CoinDesk Crypto

The credibility of Craig Wright – the Australian tech entrepreneur who controversially claims to be bitcoin’s pseudonymous inventor, Satoshi Nakamoto – has taken another blow.

After a list of bitcoin addresses Wright had provided as being his holdings in an ongoing court case were briefly and “inadvertently” made public by plaintiffs on May 21, 145 of the addresses were used to sign a public message both calling Wright a “fraud” and making it plain that he does not in fact own or control them.

The court case was brought by Ira Kleiman, the brother of Wright’s former business partner, David Kleiman, and seeks half of 1.1 million bitcoin (worth around $9.6 billion) the two allegedly mined in the early days of the cryptocurrency, as well as intellectual property. The case hinges on whether Wright can prove he has the keys to the trove of cryptocurrency.

Related: Bidooh Founders Admit to Cloning Business for Rival Advertising Venture

While the list of addresses was quickly resealed by the Kleiman legal team, it still exists on Court Listener and looks to have provided a means for another individual to identify a number of addresses they in fact hold the keys to. That, in turn, enabled them to sign a message with the bitcoin keys. It reads:

“Craig Steven Wright is a liar and a fraud. He doesn’t have the keys used to sign this message. The Lightning Network is a significant achievement. However, we need to continue work on improving on-chain capacity. Unfortunately, the solution is not to just change a constant in the code or to allow powerful participants to force out others. We are all Satoshi”

Some of the many addresses in the court filing published on Court Listener are indeed used to sign the message.

The message was first brought to wider attention on Reddit, with the claim that the addresses are for bitcoin mined in 2009 and that have not been moved since.

Related: Judge ‘Puzzled’ by Craig Wright’s Objections to Producing Evidence of Over 1.1M Bitcoin

BitMEX Research tweeted that it had taken “a random sample of 20” of the addresses and found they did not match the holdings of the “dominant” early bitcoin miner in 2009, who many think was Satoshi. The firm’s earlier research on this is to be found here.

Wright had claimed in court that his billions in bitcoin were held for him in so-called Tulip Trusts, but that he could not prove his control of the keys due to attorney-client privilege. He has been accused by the judge of “abusing” client-attorney privilege to withhold documents and “obfuscate” proceedings elsewhere in the case.

Last August, the judge also found Wright had argued in bad faith, perjured himself and admitted false evidence.

In another filing on May 21, the Kleiman team filed an omnibus motion for sanctions against Wright, claiming: “Wright has engaged in a sustained pattern of perjury, forged evidence, misleading filings, and obstruction – this included submission of false evidence which, if not unmasked, could have resulted in Plaintiffs being deprived of their day in court.”

Saying the abuses are “undeniably directed at the singular goal of making it impossible for Plaintiffs to prevail at trial,” defendants seek sanctions and a default judgement against Wright.

Wright for his part is hoping to bring new expert witnesses into court, one of whom is said to be a “licensed clinical psychologist who has studied Autism Spectrum Disorder.”

If the judge rules in favor of Wright on this matter, Dr. Ami Klin “will testify that he has diagnosed Dr. Wright with Autism Spectrum Disorder with high intellectual skills. Dr. Klin’s testimony will help the jury understand how this disability affects behavior.”

Another of Wright’s experts would testify on whether David Kleiman “had the requisite skills and experience to have written or significantly have contributed to the original Bitcoin software application released in 2009.” The Kleiman team is seeking to block the appearances of the four expert witnesses.

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With bitcoin’s price losing altitude again, small investors appear to be seeking exposure to the top cryptocurrency by market value.

Prices fell by 9.8% last week to register bitcoin’s biggest weekly decline since the second week of March, according to CoinDesk’s Bitcoin Price Index. A two-week low of $8,630 was registered early on Monday, with prices last seen at $8,730 – down over 11% from the post-halving high of $9,960 registered on May 18. 

Despite the price drop – or perhaps because of it – the number of addresses holding smaller amounts of bitcoin has continued to rise. 

Related: Market Wrap: Traders ‘Buy the Dip’ as Bitcoin Hovers at $9,000

The number of unique addresses holding at least 0.01 BTC (around $87 at press time) rose to a new high of 8,478,746 on Sunday, according to data provided by blockchain intelligence firm Glassnode.

Meanwhile, the number of addresses holding at least 0.1 BTC (roughly $870) also rose to a lifetime high, reaching 3,053,004 on Friday. Both metrics regained their upward trajectory following the May 11 mining reward halving.

See also: Bitcoin Halving Arrives: Mining Rewards Drop for Third Time in History

“Retail investors are likely in an accumulation phase,” said Ki Young Ju, CEO of blockchain analytics firm CryptoQuant. 

Related: Bitcoin Drops Over 3% Despite Golden Cross and Bank Calls for More US Stimulus

The dip demand may be associated with the bullish narrative that bitcoin could repeat history by charting a solid price rally over the next 12 months. The cryptocurrency witnessed a 30% pullback in the four weeks following its second reward halving on July 9, 2016. However, the decline was erased in the subsequent months and prices rallied to record highs by March 2016.

Prominent trading firms are also retaining a constructive outlook on the cryptocurrency. “The price pullback was expected and the long-term bias remains bullish. We would accumulate if prices drop to the $6,000-$8,000 range,” said Darius Sit, co-founder and managing director at Singapore-based QCP capital.

That said, the growth in the number of small addresses does not necessarily all represent new individual investors. This is because a single user can hold cryptocurrency in multiple addresses. 

Exchanges and custodial services also tend to hold bitcoins in multiple addresses. “Wallet management systems of virtual asset service providers have become more complex and granular. Their wallet clusters include more small wallets for security, etc.,” said Ju. 

As such, it is difficult to gauge exactly how much of the small address growth has been driven by new investor participation. 

Even if small investor participation is increasing, it is unlikely to have a big impact on prices, as the market is still dominated by large players, popularly known as “whales.” The number of addresses holding at least 10,000 BTC and 1,000 BTC have declined over the last two weeks, according to Glassnode data.

Moreover, options market activity suggests a deeper price drop could be in the offing in the near-term. “Traders are buying out-of-the-money puts,” said Chris Thomas, head of digital assets at Swissquote Bank. 

A put option represents a bearish bet on the cryptocurrency, while a call option represents a bullish bet. An out-of-the-money put option has a strike price that is lower than the market price of the underlying asset. 

Thomas expects bitcoin to move toward the $8,000–$8,200 range in the short-term. That looks likely, as per the charts, as the cryptocurrency has breached a trendline rising from March lows. 

Daily chart

Bitcoin fell by 5% on Monday, violating the support of the 2.5-month-long bullish trendline marked. The breakdown is backed by deeper bars on the MACD histogram, a sign of strengthening bearish momentum. 

“However, the relative strength index is neutral (going sideways),” Yuriy Mazur, head of data analytics at cryptocurrency exchange CEX.IO, told CoinDesk, while adding that, “there is no clear understanding where BTC will go currently. It may either retrace back to $6,500 or reach $10,000. We may get a clear indication of the further direction in the nearest days.”

Also read: Innovation Cycles, Crypto Venture Funds and Institutional Investors

The immediate bearish case would weaken if prices rise above Sunday’s high of $9,310 on the back of strong volumes. That said, a convincing move above $10,000 may be needed to restore the bullish trend. 

“After the halving took place, there were practically no buyers for Bitcoin, but in the range of $9,900–$10,000, a zone of hard technical resistance formed, that is very difficult to overcome under the current conditions,” said Mazur. 

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Telegram has thrown in the towel in its court battle against the U.S. Securities and Exchange Commission (SEC) and will no longer be fighting the ban on its blockchain token project.

In a filing on Friday (see bottom), the messaging app provider said it was withdrawing its appeal over a previous court decision that backed the SEC in prohibiting the issuance of “gram” tokens to investors both in and out of the U.S.

The new document filed with the U.S. Court of Appeals for the Second Circuit states: “The parties in the above-referenced case have filed a stipulation withdrawing this appeal pursuant to Local Rule 42.1.”

Related: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

The rule means that the parties have filed an agreement for dismissal of the case without prejudice. As such, the case is over for now, but not necessarily forever.

Telegram raise $1.7 billion in a private token sale in early 2018 to develop a blockchain named the Telegram Open Network, or TON. The project was halted by the SEC for violating U.S. securities law in October, weeks before its scheduled launch.

Also read: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

After six months of written arguments from both sides and one hearing in the Southern District court of New York, Judge Kevin Castel supported the initial preliminary injunction barring Telegram from issuing tokens to investors, on March 24. Telegram moved immediately to appeal, but that effort died with Friday’s filing.

Related: Russia Considering Draconian Rules for Illegal Crypto Operations

See a discussion of Telegram case during CoinDesk’s Consensus: Distributed online conference here:

On May 12, Telegram’s CEO Pavel Durov announced in a blog post that Telegram would no longer be developing TON. The post marked Durov’s first ever public statement about the project, which was being developed largely in secret.

Gram investors have now been given two options: either take back 72% of their investment in TON, according to the previously agreed contract amendment; or to loan the money to Telegram for one year, with a promise to get 110% in April 2021. U.S. investors have been given only the first option.

See also: A Former Coinbase Lawyer Is About to Become Acting Head of US Bank Regulator

Some investors told CoinDesk they had already received their refunds, while others said they had taken the loan route. However, a number have been unhappy with the outcome and said they are considering suing Telegram. No filed lawsuit has been made public so far.

The TON project may not be completely dead, however. Earlier this month, a group of professional validators launched a forked version of the blockchain, named Free TON, with the technical support of TON Labs, a startup that previously helped Telegram with the project.

See the full court filing below:

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Binance is forced to “technically” support last week’s hard fork of the Steem blockchain, according to the crypto exchange’s CEO, Changpeng “CZ” Zhao.

In a statement on the company’s official blog Sunday, CZ said that, while the exchange is “very much against zeroing other people’s assets on the blockchain,” to not support it would mean that Binance users would not be able to withdraw their steem tokens.

The result of a dispute in the Steem community over the acquisition of SteemIt – the blockchain ecosystem’s biggest and more powerful application – by Tron and Justin Sun, the hard fork was used as a tool to strip 64 dissenters of their token holdings. At the time around $6.3 million-worth of cryptocurrency was grabbed, with one of the affected parties, Dan Hensley, saying he alone had lost around $1 million of the total.

Related: Binance, Eosfinex Join EOSDT Stablecoin Governance Board

Wiping out people’s token holdings “goes against the very ethos of blockchain and decentralization,” said CZ. The fact that this can happen on a blockchain means it is overly centralized.”

The fork put Binance in a “tricky” situation, he continued. While the exchange would not otherwise support the fork, “if we don’t support it (technically), no users can withdraw any STEEM coins.”

CZ explained that Binance had waited to see how other exchanges reacted to the fork, saying that soon some had enabled the upgrade. He added that users had been demanding support for the fork too.

Reading between the lines, CZ appears to be encouraging users to withdraw their steem tokens, mentioning several times in the post that support that supporting the fork would allow withdrawals – of course, it could allow continued holding or trading too.

Related: Caught Up in Steem Squabble, Bittrex to Return Tokens Diverted in Hard Fork

“We do not want to block people’s funds. In this case, we should allow users to withdraw their funds, whether we willingly support this hard fork or not,” reads one of his lines.

The issue of the hard fork – launched apparently with the sole purpose of confiscating the holdings of key community members who were unhappy with Justin Sun’s power in the ecosystem and how he was wielding it – followed a previous hard fork that saw some Steem users create a new blockchain called Hive. The new chain copied over all the tokens from Steem, but not those of Sun and some Steem witnesses.

While the tit-for-tat fork may seem to some a fair reprisal, it’s worth noting that Hive’s tokens were effectively a free copy, while original holdings on Steem were obtained through genuine investments.

In the post, CZ notes that crypto advocate and author Andreas Antonopoulos had suggested in a tweet that Steem’s latest fork would likely result in litigation, with supporting exchanges also to be included as defendants.

The Binance CEO said:” I would have thought that [a class-action lawsuit] would go against everything he is preaching. In a decentralized world, anyone should be able to support any fork. Exchanges providing choices for users to get a ‘forked coin’ is no different by definition.”

The Steem saga illustrates that decentralization is not a utopia and that the community must work together “build a healthier decentralized ecosystem,” he concluded.

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The Louisiana State Senate is about to consider a bill to regulate and license virtual currency businesses.

Sponsored by state Rep. Mark Wright (R-77), HB701 sailed through the state House of Representatives with unanimous approval, and is being referred to the Senate Committee on Commerce, Consumer Protection and International Affairs.

If passed, the legislation would establish Louisiana’s first crypto licensing regime.

Related: New Jersey Lawmaker Wants to Create a Crypto License

Crypto businesses would have to apply with the state’s Office of Financial Institutions (OFI), fork over executives’ fingerprints, subject their “experience, character and general fitness” to investigation – and perhaps the business premises as well – and pay a nonrefundable registration fee, among other requirements.

Registrants licensed by states with comparable regimes would not need a Louisiana license under the bill. Individuals dealing with less than $35,000 annually would only need to register with OFI. 

OFI projected charging a $2,000 application fee and $1,000 for annual renewal. Louisiana’s budget gurus estimated the bill would cost the agency nearly $150,000 in its first year and about $1.3 million over five as OFI ramped up enforcement. 

Bill sponsor Rep. Wright first called upon the OFI to study virtual currency regulation in 2019, according to The Advocate. During that session, he also introduced a different crypto licensing bill.

Related: Luxembourg Passes Bill to Give Blockchain Securities Legal Status

That bill died in the House committee.

Source law

Andrew Hinkes, a lawyer with Carlton Fields, said the 2020 bill appears to derive from the Virtual Currency Business Act (VCBA), a licensure regime by the non-partisan Uniform Law Commission (ULC). 

ULC drafts model laws meant to bring statutory uniformity across state lines. California, Oklahoma and Hawaii are all considering versions of the VCBA, he said.

See also: The Uniform Law Commission Has Given States a Clear Path to Approach Bitcoin

“Sometimes the [ULC] model is released and everybody says, ‘Oh, this is the greatest thing that’s ever happened to me,’ and everybody goes out and passes it in their own state legislature,” he said. “Sometimes they release a law and everybody looks at it and says, ‘Yeah, not interested.’”

The 23-page bill Wright bill has ‘significant’ differences from the ULC’s 50+ page VCBA. Hinkes said it does not include reporting requirements, enforcement mechanisms, compliance programs and consumer protections that the VCBA put forth.

Rep. Wright did not immediately return a request for comment.

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After the most recent halving of the Bitcoin block subsidy, data analysis illustrates pattern that many large bitcoin mining operations have shut down, at least for the time being.

News ‘Diet’

Laszlo Hanyecz has the honor of conducting the first commercial Bitcoin transaction: trading 10,000 bitcoin for about $30 worth of pizza.

Ten years later, those bitcoin would be worth $91 million. He apparently has no regrets. “It was a really interesting system but nobody’s using it,” Hanyecz said. “If nobody’s using it, it doesn’t matter if I have it all.” 

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. Blockchain Bites will publish next on Tuesday, May 26. Happy Memorial Day to our U.S. readers.

Related: 10 Years After Laszlo Hanyecz Bought Pizza With 10K Bitcoin, He Has No Regrets

This one transaction, conducted about a year after Bitcoin’s inception, was the proof-of-concept necessary for a whole emergent economy to blossom. Ten years – to the day – later Bitcoin is looked at as a legitimate hedge against the Fed, a means of payment and a veritable worldview. 

While Hanyecz has said if it wasn’t him it would have been someone else, today we recognize his sacrifice and experiment. 

Happy Bitcoin Pizza Day!

Top Shelf

Iranian Crypto Mining
Iranian President Hassan Rouhani has ordered the the Central Bank of Iran (CBI), energy department and information and communication technology ministries to draft a renewed national strategy for the crypto mining industry. The news comes days after the Iranian parliament published a bill proposing to apply the country’s strict foreign exchange and currency smuggling regulation to cryptocurrencies. It’s unclear why the nation’s crypto policies are being revisited, though some speculate its to prevent value from escaping the nation’s borders.  

Related: Blockchain Bites: Satoshi’s Sword of Damocles

Tough Drafts
Harsh new rules making many uses of digital assets punishable with fines or prison might soon become law in Russia. Two draft bills setting out how Russia should regulate cryptocurrencies were sent to the country’s parliament, the State Duma, earlier this week. The first of which would prohibit the issuance and transaction of digital currencies in the nation, while the second would impose new sanctions for the illegal use of digital assets. The draft bills have not been finalized, according a high ranking official at the Duma.

Quarterly Loss
Canaan has reported a net loss of $5.6 million and shrinking cash reserves for the first quarter of 2020. Revenues are up 44% quarter over quarter after the firm slashed prices, but it also incurred $9.3 million and $5.9 million expenses in cost of goods sold and R&D, respectively. Canaan’s next generation miners will hit shelves next quarter, though the firm has not provided a business outlook citing the uncertainties of the COVID-19 pandemic and the post-Bitcoin halving.

Libra-like Stablecoin
Top Chinese political advisers have proposed a regional digital currency to facilitate regional trade that would be backed by four major Asian currencies including the Japanese yen, Korean won, Hong Kong dollar and the yuan, with the People’s Bank of China leading the proposed effort. The basket of underlying collateral would be weighted based on its nation’s economy, resembling the original vision for Facebook’s libra.

Next of Kin

• The kin cryptocurrency may leave its own fork of Stellar for the Solana blockchain. “The fork of Stellar enabled Kin to reach millions of consumers, but we knew it would not be a long-term solution,” a draft Kin Improvement Proposal reads. “Stellar has five-second block times, so irrespective of network load, a consumer could be seeing five-second latency on their transactions – not what we would deem a great consumer experience.” The draft proposal claims switching to Solana would lead to an 84% reduction in kin’s latency.
• The Kin Foundation published a transparency report Thursday, laying out its structure and operations, in a partnership with Messari and its disclosure database. Notably, 28 million users have acquired kin in the last three years across more than 50 different apps, and are spending 300 million kin per day, the report claims. The foundation’s tokens are vested at a rate of 20% per year.

Blockchain Bill of Rights
The World Economic Forum revealed a “blockchain bill of rights,” to protect a crypto user’s right to “manage consent of data stored in third-party systems, port data between interoperable systems” and “revoke consent for future data collection.” Called the Presidio Principles, the document includes signatories from the Government of Colombia, Deloitte, ConsenSys, Electric Coin Company, CoinShares and the United Nations’ World Food Program, just to name a few. 

Breadcrumbs…
Anchorage now has six executives in its C-suite, hiring a head of finance and head of sales with experience in both tech and Wall Street. With the new hires, this will be the first time the custodian has employees with “this deep of a bench” running the sales and finance sides of the business, President Diogo Mónica said. “It’s pretty obvious that Anchorage has larger ambitions than its current set of services,” he said. “I think you can start following the breadcrumbs.”

ADAM Hires Blockinger
ADAM, a 15-member crypto trade group, hired Jeffrey Blockinger, a former hedge fund legal chief, as its first chief executive. The agency write codes of conduct for the industry. “I look forward to expanding our leadership role in shaping the future of the digital assets markets by building consensus for the entire industry,” Blockinger said in a statement. (The Block)

Hack Track
Whale Alert has tracked 28.3 bitcoin ($260,000) stolen in a Bitfinex hack four years ago moving to an unknown wallet. (Decrypt)

Crypto Travels
Travala, a crypto travel booking platform, has been merged with Binance’s TravelbyBit, which also provides travel services. The merged company aims to provide offerings for 2 million hotels and 600 airlines. (The Block)

Weekend Reads

Crypto ‘Gray’ Markets Could Be Unintended Consequence of FATF Travel Rule
The Financial Action Task Force’s (FATF) “Travel Rule,” an attempt to extend prescriptive banking regulations to the crypto market, may lead to a bifurcation of the market. “We are going to see white crypto; we are going to see gray crypto. And those different forms of crypto will most likely trade at different prices,” said Bakkt President Adam White at Consensus: Distributed. Other commenters noted that the rule could lead to increased use of privacy coins and regulatory arbitrage between nations that choose to turn a blind eye on exchanges ignoring this global standard.

Finance and the Real Economy Can’t Stay Out of Sync Forever
Jill Carlson, co-founder of the Open Money Initiative, argues that the imbalance between stock prices, spurred by Federal stimuli, and record-levels of unemployment will rectify sooner than later. “[W]hen I look at the impacts of COVID-19, I see as much slowing down or creaking to a halt as I see speeding up. Our way of life has slowed. Economic time has stopped. For now, financial time has carried on. But there is good reason to think that may slow soon, too, as we realize our spendthrift habits don’t always serve us well,” she said. 

The Breakdown

‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen
Tuomas Malinen, CEO of GnS Economics, a macroeconomic advisory firm, joins NLW to discuss how the COVID-19 pandemic is putting pressure on the legitimacy of the European Union and the euro. 

Who Won #CryptoTwitter?

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Binance is trying its hand at decentralized stablecoin governance.

The exchange joined the distributed oversight team that approves contracts and code changes on Equilibrium, a DeFi outfit behind the EOSDT stablecoin. EOSDT contracts hold nearly $10 million in collateral according to the Equilibrium website.

Announced Friday, Binance now has oversight power over new EOSDT smart contracts. As a party to Equilibrium’s multisignature hierarchy, Binance will grant – or conceivably withhold – its approval to all contracts prior to release.

Related: CZ’s Twitter Feed Swayed New CoinMarketCap Ranking That Put Binance on Top

That authority had been exclusive to block producers EOS Nation and EOS Cannon. Now, it also includes Binance and fellow newcomer eosfinex, the decentralized exchange developed by Bitfinex.

“You can also consider it as establishing a four-eyes principle for Equilibrium’s EOSDT,” Equilibrium CEO Alex Melikhov told CoinDesk. For any one transaction to take effect, at least two parties must first give their okay.

Read more: EOSDT Now Has $17.5M in Insurance That Pays Out Automatically

In doing so, Melikhov said the four give EOSDT updates the weight of their reputation. 

Related: Binance Quashes Upbit Hackers’ Attempt to Launder Stolen Funds

“Instead of a single owner who can potentially do whatever they want there is a group of reputable and known ecosystem participants who bid their reputation on the integrity/relevance of these updates,” he said.

That involves more than just rubber stamping public proposals. According to Melikhov, Equilibrium will give a “detailed audit report” to the four before release. They will also conduct their own independent reviews, he said.

“So eventually the community and users can be 100% sure that the smart contract owner cannot deploy malicious code or simply transfer funds out,” he said.

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The kin cryptocurrency is exploring a move from its own fork of Stellar to the Solana blockchain. 

To recap, the mobile app company Kik ran a $98 million initial coin offering (ICO) for kin in 2017, which was made on the Ethereum blockchain. Then the company said that it would use Ethereum for security and Stellar for transactions. Then it forked Stellar and ran its own chain. Now that’s proving to be inadequate so the cryptocurrency will port over to Solana in a matter of months, pending adequate support from app developers in the Kin ecosystem.

“The fork of Stellar enabled Kin to reach millions of consumers, but we knew it would not be a long-term solution,” a draft Kin Improvement Proposal shared with CoinDesk reads. “Stellar has five-second block times, so irrespective of network load, a consumer could be seeing five-second latency on their transactions – not what we would deem a great consumer experience.”

Related: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

Read more: Goodbye Ethereum: Kik Plans to Move Its ICO Tokens to Stellar

Solana is a high-throughput blockchain that relies on a concept called optimistic concurrency control, which assumes that transactions generally don’t conflict with each other. The project describes several other key features of its technology on Medium.

“Kin is one the best ways to show what Solana is capable of,” Anatoly Yakovenko of the Solana Foundation told CoinDesk. “We expect to see other projects looking for speed and raw horsepower to migrate to Solana as well.”

The Kin Improvement Proposal says the move would enable an 84% reduction in latency. “Solana is measured to have approximately 60,000 transactions per second, with 400ms block times,” it says. 

Related: Stellar Enterprise Fund Invests $5M in Crypto App Abra Ahead of Blockchain Integration

The Solana Foundation would actually pay the Kin Foundation for making this move, however, awarding it with up to 1% of the supply of SOL (roughly $6 million at today’s prices), with 0.1% unlocking for each new 1 million active users that join over a 24-month period. 

Next steps

The next step will be for Solana to make a presentation to kin developers about the process for switching chains. If enough developers agree to make the move, Solana staff will largely facilitate it and the process should be complete in a matter of months. 

“It is ultimately up to the developers in the Kin ecosystem to decide if they want to migrate to Solana; however, we know that speed and throughput are two key issues within this community, and those happen to be two areas where Solana shines brightest,” Yakovenko wrote. 

Read more: Solana Blockchain Adds Korean Stablecoin Terra for Better Payments

Based on the Kin Improvement Proposal, the Solana Foundation will start tracking progress on Jan. 7, 2021. 

“Few projects in the blockchain space have shown an ability to grow a user base as fast as Kin has,” Gokal wrote. “We expect to see a myriad of use cases that come out of the Kin ecosystem within the near future that perfectly exemplify Solana’s leading performance.”

Why now?

“What has happened over the last year, but mostly has been accelerated in the last six months, is the kin ecosystem has been growing like crazy,” Tanner Philp, head of corporate development at Kik, told CoinDesk.

Kin has seen a dramatic uptick in its core metric – monthly active spenders – over the course of the coronavirus quarantine period, Philp said.

In early March, there were approximately 1.5 million people who had spent kin in the prior 30 days. On April 20, the growth spike peaked at 4.4 million. The numbers have trended down somewhat since then but it’s still running at about 3.5 million, a significant gain over prior numbers.

Read more: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

Kin has been integrated into 57 different applications, but usage is dominated by a few popular ones, including apps for sharing media and making funny, shareable shorts. 

Kik, the company that still oversees kin, began investigating new blockchains to pursue eight months ago in anticipation of the need to get to something faster, Philp said. 

The key use for kin is payments, and that was what Solana was always designed to accelerate. 

“Solana is one of the solutions, if not the only solution, that scales transaction times down into sub-second territory – the type of experience you’d demand for any mainstream application, such as Kin,” Yakovenko wrote.

Kik believes its Stellar fork has room for several more months, though pending developments could shorten that runway.

“What we’re getting close to is rolling out the new wallet for kin that Kik Inc. is working on, to connect the ecosystem, and that’s where you’ll start to see some more vibrancy within the ecosystem,” Philp said. 

New features

The wallet will make it simple to move kin earned in one app over to others. The company isn’t committing to a timeline but that wallet could appear in late Q3, Philp said. 

When that happens, if users start moving tokens around between apps, it will become important to add metadata to transactions showing which application drove the spend. That data helps apps get properly credited by the Kin Rewards Engine. Stellar does not support a large enough amount of data to make its metadata features useful.

Read more: Blockchain Gaming, Messaging Apps See User Growth Amid Coronavirus Lockdowns

Kin was founded out of the company that formerly ran the Kik mobile app. The vision for the cryptocurrency was to create a way for people using mobile and web-based products to have a marketplace of value, but one where that value could be very tiny, for trade in items like digital stickers and access to small games.

Companies are rewarded for building out the kin ecosystem with daily emissions from the Kin Rewards Engine, which shares out its vast trove of undistributed kin to developers who are driving transactions. 

“Kin started out with getting a lot of users using it across a lot of different apps,” Philp said. “Now it’s about getting people to spend larger amounts, and by that we mean going from fractions of pennies to pennies spent.”

Related Stories

• Judge Approved Blockchain Association’s Brief in Kik Case Despite SEC Objections
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Related: Why Kyber Network Tokens Tripled to $100M Despite the Coronavirus Recession

“Any asset minted on Ethereum by RenVM is a 1:1 backed ERC-20. This means that if you have 1 renBTC (an ERC-20), you can always redeem it for 1 BTC. It’s a direct supply peg. renBTC isn’t a synthetic, it doesn’t rely on a liquidation mechanism, and it’s not the price of Bitcoin on Ethereum. It is a one to one representation of Bitcoin on Ethereum that can be redeemed for BTC at any time, in any amount.”

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The latest implementation of bitcoin (BTC) on the Ethereum blockchain quietly went live this week.

There are 1.24 renBTC live on the Ethereum mainnet now, according to Etherscan. Three sources with knowledge of the project have confirmed this is the Ren smart contract, live ahead of its launch announcement.

However, there’s no way yet for members of the public to mint additional bitcoin-on-ethereum using Ren, the CEO of the company behind the project told CoinDesk in an email.

Related: Colombia, Deloitte, ConsenSys Sign On to WEF’s ‘Blockchain Bill of Rights’

“While the smart contracts have been deployed on Ethereum, RenVM itself is not actually on mainnet. This is because RenVM is a distinct network separate to Ethereum. The final mainnet subzero version of RenVM won’t be deployed until later,” Taiyang Zhang wrote. Those minted so far have been made as part of internal tests.

RenBTC becomes the latest in a rash of products built to expose bitcoin-backed assets to the benefits of Ethereum’s various decentralized finance (DeFi) platforms.

Here’s a succinct description of the system from a Medium post by the company’s CTO, Loong Wang:

“Any asset minted on Ethereum by RenVM is a 1:1 backed ERC-20. This means that if you have 1 renBTC (an ERC-20), you can always redeem it for 1 BTC. It’s a direct supply peg. renBTC isn’t a synthetic, it doesn’t rely on a liquidation mechanism, and it’s not the price of Bitcoin on Ethereum. It is a one to one representation of Bitcoin on Ethereum that can be redeemed for BTC at any time, in any amount.”

Related: Why Kyber Network Tokens Tripled to $100M Despite the Coronavirus Recession

Kain Warwick of Synthetix tweeted Wednesday that he was the first person to hold a full bitcoin in renBTC.

The contracts for the three new tokens are already published in Ren’s documentation. There are also already 1.12 renZEC minted and a negligible amount of renBCH.

Ren is a project that grew out of the $30 million initial coin offering (ICO) for the Republic Protocol, originally envisioned as a way to run dark pools – privacy-preserving trading venues where the order book is kept secret. According to Crunchbase, its backers included Polychain Capital and FBG Capital.

Read more: Into the Dark Pool: $30 Million ICO Could Pave Way for Huge Crypto Trades

But, in a recent issue of The Defiant newsletter, Wang explained his firm’s pivot away from dark pools. 

The big trades were on chains that weren’t Ethereum, he said. “ETH had a lot of liquidity, but it was predominantly Bitcoin and USDT. So we would had to leverage things like atomic swaps, and they’re just too painful,” Wang told The Defiant’s Cami Russo. “And so we kind of turned around to say, well, we need to solve this interoperability problem before large liquidity is actually truly accessible in this space.”

According to a promotional release sent to CoinDesk, the RenVM was slated to go live May 27. 

The RenVM is a way to hold a cryptocurrency in a multi-signature wallet controlled by nodes in the RenVM and mint a representation of that asset as an ERC-20 token for use on Ethereum. Unlike other projects, RenVM is bringing more than bitcoin to Ethereum (see bitcoin cash (BCH) and zcach (ZEC) above), with other assets to follow.

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China-based bitcoin miner manufacturer Canaan has reported a net loss of $5.6 million for Q1 2020, even though it had cut down the prices for its hardware by more than half in an effort to sell more machines.

In an earnings report released on Friday, the firm said it made $9.4 million in revenue for the first three months this year with a growth of 44.6% compared to the same period last year. But it also incurred $9.3 million and $5.9 million expenses in cost of goods sold and R&D, respectively.

For that revenue, Canaan sold 0.9 million terahashes per second (TH/s) of Bitcoin computing power, which accounts for less than 1% of the network’s current total.

Related: Bitcoin Mining Difficulty Drops by 6% in First Adjustment After Halving

That means Canaan had cut down the prices for its mining hardware sold in the first three months by more than 50% to just $10 per TH/s, reflecting an overall slowdown of the buying interest into mining hardware amid Bitcoin’s halving event and the COVID-19 pandemic that has disrupted global logistics.

For context, Canaan booked a revenue of $66.5 million in 2019 with 2.9 million TH/s of Bitcoin computing power sold, meaning the average prices was around $22 per TH/s last year. Other major manufacturers have also taken a similar price cut strategy over the past a few months.

“The overall market situation since December last year until January had not been too good. So the unit price per TH/s was indeed lower,” Zhang Nangeng, CEO and chairman of Canaan, said in an earning call on Friday. “And the logistics in mainland China had basically stopped around the Chinese new year due to the COVID-19 pandemic. So even though bitcoin’s price was a higher point in February and early March, the pandemic largely affected our sales.”

The filing also shows that as of March 31, Canaan had cash and cash equivalents of $37 million, compared to $71 million as of the end of last year.

Related: The Last Word on Bitcoin’s Energy Consumption

“The decrease was mainly due to higher short-term investments as the Company invested RMB173.4 million (US$24.5 million) in short-term investments as of March 31, 2020,” Canaan said in the report.

Zhang said the firm has partnered China-based Semiconductor Manufacturing International Corporation – in addition to its existing supply chain partnership with Samsung and TSMC – to roll out bitcoin mining equipment with 14-nm chips and expects to be able to ship in larger quantity in Q2.

But the firm declines to issue a business outlook for Q2 2020 citing the uncertainty of the COVID-19 pandemic and the uncertainties after Bitcoin’s halving gives itself “very limited visibility on the potential impacts to its business and the markets in which it operates.”

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The token economy just gained an organized structure for collaborating with world leaders. 

The World Economic Forum revealed its Presidio Principles on Friday, a “blockchain bill of rights,” according to the nonprofit focused on fostering diplomacy and international business partnerships. The document includes signatories from the Government of Colombia, Deloitte Consulting LLP, ConsenSys, Electronic Coin Company, CoinShares and the United Nations’ World Food Program, just to name a few. 

“We supported the creation of the Presidio Principles – as well as guidelines and design principles for public institutions – because we wanted to ensure that progress can continue rapidly and responsibly, ensuring that basic characteristics like security and data privacy are secured for our citizens,” Victor Munoz, Colombia’s presidential advisor on economic affairs and digital transformation, said in a press statement. 

Related: RenBTC Quietly Goes Live in Latest Bid to Bring Bitcoin Into Ethereum

Read more: Why the World Economic Forum Is Creating a Blockchain ‘Bill of Rights’

The principles include a user’s right to “manage consent of data stored in third-party systems, port data between interoperable systems” and “revoke consent for future data collection.”

Ethereum co-founder Joe Lubin encouraged crypto startups to become signatories and join the WEF’s open dialogue. In a press statement, he said he hopes “all builders of Ethereum-based projects – and across the blockchain landscape – will sign on to demonstrate their commitment to the users of their systems and applications.”

Indeed, Aya Miyaguchi of the Ethereum Foundation was involved. Greg Medcraft of the Organisation for Economic Co-operation and Development (OECD) and Delia Ferreira Rubio of Transparency International also contributed to the project.

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Iranian President Hassan Rouhani has ordered the government to draw up a renewed national approach for the emerging crypto industry.

Chairing Iran’s economic coordination headquarters – a seminar for the national economic strategy – earlier this week, Rouhani told officials from the Central Bank of Iran (CBI), energy department and information and communication technology ministries that they needed to devise a new national strategy for crypto mining, including regulation and mining revenue, Iranian news site ArzDigital reported Wednesday.

The news comes barely two days after the Iranian parliament published a bill proposing to apply the country’s strict foreign exchange and currency smuggling regulation to cryptocurrencies. The new parliamentary law would also require crypto exchanges operating in the country to first register with the CBI – possibly in a move to try and prevent too much capital leaving the country.

Related: First Mover: Bitcoin Just Got Easier to Mine, but for How Long?

Penalties for smuggling in Iran can include fines and imprisonment.

Just months ago, the administration of U.S. President Donald Trump raised concerns that Iranians were using digital assets in order to circumvent sanctions.

See also: Iran Issues License for Nation’s Biggest Bitcoin Mining Operation

Iran was one of the first countries to officially recognize cryptocurrency mining as a legitimate industry back in July 2019. The government now issues mining licenses, giving companies the right to mine and then sell off any digital assets produced. An industry report in January said Iran had issued over 1,000 such licenses in its first six months.

Related: Iran Moves to Restrict Crypto Exchanges Under ‘Currency Smuggling’ Laws

Iran currently has a 4% share in bitcoin’s total hashrate, according to the Bitcoin Mining Map, more than double what it was at the beginning of September 2019.

It’s unclear why Rouhani wants Iranian officials to revisit bitcoin mining regulation. With the clampdown on value leaving the country, in the form of cryptocurrencies, it’s possible the President wants to ensure miners, too, aren’t taking their money away from the government’s clutches.

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Bitcoin fell for a second day, extending a downdraft triggered by Wednesday’s revelation that a member of the cryptocurrency community from the blockchain’s earliest days in 2009 had moved a long-dormant cache of coins. 

As of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading at $9,044, a loss of 5.6% over 24 hours. 

Bitcoin remains well below its 10-day and 50-day technical indicator moving averages — a signal of bearish sentiment. 

Related: Bitcoin Drops Over 3% Despite Golden Cross and Bank Calls for More US Stimulus

At 14:00 UTC (10 a.m. ET) the world’s oldest cryptocurrency began experiencing high selling volume on exchanges including Coinbase, dropping bitcoin below $9,000 for the first time since May 13.

While the market appears to have turned bearish, Rupert Douglas, head of institutional sales at asset management firm Koine, said he planned to “‘buy the dip” — a popular phrase for accumulating an asset when prices drop in the belief that they’ll soon start going up again. 

“In a way I was hoping for this,” Douglas said in an email. “I’m a buyer at $9,000, as this is shaking out the weak longs before taking it higher.” 

Read more: What I Learned the First Time I Lost a Million Dollars

Related: Market Wrap: Bitcoin Rebounds to $9,500 After Scary Sell-Off

Volatility in the notoriously fickle bitcoin market has declined since collapsing in March, when the devastating economic toll from the coronavirus started to become clear.   

“I wouldn’t call this a dump,” Darius Sit, managing partner at crypto quantitative fund QCP Capital, told CoinDesk via a Telegram message. “It’s nowhere near statistically significant.”  

The price drop could take a toll on the profitability of bitcoin miners, already hurting from a revenue cut following last week’s rewards halving. The miners have had to rely more on transaction fees to maintain revenue. 

Fortunately, fees are up post-halving, said Marc Fleury, CEO of digital asset brokerage Two Prime. 

“Transaction fees associated with moving bitcoin around have increased from 60 cents to upwards of $5, providing some income for the miners,” he said. 

Read More: Why Kyber Network Tokens Tripled to $100M Despite Coronavirus

Fleury said many bitcoin miners are counting on a price increase to stay profitable. “This has historically happened in the past two halvings, within a span of 18 months,“ said Fluery. “It will take some time for the market to adjust.”

Other markets

Digital assets on CoinDesk’s big board are in the red Thursday. The second-largest cryptocurrency by market capitalization, ether (ETH), lost 5.6% in 24 hours as of 20:30 UTC (4:30 p.m. ET). 

The biggest losers in 24-hour trading were cardano (ADA) slipping 7.6%, iota (IOTA) losing 6.5% and neo (NEO) down by 6.1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Thursday.

In the commodities sector, oil is trading up 1.4%, with the price of a barrel of crude at $33 at press time. Oil has experienced a wild ride in 2020, up 101% the past month yet still down 44% for the year to date. 

Gold is in the red today, with the yellow metal falling 1.2% to $1,725 at the close of New York trading. 

Read More: Genesis Trading Buys Crypto Custodian Vo1t in Bid to Become Prime Broker

In the U.S. the S&P 500 fell less than 1% on the day, but still up over 2% since Monday despite U.S. jobless claims coming in at over 2.4 million for the past week, the seventh weekly increase. 

U.S. Treasury bonds slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year bond, falling 5.6%.

In Asia, the Nikkei 225 index ended its trading day down less than a percentage point on losses in the real estate and transportation sectors. Trading of Europe’s largest public companies by market cap on the FTSE Eurotop 100 index was also down less than a percent, dragged down due to continued coronavirus uncertainty. 

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Top Chinese political advisers have proposed a regional digital currency that would be backed by four major Asian currencies including the Japanese yen, Korean won, Hong Kong dollar and the yuan. 

The proposal unveiled Thursday describes the currency as a “stablecoin,” a term for cryptocurrencies designed to hold their value and backed by a reserve currency, although it does not explicitly mention crypto or blockchains.

The People’s Bank of China (PBOC) would lead the proposed effort. The basket of underlying collateral would follow the special drawing rights (SDR) model of the International Monetary Fund (IMF), where each country’s currency is assigned a different weight based on its economy.

Related: Internal Struggle at Bitcoin Mining Giant Bitmain Escalates to Physical Confrontation

As such, the proposal resembles the original vision for libra, before that Facebook-spawned project watered down its plans and pivoted to developing digital versions of individual fiat currencies. (The Libra Association recently welcomed Singapore investment company Temasek as its first state-owned entity member.)

The proposed stablecoin would help facilitate trade among the four countries, which is key to economic recovery in the region after coronavirus, its proponents said. It would do so by improving cross-border settlement and clearing services with a new payment network and digital wallet for enterprises. 

Read more: Chinese City Known for Bitcoin Mining Seeks Blockchain Firms to Burn Excess Hydropower

Neil Shen, founding and managing partner of Sequoia China and a member of China’s upper house, presented the proposal to Chinese legislators during the Two Sessions, the country’s largest annual political gathering.  

Related: Crypto Exchange OSL to Establish ‘Digital Asset Powerhouse’ in Asia, US Regions

Nine other advisers who are also upper house members, including Kennedy Wong, a solicitor of the Supreme Court of Hong Kong, former chief secretary of Hong Kong Henry Tang and Hong Kong-based Chinese billionaire Songqiao Zhang, co-signed the proposal.

Shen attended the first session of the Chinese People’s Political Consultative Conference (PCC) on Thursday. The PCC is essentially an advisory upper house where a range of organizations and independent members help the government make national-level decisions. This meeting will be followed by plenary sessions of the National People’s Congress (NPC) starting Friday and lasting for about two weeks. 

Proposals out of the PCC do not tend to have the same level of influence as the more concrete bills discussed in the NPC because the bills will yield significant changes in laws and regulations.  However, in this case the proposal might have some sticking power.

California-based Sequoia Capital, Sequoia China’s parent, is one of the few big-name VC firms that have ventured into crypto. It invested in $10 million in one of the largest global crypto exchanges by volume, Huobi Group, when it was based in China in 2014. (Huobi Group is now based in Singapore.)

It also invested in Nervos and Conflux via private token sales. Both these startups have collaborated with China’s state-owned entities to develop blockchain technologies. 

The stablecoin proposal also suggests creating a regulatory sandbox and scaling up the system in Hong Kong over time to improve cross-border payment services between the four countries. 

Read more: Meet Red Date, the Little-Known Tech Firm Behind China’s Big Blockchain Vision

Led and supervised by the PBOC, companies from private sectors would launch the stablecoin and develop the project with the latest financial technologies. Enterprise users would be able to store the coins in a digital wallet and deposit cash at a custodian as reserves to back their stablecoins, according to the proposal. 

The Hong Kong Monetary Authority and PBOC can create a framework to regulate the stablecoin’s cross-border transactions, manage risks and discourage money laundering, the proposal said. 

The stablecoin could be launched ahead of China’s national digital currency and pave the way for its rollout by testing use cases to identify potential risks and technical problems. If launched, the stablecoin could be “seamlessly” connected with the digital yuan, the proposal said. 

The proposal stresses Hong Kong is one of the most important financial gateways that connect mainland China to the other Asian countries, with over 70% of cross-border renminbi payment processed in the city. 

Hong Kong could be the most favorable jurisdiction for such a regional stablecoin. The Hong Kong Securities and Futures Commission created a licensing system to regulate virtual assets transactions and trading platforms in November.  

Among the first 12 entities awarded with the license are Tencent’s WeBank; Alibaba’s fintech arm Ant Financial; Infinium Limited, a joint venture that includes Tencent, Industrial and Commerce Bank of China (ICBC) and other two Hong Kong-based institutional investors; and SC Digital Solutions Limited, whose 65 percent stake is owned by Standard & Chartered Bank. 

Read more: Starbucks, McDonald’s Among 19 Firms to Test China’s Digital Yuan: Report

On the other end, the PBOC and the top Chinese financial watchdog, the China Securities and Regulatory Commission (CSRC), recently put forward a slew of new measures to reform the financial system in the Guangdong-Hong Kong-Macao Greater Bay Area and encourage blockchain applications for improving international financial services in this area. 

In 2017, the Chinese government came up with an initiative to further integrate the Guangdong province with Hong Kong and Macau in a bid to build stronger financial connections between these cities and the mainland. The initiative encourages banks in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to have a regional network and operate in a more interconnected financial system.  

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The Kin Foundation is offering a peek under the hood.

The group published a transparency report Thursday, laying out its structure and operations, in a partnership with Messari and its disclosure database. 

According to the report, the Kin Foundation plans its budget a year in advance, with funds going to app developers, node incentives, user grants and marketing and operations. There are 1.45 trillion kin tokens currently circulating, out of 10 trillion created in all. 

Related: Telegram Agrees to Give SEC Bank Records, Communications in Ongoing TON Lawsuit

The foundation is currently run by a board of directors that consists of two members: Kik Interactive CEO Ted Livingston and William Mougayar, author of “The Business Blockchain” and one of the founders of the Token Summit annual conference. Kik created kin in 2017.

“The Board of Directors is appointed annually by the members,” the report said. There is also a Kin Representative, which the report says acts as “a conduit between the Kin Foundation and the community of developers and holders.”

Read more: Judge Approved Blockchain Association’s Brief in Kik Case Despite SEC Objections

Matt Hannam, who took the post last month, is the only representative at present, but the foundation plans to add another two or three over the next year. Kin also has an “informal” community of 10 delegates who oversee kin rewards and disagreements.

Related: Telegram Withdraws Offer to Repay Investors With Gram Tokens

The foundation’s tokens are vested at a rate of 20% per year, though the report noted that the first year is only a partial year (kin was created midway through 2017).

The report claims that more than 28 million users have acquired kin in the last three years, using more than 50 different active apps. Active apps are defined as those with at least one user spending kin in the past 30 days.

According to the report, nearly 300 million kin were spent per day earlier this year.

Legal fight

The report comes amid Kik’s ongoing legal fight with the U.S. Securities and Exchange Commission (SEC), which sued the company last year on allegations the kin token sale was an unregistered securities offering. 

Earlier this month, both parties filed their reply memos as part of the motions for summary judgement each party sought. 

Kik maintains that “the SEC cannot meet its burden to prove that Kin purchasers were primarily led to expect profits from the managerial efforts of others,” pointing to the terms of use kin purchasers agreed to as one piece of evidence. 

For its part, the SEC says Kik’s marketing of the kin token would have led purchasers to expect a profit, highlighting various online posts and a roadshow the company underwent.

In a statement, Kik General Counsel Eileen Lyon said, “Our take on the SEC’s opposition is that it relies heavily on the recent Telegram case, which we think was poorly reasoned and wrongly decided,” referring to the granting of a preliminary injunction against Telegram.

Read more: With Kik and Telegram Cases, the SEC Tries to Kill the SAFT

The Telegram case decision “is not binding precedent,” she said, “so it will be interesting to see what impact it might have, in light of the many other authorities we have cited and the significant factual differences in the two token offerings.”

Kik also felt that the SEC’s arguments about the “integration” issue “were conclusory and circular,” she said.

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Top Shelf

Yesterday, some of the earliest mined bitcoin moved after more than a decade of dormancy.

Whale Alert – a popular, mostly-automated Twitter account that tracks major crypto transactions – broadcast the message across the cryptoverse, saying 40 coins mined in the first month of the network’s operation had transferred from a “possible #Satoshi owned wallet,” referring to bitcoin’s long silent creator, Satoshi Nakamoto. 

This unfounded connection – based on the age of the bitcoin, and the fact they had not been moved for 11 years – caused a minor market stir.

Related: First Mover: Bitcoin Rattled by Transfer of Satoshi Coins That Might Not Be Satoshi’s

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. 

Since then, blockchain archeologists and bitcoin sleuths have poked holes in the theory the coins are Nakamoto’s, who, as far as we can tell, has never moved a single satoshi from the hoard of bitcoin he mined in the network’s early days. (Except for a test transaction sent to Hal Finney.)

Determining the sender of these coins is impossible, for now. But the occurrence is a moment to reflect on some important insights about the bitcoin community, infrastructure and market. 

Of the approximately 18.5 million coins already mined, about 2 million are dormant – either unspent because the keys have been lost, or for other personal or technological reasons. Estimates on the higher side assume as many as 4 million bitcoin are “lost forever.” Nakamoto once referred to lost coins as a “donation” to the network. The bitcoin protocol hardcaps the total supply of bitcoin at 21 million coins, but knowing that some coins have been “donated” has led some researchers to develop a new metric: Realized Capitalization. This measure discounts Bitcoin’s total supply to account for lost or otherwise inaccessible coins.

Related: 50 BTC Just Moved for First Time Since 2009 – But It Doesn’t Look Like Satoshi

When previously inert coins move – be they Nakamoto’s or not – this should challenge the assumption that coins in deep storage are out of circulation. Unless they’ve been tossed in the bin. Therefore, a price adjustment is logical.

A partial cause for yesterday’s price movements were fears Nakamoto has returned and could potentially dump billions of dollars worth of bitcoin on the market. Nakamoto’s seemingly altruistic, or at the very least mysterious, “donation” to the bitcoin community hangs over the market like the sword of Damocles.  

Like Nakamoto’s motivations, it’s an open question as to how many coins he holds. In 2013, Sergio Lerner wrote a blog post estimating the Satoshi stockpile to be around 1 million bitcoin. Years later, derivatives exchange BitMEX recounted and found the hoard to be in the neighborhood of 700,000 coins. 

Both estimates look at a technical detail called the nonce value to determine what blocks Nakamoto was likely to have mined. It’s analysis of this same block feature that leads many to assume yesterday’s transaction did not belong to Nakamoto, but one of the dozens of other miners assumed to be live on the network at the time.

Curiously, when these bitcoin were mined, bitcoin itself had no market value. The block reward is now worth just shy of half a million dollars. There were also no CoinJoins or SegWit code updates, modern wallet features yesterday’s transaction utilized, nor a host of blockchain analyzers watching where these coins will jump to next. 

How far bitcoin has come!

Castle Island Venture’s Nic Carter, in conversation with Moneymail developer Lawson Baker, said the biggest clue into the identity of the owner of the coins could come in a couple of days. Just look at the OP_RETURN field, a place to encode permanent messages on the Bitcoin blockchain, Carter said. We’ll be watching.

Media Diet

Red Flags: Citizen, the mobile application that alerts its more than 2 million users to crime and disaster around them, has launched a contact tracing functionality, called SafeTrace, in the fight against the coronavirus. The application, which makes use of GPS and Bluetooth proximity tracking and stores data in a centralized manner, has raised alarms among privacy experts and technologists. “GPS data tracking a person’s movements is very revealing, and difficult to effectively anonymize,” said Ángel Díaz, counsel at the Liberty and National Security Program of The Brennan Center for Justice in New York.

Brazil Banks Investigated: On Wednesday, Brazil’s antitrust watchdog, the Administrative Council for Economic Defense (CADE), voted to continue its investigation of banks who denied financial services to crypto brokers in alleged violation of Brazilian competition law. CADE’s nearly two-year-old inquiry into Itaú Unibanco, Banco do Brasil, Santander, Inter, Bradesco and Sicredi now returns to the General Superintendency for further review. Those six banks, which comprise nearly 80% of Brazil’s deposit market share, could face eventual sanctions and even be forced to provide financial services to crypto brokers.

Geographic Details: Block.one, a primary EOS developer wielding about 9% of the total token supply, is about to begin voting in the ecosystem, after years of holding back its influence. In a note last Friday, the Cayman Island-based company outlined criteria it would use to decide on which block producer candidates to support and vote for, including information pertaining to the public disclosure of the “location of the node.” While Block.one representatives downplay the significance of this geographic information, other stakeholders believe it could lead to favoring specific countries. 

New Shareholder: IBM has become a shareholder in we.trade, the trade finance platform jointly owned by 12 European banks, signaling further consolidation across the enterprise blockchain space. While IBM has been a technology partner since the beginning, we.trade has always intended ween itself off the Hyperledger-based IBM Blockchain Platform and take its tech stack in-house. Ciaran McGowan, we.trade’s CEO, said this financial relationship with Big Blue will help the platform in its next phase of global expansion.

Digital Dividend: Online retailer Overstock has finally distributed its digital dividend to shareholders after a series of delays including an investor class action suit against the company and the ousting of the dividend’s brainchild former Overstock CEO Patrick Byrne. The digital security, called OSKTO, can now be freely traded on Overstock subsidiary tZERO’s blockchain-underpinned platform. Shareholders need to open a brokerage account with a broker-dealer that subscribes to the tZERO ATS to trade the securities, the firm said.

Genesis Brokerage: Genesis Global Trading is moving toward full-service prime brokerage – covering lending, trading and custody – with the acquisition of crypto custodian Vo1t.  The terms of the deal were not disclosed. “We’re coming at this after having a successful business on the trading and lending side,” said Genesis CEO Michael Moro. “The goal is for clients to be able to do any and all activities with Genesis.” Genesis is owned by CoinDesk’s parent, DCG.

Blockchain Strategy: A U.S. lawmaker introduced a bill calling on the Federal Trade Commission (FTC) to survey how blockchain technology is being used by other nations as well as outline a comprehensive blockchain strategy for the United States.

“Bloodbath”: Highly leveraged crypto hedge funds are struggling to recover from recent volatility, reports the Financial Times.

Digital Euros: Societe Generale issued €40 million worth of covered bonds as security tokens that were then settled by the Banque de France, the nation’s central bank, in blockchain-based digital euros. (The Block)

Synthetic, Priceless Token Model: The UMA Project community approved contracts that allowed creating its first token: ETHBTC. This is also the first experiment with UMA’s priceless token model, which minimizes the need for oracles, allowing for the synthetic ETHBTC token to track the relative value of ETH to BTC, without requiring users to stake either of the two cryptos.

Staking Services: Coinbase Custody now offers staking services for Cosmos and Algorand tokens. Last year the firm added staking support for Tezos tokens. (The Block)

Market Intel

Buyers Exhausted? Bitcoin prices look to be struggling with buyer exhaustion, having put in a negative performance in the last 24 hours despite positive developments on both the macro and technical fronts. Despite intimations from JPMorgan and Goldman Sachs calling upon the Federal Reserve to step up its inflationary bond purchase programs, analysts at Stack, a provider of cryptocurrency trackers and index funds, expect bitcoin to consolidate in the range of $8,000–$10,000 for some time. 

The Breakdown

Dollar’s Strength Weakens the World: Lyn Alden, founder of Lyn Alden Investment Strategy, joins The Breakdown to discuss why the U.S. dollar’s persistent hegemony is bad for everyone. 

Who Won #CryptoTwitter?

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Anchorage now has six executives in its C-suite, hiring a head of finance and head of sales with experience in both tech and Wall Street.

Julie Veltman, who’s joining the crypto custodian as head of finance, has issued new asset-backed securitizations for Merrill Lynch’s Structured Product Capital Markets group. She also built out a broker-dealer, debt issuance platform and fixed-income trading business for financial services firm Cohen & Company. Most recently, Veltman drove financial planning, reporting, and efficiency at Salesforce. 

Geoff Clauss, who’s joining Anchorage as head of sales, has more than two decades of experience in private equity, wealth management and fintech. Before Anchorage, Clauss spent seven years overseeing sales at wealth management platform Addepar. He also spent 15 years at investment software company Advent. 

Related: Genesis Trading Buys Crypto Custodian Vo1t in Bid to Become Prime Broker

Veltman will oversee operational finance, day-to-day operations and the firm’s prime brokerage products. The fact that Veltman’s experience extends far beyond Anchorage’s current products is a sign of where the firm wants to go, said co-founder and President Diogo Mónica.

“It’s pretty obvious that Anchorage has larger ambitions than its current set of services,” he said. “I think you can start following the breadcrumbs and seeing where the direction of the company is going – Julie’s background is absolutely perfect for where we want to go with the company.”

Read more: Anchorage Moves Into Crypto Trading With New Brokerage Service

With the new hires, this will be the first time the custodian has employees with “this deep of a bench” running the sales and finance sides of the business, Mónica said. While the company won’t be hiring any more executives in the near future, it does continue to hire more employees throughout the current economic crisis. 

Related: BlockFi Hires Credit Suisse, Prudential Execs to Drive Global Expansion

“We’re rounding out our executive team and it really feels internally like we’re getting to the next step of execution of the company and maturity of the company,” he said.

Sometime in the near future, Anchorage is going to announce new products related to quantitative analysis and risk modeling from its Merkle Data acquisition in January, Mónica added.

“We’ve already integrated a lot of the work that they’ve done, and we’re going to be launching some products that actually rely heavily on their work pretty soon,” Mónica said.

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Spoooky! BTC saw a ghost Wednesday and scared the markets. It’s CoinDesk’s Markets Daily podcast.

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

This episode is sponsored by ErisX, The Stellar Development Foundation and Grayscale Digital Large Cap Investment Fund.

Related: ‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen

Today’s stories:

50 BTC Just Moved for First Time Since 2009 – But It Doesn’t Look Like Satoshi

Bitcoin Drops Over 3% Despite Golden Cross and Bank Calls for More US Stimulus

After Lawsuits and Delays, Overstock Hands Shareholders Digital Dividend

Related: Why a Strong Dollar Is Bad for the US and Bad for the World, Feat. Lyn Alden

Genesis Trading Buys Crypto Custodian Vo1t in Bid to Become Prime Broker

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

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