The U.S. Securities and Exchange Commission (SEC) has filed charges against international securities dealer 1pool Ltd., which was offering Bitcoin-funded security-based swaps, according to an SEC announcement published September 27.

Per the SEC, the case involves the Marshall Islands-based corporation 1pool Ltd., which provides cryptocurrency-related services and stands behind 1broker.com, and its Austria-based CEO Patrick Brunner. The complaint alleges that the parties violated federal securities laws in connection with security-based swaps funded with Bitcoin (BTC).

The complaint was filed in the U.S. District Court for the District of Columbia and seeks permanent injunctions, disgorgement plus interest, and penalties. The SEC states that the Commodity Futures Trading Commission (CFTC) has filed its own charges against 1pool in a parallel action.

According to the complaint, a Special Agent with Federal Bureau of Investigation (FBI), acting undercover, purchased security-based swaps on 1broker’s platform from the U.S., though he did not comply with the discretionary investment thresholds required by the federal securities laws. The SEC also adds that users could open accounts on the platform with their email address and a user name only, without providing additional information.

The SEC further alleges that Brunner and 1broker failed to transact its security-based swaps on a traditional exchange registered in the U.S., as well as properly register as a security-based swaps dealer. Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office commented:

“International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”

This week, the SEC announced it is seeking sanctions against the individuals behind the allegedly fraudulent Initial Coin Offering (ICO) known as PlexCoin. The parties are accused of “misappropriating” investor funds that were “illegally” raised in a misleading, deceptive, and unregistered securities offering.

Earlier this month, the SEC issued a cease and desist order and a $200,000 fine to Crypto Asset Management (CAM) and its founder Timothy Enneking. The SEC order says that CAM “misrepresented” itself as the "first regulated crypto asset fund in the United States," and raised $3.6 million from 44 investors in late 2017, bringing its net asset value to $37 million.


Via: https://cointelegraph.com/news/tom-lee-ethereum-will-rally-strongly-up-to-1-900-by-the-end-of-2019

An increasing amount of bitcoin is being held by active individual users, rather than companies and long-term investors, according to new data from Chainalysis.

Announced Monday, the analytics firm found 4.8 million bitcoin, or roughly 32 percent of the protocol's cryptocurrency supply (minus lost coins), was held in personal wallets with some level of transactional activity as of August 31. That's up substantially from the end of 2017 – around the time the market peaked – when just 3.8 million bitcoin, or 26 percent, was in the hands of individuals.

The August numbers were the second-highest for individual accounts on record, and off only slightly from July's high of 4.95 million bitcoin, or 33 percent of all coins in circulation.

"There are more people who are holding crypto personally," Chainalysis economist Philip Gradwell told CoinDesk.

As a result, Gradwell said, "there's a much larger supply that's liquid. A lot of the people who bought [this year] are buying smaller amounts," adding:

"They are ready – if things were to change, [if] the opportunity to spend it were to arise – to actually spend it. We've kind of overcome the first hurdle of adoption, getting bitcoin into people's hands."

Speaking to that potential, Gradwell said technical solutions aimed at improving bitcoin – like the much-lauded Lightning Network, which could enable faster payment processing options for merchants and service providers – could tip the scales for users deciding whether to transact with bitcoin or cash out during the next bull market.

To be sure, bitcoin is still predominantly held as an inactive investment, whether custodied by an institution or individual, with 6.3 billion held in accounts that had no activity in over a year, according to Chainalysis data.

Further, one person can control multiple wallets, so the data is an imperfect proxy for the adoption and distribution of bitcoin.

And the original cryptocurrency's deflationary supply and dramatic appreciation in its 10 years of existence tend to incentivize users to hold rather than spend, all else equal – many bitcoin proponents view this as a feature, not a bug.

See more:https://www.coindesk.com/hodl-no-more-the-amount-of-bitcoin-in-active-wallets-is-near-to-a-record-high/

IBM has joined a decentralized cross-blockchain registry initiative which it states is a Yellow Pages analogue for blockchain projects, according to an announcement September 13.

The initiative called Unbounded Registry will be led by blockchain startup HACERA, and is designed to provide “a decentralized means to register, look up, join and transact across a variety of blockchain solutions, built to interoperate with all of today’s distributed ledger technologies.”

The project will reportedly address major issues in the field, including reserved naming for blockchain projects, the discoverability of blockchain networks and applications, and a catalogue of domain-specific functions and services.

Other members of the registry include Intel, Chinese tech giant Huawei, Batavia, Hitachi, and the Australian Blockchain Association.

IBM is known for its openness to the study and application of blockchain technology across various fields. Earlier this month, the tech giant revealed a Stellar-based “near-real-time” blockchain payment network called Blockchain World Wire (BWW). The solution is developed to facilitate international settlements between banks.

In August, IBM and Danish transport and logistics giant Maersk jointly launched their global blockchain-enabled shipping solution. The platform is reportedly able to track critical data about each shipment in a supply chain in real time, generating a distributed, immutable record on the fly.

In June, IBM iX, the business and tech consulting wing of IBM, in partnership with software supplier Mediaocean, launched a blockchain-powered tracker for digital media transactions to “clean things up” in the media buying industry.

see more:https://cointelegraph.com/news/ibm-joins-decentralized-yellow-pages-for-blockchain-projects

Hank Paulson, former secretary of the U.S. Treasury, called it "an economic 9/11."

Having loaded up on mortgage debt that went sour, then failed to find a savior in the government or private sector, the 158-year-old Wall Street investment bank Lehman Brothers filed for bankruptcy on Sept. 15, 2008.

The fallout over the following days, weeks and months would threaten to topple the entire financial system, necessitating trillions of dollars in rescue lending to banks and other firms by governments and central banks. The global financial system hadn't looked more fragile at any point since 1929.

Worse, support for the system was undermined by the fact that Wall Street executives still collected multimillion-dollar bonuses – even as millions of the taxpayers, who helped fund those bonuses, lost their homes.

Within a couple of months of Lehman's bankruptcy, though, a new piece of technology would debut – almost unnoticed – one that appeared to offer an alternative to this catastrophe-prone system. On October 31, 2008, an unidentified individual going by the name Satoshi Nakamoto published the bitcoin white paper to a cryptography mailing list.

The paper described "a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution."

Satoshi had almost certainly been working on the protocol for months or years prior to Lehman's collapse but, according to Cornell computer science professor and blockchain researcher Emin Gun Sirer, there was a timely motive to the launch.

Sirer told CoinDesk:

"It's very clear that Satoshi was affected by the events that led up to the financial crisis of 2008, and then it's obviously recorded in the genesis block as well."

Sirer is referring to the Times of London headline bitcoin's creator pointedly inserted into the first bitcoin block ever mined, on Jan. 3, 2009: "Chancellor on brink of second bailout for banks."

As awareness of bitcoin spread, different people saw different things in it, but for many, it represented an alternative to fiat currency issued by central banks (which had just fired up the proverbial printing presses again) and the fractional reserve banking system (which had nearly collapsed beneath a mountain of lending).

Most of all, it promised to bypass the financial institutions the crisis had cast such doubt on.

Laszlo Hanyecz, known as "Bitcoin Pizza Guy" for becoming the first person to use the cryptocurrency to purchase real-world goods (two pizzas for 10,000 BTC in May 2010), told CoinDesk that he believed bitcoin could replace "the established system of banks and the endless line of middlemen all taking a cut."

Yet over the past decade, the worlds of bitcoin – and its cryptocurrency and blockchain offshoots – and traditional finance have begun to interact in ways almost no one would have predicted early on.

Wall Street veterans are decamping to work for firms focused on cryptocurrency. Major financial institutions are flirting with blockchain. And cryptocurrency investors are pushing for the creation of investment vehicles by industry incumbents.

Ten years after bitcoin was born into the flames of the financial crisis, have the cryptocurrency community and Wall Street made nice?

Bitcoin versus the world?
Early on, the ethos around bitcoin was undeniably subversive.

One early adopter and miner, who asked to remain anonymous, told CoinDesk that "in the very beginning" there was "a great deal of discussion about the anarcho-capitalist and/or libertarian ideals" that bitcoin appeared to make possible.

He mentioned dark web markets such as Silk Road, which used bitcoin, but noted that these rested on a misunderstanding of the protocol's limited anonymity.

Even ignoring its illicit use cases, though, the creation of decentralized money appeared to pose a threat to the established order. It provided, the early adopter said, an escape from "the interpersonal and cultural damage and destruction done by the monetary monopolies" – meaning banks and governments.

Taariq Lewis, a long-time cryptocurrency developer whose most recent project is codenamed Lyra Protocols, agreed that "bitcoin was always meant to bypass the financial system."

As such, some early bitcoiners worried that participating in such a project could be dangerous.

Stefan Thomas, who discovered bitcoin through the random-browsing site StumbleUpon in 2010, and then went on to work as Ripple's CTO before starting his own venture, told CoinDesk:

"A lot of people early on in the bitcoin community were very worried that central banks would look at this as a fundamental threat to one of the key, key, pillars of power of the government, which is the ability to issue currency. And so a lot of people early on stayed anonymous, they did not reveal their real identities."

As it turns out, he said, most of the supposed central bank "illuminati" were simply curious about the new technology.

Although, that's not to say that mavens of established finance haven't lashed out on occasion. Jamie Dimon, JPMorgan's CEO since before the crisis, has called bitcoin a "fraud," though he's since walked that statement back. And Warren Buffett, the billionaire investor who bailed Goldman Sachs out in the week following Lehman's bankruptcy, has called bitcoin "rat poison squared."

To be sure, for all the hope it's inspired (and acrimony it's generated), bitcoin is far from toppling the incumbent financial system.

Wall Street banks – most of them – not only survived the crisis, but have grown bigger than they ever were before it. Central banks and fiat money show no signs of going anywhere, and bitcoin remains a tiny sliver of the global monetary system.

"It's turned out," said Sirer, "that undoing the Fed and replacing money as we know it is actually a tall order, and it has to happen in stages if it's going to happen at all."

In the meantime, he added, "There's a lot to be had from playing nice with the existing system and making it better."


read more:https://www.coindesk.com/10-years-after-lehman-bitcoin-and-wall-street-are-closer-than-ever/

The South Korean government is literally doubling down on its efforts to trial blockchain in the public sector, adding more projects and increasing available funds for 2019.

The Korea Internet & Security Agency (KISA) – a sub-organization of the Ministry of ICT – has said it is aiming to increase the number of blockchain pilot projects in the public sector from six this year to 12 in 2019, as CoinDesk Korea reported on Tuesday.

"In the next year, we are considering expanding blockchain pilot projects in the public sector to 12, and plan to support more than three private-led blockchain national projects," said Min Kyung-sik, head of KISA's blockchain team.

Further, the government agency will also boost the blockchain pilot budget for 2019 to more than 10 billion Korean won, or $9 million, in addition to the previously reported $9 million fund for both 2018 and 2019.

In June, the Ministry of ICT revealed a development plan that would see it work with other relevant ministries to develop six blockchain projects in the public sector – all selected from a total of 72 project ideas submitted by 41 institutions.

The six projects were focused on livestock supply chain management, customs clearance, online voting, real estate transactions, cross-border e-document distribution and shipping logistics.

KISA indicated for this year, the government has allocated $3.76 million for the six projects, with $3 million coming from the government and the remainder from private contributions.

The results of the current pilot projects will be announced in November, after which KISA will host a blockchain hackathon competition in December in an effort to select new project ideas, the agency said in the report.

Via: https://www.coindesk.com/south-korea-to-double-blockchain-trials-in-public-sector-next-year/

Throwing away revenue?

It might not make sense in conventional business, but don't tell that to crypto entrepreneurs. Indeed, for some projects, economist Joseph Schumpeter's notion of "creative destruction" is taking on a literal meaning in that they're actively destroying their own money supply – and generating value for investors in the process.

It's turning out to be an unexpected benefit of the initial coin offering (ICO) model, whereby startups and projects fuel and fund their projects with a scarce digital asset they create. In short, these projects can use the token to price their services, and then strategically alter the economics of the money supply to which they have a direct relationship.

To that end, burning tokens, or destroying the cryptographic keys to these assets so they can't ever be recovered, has proven to be a selling point for investors, with ICO white papers finding projects promising they will destroy new tokens as they return to the issuer as earnings. Essentially the ask is, if you buy our token now, these companies promise potential backers they'll trash them as they earn them back.

However unorthodox, one thing is clear: speculators appear to love the model.

Take Switzerland-based Eidoo, which just announced that it was burning 1 percent of the total supply of the EDO tokens it created when it did its ICO in November.

Its latest blog post reads: "The excellent news is that we will destroy 920,000.00 EDO tokens starting from August 31st. This means that we are going to permanently remove one percent of the total supply of EDO tokens."

Sure enough, EDO's price spiked nearly 40 percent shortly after the post above came out.

For Eidoo, this means it earned the tokens it created back as revenue from helping startups to run ICOs on its app. But since it isn't going about this process alone (the company says it has 200,000 users eager to get in on more sales), it's jettisoning a full half of the money it brought in by burning the tokens.

The twist is, Eidoo is a major holder of EDO tokens, meaning it's a win-win for the company and investors.

As Eidoo's Amelia Tomasicchio told CoinDesk:

"Burning 50 percent of our revenue is not really creating any loss for the company itself, but it is creating value for the entire EDO token holders."

See more:https://www.coindesk.com/crypto-startups-are-destroying-millions-of-coins-and-investors-love-it/

Members of the U.S. Senate Committee on Energy and Natural Resources asked about the cost of cryptocurrency mining and the opportunities for blockchain in the public sector on Wednesday.

Like other crypto-related hearings on Capitol Hill, the hearing – which featured a range of public and private-sector speakers – served in part as an informational session for lawmakers who aren't very familiar with the technology.

In contrast with past Congressional hearings which at times turned acrimonious toward the concept of blockchain and cryptocurrencies, senators on the Energy Committee largely inquired about how blockchain can be applied to various projects.

The people giving testimony were Robert Kahn, CEO and president of the Corporation for National Research Initiatives; Paul Skare, chief cybersecurity and technical group manager of the Pacific Northwest National Laboratory; Thomas Golden, program manager of technology innovation at the Electric Power Research Institute; Claire Henly, managing director of the Energy Web Foundation; and Arvind Narayanan, an associate professor of computer science at Princeton University.

In remarks, committee chair Senator Lisa Murkowski of Alaska noted the "hearing will examine any cybersecurity advantages that blockchain and similar technologies might offer over other ways of securing our energy infrastructure."

Mining concerns
The foremost risk discussed at the hearing revolved around the energy needs of cryptocurrency miners. Networks relying on proof-of-work – which require the expense of energy to prove that "work" has been completed – generally require large amounts of energy, such as the bitcoin blockchain, according to Golden.

The witnesses estimated that public blockchains may be using anywhere from one to as much as five gigawatts worldwide, though, as Golden contended, "this is less than 0.1 percent of the global power usage."

Murkowski remarked that growing demand on the local level from new crypto mining farms can cause stress for utility providers, and may even damage the electric grid. Her concern is that this may translate to increased costs for the provider's customers.

She asked:

"Can we anticipate the consumer rates and the concern that some might have that, 'my family and I might not be the ones that benefit from blockchain and bitcoin and yet I'm wondering are my rates going to be expected to pay for this infrastructure?'"

Senator Steve Daines similarly asked how communities can prepare for mining farms moving onto their power grids.

Golden said power utilities should begin having discussions with their communities about providing power for these companies, as a start to solving the infrastructure issue.

But even reinforcing some localities' grids may not be enough. Henly noted that "bitcoin's energy use is a substantial concern … we know that bitcoin's energy use will prevent it from being able to scale."

Her solution was to look at alternatives to PoW, noting that while they require large amounts of power, proof-of-stake and proof-of-authority algorithms are far more energy efficient, and can pose as feasible alternatives to scaling a blockchain without requiring large amounts of power.



See more: https://www.coindesk.com/us-senators-raise-crypto-mining-concerns-propose-government-blockchains/

New to crypto trading? Read CoinDesk's full set of guides.

Are you a crypto trader struggling to find a footing in a volatile crypto market?

If yes, then the first thing you need to master is the art of identifying support and resistance levels.

Imagine bouncing a ball inside your house. There are two barriers that will limit the flight and fall of the ball – your floor and ceiling. In trading, there are similar barriers that limit the movement of price action known as support and resistance.

Such barriers in trading can have long-lasting effects on an asset, since price action rarely forgets its past. If traders regard a certain price level as a great entry or exit point, it will likely continue to act as a barrier for prices until all of their respective needs are satisfied.

Support

For example, buyers will generally continue to buy at a specific price, given the asset is perceived as undervalued, until all of their demand is fully absorbed by the market. So, if buyers engage at X price and the price moves upward only to later return, the same buyers will look to defend their positions at X and potentially add more to their positions.

New buyers will see that price fell no further than X before, so are likely to consider it a safe entry. This concentration of buy pressure will prevent price from falling any further, creating a temporary floor known as support.

Resistance

On the other hand, if an asset is perceived as overvalued at a certain price level, sellers will be sure to take advantage. Here, those large buyers from before will look to exit their position and take profit. It's also possible traders will enter "short" positions at this level, given the perceived over-valuation, increasing the market's sell pressure.

Just like when there was high buy pressure, this concentration of sell pressure will force the price level to act as a barrier, except this time it will act as a ceiling, rather than a floor, known as resistance.

Horizontal Support & Resistance
The most important and easiest to identify support and resistance levels take the shape of horizontal lines as a result a trend being rejected repeatedly at a very similar price point.

Horizontal support or resistance lines can be created by simply "connecting the dots" between trend peaks or valleys as seen in the chart below.


See more: https://www.coindesk.com/crypto-trading-101-an-introduction-to-support-and-resistance/

The cryptocurrency market is flashing green Wednesday following a major downturn, with the total capitalization rising more than $11 billion on a 24-hour basis.

The signs of a turnaround emerge in the wake of a rough patch for the market, during which it hit its lowest point for 2018, as CoinDesk previously reported.

At press time, bitcoin, the world's biggest cryptocurrency by market capitalization, is trading hands at an average of $6,349 – a considerable improvement from yesterday, when the price hit a low of $5,921.65, according to the CoinDesk Bitcoin Price Index (BPI).

Bitcoin hit a high of $6,612.73 during Wednesday's session, BPI data shows.

A turnaround for the world's second largest cryptocurrency by market capitalization, ether (ETH) is perhaps most notable given the severity of its recent market free fall.

The price of ETH fell from $407 on August 7th to a low of $257 yesterday – a more than 36 percent week-to-week depreciation, according to CoinDesk's Ether Price Index (EPI). Ether's plummet made it next to impossible for many cryptocurrencies to show positive growth in BTC value.

Sellers of the cryptocurrency have since taken a breather, allowing for a more than 12 percent relief rally in price to occur (by press-time prices). The EPI is reporting a price of roughly $289 at time of writing.

The rest of the market immediately followed suit, bringing the total market capitalization at one point back above the $212 billion mark from a more than eight-month low. As of the time of writing, that figure is hovering around $205 billion.

All of the top 10 cryptocurrencies by market capitalization are currently reporting 24-hour gains above 4 percent with the exception of stellar lumens. What's more, ETH, XRP, Monero, and EOS are all posting gains of above 8 percent, with ETH leading the pack for price growth in the past 24 hours, according to CoinMarketCap.

Disclosure: The author holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing.

Image via Shutterstock



See more:https://www.coindesk.com/crypto-bulls-fighting-back-market-sees-green-after-sell-off/

Tuur Demeester is an economist and investor.

The following article references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for that.

Despite an already six month cool-off period, for 2018 we see more sideways and downside potential in the bitcoin price due to sluggish retail demand, hesitation from institutions and a current market cap that seems too high relative to the activity occurring on available blockchains.

Many investors and advisors are on record stating that $5,700 was the bottom in bitcoin for this year, and that higher prices lie ahead. While we are very bullish on bitcoin's long-term prospects, we do heed caution for more short-term price optimism.

To find the starting point of the historic parabolic rally in bitcoin that ended at $20,000 we have to go as far back as August 2015, when bitcoin traded at below $200. This past rally was a stupendous, historic move. Even in secular bull markets, the collective of economic actors need time to absorb the information embedded in its characteristic high volume rallies.

As I've indicated in my 2018 outlook, I think chances are high for this year to be remembered as a shakeout year: a lemon market in altcoins, regulators catching up and infrastructure growing pains.

Short-term bearish signs
Since January, the bitcoin mining hashrate (aggregate computations per second made to secure the network ) has tripled, which means that a huge amount of new or more efficient mining rigs have come online. In combination with declining prices, this means that miners who weren't able to upgrade their machines or find cheaper electricity have been faced with a steep decline in profitability, a 90% drop in 7 months (altcoins have faced similar or steeper declines).

With profit margins under heavy pressure, it's not unlikely that miners are and will stay responsible for a significant amount of selling in the market.

See more: https://www.coindesk.com/dont-expect-new-bitcoin-price-highs-in-2018/

Crypto exchange Coinbase is now offering deposits and withdrawals denominated in the British pound (GBP), the firm announced Wednesday.

The exchange's U.K. division will now offer same-day deposits and withdrawals from the platform, allowing transfers to happen almost immediately. In a statement, Coinbase U.K. chief executive Zeeshan Feroz wrote that this system will replace the previous method, which had customers convert cryptocurrencies into euros before converting a second time into pounds.

The old process took several days, he said, an aspect that the new process will skip altogether.

Feroz explained:

"Customers will now be able to deposit and withdraw pound sterling and use it to directly buy and sell cryptocurrency – for the first time. Customers will not only benefit from increased speed, but reduced cost as well. By no longer having to convert funds from GBP to euros and vice versa to add and remove funds, there will be no more exchange rates."

The rollout of this new system is ongoing. Several customers already have access to GBP wallets, and all U.K. customers will receive access over the next few weeks.

Both individual and institutional customers will benefit, Feroz said, adding that the new wallets "will allow investors to make almost immediate transfers, an essential feature for traders and hedge funds who need to be able to enter and exit their positions quickly."

More broadly, he noted that the exchange is working on expanding its services in both the U.K. and the EU, citing the e-money license the firm received earlier this year.

See more: https://www.coindesk.com/coinbase-adds-british-pound-for-uk-crypto-users/

Bitcoin bears may be in the midst of taking an upper-hand.

At press time, BTC is changing hands at $7,536 on Bitfinex, down 6.9 percent on the day, a figure that also finds the price breaking a key support level at $7,800.

The world's largest cryptocurrency by market capitalization has been largely confined to a narrow price range of $7,673–$7,800, since it broke $8,000 yesterday. However, mounting sell volume continues to apply downward pressure, presenting a bleak outlook for bulls looking to take back the reins.

As such, bulls now are looking for 24-hour volume in excess of 2.4 billion, a threshold that would inspire hope of a reversal.

See more:https://www.coindesk.com/bitcoin-drifts-down-as-price-breaks-below-key-7-8k-support/

Professional consulting giant Accenture Global Solutions may be considering using blockchain to streamline and automate shipping logistics.

According to a document published by the U.S. Patent and Trademark Office on Thursday, the proposed system would determine certain types of attributes for objects being shipped and store that information on a blockchain. The proposed system will then track the objects as they are shipped from one location to another, using the data stored on the ledger to confirm the objects' status and condition.

Devices participating in the network – which could be robots or unmanned aerial vehicles, for example – can check on the integrity of those shipments as they are transported to different locations, comparing their status to the information that's already stored on the blockchain.

The information can also be tracked by driverless or other autonomous vehicles.

If an analyzing device verifies the identity of an item successfully by matching its attributes to what's already described and stored on the blockchain, it will allow the item to continue its trip, whether that places it on shelves, onto a vehicle for further transportation or is incorporated into a further manufacturing process.

If the data from the current and previous stages doesn't match, the device may order the system to return the product and halt the payment.

The system can also create alerts and messages for managers involved in the shipping process or government agencies that regulate the product. The system could even call for a manager meeting if necessary or request that an investigator check if a product was tampered or altered.

The application is Accenture's latest show of interest in blockchain applications (and not its first effort to secure intellectual property related to the tech).

Last summer, Accenture and Microsoft launched a prototype of an identity-storage blockchain and is currently working with the World Economic Forum and the United Nations on projects concerning digital identity.

Link: https://www.coindesk.com/accenture-may-use-a-blockchain-to-automate-logistics-processes/

Ethereum's most polarizing debate is back – and, arguably, as complex as ever.

Largely undiscussed since April, the question of whether the world's second-largest blockchain would consider a system-wide software upgrade as a way to return $239 million lost due to a mishap at a major startup resurfaced with a new round of infighting among stakeholders this week.

Sparked in the days prior to a meeting in Berlin meant to address decision-making challenges on the decentralized network, the issue revolves around a code proposal called ethereum improvement proposal (EIP) 999 and the specific way in which it has been reviewed.

At issue is not just how ethereum developers will handle this contentious code change, but those that may arise in the future as the platform grows and expands.

Still, this week's events began on a smaller scale, with the planned meeting of the Council of Ethereum Magicians, a developer group launched in early 2018 as a forum for discussion on how ethereum should handle technical updates and code disputes.

Following the discussion Saturday, Afri Schoedon, communications manager at Parity Technologies, the startup whose code snafu caused the widely publicized fund freeze, suggested a change to EIP 999 – a proposal that seeks to reactivate the 584 wallets in which much of the lost funds remain.

A relatively minor suggestion, Schoedon asked to advance EIP 999 within the parameters of ethereum's process for code review. Due to what he perceived as a lack of technical objections to the proposal, he inferred it should be set to "accepted" status.

But the move had wider repercussions, with sometimes vitriolic debate surfacing on Twitter, Github and Reddit. The reaction was swift, with those against the code even proposing a rival pull request to move the proposal to the "rejected" state.

"I wish people would stop using the EIPs repository for political grandstanding," core developer Nick Johnson tweeted.

The move has sparked a heated reaction from those who don't want to see the funds restored out of fear these requests will become too commonplace.

As the rationale goes, if ethereum users and developers are able to act like market managers, how are they different from today's central monetary authorities?

"The Parity bailout EIP was just stealth 'accepted' by the Ethereum Foundation despite community rejection. Apparently the community found out and now the pull request has been closed," one observer tweeted: "Ethereum is completely centralized."

Backtracking the code
But if the implications of the move have been lasting, the inciting incident was arguably brief.

Schoedon has since asked for the pull request to be closed, stating that his actions stemmed from a misunderstanding of how others believe the EIP process should be conducted (the subtleties of which are still being debated).

Complicating matters was that Schoedon, who initiated the pull request to move the proposal to "accepted," is also the author of EIP 999.

More broadly, however, the issue appears to have exacerbated the very problems that many ethereum developers have acknowledged for some time – despite attempts to coordinate in person, digital communications hold the potential to vastly polarize users.

On top of this, there are concerns that, on the internet, competing projects could deliberately add fire to the controversy, swarming social media with fake accounts to create the illusion of outrage.

In an effort to ease the impact this could have on core developers tasked with accepting code changes, the controversy has forced developers to consider how to clarity the EIP process, the formal way by which code changes are organized in the ethereum repository.

One user summarized:

"EIP 999 is a great example of stalled governance and it just won't go away, and it is consuming every discussion to the point of exhaustion."

See more: https://www.coindesk.com/ethereums-most-heated-tech-debate-is-proving-its-far-from-over/

Three bitcoin mining companies have joined a list of "unicorns" – private companies valued at over $1 billion – for the first time.

The Shanghai-based Hurun Research Institute published its Q2 Unicorn Index for the Greater China region on Wednesday, which notably included the names of several major bitcoin mining firms: Bitmain, Canaan Creative and Ebang. The third Hurun list of 130 Chinese unicorns has never before featured a fully cryptocurrency-focused firm.

Ranking highest of the three, Bitmain appears at 13th on the list with a valuation of around 70 billion yuan, or about $10.4 billion, close to other notable companies such as JD Logistics.

The ranking follows recent news indicating that Bitmain has completed a Series B round funding that could value the firm around $10 billion ahead of a potential initial public offering (IPO).

Meanwhile, Hurun values Canaan and Ebang at around $3 billion and $1.5 billion, respectively – figures that saw the firms placed at at 32nd and 53rd on the list, also respectively.

Recent reports have indicated that Canaan and Ebang too have both filed applications to go public on the Hong Kong Stock Exchange. However, since the IPO applications were in initial draft form, it is unclear how much the two were seeking to raise or what their valuations might be. According to a previous report from Reuters, in mid-2017, Canaan was estimated to be worth around $500 million.

While the three are the first fully devoted bitcoin firms to appear on the Greater China Unicorn Index, some of the companies already on the list have already made major moves in the blockchain industry.

For instance, Ant Financial – a payment affiliate of Alibaba that tops the list with a valuation of $149 billion – announced late last month that it has launched a blockchain-powered payment corridor between Hong Kong and the Philippines.

Further, OneConnect – a fintech development arm of Chinese insurance giant PingAn and valued at $7.4 billion – has helped the Hong Kong Monetary Authority engineer a blockchain trade finance platform that is set to go live by September.

via: https://www.coindesk.com/bitcoin-mining-firms-make-chinese-unicorns-list-for-first-time/

Schnorr is coming...

In fact, the bitcoin upgrade arguably took its most significant step yet toward implementation last week when influential developer Pieter Wuille unveiled a draft outlining its technical makeup. With the release, the idea, one that's been in the works by bitcoin developers for years, is one step closer to improving the scaling and privacy of the world's most valuable cryptocurrency.

Effectively, this sets up Schnorr as the next big change to bitcoin, meaning it will be the largest code change since Segregated Witness (SegWit), a pivotal bug fix that prompted a drawn-out battle in the bitcoin community last year before ultimately being adopted.

At a technical level, adding support for Schnorr, a digital signature scheme, would give bitcoin users a new way to generate the cryptographic keys they need to used to store and send bitcoin. By doing so, it also paves the way for a number of exciting benefits, including tackling privacy and scalability, arguably two of bitcoin's most worrisome problems.

"It is a building block for a variety of improvements," Wuille told CoinDesk, adding there are even some further-out improvements that haven't gotten a lot of attention quite yet. And while Wuille hopes the change will ultimately be adopted, he added it's "ultimately up to the users" if they want to adopt it - as was the case with SegWit.

Co-authored by several top bitcoin developers, including the likes of Bitcoin Core contributor Johnson Lau and Gregory Maxwell, the technical, math-ridden proposal outlines the exact signature scheme that could be coded in bitcoin.

And while it's far from that final goal, it's a necessary piece.

Blockstream engineer and co-author Jonas Nick told CoinDesk:

"Standardizing Schnorr for bitcoin is a big step towards using it in bitcoin."

See more: https://www.coindesk.com/schnorr-is-looking-poised-to-become-bitcoins-biggest-change-since-segwit/

Even in an industry that's seen no shortage of grand proclamations, those words, issued by entrepreneur Charles Hoskinson in April, grabbed attention.

The CEO of blockchain firm IOHK (and one-time CEO of Ethereum), Hoskinson was seeking to send a message about a new research paper, one he believes proved that the company's novel twist on how blockchains come to consensus, called Ouroboros, had addressed long-standing concerns about whether the model can sufficiently secure investor funds.

Given the size of the claim (and its impact), it's an assertion that sparked doubt from cardano's more prominent competitors. However, months later the team at IOHK maintain Ouroboros may be the answer to one of crypto's most divisive questions – whether so-called proof-of-stake systems offer solutions to some of the industry's pressing problems.

So far, the market appears to be interested in the opportunity to support the thesis.

Soon to power the public blockchain cardano, Ouroboros may one day support the world's eighth-largest cryptocurrency, with its 25 billion ADA tokens worth $3.3 billion. And a look at the history of proof-of-stake systems perhaps showcases why so much money is on the line.

First pitched by developers Scott Nadal and Sunny King in 2012, proof-of-stake offers what is claimed to be a more sustainable alternative to proof-of-work, the consensus method underlying the world's biggest blockchain by market cap, bitcoin.

Allowing users to vote or "stake" their coins on a transaction history in exchange for rewards (instead of burning computational energy), it's relatively untested, having so far only been adopted in hybrid, small-scale or delegated formats.

So, while bitcoin's security is comparatively proven (its blockchain is currently sustaining $114 billion and has held up for years), many crypto coders believe proof-of-stake is necessary to transition the industry into the next phase, in which users no longer have to own hardware in order to claim a blockchain's rewards.

The trouble is, no one can agree on how this should be done.

"Different consensus algorithms do well in different environments," Nate Rush, a proof-of-stake researcher for ethereum, told CoinDesk, "If the assumptions that some protocol is 'solved' under turn out to break or be unrealistic, then this protocol can fail."

Still, the team behind cardano, IOHK, have worked to secure academic partnerships, as well as relationships with researchers in the field distributed computation in an effort to prove the proof-of-stake model can be achieved.

Taking the security of bitcoin as its starting point, the chief scientist behind the protocol, Aggelos Kiayias, has created formal proofs for each step of the protocol's design, used to dispel doubt as to the algorithm's ability to protect assets.

Kiayias told CoinDesk:

"Contrary to [other proof-of-stake protocols], we developed Ouroboros together with a formal proof of security that the protocol indeed captures the security properties of a robust transaction ledger like bitcoin."

See more: https://www.coindesk.com/a-3-3-billion-claim-has-cardanos-blockchain-solved-proof-of-stake/

Michael J. Casey is the chairman of CoinDesk's advisory board and a senior advisor for blockchain research at MIT's Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

"I want to quash this false narrative that's been going around for the past two years that you can separate blockchain from crypto. You can't."

No, that's not a bitcoin maximalist, a HODLer or a crypto-anarchist talking. It's a regulator.

And Sopnendu Mohanty, the chief fintech officer of the Monetary Authority of Singapore, wasn't preaching to the crypto-converted, either, when he issued this reminder that native tokens are integral to a decentralized blockchain.

Rather, he was addressing a room full of curious but wary central bankers and international development officials, all of whom were attending a G20 forum in Riyadh, Saudi Arabia on technology and financial inclusion.

It was refreshing to hear someone in the official sector take issue with the simplistic "blockchain without bitcoin" refrain that gets sold to corporate and government leaders who don't always realize that their problems might be better solved with a less cumbersome distributed database.

That wasn't only because it's important for people to understand how native digital tokens are an integral part of the incentive and security models upon which open, permissionless and censorship-resistant transaction-recording systems are built. It was also because Mohanty's intent was to help shape sensible crypto regulation.

He was urging regulators to adopt nuanced policies that recognize certain crypto-tokens belong to a new type of technology for improving economic coordination, one that can't be jammed into a decades-old securities law framework. And it's also encouraging to see evidence that he's not alone in thinking this way.

Various regulatory authorities around the world are opening up to the idea that, when tokens have a clearly functional role within a blockchain network, it's better to manage them with existing consumer protection and anti-money-laundering laws than with burdensome securities regulation.

To be sure, they're doing so somewhat nervously; many are understandably concerned about investors being duped by scammy ICOs in Wild West token markets.

Nonetheless, their gradual yet earnest attempts to define these concepts open the door to blockchain technology's more meaningful integration into the global economy.

Forward-thinking states
Here, Singapore's central bank is leading the way. In a March speech, MAS Managing Director Ravi Menon laid out a clear rationale for distinguishing "good" tokens from "the bad and the ugly."

The Swiss Financial Market Supervisory Authority, or FINMA, has also been proactive. It came up with a useful taxonomy that divides tokens into three categories: payment tokens (bitcoin, litecoin and co.), utility tokens (ether and, in theory at least, various kinds of ERC-20 tokens) and asset tokens, with only the latter being subject to securities laws. 

Other developed-country jurisdictions are also wading in. Both Malta and the U.K. dependency Gibraltar have shown an open regulatory posture toward ICOs and token exchanges. Meanwhile, Caribbean countries such as Bermuda  are developing regulatory frameworks for tokens that would promote blockchain innovation while preserving their status as trusted domiciles for foreign financial institutions.

Governments are also taking action at the provincial level. Wyoming's state legislature passed legislation defining utility tokens as a new asset class and exempting them from securities regulations.

Until last month, it appeared that the U.S. Securities and Exchange Commission was taking the exact opposite approach. In February, Chairman Jay Clayton, speaking before the Senate, said, "I believe every ICO I've seen is a security." The implication was clear: most, if not all, of the hundreds of tokens already sold in this manner should have registered with the SEC and complied with related disclosure and compliance requirements.

In stoking fears of a dragnet approach from the SEC against all tokens, this statement prompted ICO issuers to ring-fence themselves from the U.S. markets. It also gave a boost to purveyors of "security tokens," who don't pretend to be inventing anything more than a more efficient means of selling securities to investors.

But since then, the SEC has also softened its stance. Clayton later told CNBC that bitcoin would not be classified as a security. And, then, in a landmark speech last month, William Hinman, the SEC's director of the Division of Corporate Finance, answered a question that had been nagging the ethereum community. Hinman said that although ether was a security at the time of the ethereum proto-ICO in 2014, it no longer met that definition because of how it now functions within the ethereum network.

This was not as proactive as other jurisdictions' moves to explicitly carve out the concept of a utility token. Hinman was merely defining what ether was not. But by coming to that conclusion, he had recognized the unique qualities of this particular token: how ether is a kind of "crypto fuel," used to pay for the decentralized computation by which smart contracts are executed on the ethereum platform.

What's important is that regulators are doing their homework and starting to recognize there's at least potentially something different going on here from what they're used to seeing. There's a lot of learning still to come, but light bulbs are quietly going off in different corners of the regulatory world.

Whether you're in the camp that welcomes regulatory clarity to foster public confidence in this technology or among those in the crypto community who see government engagement as anathema to a system of money originally designed to bypass the state, this emerging regulatory awareness represents a seminal moment.

The race is on
Clearly, many countries taking these steps have their eyes on the potential economic gains generated by the freewheeling ICO market, one that has raised $20 billion so far and which, with $275 billion in (admittedly poorly measured) market capitalization, has come to constitute a significant parallel capital market. There are tax windfalls to be had and there's the real prize of attracting innovation to their shores.

They need to be careful, though, as this is an exceptionally fleet-footed form of capital. They risk encouraging global "regulatory arbitrage." When a technology is as geography-agnostic as this, its users will often choose their home base depending on where regulation is lightest, stoking competition among jurisdictions. Given the inordinate number of scammers in the ICO business, the danger is that the worst players gain too much freedom and, by extension, too much influence over how this industry is broadly perceived.

In times past, U.S. regulators could rise above such problems. The sheer amount of money raised in the U.S. left global actors with no option but to comply with their rules just to ensure access to it. But with foreign capital markets deeper in the age of globalization, globally distributed blockchain development teams are deciding that the U.S. just might not be worth it. We are already seeing ICO issuers deciding that they can comfortably raise all they need from Asian investors.

Where this is all pointing, I hope, is to a coordinated international effort to better harmonize the regulatory approach.

Mohanty told me he sees six or so of the world's more important regulators coming to a broad agreement on utility tokens and on what distinguishes them from payment and security vehicles. There's a need, for example, to define pressing questions about what level of platform functionality, and when, a token must have to earn exempt utility status. And, beyond the securities laws exemptions, regulators should agree on strategies to apply existing consumer protection laws to ensure that ICO issuers are still held to account for the promises they make to people who put money into their token pre-sales.

Some have forcefully argued that carving out explicit legislative definitions of a utility token – a la Wyoming – overly constrains innovators to those definitions and creates contradictions across jurisdictions. Better to rely on existing laws than to add to the body of legislation, they say. But such concerns should not prevent regulators from creating clearly signaled guidelines to participants in the blockchain development community about how they will apply existing law to different scenarios.

There's a still a lot of work needed to improve and scale blockchain technology and to foster broad confidence among future buyers of crypto tokens. Best practices among issuers, exchanges and investors/buyers need to be developed. But encouraging the expansion of utility token models is a worthy goal, one that's much harder to achieve if the burdens of securities laws were to be imposed on all those who create them.

To understand this, one need look no further than the financial inclusion objectives of the Riyadh-based conference that Mohanty spoke at. Organized by the Global Partnership for Financial Inclusion under the leadership of Argentina, which holds the G20's current presidency, the event explored, among other goals, how to encourage entrepreneurship in low-income, developing countries.

If we want the whole world, include enterprising people in such countries, to have access to the powerful economic advantages of decentralized, peer-to-peer applications and business models, regulatory barriers to entry must be softened.

This is, in other words, a cause for humanity.

Link: https://www.coindesk.com/regulators-are-slowly-starting-to-get-it-utility-tokens-are-real/

The wider world of crypto tokens is becoming a bit more accessible to institutional investors.

The security startup BitGo exclusively told CoinDesk on Tuesday, July 10, it will expand its suite of custody products and services to support 57 new ethereum assets, a move driven by demand for services that safeguard private keys – the alphanumeric strings that act as passwords for crypto assets – and that, once lost, are gone forever.

As such, the move is a telling one for the blockchain security sector, one that showcases how it's in the midst of a changing competitive landscape.

Founded in 2013, BitGo has become an industry leader managing wallets at crypto exchanges, but to date, its service has been limited to larger protocols like bitcoin and ethereum. (Indeed, the overall lack of options has even led traditional custodians like BNY Mellon, JPMorgan and Northern Trust to consider the business, sources told Bloomberg in June.)

The startup is hardly the only industry upstart rushing to debut institutional custody services – U.S. exchange provider Coinbase, the Swiss startup Smart Valor and Japanese bank Nomura are just three of the companies rolling out licensed crypto storage solutions.

Yet the addition of ethereum tokens could be a key first-move advantage. According to BitGo CTO Benedict Chan, there has been a surge in demand for custody solutions for alternative crypto assets such as the kind it's now adding.

Benedict Chan, CTO of BitGo, told CoinDesk:

"These institutions, they generally don't want to self-manage their coins. They are looking for someone that can support multiple coins."

Timothy Furey, CFA and head of banking at Satis Group, a firm focused on advising institutions on ICO investments, described this blockchain industry trend as an "arms race" to offer institutional-grade custody solutions for a spectrum of assets.

That's why VP of product marketing, Robin Verderosa, said BitGo is now looking to obtain a BitLicense in New York and a qualified custodian license in South Dakota. BitGo aims to offer even more custodial services, adding more than 100 cryptocurrencies by the end of 2018.

Verderosa said courting institutional investors has become BitGo's priority, adding:

"What we've learned is that they're interested in investing in a basket of coins and tokens that kind of help hedge the market and give better returns."

See more: https://www.coindesk.com/bitgo-adds-57-ethereum-crypto-tokens-custody/

Life used to be different for "Crypto Shaolin."

Long before he was known by his current nickname, he'd follow tourists in the heat of central Africa, swinging an ice box and offering them a chilly bottle of Coca Cola or Fanta with a sugary smile to match.

But as chipper as his demeanor made him out to be, Crypto Shaolin calls this past work "frustrating." Not only was it meager pay, he had ambitions to rival his role models Elon Musk and Steve Jobs.

One of these drinks may have put him on that path, though, when by chance he passed a Coke to a man wearing a strangely worded shirt.

Curiosity piqued, Crypto Shaolin asked what it was all about. After all, he'd never heard of "HODL" before.

"[Crypto]'s the future," the man answered cryptically, adding:

"Are you here tomorrow?"

The stranger would go on to give him what amounted to an annual salary in exchange for his interest.

"I managed to escape poverty," Crypto Shaolin says of what came next.

The money, of course, wasn't in the usual form. The man presented Crypto Shaolin with ether, the cryptocurrency that powers ethereum, asking for only one thing in return: that he research the technology.

Without a laptop, this wasn't an easy task, but Crypto Shaolin would later find a cafe with internet that allowed him to continue his journey down the cryptocurrency rabbit hole.

"I was so amazed by what I've just discovered I could not sleep the next days," he said.


See more: https://www.coindesk.com/crypto-bounty-hunting-is-offering-a-way-out-of-poverty/