European Parliament Member: Decentralization via DLT ‘Provides More Security’

Maltese politician and a Member of the European Parliament (MEP) Roberta Metsola claimed that decentralization powered by blockchain “provides more security,” Cointelegraph learned during her speech at the Malta Blockchain Summit on Friday, Nov. 2.

Addressing the summit, Metsola expressed a positive stance by the European Parliament (EP) regarding the emerging industry of blockchain and cryptocurrencies. The Maltese politician revealed that the industry’s issues are “of course” on the agenda of the EP, with its members encouraging to move adoption from “vision to reality.”

In her testimony, Metsola declared that European authorities should demonstrate to people that decentralization generated by distributed ledger technology (DLT) “actually provides more security.” Blockchain technology is “essentially about increasing trust,” so its decentralized nature delivers “more peace of mind,” Metsola explained.

Emphasizing the open attitude of the EP to the  industry, Metsola called for a gentle approach in regulating the blockchain and crypto sphere, claiming that the new industry needs the “right type of regulation.” The member of the EP clarified that the industry required “specific legislation” which must be adopted “at the right time.”

To date, members of the EP must first ensure that the European regulatory and constitutional ecosystem is flexible enough to embrace the new technology, Metsola said.

In this regard, Metsola mentioned the new crypto and blockchain-related legislation passed by Malta’s parliament in July, calling it a “good step forward.” Still, the politician stressed that the government should “remain adaptable and on our toes.”

In mid-October, Cointelegraph released an analysis on European Union (EU) countries that are getting more serious about blockchain technology within the new body called the European Blockchain Partnership.

Earlier in October, the European Securities and Markets Authority (ESMA) funded an investigation campaign with a 1 million euro budget in order to monitor fintech and crypto assets, aiming to develop universal regulations for EU financial markets as well as provide market oversight.

Trend of Global Crypto Mining: Despite the US-China Trade War, Activity Surges as Samsung and GMO Enter

Throughout 2018, the cryptocurrency market experienced the fourth worst correction in its nine-year history, as Bitcoin lost more than 69 percent of the value from its all-time high of $19,500.

Despite the substantial decline in the price of Bitcoin (BTC), which heavily affects the earnings of miners, the hash power of the Bitcoin network has continuously increased throughout the past 10 months, from 15 million TH/s to over 50 million TH/s from January to October.

Bitcoin Network Hash Rate Over the Year

As portrayed by the research of blockchain analyst Barclay James, the breakeven cost of mining Bitcoin at 35 million TH/s is around $6,900. The formula employed by James considers the hash power of the Bitcoin network, the hashing power of an ASIC Bitcoin miner, and the efficiency of each miner in producing BTC:

# units = global hashing power ÷ unit hashing power ÷ unit efficiency

Given the cost of Bitcoin mining, when its hash power is currently around 35 million TH/s and the value is $6,400, the breakeven cost of Bitcoin is in the $7,000 to $8,000 range. Which means, at $6,400, Bitcoin miners are losing money by generating BTC and are solely relying on their expectations of the price of BTC to eventually increase in the months to come.

For miners outside of China, specifically the mountainous region of Sichuan known to have the cheapest electricity in Asia and a cold climate that naturally cools down cryptocurrency mining equipment, it is even more expensive to mine BTC. The paper of Barclay James reads:

“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage. In fact, current estimates place 70 % of global hashing power in China, the majority of which is located in the Sichuan region.”

Since June, Bitcoin miners have been mining the dominant cryptocurrency at a significant loss. The fact that the hash power of BTC has continuously risen throughout the bear market of 2018 demonstrates large activity in the global cryptocurrency mining sector and the confidence of miners that the industry will recover as the year comes to an end.

Bitmain and its Antminer sold at a discount

BitMEX Research, a cryptocurrency firm that operates as a research subsidiary of major digital asset exchange BitMEX, disclosed in its paper in August that Bitmain, the dominant conglomerate in the cryptocurrency mining sector, has been deliberately selling its latest Bitcoin ASIC miner Antminer S9 at a lower price.

In 2017, Bitmain sold more than one million Antminer S9 miners and another 700,000 of them in the first quarter of 2018. According to the researchers, who calculated the disclosed gross profit margin of Bitmain in 2017 and the implied cost of each miner. Bitmain has set a negative profit margin of 11.6 percent for the Antminer S9, its main product.

The researchers stated that the distribution of Antminer S9 miners at such a low profit margin and the sudden increase in the sale of the miner in the first quarter of 2018 suggest the company employed a strategy to outsell its competition by underpricing its products.

“These low prices are likely to be a deliberate strategy by Bitmain, to squeeze out their competition by causing them to experience lower sales and therefore financial difficulties. In our view, herein lies the key to one of the main driving forces behind the decision to IPO. A successful IPO may increase the firepower available to continue this strategy and eliminate an advantage rivals could have by doing their IPOs first.”

The paper also proposed that the company may simply have too many Antminer S9 miners in its inventory.

In June 2018, Bitmain was criticized for shipping Antminer S9 miners caked with dust. Some miners alleged the firm of sending old or used ASIC miners. In response to this, Bitmain stated that all traders who received defective or affected Antminer S9 miners would be fully compensated.

“Any product can be imperfect, and there will be shortcomings in the process of enterprise development. We have also compensated the miners who have received mining equipment with inadequate computing power and the mining equipment are now being run properly.”

Whether the decision of the firm to sell its main ASIC miner with a low profit margin was to due to its competition or to clear its inventory, the end result was the distribution of an increased number of efficient and high performance ASIC miners to the global mining sector, which ultimately led to the increase in the hash power of the Bitcoin network.

Is Bitmain’s dominance in danger with the emergence of Samsung and GMO?

In the first quarter of 2018, Bitmain generated twice the profit of Nvidia, the world’s largest graphics card manufacturer. Nvidia generated $550 million in pure profit while Bitmain recorded $1.1 billion in profit from January to March.

The lucrative business model of Bitmain and its high profits led GMO and Samsung, two of the most influential technology conglomerates in Japan and South Korea, to enter the global cryptocurrency mining industry.

GMO introduced its own ASIC miner with competitive specifications in comparison to Bitmain’s Antminer S9. Samsung Electronics has allocated a portion of its foundry in Suwon, South Korea, to manufacture cryptocurrency ASIC miners, in partnership with emerging companies in the mining sector.

When Samsung Electronics first announced its decision to target the global cryptocurrency mining industry, it emphasized that it remains unsure whether it can improve the company’s revenues in general. But, the emphasis of the establishment on its mining venture was to engage in an emerging industry like crypto, given that it has successfully penetrated into insurance, fintech, electronics manufacturing, car making, and ship building in the past several decades. Samsung Securities analyst, Hwang Min-seong, said in January of this year:

“Samsung Electronics could increase its revenues through ASIC chip manufacturing but because the foundry only accounts for a small portion of the company’s semiconductor manufacturing plant, it is difficult to predict that the firm’s mining venture will have a significant impact on the company’s revenues.”

 Since then, Samsung has aggressively expanded its mining businesses, seeing an increased demand in the market. The uncertainty of Samsung towards cryptocurrency mining demonstrated the firm’s unwillingness to commit to the industry unless the company sees significant potential in both the short-term and long-term growth of the market.

Most recently, Samsung signed a deal with Squire, a Canada-based crypto mining corporation that raised $19.5 million in August to develop cryptocurrency mining equipment, to manufacture ASIC miners on behalf of the Canadian firm.

Around a similar period, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest independent chipmaker, slashed the growth target of the cryptocurrency mining sector from 9 percent to 6.5 percent.

The conglomerate stated that the weakening of the demand for cryptocurrency mining led the firm to decrease the growth target of the industry. But, it remains unclear whether the report is exclusive to Bitmain, given that TSMC is the manufacturer of Bitmain’s ASIC miners, or to the rest of the industry.

“However, our business is also negatively impacted by further weakening of cryptocurrency mining demand. As a result, we estimate our 2018 growth rate will be about 6.5% in U.S. dollar term, which is close to the foundry industry’s growth but slightly below our 7% to 9% guidance given in the last conference.”

New multi-million dollar mining facilities open

Despite the conflicting viewpoints of Samsung and TSMC toward the demand for cryptocurrency mining, in the past several days, two multi-million dollar mining facilities have opened in Armenia and Colorado.

Local publications in Armenia reported that a new $50 million digital asset mining facility was opened on October 19 with 3,000 ASIC miners to mine Bitcoin and Ethereum. In the upcoming months, 120,000 ASIC miners are expected to be added to the facility.

It was local real estate firm Multi Group Concern (MGT) and Malta-based technology company Omnia Tech International Company which created the facility with the support of the government and local authorities.

The plan to build the facility was originally released in April, when Omnia Tech founder, Robert Velghe, said that the two companies intend to invest more than $2 billion in mining and crypto-related businesses in Armenia.

“We will also help Omnia Tech with the establishment of the Financial Technology Park and the data exchange center in Armenia. We intend to create here a blockchain-based center for the development of new information projects, which will turn Armenia into a high-tech platform.”

On October 25, MGT, the largest mining facility operator in the U.S., announced that it will establish another large-scale mining facility in Colorado equipped with 6,300 Bitmain S9 miners. Already, MGT operates 6,800 Bitmain S9 miners and 50 GPU Ethereum mining rigs in the country.

MGT COO Stephen Schaeffer emphasized that despite the decline in the price of Bitcoin, the company intends to “run into the burning building” to find opportunities, which in this case is to mine BTC.

Regulation and state of the mining sector

Many of the world’s largest economies are in the process of implementing practical regulatory frameworks to facilitate the growth of mining companies. Authorities in South Korea, Japan, and the U.S. have welcomed mining facilities to operate with low-cost energy. Countries with ambiguous cryptocurrency regulations such as China and Russia have also demonstrated a neutral stance towards mining.

Throughout the past 15 months, China has banned virtually every business and activity related to the cryptocurrency sector including trading, events, and over-the-counter (OTC) investment. However, it has opened two use cases of cryptocurrencies: processing transactions and mining digital assets.

Several regional governments in Russia have also opened up to cryptocurrency mining, leading various initiatives to convince major mining companies to launch mining farms in the country.

In August, Deputy Governor of the Leningrad Region, Dmitry Yalo, said at the opening of a new mining facility in Russia that the region intends to lure in more mining centers in the years to come with low electricity prices, qualified personnel, and a naturally cold climate to cool down ASIC miners with no additional costs.

US-China trade war

The conflict between the U.S. and China began to affect chip makers and mining equipment manufacturers based in China, including Bitmain. The 27.6 percent tariffs on the Antminer S9 has made it significantly more expensive for buyers outside Asia to purchase the miner.

Previously, Bitmain was able to ship Antminer S9 miners with no tariffs as the product was classified as a data processing machine. The sudden imposition of tariffs against electrical machinery apparatus, which includes data processing machines, has created an inefficient ecosystem for China’s ASIC manufacturers.

The imposition of tariffs by the US against China comes in a period in which U.S. President Donald Trump has expressed concerns about the lack of reciprocity between the two countries. For many years, China has been able to ship products to the U.S. with near-zero tax and fee, thus, Amazon’s Vice President of Global Policy Paul Misener said once:

“The cost to ship a one-pound package from South Carolina to New York City would run nearly $6; from Beijing to NYC: $3.66.”

South Korea and Japan remain unaffected by the tariffs, and with practical regulatory frameworks established by both countries, Samsung and GMO are expected to continue their successful run in the global mining sector.

As of current, despite the significant drop in the price of major cryptocurrencies, the demand for cryptocurrency mining remains relatively high as seen in the rise in the hash rate of the Bitcoin network and the expansion of Samsung, GMO, and Bitmain’s operations.

Major regions have established positive regulatory frameworks towards cryptocurrency miners and companies, which could lead to the increase in the establishment of mining facilities by investors that foresee a substantial surge in the valuation of the crypto market in the mid-term.

Tether Opens Bank Account with Caribbean Deltec Bank

Tether Limited, the issuer of stablecoin Tether (USDT) wholly-owned by Bitfinex, has opened a bank account with Bahamas-based Deltec Bank. The move follows a long process of due diligence review of the company, including the ability to maintain the USD peg at any moment in time, the announcement says.

Deltec Accepts Tether as Client After Long Due Diligence Process, Company Says

The 72-year-old financial institution with headquarters in the Commonwealth of The Bahamas has accepted Tether as a client. The news comes as a milestone for Tether following months of tribulation as many questioned whether the firm had enough USD to match the number of Tether tokens distributed on the Bitfinex platform.

Tether said in a statement:

“The acceptance of Tether Limited as a client of Deltec came after their due diligence review of our company. This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”

Tether Limited, which is registered with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, claims all USDT in the market is fully backed by U.S. dollars “that are safely deposited in our bank accounts.”

While many questioned the veracity of the claim, the controversy surrounding the stablecoin only intensified when consulting services firm Friedman LLP decided to end the relationship with Tether because the firm denied access to their accounts.

In late October 2018, the company announced it had burned 500 million tokens, supposedly worth $500 million. Tether wasn’t clear about the reasons why it did proceed to burn units. Some believe Bitfinex funded the redemption by selling 100,000 BTC to remove the amount of circulating supply from the market, partly because of new strong competition coming from the U.S., with Coinbase announcing support for Circle’s new stablecoin, USDC.

Tether is only confirming previous reports that the firm opened a bank account with Deltec Bank. People familiar with the situation told The Block that the arrangement was made weeks ago and some over-the-counter trading desks have already shown interest in doing the same in order to redeem USDT directly.

Tether, which was on the top five cryptocurrencies by market cap for a long time, saw its position falling apart in October. Its market cap crashed to $1.7 billion from $2.8 billion in a matter of weeks and it hasn’t stopped bleeding yet. The announced new banking relationship might ease the pressure, but the USDT is still trading at $0.98, which indicates a lack of trust in the market.

One side-effect of the panic regarding the true value of Tether was the run towards Bitcoin, which pushed the number one cryptocurrency to the $7,500 area as USDT holders dumped the token. Investors were willing to pay a $300 premium on Bitcoin in order to get rid of the stablecoin.

Featured image from Shutterstock.

ETF ‘Godfather’ Bearish on Bitcoin ETF – For Now

 

Reggie Browne, a living legend on Wall Street and one of its most prominent exchange-traded fund (ETF) developers, has said a bitcoin ETF will come “no time soon,” citing lack of market activity.

 

Speaking yesterday at an industry conference, Browne explained that :

it’s very difficult for the commission to wrap their heads around a positive approval because there’s no data yet […] the markets just aren’t here.

Liquidity, ETFs, and Browne

 

Market liquidity was a sticking point for the U.S. Securities and Exchange Commission (SEC) during their recent review of the proposed VanEck SolidX bitcoin ETF, wherein the Commission repeatedly emphasized that markets must be “of significant size.” This is the case partially so that there is enough market data to detect market manipulation, and partially because liquidity is generally very important in ETF trading.

 

Browne has a reputation and historical role as an ETF market maker – a critical role for providing market liquidity. “After the investor, the [lead market maker] is probably the most critical piece for a new ETF,” the Washington Post quoted an ETF specialist as saying.

 

He thus played a critical role in fostering the ETF industry when it was in its infancy, and is a central figure in the astronomical growth of ETFs during the past two decades, being referred to as “a missionary, especially in the institutional space. He’s the person on the ­­edge showing people the power of the ­exchange-traded fund.”

 

Between 2000 and 2014, ETF assets grew from $79 billion to $2.4 trillion, and ETFs were “the biggest innovation in the distribution of investment products since the invention of the mutual fund in the 1920s,” according to another ETF expert quoted by the Post.

 

‘That’s why Reggie’s the godfather’

 

In light of Browne’s great stature and experience on the subject of ETFs, the prospect of a bitcoin ETF approval no longer looks very auspicious. This notion, however, clashes with recently reported rumors that would suggest the opposite.

 

Only time will tell, as the SEC has a maximum limit of February to reach a conclusion on the VanEck/SolidX bitcoin product.

 

A Week of Satoshi Pt. 5: What Is on the Horizon for Bitcoin?

Bitcoin is set to witness a range of upgrades that will address its network’s challenges and potentially cement its leadership position as the world’s largest digital currency for decades to come.

The fifth part in our A Week of Satoshi series will provide insight into the planned improvements for the pioneer crypto network and how these upgrades may affect the digital currency going forward.

The Introduction of the Lightning Network

The Lightning Network mainnet beta was launched on March 15, 2018, as a response to the significant scalability challenges that the Bitcoin network had been facing. Created by Joseph Poon and Thaddeus Dryja, the Lightning Network protocol was published in a white paper in 2015.

The Lightning Network is an off-chain scaling solution for bitcoin. The protocol is based on a second layer built atop the original Bitcoin blockchain. The layers can communicate and facilitate the transfer of payments between each other.

The fact that transactions can be sent between the two layers is the reason why the Lightning Network is being implemented. The protocol works by allowing nodes on the network to temporarily create channels through which transfers from the other chain can be facilitated. These channels are under the control of both parties involved and are closed, and created, at the behest of the actors involved in the transaction.

As transfers on the two layers are interoperable, this results in faster transaction speeds as well as much lower costs. The nodes are also able to send units of bitcoin back and forth between each other. However, there are ways in which the scalability solution is contrary to the workings prescribed in the original Bitcoin network protocol.

The most important of these is the fact that Lightning Network transactions are recorded differently. On the Bitcoin network, every single operation, as well as its associated data, is currently registered on its public blockchain. With the relatively small block size of the Bitcoin network, it is easy to understand why the network fell victim to sluggish speeds as its adoption grew.

The Lightning Network aims to remedy this by greatly reducing the amount of data that is recorded. The LN only records the initial and final balances of a channel. Once both parties deposit their bitcoin in the address associated with the channel, the protocol records this amount. The parties privy to the channel can transfer bitcoin an unlimited amount of times to each other. The final amount is recorded once the channel is closed.

The Lightning Network allows the Bitcoin network to increase capacity while still maintaining security and the integrity of the world’s leading digital currency. Additionally, the main chain can be called in to ascertain any values in the case of conflict between channel members. The Lightning Network is considered an excellent option for bitcoin adoption especially for businesses who handle a high volume of small payments daily.

The number of nodes on the mainnet had already surpassed that of the testnet. Following the full release of its Beta platform, the Lightning Network saw a significant increase in nodes on the protocol. Needing less than two weeks to surpass the number of nodes on its previously released testnet, the speed at which the community responded signals a certain level of necessity and belief in the protocol.

Increasing Popularity and its Side Effects

The protocol continues to attract all kinds of attention as the number of nodes and its capacity increases. However, not all of it has been positive.

Earlier in the year, Diar conducted research and published its opinion that the LN was unable to handle large transaction volumes. It further added that the protocol unnecessarily introduced more levels of complexity to the bitcoin network.

Additionally, Emin Gün Sirer, a Cornell University computer science professor, reiterated this negative opinion about the LN, stating “amounts of Lightning Network routes has grown ten times in the past five months, but the probability of successful routing has not increased at all.”

As the discourse on the matter intensified online, Olaoluwa Osuntokun, Lightning Labs co-founder and chief technology officer, called out Diar’s research methods. He took aim at the publication, explaining that they focused on irrelevant data points to prove a point. Osuntokun stated:

“On what I can find with respect to the methodology used to generate these metrics, [the] model itself is flawed and produces flawed metrics. When one takes into account how Lightning Network works, this is akin to saying ’the probability of room that fits ten people may fit 50 people is 0 percent.’”

The LN protocol also has its supporters, especially from those who believe the entirety of the digital currency sector needs to focus on sound infrastructure before embarking on further projects. Speaking to Forbes, Jack Mallers, a Zap Wallet developer, explained:

“This release is a step forward for the network itself. What I mean by that is: Before all the apps, we need to build a healthy network that has liquidity, reliability, high-uptime nodes, healthy channels, etc. We need to onboard an entire industry onto a new layer and build a healthy topology. This release kinda marks the ‘start’ so to speak.”

Lightning Network collaborated with payment processing startup CoinGate to increase merchant adoption for the scalability solution. The partnership with CoinGate came with 4,000 merchants from high-end brands such as Chronoswiss and Louis Chevrolet to online services like Mmoga.com and Bitlaunch. Moreover, in July 2018, CoinGate and the Lightning Network initiated a beta test in which they boarded 100 stores worldwide. The test produced desirable results with no reported errors as yet.

As more developers begin to work on creating Lightning Network-compatible products and services, there is continuing speculation about whether the adoption of the Lightning Network will lead to an increase in bitcoin adoption as well as the cryptocurrency’s value.

There is a universally accepted consensus that an increase in consumer and merchant adoption of a digital currency is directly proportional to a rise in its value. If the Lightning Network succeeds in bringing larger businesses to the bitcoin network, then there are good times ahead for all bitcoin holders and investors.

Additionally, for bitcoin to make a move from a popular disruptor and cement its position as a universally respected currency, an increase in merchant and consumer adoption is paramount.

The Liquid Network

Attempting to remedy Bitcoin’s scalability challenges, Blockstream has announced the launch of the Liquid Network. The Liquid Network went live on September 27, 2018, according to Samson Mow, Blockstreams’ Chief Strategy Officer.

Similarly to the Lightning Network, the Liquid Network is a second layer on top of the Bitcoin blockchain. However, the Liquid Network functions in a completely different manner. The Liquid Network is a federated sidechain which is pegged one-to-one to BTC. It has the distinction of being the world’s first production Bitcoin sidechain.

The protocol was initially devised by Blockstream developers in 2014 and was published in a white paper under the name “Enabling Blockchain Innovations with Pegged Sidechains.” In the following years, the blockchain company focused on the ideas put forth and developed the first viable sidechain for the Bitcoin network.

The Liquid Network has its native digital currency called L-BTC. The digital currency is verifiably pegged to BTC with an equal amount of BTC frozen in the main chain at all times. The two-way peg allows for transactions sent over the Liquid Network to be settled immediately without the need to wait for confirmations to be sent by the Bitcoin Network.

In this way, the Liquid Network aims to reduce the inter-settlement lag times. Blockstream developed the sidechain to function in the context of exchanges.

“The Liquid Network was built specifically to address the particular needs of exchanges and enables the rapid, confidential and secure transfer of funds between participants, providing a solution to the inherent problem of delayed transaction finality on the Bitcoin network.”

Because a group provides consensus on the Liquid Network, it calls a “Strong Federation of trusted functionaries,” settlements are much faster, and final states are reached in a more timely manner. Additionally, all transactions on the Liquid Network are feeless due to the consensus architecture of the protocol. The platform also supports tokenized assets due to its one-to-one peg. Moreover, it is possible to obscure the amounts transferred in a payment providing a greater level of privacy and confidentiality.

The Liquid Network generated its first block on September 27, 2018, with support from 23 stakeholders who will also serve as the federation keeping the network secure. If the Liquid Network delivers on its potential, it will be interesting to see how fast, feeless payments will affect the value and adoption of the digital currency.

RSK

Rootstock (RSK) is the first open-source smart contract platform created for the Bitcoin network. RSK labs, the startup behind the innovation, mined the network’s genesis block on January 2018. The platform is a two-way smart contract platform pegged to the Bitcoin network.

With its genesis block, RSK launched its mainnet beta release on January 5, 2018. The iteration is called Bamboo and aims to facilitate the addition of smart contracts to the Bitcoin network. Moreover, the protocol also promises fast settlement times as well as increased scalability.

While RSK has come under fire for lack of foresight concerning scalability challenges in future, the protocol has received support from the mining community due to the fact that it is designed to support merge mining. RSK Labs co-founder, Gabriel Kurman, recently announced that one in ten bitcoin miners also support the RSK sidechain.

While working on addressing the scalability challenges should more users join the RSK network, the startup is also working on other solutions designed to increase the Bitcoin network’s speed. Kurman explained:

“Before the end of the year, we hope to launch the Lumino network, which will allow for 20,000 transactions per second.”

If RSK succeeds and can bring smart contract functionality to the Bitcoin network stably and securely, it is very likely that the value of the digital currency will skyrocket. It will also be interesting to see how Ethereum performs on the market if smart contracts become available on the Bitcoin network as more developers are likely to relocate to Bitcoin as it has the more trusted and robust codebase.

An Emerging, Bonefide Investment Asset Class

Bitcoin as an asset class has witnessed an increase in interest from institutional investors in the past 12 to 18 months. Speaking to Bloomberg, Bobby Cho stated that the company had seen a significant uptake in high net worth individuals and funds purchasing bitcoin over-the-counter (OTC).

Cho, who works as the global head of trading at Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holding, believes this heralds a new age for the cryptocurrency sector. Cho said:

“What that’s showing you is the professionalization that’s happening across the board in this space. The Wild West days of crypto are really turning the corner.”

Additionally, a report from Grayscale, a provider of digital currency investment trusts, published in July 2018 points to continued investment in the cryptocurrency market from institutional investors. This has been confirmed by recent statements made by Morgan Stanley and Fidelity Investments.

The future for Bitcoin is set to be interesting as various groups are working to better the underlying software of the network. Moreover, as more merchants and investors interact with the digital currency, it is likely that the value of the digital currency will continue to rise as adoption grows.

Despite its challenges, bitcoin is well-positioned to withstand the wave of altcoins attempting to dethrone it as the number one digital currency in the world thanks to its large community of developers who want to see Bitcoin succeed.

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OKEx Named “Crypto Exchange of the Year” at Malta’s Cryptocurrency Conference

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Popular cryptocurrency exchange OKEx, which recently started setting up operations in Malta, has recently been named “Crypto Exchange of the Year,” during the Malta Blockchain Summit’s Blockchain Awards.

According to a recently published press release, the awards were organized to recognize businesses, experts, and leaders in the sector that have made an “outstanding contribution to the blockchain technology development in Malta.”

OKEx, a cryptocurrency exchange that recently delisted 58 trading pairs, received the award after it was judged by 32 industry leaders and executives “with combined experience in the blockchain industry.” Other finalists included leading exchange Binance and BitBay, which moved to Malta after facing a banking blockade in Poland.

OKEx’s head of operations Andy Cheung was quoted as saying:

These awards are particularly gratifying as they reflect a vote of confidence from industry leaders, who recognize our ongoing efforts. Like we said, we dare to innovate and will keep pushing the limits of what is possible.

Cheung added that receiving the award is “truly a testament” to the exchange’s efforts in improving the cryptocurrency ecosystem and “revolutionize our world with blockchain technology.”

The cryptocurrency exchange was founded in 2017, and has over 400 tokens listed on its platform, which also offers its users futures trading options. Earlier this year, it had to introduce new measures after its “clawback model” forced profitable traders to cover the losses on a $416 million-leveraged long position.

Malta’s cryptocurrency conference this year reportedly attracted over 5,000 attendees, and featured a Crypto Cruise, the Blockchain Awards Ceremony, an ICO Pitch, and a Hackathon. The country is seen as the “blockchain island” thanks to its forward-thinking approach when it comes to crypto and blockchain technology.

As CryptoGlobe covered, the country’s Prime Minister has called cryptocurrencies the “inevitable future of money,” and Malta has earlier this year become the first country to establish a full regulatory framework for distributed ledger technology (DLT). It has also proposed a test back in April, that would help identify when ICO-issued tokens are securities.

‘Decentralized’ Exchange IDEX to Introduce Full KYC

IDEX, the world’s most popular decentralized exchange, is to transition to a full verification model. The move comes days after the platform began excluding residents of New York State as part of its compliance efforts. Its latest measure, described by IDEX as “pragmatic decentralization” has drawn ire from a segment of the cryptocurrency community.

Also read: China Updates Crypto Ranking, Downgrades BTC Further

IDEX Goes Full KYC

A cryptocurrency exchange introducing know your customer (KYC) requirements is not generally headline news. When the platform in question is a decentralized exchange (DEX), however, typically one of the last outposts of privacy, it’s a major talking point. IDEX’s decision will be monitored closely by the cryptocurrency community to see whether it is an isolated incident or the shape of things to come. IDEX’s dominant position within the DEX market, capturing around 7x the trading volume of its nearest competitor, means it exerts significant influence.

‘Decentralized’ Exchange IDEX to Introduce Full KYC

Explaining its transition to a full KYC model, IDEX wrote: “Decentralization exists on a spectrum, and unless your system or application lacks any centralized parts it can be subject to regulation. Aurora is working to create a fully-decentralized financial system, but the path to getting there requires significantly more control and centralization than the end state. In addition to IP blocking, IDEX will be implementing KYC/AML policies in order to comply with sanctions and money laundering laws.”

Same Security, Less Privacy

‘Decentralized’ Exchange IDEX to Introduce Full KYCTraders tend to use decentralized exchanges for three reasons: custody (they retain control of their funds at all times, mitigating the likelihood of theft), privacy (no KYC means not having to disclose your activities to the authorities, or risk having your identity stolen) and finally to gain access to desirable tokens before they make it into a major exchange. With the privacy element removed from the equation, all that’s left is the marginal benefit of greater security and the equally slender benefit of accessing newly unlocked tokens.

Profiting from trading IDEX tokens is extremely difficult in the current market climate, and the added inconvenience of needing to register for the privilege may be the last straw for many traders. Trading volume and the number of active users have both dropped sharply since IDEX announced its new KYC policy a day ago, though it is too early to conclusively link the two events. In the coming weeks, a clearer picture should emerge of the effect that IDEX’s new policy has had on the platform’s trading activity.

First Shapeshift, Now IDEX

In the closing remarks to its lengthy blogpost on “pragmatic decentralization,” IDEX referenced Shapeshift, the cryptocurrency-changing service which was also forced to go full KYC recently, under pressure from U.S. regulators. It concluded:

Over the next few months IDEX will begin instituting KYC procedures for all users to comply with both AML and sanctions laws. Like other exchanges, IDEX will have tiers which correlate with the amount of funds users are able to move through the service. Those trading a small amount of funds will be required to provide a minimal amount of information, while those who wish to trade larger amounts will need to undergo additional KYC steps.

There is an emerging trend for cryptocurrency exchanges that are accessible from the U.S. to kowtow to regulatory pressure out of fear or threat of being shut down. For now, there remain other decentralized platforms and protocols where cryptocurrency users can ply their trade. The question is for how long.

What are your thoughts on IDEX introducing KYC? Let us know in the comments section below.


Images courtesy of Shutterstock and Dappradar.


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