to $300 million in a capital raise; COO Daniel Yan said the $300 million valuation was misreported.

See also: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

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Blockchain Bites: Ethereum’s Lifestyle Brand, Twitch’s Crypto Discounts and MakerDAO’s $1B Milestone

CoinDesk Crypto
6 years 2 months ago

Twitch is offering discounts to subscribers paying in crypto, a federal court ruled bitcoin is money and R3 Corda’s blockchain is a big thing in Italy’s banking system.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

It’s Settled
R3’s Corda blockchain is used by 55 (~85%) Italian banks for interbank reconciliation, speeding up the process of double-checking transaction logs. The country’s Interbank Agreement was updated in May 2019 to include data standardization opening a window for blockchain processes to be implemented. Using the old system, the average time for reconciliation was between 30 and 50 days. On Corda, reconciliation is completed within a day. Separately, BCB Group is launching a SWIFT alternative for instant cash-crypto settlements for several European currencies. 

Related: First Mover: Bitcoin at Last Passes $10K, but Why Has It Struggled While Gold Shone?

XRP Purchases?
Payburner is a new, non-custodial payments platform based on XRP that will work on the Chrome and Brave web browsers. Built as a labor of love by Ripple executive Craig DeWitt, the platform leverages Xpring, a Ripple project that provides tools and funding for developers and startups working with XRP. Released in beta, Payburner can be used to purchase goods online using the XRP cryptocurrency.

Twitch Hitches With
Twitch is giving subscribers a 10% discount if they pay in bitcoin, ether, bitcoin cash or litecoin. The Amazon-owned company, with around 3.8 million broadcasters in Q1 2020 and around 1.44 million concurrent users as of March 2020, announced the deal on Saturday. Twitch first introduced a cryptocurrency payment option in 2014, removed it in early 2019 and brought it back a few months later. The company uses the U.S.-based BitPay to process its crypto payments.

Decentralized Derivatives 
FTX will launch an exchange for the growing DeFi space on top of the Solana blockchain. Called Serum, the decentralized exchange will be geared towards derivatives, and aims to solve some of the structural vulnerabilities and limitations in the existing DeFi space. Solana claims it can process 50,000 transactions per second, compared to Ethereum’s 15. The new dex will be fully interoperable with Ethereum so it can tap into the existing DeFi space, which saw its market cap break the $4 billion boundary over the weekend.

Bitcoin Is Money 
Bitcoin is a form of “money” in Washington, D.C., a federal court said Friday. The ruling came as part of the United States v. Harmon, where Chief Judge Beryl A. Howell wrote that money “commonly means a medium of exchange, method of payment, or store of value… Bitcoin is these things.” The court’s decision to define bitcoin as money was in the context of a case alleging money laundering under federal law. Neeraj Agrawal, director of communications at Coin Center, said the court’s comments mean that bitcoin “is treated as money in the context of money transmission licensing in D.C., nothing more.”

Quick bites
  • China’s BSN “has attracted more than 6,000 enterprise, government and individual users” (Bloomberg)
  • Cardano’s latest upgrade is primed for launch (Decrypt)
  • Bitmain spin-off Matrixport is launching a crypto derivatives exchange (The Block)
  • How billion-dollar crypto scams lure victims (Bitcoin.com)
  • Leading Austrian telecom provider adds crypto to a cashless payment network
At stake

Related: Blockchain Bites: Ghosn’s Crypto Payments, Russia’s Red Line and Why Banks Won’t Bite

The decentralized finance (DeFi) space crossed a milestone: MakerDAO’s total value locked-in is now over $1 billion. $1.1 billion, to be exact.

Built primarily on the Ethereum blockchain, DeFi has become crypto’s most vibrant sector. Nearly $3.6 billion is currently flowing through its interlinked protocols and applications, up from $1 billion in early February, according to DeFi Pulse.

It’s the latest emergent industry that the “world’s computer” has unlocked. In just five years, Ethereum has given rise to crypto’s most promising use cases – and some of its biggest regrets.

From ICOs to stablecoins, and dapps to DAOs, Ethereum’s programmable, decentralized network has grown into a platform for real financial and technological experimentation. Plus, as CoinDesk’s Leigh Cuen reporters, Ethereans know how to have fun while disrupting everything.

CoinDesk is marking Ethereum’s five-year anniversary this week with a special package of reported stories, live streamed conversations and a pop-up newsletter, all celebrating Ethereum at Five. You can subscribe to the special Substack newsletter here.

Market intel

The Golden Context
Bitcoin finally passed the $10,000 mark over the weekend. First Mover asks why this hadn’t happened sooner. In the past month, fears of stagflation have settled in due to the greenback’s devaluation and an underutilized labor market in the U.S. This has pushed gold’s prices – seen as a hedge against inflation – to all-time highs of $1,940 (passing the previous ceiling of $1,921 an ounce in 2011). Bitcoin, meanwhile, has been stuck in a narrow trading range since April and only recently passed the $10,000 threshold, approximately half of its 2017 all-time-high of $20,000. “Bitcoin has its own microeconomics very unique to crypto, including mining difficulty cycles, the changing regulatory environment and other factors that have little to do with inflation,” Richard Rosenblum, co-founder of GSR, said. Subscribe here to get First Mover directly in your inbox.

Mining Profits
Ethereum miners’ daily income has soared over 60% in a month, according to Sparkpool. The profitability is tied to soaring transaction fees and relatively slow growth in competition from other miners. Daily income was around $1.85 per 100 megahashes second (MH/s) on the network on June 27, rising as high as $3.27 on July 25. This surge has outpaced ether’s (ETH) price jump of 40% over the same period.

Opinion

Crypto’s Outthinking Fintech’s Box
Crypto is so much more than fintech. In the latest Crypto Long & Short newsletter, CoinDesk’s head of research, Noelle Acheson, argues fintech is a tired word to describe financial innovation. While crypto creates new pathways for moving money around and generating returns, it’s also a data innovation and an innovation of authority, leading to new and revised ideas of what money is and can be. “Given the impact of crypto-based innovation on our understanding and application of financial concepts, surely we can come up with something better. Using a tired catch-all for something so significant is like trying to put a formidable force into a tidy bucket. 

Podcast

Known Unknowns
What is the future of decentralized exchanges in a regulatory environment shifting towards greater transaction monitoring and know-your-customer (KYC) constraints. CoinDesk’s Anna Baydakova sits down with executives and contributors to Hodl Hodl and Bisq – which eschew centralized custody – to discuss the responsibilities, risks and rewards of dealing in crypto without revealing your identity. 

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CoinDesk

Why Debt Financing May Be a Double-Edged Sword for Bitcoin Miner Bitfarms

CoinDesk Crypto
6 years 2 months ago

Industrial-scale bitcoin mining is an extremely capital-intensive business. Debt financing can be an attractive way to raise the funds needed to purchase equipment without diluting ownership through equity issuance. But the mining industry is volatile and loans generally carry high interest rates and strict collateral requirements, making it a double-edged sword for those that borrow to expand. Case in point: Canadian bitcoin miner Bitfarms.

CoinDesk Research presents an in-depth look into Bitfarms. With over 29,000 ASIC miners spread across five facilities, Bitfarms is one of Canada’s largest bitcoin mining companies. Throughout 2019, the company quickly grew its overall hashrate, which was financed primarily through a $20 million loan from Dominion Capital. In this report, we examine Bitfarms’ financial position and evaluate its ability to pay down debt coming due in 2021.

Some takeaways:

  • At its core, Bitfarms operates decent equipment at a respectable cost of electricity, resulting in positive operating cash flows.
  • However, the company used high-interest-rate debt with large balloon payments to expand operations. Now, with over $20 million in financial obligations coming due by the end of 2021 coupled with declining revenue output per terahash, Bitfarms may struggle to pay off its debt.

Related: First Mover: Bitcoin Miners Find Upgrade Financing Aplenty, Even as Prices Languish

Read more: In Canada They’re ‘Essential,’ In Argentina They’re Shut Down: Bitcoin Miners Reckon With COVID-19

  • Assuming there’s no significant jump in bitcoin prices, the Toronto-based Bitfarms will likely need to expand operations with efficient mining equipment within the next 12 months, which will require the company to raise additional capital.
  • A list of covenants and restrictions from its loan, however, hampers the company’s ability to raise capital through equity and debt, leaving Bitfarms with very few options.

Read the full report here.

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CoinDesk

Private Sector Could Bring Value to Future CBDC Launches, Says IMF Official

CoinDesk Crypto
6 years 2 months ago

A director at the International Monetary Fund (IMF) thinks the private sector could bring value to the technology supporting central bank digital currencies (CBDCs), should they be adopted by nations.

  • Tobias Adrian, a financial counselor and director of the IMF’s Monetary and Capital Markets Department, gave a keynote address last week at the “Building CBDC: A Race To Reality” conference, sponsored by blockchain software firm R3.
  • Adrian offered two models for the provision of a CBDC, varying in how they would pair the private sector with central banks.
  • The first model looked at synthetic CBDCs (sCBDC), which are backed by the liabilities of a central bank but issued with the aid of a private entity, such as a commercial bank.
  • Adrian noted the private sector should be left to deal with customer due diligence, wallet design and currency distribution, while the central bank would be in charge of regulation and supervision.
  • The second, “two-tiered,” model puts central banks in charge of the issuance of a CBDC and transaction settlement, with technology likely to be occasionally updated.
  • As such, the sCBDC model would spur private sector-led innovation at a more “fundamental level,” he said.
  • Such innovation “could be extremely valuable, given the pace of technological change, and given many central banks’ limited experience in providing retail services,” according to Adrian.
  • However, there are several potential challenges to central banks partnering with private firms, including interoperability, unfair competition and payment system stability.
  • Overall, Adrian said both models could offer an “especially liquid and safe payment instrument.”
  • Adrian spoke at a time when central banks are more widely expressing a willingness to examine CBDCs, with the Bank of England, Bank of Japan and Sweden's Riksbank among those already exploring, if cautiously, the possibility of a future launch.
  • The People’s Bank of China (PBOC) is currently taking center stage with its two-tier model, and already has its digital yuan moving to testing with commercial enterprises.

See also: Private Firms Can Boost Central Bank Digital Currencies, IMF Official Says

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CoinDesk

Leading Austrian Telecom Provider Adds Cryptocurrencies to Its Cashless Payment Network

CoinDesk Crypto
6 years 2 months ago

A1 Payment, a subsidiary of A1 Telekom Austria, said Monday users can now make payments using cryptocurrencies including bitcoin, ether and dash on its cashless payments app. 

  • On its website, the firm said that regardless of the cryptocurrency used, payments would be converted to euros in real time so retailers would receive payment in fiat. 
  • The addition of cryptocurrencies to A1’s payment platform will enable about 2,500 merchants to accept digital currencies. The moves follows A1’s decision last year to integrate services WeChat Pay and AliPay onto its platform. 
  • Partly controlled by the Austrian state, A1 Telekom had announced a trial of cryptocurrency payments in a pilot program last year. That announcement noted that industries with close contact with tourists and business travelers were hurt by a backlog in the acceptance of digital currencies as travelers couldn’t pay with BTC, AliPay or WeChat Pay. 
  • According to Reuters, A1 Telekom’s revenue declined by  2.4% to 1.1 billion euros in Q2. The report also said the firm plans to cut some of its planned investments for the year, including investment in 5G. 
  • A1 Payments did not respond to a request seeking more information about cryptocurrencies on its digital payments network by press time. 
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CoinDesk

Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter

CoinDesk Crypto
6 years 2 months ago

Silvergate Bank continued to add a steady drip of crypto customers in the second quarter of 2020 but its issuance of bitcoin-collateralized loans grew by $10 million, outperforming the growth of its real estate loan book by 10x. 

According to its latest earnings report, released Monday morning, the bank’s traditional loan portfolio – a real estate–heavy loan book of about $1.1 billion – only increased by $1 million from the first quarter. Bitcoin-collateralized loans through the bank’s SEN Leverage product surged by $10 million in the first quarter.

The uptick from $12.5 million to $22.5 million represents 80% quarter-over-quarter growth for the product, which is part of the Silvergate Exchange Network (SEN).

Related: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

The publicly traded La Jolla, Calif.-based bank is one of the few U.S. banks willing to openly serve crypto-related businesses and has most of its deposits from the crypto sector. The bank went public on the New York Stock Exchange under the trading symbol SI in November. With $2.34 billion in total assets, Silvergate is less than 1% the size of JPMorgan Chase, a $3.1 trillion behemoth.

Key stats from the earnings report include:

  • Activity on the SEN increased by 28% since last quarter to more than 40,000 transactions.
  • The volume running over the SEN increased by 29% quarter-over-quarter to $22.4 billion.
  • Silvergate reaped $2.4 million in total fee income from digital currency customers.
  • The bank’s risk-based capital ratio – total capital to risk-based assets – fell by half a percentage point to 25.54% from 26.05% in the first quarter.

The bank continues to have a steady pipeline of more than 200 customers waiting to be onboarded, Silvergate CEO Alan Lane said in a press release.

Read more: Institutional Trading House ErisX Joins Silvergate Exchange Network

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US Government Files Fresh Charges Against PlexCoin ICO Organizers

CoinDesk Crypto
6 years 2 months ago

The founders of PlexCoin have been hit with charges from the U.S. Department of Justice (DOJ), just a year after settling with the Securities and Exchange Commission (SEC).

  • The DOJ said last week an Ohio grand jury indicted three figures in the PlexCoin initial coin offering (ICO) on conspiracy to commit both securities and wire fraud, as well as money laundering and one count of wire fraud.
  • The DOJ alleges founder Dominic Lacroix, Yan Ouellet and Sabrina Paradis-Royer, from Quebec, Canada, made false statements including promising returns of over 1,345%.
  • PlexCoin raised a total of $15 million from investors in 2017; the SEC stopped the sale with an emergency asset freeze in December of that year.
  • Lacroix, Paradis-Royer and PlexCorp were all sued by the SEC for securities fraud in late 2017 and Lacroix had his assets frozen again in June 2018.
  • Last August, the defendants agreed to each pay $1 million in penalties and not participate in a securities sale again; PlexCorp would also disgorge $4.56 million plus $350,000 in interest to the SEC.
  • Lacroix served a two-month prison sentence in Canada for contempt of court in 2017.
  • If found guilty, the DOJ’s indictment may well take PlexCoin’s remaining ICO funds.

See also: BitClave Search Engine Agrees to Pay Back $25M ICO in Settlement With SEC

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Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

CoinDesk Crypto
6 years 2 months ago

The likelihood of bitcoin challenging record highs by the end of the year may have have increased with the cryptocurrency’s violation of major price resistance – but don’t raise your hopes too high just yet.

  • Bitcoin jumped above $10,300 on Sunday, breaching the resistance of a trendline falling from the December 2017 to June 2019 highs. 
  • Following the bullish move, the options market now shows a 7% probability of bitcoin rising to the historical 2017 all-time high of $20,000 before year’s end, according to data from crypto derivatives analytics firm Skew. 
  • The number had dropped to 4% a week ago with short-term implied volatility, a gauge of the market’s expectations for bitcoin’s future volatility, falling to record lows.
  • “Options market is repricing quickly the probability of [new highs] by the end of the year, from 4 to 7% over the last week,” Skew CEO Emmanuel Goh told CoinDesk in a Telegram Chat.
  • However, the odds remain below 10%, meaning traders believe a rally to $20,000 is unlikely to happen this year.
  • That’s because market participants “as yet remain unconvinced that this short-term rise in volatility will extend into year-end,” said Shaun Phoon, a trader at QCP Capital.
  • The one-month implied volatility metric – the market’s expectation of how volatile bitcoin will be over the next 30 days – has risen from 48% to 64% with Sunday’s price breakout.
  • However, longer-term price volatility expectations remain depressed.
  • Six-month implied volatility has registered a meager rise from 65% to 68% over the past three days and remains below the lifetime average of 76%.
  • Implied volatility has a positive impact on option probabilities: that is, when implied volatility rises, bitcoin is more likely to reach a certain level before a specific date.
  • Bitcoin’s price is currently trading at $10,290, representing over 3% gains on the day.

Disclosure: The author holds no cryptocurrency at the time of writing.

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You Can Now Buy Hedera Hashgraph’s HBAR Token via Simplex

CoinDesk Crypto
6 years 2 months ago

Distributed public ledger Hedera Hashgraph’s native cryptocurrency HBAR is now available for purchase through Israel-based global fiat payment processor Simplex, the companies announced Monday. 

  • In a statement, Simplex said the integration will enable users to buy and sell HBAR with a credit or debit card using its global platform. 
  • Simplex is an European Union-licensed financial institution that provides global fiat infrastructure to enable secure credit card processing for the crypto industry. It already supports a host of cryptocurrencies on its platform including bitcoin (BTC), ether (ETH), bitcoin cash (BCH), XRP and litecoin (LTC). 
  • Hedera Hashgraph launched its network in September and has since processed over 200 million transactions worldwide, the companies said.
  • Hedera had a shaky start; the HBAR token crashed a month following its launch, and the company had to withhold tokens from investors in an effort to stabilize price.  
  • HBAR spiked earlier this year when Google announced it will be joining Hedera’s governing council, which includes other high-profile multinational firms including Boeing, Avery Dennison, IBM and Tata Communications. 
  • Earlier this year, Binance integrated Simplex into its platform to expand the range of fiat currencies users can use to purchase crypto. 

Also read: Australian Payment Card Company to Trial Micropayments Using Hedera Hashgraph

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