Five hurdles blockchain faces to revolutionise banking
by ilene - October 19th, 2019 6:07 pm
Five hurdles blockchain faces to revolutionise banking
Courtesy of Markos Zachariadis, Warwick Business School, University of Warwick
Blockchain is touted as the next step in the digital revolution, a technology that will change every industry from music to waste. When it comes to money, it goes well beyond bitcoin. Academics have claimed it will “do to the financial system what the internet did to media”.
There are many versions of public blockchains in existence, but the majority of them share a basic premise: they offer a secure, decentralised infrastructure to maintain a “single version of the truth”, recording all changes made on the blockchain database since its formation.
Enthusiasts predict the technology will do away with the need for banks to act as intermediaries. Whether we buy our groceries online, pay for a service through our mobile phone, or transfer funds abroad, transactions will almost immediately be recorded on the distributed ledger of the blockchain, rather than waiting a couple of days for it to register in our account as banks contact each other on a system invented in the 1970s.
A lot of banks and fintechs started experimenting with blockchain in 2015 – trying to capitalise on the speed and transparency it offers. But four years later, the idea that blockchain will remove banks as intermediaries in our payments system still seems a long way off. That’s because there are five basic challenges that the technology has to overcome if it is to be accepted as part of the financial system.
1. Governance
Blockchain’s strength is it has no central authority, but this is also a weakness. Who makes the decisions about how the technology works or when it needs updating?
If Microsoft Windows needs an update, Microsoft will decide on that and send out an update. But with no central decision-maker, decisions about updates in the world of blockchain become slow and dysfunctional.
Public blockchains operate more like communities. There is no systematic way to decide on updates or improvements. Instead they happen through huge debates among ecosystem participants, with groups arguing over issues like the length of a block, the…
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Facebook’s Libra cryptocurrency can still take off and revolutionise money
by ilene - October 18th, 2019 11:02 pm
Facebook's Libra cryptocurrency can still take off and revolutionise money
Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University
Facebook’s Libra cryptocurrency has suffered a few setbacks recently. As well as facing pressure from global regulators, seven of its 28 founding members have left the project – including high profile firms PayPal, Visa, Mastercard, eBay and Stripe. It leaves 21 companies in the Libra Association, the organisation overseeing the cryptocurrency.
But Facebook is big enough to launch Libra on its own, so why are these members even needed? After all, it is Facebook’s network of 1.59 billion daily active users that form the foundation of its business case to issue a non-sovereign currency. Why share the spoils?
The answer may be twofold. First, by having a council of members this enables Facebook to claim decentralisation status – a key tenet of any cryptocurrency. It’s a far cry from the fully decentralised alternatives of bitcoin et al., but certainly not centralised, so a valid claim.
Second, and perhaps primarily, by having a group of high-profile businesses as Libra members it goes some way towards sugarcoating this disruption in the eyes of the world’s regulators, in readiness for the inevitable pushback.
Many of the departing members – most being payments firms – stood to lose much of their core business if Libra becomes successful. So, in the face of the project facing additional scrutiny, Libra quickly became a net negative prospect for them and a respectful early withdrawal is entirely rational. But their places are likely to soon be taken up by other prospective members waiting in the wings. There are many companies that will want to capitalise on what could be a revolutionary global money system.
Total membership is likely to be expanded as a show of strength. Ben Maurer, Facebook’s blockchain technology lead, explained in June that, “over time, [Libra] is designed to transition the node membership from these founding members, who have a stake in the creation of the ecosystem, to people who hold Libra and have a stake in the ecosystem as a whole”.
Facebook has already announced that…
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Zuck Delays Libra Launch Date Due To Issues “Sensitive To Society”
by Zero Hedge - September 26th, 2019 3:35 pm
Courtesy of ZeroHedge View original post here.
Authored by William Suberg via CoinTelegraph.com,
Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed.
“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But right now I’m really focused on making sure that we do this well.”
image courtesy of CoinTelegraph
Zuckerberg on Libra: Talking first, rollout second
Speaking in an interview with Asia-based news outlet Nikkei on Sept. 26, Zuckerberg appeared to show a rare display of fear in the face of mounting regulatory scrutiny of Libra.
Facebook’s digital currency has come under fire from governments worldwide since its whitepaper appeared several months ago. High-profile regulatory hearings have so far failed to quash the negative reactions; governments fear Libra will undermine fiat currency systems.
“Part of the approach and how we've changed is that now when we do things that are going to be very sensitive for society, we want to have a period where we can go out and talk about them and consult with people and get feedback and work through the issues before rolling them out,” Zuckerberg told the publication.
He continued:
“And that's a very different approach than what we might have taken five years ago. But I think it's the right way for us to do this at the scale that we operate in.”
Coinbase calls criticism “odd and misguided”
Preemptively solving aspects of Libra critics find unappetizing strikes a notable contrast to fiat alternatives such as Bitcoin (BTC), the founder of which, Satoshi Nakamoto, simply released the code and let the network grow organically.
Cryptocurrency sources have also cast scorn on authorities keen to stifle any innovation Facebook is attempting to introduce.
Libra could appear by the end of 2020. When pressed by Nikkei, however, Zuckerberg stopped short of committing to a timeframe.
Additionally, as CoinDesk notes, David Marcus, CEO of
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Buyer beware: How Libra differs from Bitcoin
by ilene - September 21st, 2019 3:11 am
Buyer beware: How Libra differs from Bitcoin
Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)
Courtesy of Alfred Lehar, University of Calgary
Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.
The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with sovereign countries in issuing currencies.
Unlike Bitcoin, which has neither an owner nor a controlling body, Libra will be governed by a Swiss foundation comprised of several members that are well-established brands, including Uber, Visa and PayPal.
Libra operates within a much more controlled environment relative to many other cryptos like Bitcoin and Ether. It also doesn’t run on a blockchain.
Instead, the book-keeping of Libra transactions is bestowed upon a set of trusted computing nodes controlled by the members of the Libra foundation. In contrast, Bitcoin is a free-for-all where anybody can join the group of computers that verify transactions.
This difference in governance structure has wide-ranging implications for the economic gains and possible risks society faces from a possible widespread adoption of new currencies like Libra.
How to grow?
A fundamental issue most fintech companies face today is scaleability. The Visa network can authorize up to 65,000 transactions per second, while Bitcoin typically processes a few hundred thousand a day.
Technically, it’s possible to expand the Bitcoin network to a commercially viable scale, but due to the lack of a governing body, several attempts to increase capacity have ended up in endless debates, fights within the community and different camps going their own ways. It’s resulted in the creation of offspring currencies such as BitcoinGold and BitcoinCash.
Libra overcomes these struggles by a well-defined governance structure where necessary technical adaptations can be efficiently decided upon in an organized manner.
But Libra decision-makers may be tempted to put their own best interests ahead of the consumers’…
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China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs
by Zero Hedge - September 1st, 2019 4:28 am
Courtesy of ZeroHedge View original post here.
Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.
Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo.
One of the worst-hit areas was Wenchuan county, China Daily reported. The flooding knocked out local power stations and severely damaged communications infrastructure in the region.
Several major cryptocurrency mining facilities in Wenchuan were destroyed, with the Twitter account Poolin posting footage of the destruction.
A local mining farm based in Sichuan, China was DEVASTATED by the recent heavy rainfall in the region, video attached 1/2 pic.twitter.com/CvdEAUeq3x
— Poolin (@officialpoolin) August 21, 2019
The mining pool operator said rainstorms led to dangerously high levels of water in local reservoirs used by local hydropower plants, which forced several power stations to reduce energy generation. This, in return, knocked out energy for miners.
Red Li, the co-founder of 8BTC, also posted a video of the mining destruction. Li said: "Some mining facilities were wiped out by a flood in Sichuan yesterday."
Some mining facilities were wiped out by flood in Sichuan yesterday. pic.twitter.com/lZ12tapVga
— Red Li (@redtheminer) August 21, 2019
At the moment, it's still unclear how many bitcoin miners were taken offline last week.
Low-priced hydroelectricity in Wenchuan county has attracted bitcoin miners in recent years, which some miners, as shown in the videos above, set up facilities next to flood-prone areas.
Bitcoin mining data from Aug. 19 to 21 [period of the flooding] showed a slight move down in the hash rate but nothing that warranted a red flag. It appears the hash rate of the blockchain was unfazed with a bunch of miners getting wiped out in China. One could say the network was resilient.
Late last year, we reported how the hash rate plunged -35% from Oct. to Dec. Now the hash rate is setting new…
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New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto
by Zero Hedge - August 13th, 2019 7:06 am
Courtesy of ZeroHedge View original post here.
Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.
The ruling by New Zealand’s tax authority allows salaries and wages to be paid in cryptocurrencies such as bitcoin from September 1, as long as the payments are in regular, fixed amounts. The digital currency of choice must also be pegged to at least one regular currency and must be able to be converted directly into a standard form of payment.
This makes New Zealand the first country to legally support payment in crypto. There are, however, some stipulations: In a bulletin dated Aug. 7, New Zealand’s Inland Revenue excluded self-employed taxpayers from earning incomes in cryptocurrencies, and added that some companies that choose to pay their employees in bitcoin or other crypto will be able to withhold tax under New Zealand’s 'pay as you earn' income tax scheme.
Crypto enthusiasts celebrated the decision on Twitter.
Move over kiwi — New Zealand becomes the first country to legalize salaries paid in cyrpto — would you want to get paid in bitcoin?
https://t.co/8kFPyQSwyq via @financialtimes
— annmarie hordern (@annmarie) August 13, 2019
It's also notable that the decision to allow payment in bitcoin comes around the time that the RBNZ slashed its benchmark interest rate by 50 basis points, causing the kiwi to crater earlier this month. The RBNZ's board cited downside risks to inflation and jobs as its reason for the cut. The Kiwi is now near its weakest level against the dollar since 2015. Economists said the dramatic cut appeared to be an attempt by the bank to get out in front of a slowing global economy, since NZ's domestic economic data hardly necessitated such a dramatic action.
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Bitcoin Surges Back Above $10,000 As Fed Rate-Cut Looms
by Zero Hedge - July 31st, 2019 7:39 pm
Courtesy of ZeroHedge. View original post here.
A weaker dollar (perhaps) and even more negative-yielding global debt are perhaps the two catalysts for the latest rebound in cryptos as Bitcoin bounces back above $10,000 after the weekend's plunge.
With Bitcoin cash leading the rebound and Ethereum retracing its losses for the week…
And as The Fed kicks off the global rate-cut bonanza, so we suspect Bitcoin will re-engage with the global volume of negative-yielding debt…
As Bitcoin offers, like gold, a hedge against the idiocy of policymakers.
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Bitcoin Back Below $10,000 As Venezuela Sets New Crypto Volume Record
by Zero Hedge - July 23rd, 2019 7:10 pm
Courtesy of ZeroHedge. View original post here.
For the fourth time in a month, Bitcoin prices have tested back below the $10,000 Maginot Line this morning and the rest of cryptos are worse.
A sea of red…
Bitcoin is back below $10,000…
But Litecoin leads the week's losses…
CoinTelegraph's Suberg notes that the latest downturn marks a repeat of the breakdown seen in Bitcoin last week, which resulted in a recent low of $9,125. Now, as then, analysts welcomed the opportunity to buy up cheap coins.
“Wanting to see a push back up to the neutral area or resistance. If not, more 4 digit BTC to accumulate,” investor Josh Rager summarized in his latest daily price update, noting the importance of the $10,200-$10,350 range.
As Twitter user and Lightning Torch creator Hodlonaut noted, politics did not necessarily have a fairly-weighted impact on price action. One Congressman, he noted, had described Bitcoin as impossible to stop by any government.
“9 days ago Bitcoin had not yet been called an 'unstoppable force' in the U.S. Congress. Still, price was almost 30% higher than now. Some dips are tastier than others,” he wrote.
However, demand remains high elsewhere in the world, as CoinTelegraph's William Suberg details, Venezuelans traded more bolivars for Bitcoin than ever before last week, but the statistics say more about fiat than cryptocurrency.
image courtesy of CoinTelegraph
During that period, users on LocalBitcoins alone generated volumes of over 57 billion bolivars, beating the previous all-time high of 49 billion, which appeared in the previous week.
Weekly LocalBitcoins Volume (Venezuelan Bolivar) Courtesy of Coin.dance
As Cointelegraph reported, Venezuela’s currency continues to suffer from runaway inflation, which estimates claim has reached 10,000,000%, leading citizens to resort to alternative means of storing value.
But there’s a catch
Yet as the bolivar count on Localbitcoins keeps growing, in Bitcoin terms, the number is falling. The 57 billion figure for last week equated to just 574 BTC — considerably less than in some previous weeks earlier this year.
Underscoring the weakening bolivar, Venezuela’s cryptocurrency trading is not supported by the government, which also imposed embargoes on foreign currency.
Earlier this year, the Lightning Torch transaction relay raised 0.4 BTC ($4,000) in funds among Bitcoin users for Venezuelans unable to escape the country.
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Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k
by Zero Hedge - July 18th, 2019 10:57 am
Courtesy of ZeroHedge. View original post here.
Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring…
A sea of green…
Bitcoin surged back above $10,000…
Ethereum bounced off support at its flash-crash lows…
But Litecoin is outperforming on the day…
As CoinTelegraph notes, Bitcoin recovered more swiftly from its bear cycles than Amazon did during the boom and bust of the dot com era, data from crypto analytics firm Messari reveals.
Bitcoin’s 2019 breakout ‘extremely bullish’ by comparison
Fellow industry analytics firm Ceteris Paribus shared Messari’s findings in a tweet on July 17:
“The latest $BTC cycle mirrors $AMZN during the dot-com bubble, but the recovery has been much more swift. Even with the recent sell off, bitcoin is 54% down from its high, vs. the 85% Amazon was trading at over a similar timeframe.”
Bitcoin and Amazon ‘bubbles’ comparison, 2015-2019. Courtesy of Messari via @ceterispar1bus
In a further tweet, Ceteris Paribus argues that while the two assets are markedly different, they have both allegedly “traded on pure speculation” at different points in their histories.
A comparison of the two reveals that Bitcoin’s breakout following crypto winter has been “extremely bullish” as compared with Amazon’s own tumultuous past, with Ceteris Paribus noting that the coin is “much further ahead than most people imagined in Dec. 2018.”
Industry perspectives
Interestingly, veteran trader Peter Brandt has this summer compared the likely fate of altcoins to the casualties of the dot com era, predicting that Bitcoin’s bull rally this will not extend to the cryptocurrency sector as a whole — unlike the historic rally of winter 2017. He remarked that:
“Following 2001-02 tech collapse, dotcoms with real value exploded. The ‘alt’ .coms went bankrupt.”
Meanwhile, Blockstream CEO Adam Back — the inventor of the hashcash proof-of-work (PoW) system later used in Bitcoin’s mining algorithm — has favorably compared the coin with earlier periods of innovation.
“Bitcoin has come much further and much faster than people expected,” he said. “There was a saying in the early dotcom era about ‘internet time,’and [...] bitcoin time [...] seems to be moving even faster.”
This April, Cointelegraph published an expert’s take on the so-dubbed Bitcoin bubble and its historical cousins — both the 17th century Tulip mania and the dot-com bubble of 1999-2000.
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Bitcoin Breaks Back Below $10k, Crypto-Crash Accelerates As Asia Opens
by Zero Hedge - July 14th, 2019 8:13 pm
Courtesy of ZeroHedge. View original post here.
Update 2010ET: Having briefly stabilized after this morning's weakness, cryptos are tumbling once again as Asian markets open.
Bitcoin has broken below $10,000 again…
* * *
While all eyes are on Bitcoin as it slides back towards $10,000, the real mover in the last 12 hours has been Ethereum after flash-crashing around 545amET today.
Ethereum almost instantaneously collapsed from $262 to $192 before ripping back higher… but is now fading further…
It is unclear if any specific catalyst prompted this collapse but the move in Ethereum followed reports, as CoinTelegraph points out, that the Ethereum smart contract of 0x decentralized exchange (DEX) protocol has been suspended after a vulnerability has been uncovered in its code, the project’s team announced in a Medium post published on July 13.
Per the announcement, third-party security researcher samczsun warned the 0x team about the vulnerability in the exchange smart contract and, after evaluating it, the team suspended the exchange’s contract and the AssetProxy contracts.
The vulnerability would have allowed an attacker to fill certain orders with invalid signatures. The announcement reassures that one has exploited this vulnerability and no users have lost their funds.
But, we note that the only consequence is apparently a temporary suspension of the service.
Some have blamed President Trump's tweet for the slide in crypto but that seems a stretch at best…
But we do note that, as Cointelegraph reported yesterday, a draft bill entitled “Keep Big Tech out of Finance” has surfaced online, allegedly from within the United States House of Representatives Financial Services Committee, which could have spooked some short-term traders.
Also the correlation between global negative-yielding debt (perhaps a proxy for how screwed up the world is) and cryptos is holding…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site