cryptos

More Institutional Investors to Venture into Crypto in 2019

The price of a number of cryptocurrencies including bitcoin, which is considered to be the mother of all cryptocurrencies, took big hits in 2018 amid the prolonged Crypto Winter. Even though there is no guarantee that it cannot get any worse than it did in the just concluded year, many investment analysts and financial market experts are expecting the volatility to subside significantly this year largely due to the entry of institutional investors. In fact, according to a report the Australian Financial Review some analysts even believe that bitcoin may make a comeback that will be fueled by the momentum created by institutional investors.

Over the summer of 2018, Wall Street was stunned by the news that some multi-billion-dollar endowments of Harvard, Yale and Stanford had decided to invest in digital currencies. Analysts believe that due to the herd mentality of most institutions, the move is likely to trigger a chain reaction of sorts among other institutional investors like pension funds. This influx of institutional investors was expected to pick up in a major way in late 2018 but the harsh bear market that affected nearly all digital currencies stalled most of the efforts – a number of the institutions were reportedly scared off by the protracted downturn of the crypto market which is an understandable move especially for organizations operating within that particular space.

Financial analysts have projected that, as Wall Street appears to be poised to even more turbulence in 2019, organizations may begin to consider crypto assets even more seriously – these assets are not buoyed since they have no correlation to the regular stock market and this makes a pretty good investment, especially during volatile periods.

Will Crypto Finally be Legitimized?

Well, many observers believe that, as it stands, mainstream adoption hinges on regulatory clarity to help legitimize the market. Regulation is already a big deal and has been defined by the move by US lawmakers in December 2018 to propose legislation that was designed to prevent bitcoin price manipulation and position the United States as a market leader in the crypto space. The US is being encouraged not to ignore the “profound potential” of crypto to bolster the country’s economy and this might just be what is needed to have digital currencies legitimized. The industry is putting a lot of effort into advancing the agenda of mainstream adoption of crypto most by greasing the wheels of Congress.

Unfortunately, there are some setbacks that may still impede the growth of the sector and one of the most serious ones is the scalability. As it stands, most platforms would need about a year to figure out concrete solutions to scaling, but until then let’s hope that the Lightning Network grows further and, hopefully, achieves its full potential.

btc-tax

UK Lawmaker Proposes Tax & Utility Bill Payments in Bitcoin

Eddie Hughes, a Conservative UK Member of Parliament is calling for local authorities in the country to take the lead and begin accepting tax and utility bill payments in bitcoin. According to the politician, bitcoin and the underlying blockchain technology both have great potential but the lack of reliable or adequate information and knowledge in this regard is one of the things that is preventing wider adoption.

“You’re either ahead of the curve or you’re behind the curve,” he said in a recent interview.

In the interview with the Daily Express, the lawmaker pointed out that the country is in a very interesting position especially because it hopes to be seen as a progressive nation. While the United Kingdom is still at crossroads, the decision to adopt the use of cryptocurrencies could prove to be very beneficial in the near future. If this is to happen, people will first have to understand how the transactions work and see how accessible the technology can be – ideally, the technology needs to appear like an app that can be used to make fast, safe and secure payments.

Being that the technology is talked about a lot in, the member of parliament feels that all the other lawmakers have a duty to understand it, something that will then enable them to make more informed decisions pertaining to the technology. Hughes further cited the Royal National Lifeboat Institution which is currently accepting charitable donations through cryptocurrency – this particular use case proves that bitcoin and other digital currencies can be used for many other services as well.

“The state should focus its attention on using blockchain to enable social freedom, to increase efficiency, and to rebuild societal trust,” Hughes stated.

This is, however, not the first time that Hughes has publicly supported cryptocurrencies and blockchain technology. Back in July, he wrote a report that called for the state to appoint a ‘Chief Blockchain Officer.’

Is This Possible?

Accepting taxes and utility bills in crypto would definitely be a good start for the crypto community and the country. However, regulators in Europe have been very skeptical about cryptocurrencies especially because digital currencies are very volatile and risky and are often associated with such vices as terrorism, fraud and money laundering. These European regulator’s alarmist entreaties have mounted quite a lot of pressure on the government of various European countries to implement some very stringent regulations that are supposedly meant to protect the public and investors while at the same time preventing the risk of financial instability.

As it stands, the future of crypto in the UK is even more uncertain thanks to a revelation by the country’s Finance Conduct Authority that it is considering banning crypto-linked derivative products. All these will be looked into in the first quarter of 2019.

blockchain-speed

Conflux Raises $35 Million into New Blockchain Protocol

The cryptocurrency industry, despite having existed for well over a decade and culminated into several innovations, is still in its nascent stage. Needless to say, there have been some very high moments for the industry as well as some very low lows, but cryptocurrency enthusiasts are in no mood to give up their optimism for a bullish future.

Still, we have to acknowledge the fact that the crypto market has been on a downward slope for a better part of this years, a bearish trend that is still going on. One of the major factors that go against digital currencies, more specifically bitcoin which is the flag bearer of the cryptocurrency world, is the sluggish nature of the underlying blockchain technology which makes its an infeasible choice for a real-world ledger. Even though developers have been working round the clock to solve this problem, it remains to be one of the most significant stumbling blocks to the wider adoption of cryptocurrencies.

Well, things, in this regard, are about to change for the better.

Enter Conflux

In a bid to provide the much-needed solution to the problem, a group of university professors and researchers have raised a whopping $35 million for Conflux, a non-profit foundation that will support the development of a new and improved blockchain network. The Conflux project which is being backed by a Sequoia China and a number of Chinese Internet Companies claims to be able to overcome a key limitation of the existing blockchain – this limitation is rooted in the fact that protocols like bitcoin’s can only add a single block to the blockchain at any given time. The addition of multiple blocks at the same time results in the creation of a fork which leads to competing chains.

Conflux’s solution involves the utilization of a system that allows users to simultaneously work on blocks and put them in the chain. This new system will also be able to maintain a decentralized consensus method that prevents any entity from taking control of the blockchain. The general idea is to make the entire blockchain scalable.

In essence, Conflux serves to fulfill Etheruem’s promise of allowing the users to create an execute the so-called “intelligent contracts” in a distributed blockchain library. Unfortunately, even though Ethereum boasts of being a powerful technology, it still suffers from the same speed scaling issues that have hampered the growth of bitcoin up until now.

“Contrary to popular belief, true decentralization isn’t sacrificed to increase throughput, highlighting Conflux as the first example that achieves the best of both worlds. By weaving a Directed Acylic Graph data structure into Conflux’s Proof of Work consensus algorithm, tests on its testnet has achieved a throughput of at least 6,500 Transactions Per Second (TPS), while supporting at least 20,000 nodes,” said the foundation’ press release.

Private blockchains have been able to overcome the aforementioned scaling problems but this has been at the expense of decentralization since they were only able to do this by relying on central authority. Conflux, on the other hand, promises to offer the best of both worlds, that is, both speed and decentralization.

whirl

Socially Driven Crowdfunding Comes to the Blockchain

Following years of extensive research and one and a half more of development through legal vetting, an A-list team of blockchain, non-profit and crowdfunding experts is proud to launch WHIRL, the global market’s first ever blockchain-powered consumer crowdfunding platform. According to Roel Wolfert (Bancor, VISA) and Martijn Hekman (World Vision, United Nations), WHIRL aims to give the world a whole new way of financing dreams and obligations through the introduction of a revolutionary incentive system designed to maximize success and also encourage charity. Like other revolutionary blockchain-based projects, this one is expected to a great leap forward for the crypto community.

How Does It Work?

WHIRL has been described as a “what goes around comes around” kind of system owing to its unique karma-based model – in fact, the system’s reward concept is literally referred to as a Karma. The platform is not only socially driven but is also deeply rooted in traditional crowdfunding, that is, where individuals, groups organizations come together in a bid to pool resources towards their projects.

WHIRL can reportedly be used to finance any type of venture; ranging all the way from personal goals to medical bills, business ventures, and even scientific endeavors. People can, therefore, get funding by participating in charity instead of taking out loans or sourcing for funds from family and friends. While this makes it a cut above the rest since it is pegged onto the blockchain network, there is more to it than meets the eye.

The platform utilizes a fair and transparent queue system which limits the number of listed campaigns at any given time. Its blockchain is powered by WRL tokens and the concept of Karma, a reward system that supports and facilitates the giving economy within WHIRL. With these, it is able it is able to guarantee a 100 percent success rate to all projects listed under a campaign. However, only those with a history of contribution are allowed to create fundraising campaigns.

Contributions are tracked through the issuance of Karma points – 7 to 20 Karma points are awarded for every dollar contributed on any campaign listed on WHIRL. Consequently, there is a threshold number of points required to launch a campaign and based on the number of points accumulated, the size and duration of the campaign is determined. In addition to this, the campaigns also go into a transparent queue based on the order of submission.

So Many Birds, One Stone

WHIRL is poised to take care of a number of unattended needs in the crowdfunding market which has stagnated over the past decade due to fraud, oversaturation and, of course, the declining rate of success of crowdfunding campaigns. By listing only a limited number of campaigns at any given time and incentivizing backers with a fair and transparent system, the platform definitely takes care of most of these problems.

In addition to that, WHIRL supports 12 cryptocurrencies (including BTC, BCH, DASH, and ETH) at the moment, something that by itself already sets it apart from many other crowdfunding platforms – it also has plans to add more digital currencies in the future. This is great for the crypto community as a whole since it will aid further proliferation of digital currencies into the mainstream market.

 

bitcoin-united-states-us-flag

Michigan Bans Use of Crypto as Political Campaign Donations

The Michigan Department of State has formally barred digital currencies from being used as donations for political campaigns. According to a letter that was published last Thursday by the state’s Secretary of State, the law does not recognize crypto and associated virtual assets as political campaign donations because their values cannot be determined with absolute certainty.

This was in response to a letter from William Baker, a Michigan State Legislature candidate, that outlined some of his opinions on why state politicians should be allowed to receive digital currency campaign donations from their supporters. In the letter, Baker points that cryptocurrencies are a valid way to receive payments and donations and thus political campaigns should be no exceptions. He however also acknowledged that there were such issues as recording the value and utilization of these digital currencies that still need to be resolved.

“With some modest record keeping, donations of digital currencies can be an additional method of raising funds for political campaigns in the coming years, just as the internet first allowed political based websites to collect credit card donations roughly twenty to twenty-five years ago,” Baker’s letter read.

As it stands, Michigan politicians are allowed to accept non-monetary political campaign donations, which, much like most digital currencies rarely hold and a precise or value.

State Department Disagrees

The Michigan Secretary of State, Ruth Johnson, responded to Baker’s letter by stating that bitcoin and other digital currencies may not be used to make political campaign donations simply because “the value of these crypto assets is not fixed, and their volatility makes it impossible to assign an exact dollar value to them in administrative terms.”

“In the context of a contribution under the MCFA, an ascertainable monetary value is one that is exact, precise, and certain or can be determined with certainty. Where it cannot be determined the exact or precise dollar amount for a contribution made with Bitcoin at the time it is given, there can be no ascertainable monetary value,” an excerpt from the Michigan State Department’s letter read.

The State Department’s letter further compared digital currencies, more so bitcoin, to a security – it quoted legal precedents which effectively restricted the use of any financial assets save for those held by banking institutions for use in campaigns. Still, the department did acknowledge that bitcoin is analogous to a security, that is, both cannot be used “in and of themselves to purchase goods or services”, something that many crypto enthusiasts consider to be a highly contestable claim.

The main takeaway from the letter is that the crypto campaign donations are effectively illegal in Michigan mostly because of the reasons stated above and because the reporting requirements do not allow for multiple recordings that are required to capture various values that are likely to be held by digital assets at various points in the process.  These include such issues as the date of receipt by the candidate, the date of sale to the donor as well as the date of record on a campaign statement.

declub

Macau Casino Plans to Build World’s First Blockchain Casino

Despite a significant decline in prominent blockchain-based digital currencies such as bitcoin due restrictions that are being enforced by the governments of countries like China, there are still large and prevalent communities of cryptocurrency enthusiast in those areas. Similar restrictions have been imposed on gambling activities within the same areas.

However, in the peninsula of Macau which is the Chinese licensed Mecca of gambling activities, casino operator known as DeClub Macau has come up with a new idea to take advantage of the high demand for cryptocurrencies. For this, the casino has already inked a partnership with Wide Rich Global Company, a Maltese investment firm, to bring gambling and blockchain technology together.

DeClub, in its press release, said that Wide Rich Global Company intends to buy the casino so as to build the what the duo is referring to as the “world’s first blockchain-based casino gaming hub with fully integrated online and land-based casinos.” Wide Rich hope to fund the purchase by offering an Initial Coin Offering (ICO) which will hopefully bring in as much as $1 billion.

“The tokenization of chips, casinos and their surrounding entertainment service providers will be able to build a pan-gambling business ecosystem together, so that people with varying business needs – from tourism to business meetings, to shopping – can all gain easy and cost-effective access to customized and prestigious services on their mobile devices,” Wide Rich Global Company’s officials stated in a recently released white paper.

Once the sale of the 20 billion DEC tokens is complete, De Club International will move forward with its plans to apply for a junket promoter license in Macau – this is because it intends to open multiple land-based gambling facilities both within and outside of the Macau region. The company has allocated about 35 percent of the funds from the token sales to the acquisition and licensing of said casinos.

Bypassing the Limitations of the Gambling Industry

Apparently, the prime motivator of this project is the need for a viable solution to the untrustworthy nature of the gaming industry. The project is aimed at achieving transparency are trustworthiness using blockchain technology – in essence, the project managers are counting on the fact that it is easy to conduct research, investigations or digital forensics on blockchain-based serves.

China has in the recent past had a very strained relationship with cryptocurrencies. The country also penalizes gambling outside Macau despite the obvious demand for it, but with blockchain technology, it will be much harder for the country’s government to implement these restrictions since users can gambler using a number of digital currencies anonymously.

There are, of course, a number of challenges that stand in the way of the project – the fact that Macau does not allow blockchain gambling yet, for instance – but with just enough lobbying, it will be a reality sooner than we may anticipate.

liquid

Blockstream’s Liquid Network Launches for the BTC Blockchain

One of the major setbacks for the mainstream adoption of cryptocurrencies has been the difficulty and slow nature of crypto settlements, especially where large volumes of these digital assets are involved. There have of course been attempts at fixing this problem with the so-called sidechains that promise faster transactions but the pace of the developments has not been as reassuring as many people had hoped for. The Lightning Network, for instance, has managed to gain quite a lot of traction in the past several months but its use of nodes with limited capacities has been quite detrimental to its growth, to say the least.

Now, Blockstream, a San Francisco-based blockchain technology company may have finally found a solution to the problem. Referred to as the Liquid Network, the company’s new bitcoin sidechain is set to revolutionize the crypto space by allowing for faster and more secure digital currency and asset settlements with an emphasis on the larger volume settlements. The sidechain which will be connecting institutions, crypto exchanges, and even brokers partnered with 20 exchanges at launch, a move that is certainly bound to improve its standing in the crypto space and speed up its adoption at the same time.

“Liquidity across exchanges is definitively not there yet. With the advent of Liquid — with faster settlement times — we should be able to improve it by making it faster and easier to transfer,” Samson Mow, Blockstream’s Chief Strategy officer said.

How It Works

According to Samson Mow, the members of the Liquid Network and the exchanges will be the main providers of liquidity since they will be the ones responsible for keeping a balance of L-BTC that they would, in turn, allow their users to swap. The Liquid Network’s design is a bit of a twist of the original concept of the sidechain which was initially pitched as a means for trustless swaps – Blockstream’s spin requires the intermediaries to execute the swaps themselves.

“When someone wants to move BTC to the Liquid sidechain,” Mow went on to explain. “they send it to a unique peg-in address. When someone is ready to move their money back to the Bitcoin blockchain, they can make a peg-out transaction that will tell the [Liquid members] to send Bitcoin to the desired address.”

Contrary to what many people would assume, the Liquid Network is not a replacement of the Lightning Network. In fact, in the blog post that announced the launch of the project, Blockstream clarified that the Liquid Network is capable of adding the Lightning Network as a second layer which makes the two technologies complimentary as both of them are vital to the crypto ecosystem.

ny-crypto

NY AG Says Crypto Exchanges Are at Risk of Manipulation

The New York Attorney General’ office on September 18 published a report that says that cryptocurrency exchanges are vulnerable to conflicts of interests, manipulation as well as many other consumer risks. The 32-page “Virtual Markets Integrity Report” highlights concerns that exchanges are not doing much to protect investors.

Launched in April, the “Virtual Markets Integrity Initiative” kicked off when Eric T. Schneiderman, the then-New York Attorney General, sent letters to thirteen cryptocurrency exchanges requesting information on their operations, internal controls as well as other key issues.

“The New York State Office of the Attorney General (the “OAG”) launched the Virtual Markets Integrity Initiative to protect and inform New York residents who trade in virtual or “crypto” currency. As a medium of exchange, an investment product, a technology, and an emerging economic sector, virtual currency is complex and evolving rapidly. The OAG’s Initiative, however, proceeds from a fundamental principle: consumers and investors deserve to understand how their financial service providers operate, protect customer funds, and ensure the integrity of transactions,” reads the statements from the Attorney General’s office.

“The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity.”

The Key Findings

The study found that the absence of accepted methods of auditing virtual assets has resulted in the lack of a consistent and transparent approach to the independent auditing of digital currencies trade on the exchanges. This, therefore, puts the customers’ funds in the various exchanges at risk of theft or cyber-attacks.

“New Yorkers deserve basic transparency and accountability when they invest – whether on the New York Stock Exchange or on a cryptocurrency platform,” Barbara Underwood, New York’s current Attorney General said in a statement. “Many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”

One of the more bizarre revelations was that only four cryptocurrency exchanges have mechanisms for market manipulation detection and prevention in place. The four exchanges – HBUS, Coinbase, Gemini and Bittrex – are therefore the safest options for crypto investors.

On the flip side, the report went on to refer three major New York crypto exchanges – Gate.io, Binance, and Kraken – to authorities over charges of violation of state law for allowing trading on the part of New Yorkers.

The report has attracted an equal measure of support and criticism from the crypto exchanges and other stakeholders of the industry. Still, it is going to be a while before we finally see the ramifications of these findings.

Ethereum

Ethereum Drops Below $200, Further ICO Selloff Expected

Over the past few months, Ethereum investors have had to cope with bears from everywhere thanks to the pessimistic news and sporadic or wavering statements that have grown rather rampant within the period of its existence. While a lot of work has been put into the Ethereum project, the digital currency otherwise known as ETH has managed to plunge so deeply to a new all-time low of about $183 – this is the first time that the cryptocurrency market is seeing a bloodbath that has caused a plummet of close $198 billion.

There was a boom in the number of Initial Coin Offerings in towards the end of the 2017 and early this year, something that drew the attention of a number of different market players including mainstream media. Ethereum happened to be one of the biggest beneficiaries of this rapid increase in the number of Initial Coin Offerings. In fact, the digital currency remains to be the second biggest cryptocurrency market and its smart contract has spawned several projects including Tron and EOS.

Unfortunately, this year has not been Ethereum’s best year having gone through a constant drop this year. This drop in Ethereum’s value has been one of the most shocking outcomes in the cryptocurrency industry and the ICOs are reportedly to blame for the digital currency’s downward price trend.

“The blockchain space is getting to the point where there’s a ceiling in sight. If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore,” Vitalik Buterin, the co-founder of Ethereum commented on ETH’s decline.

This is certainly not good news for speculators and crypto enthusiasts who purchased digital currencies at high prices at the beginning of the year with the hopes of stopping glosses from the year-long slump. As such, it is very important for stakeholders to have practical anticipations for possible gains especially considering last December’s astounding flare-up in crypto prices that was described as a “retail bubble” by many investors.

Why Fingers Are Pointing to the ICOs

Ethereum-based ICOs have spent 157,700 ETH over the past 8 days – this is equivalent to $29.9 million at the digital currency’s present value and is the highest amount spent since March. Due to this, there has been speculation that the cryptocurrency startups have been offloading Ethereum for fiat currency on major exchanges.

Alex Kruger, a cryptocurrency analyst, says that about 4 percent of the Ethereum held in visible ICO wallets was transferred out last month. Kevin Rooke, another cryptocurrency analyst, also pointed out that the Ethereum reserves held by ICOs fell to $600 million in the last week. This ICO cash-out is one of the causes of ether’s 40 percent price drop over the past month.

BTC-lightning-network

The Lightning Network Hits 100 BTC and 12K Channels

Even though the price of bitcoin has been facing a bear market lately and the innovative Lightning Network is still facing some issues, the latter is growing bigger by the day. Bitcoin’s Lightning Network became bigger than ever before this month when its capacity finally crossed the 100 BTC mark (about $73,000). This can partly be attributed to the fact that bitcoin has managed to grow its popularity immensely – this has, in turn, lead to the hastening of the development progress of the off-chain payment protocol in the past few months.

The proposed second-layer scaling solution which was as low as 3 BTC at the beginning of the year has shown a great deal of promise not just for bitcoin enthusiasts but for the cryptocurrency community as a whole. While getting to the 100 BTC mark took a relatively short time (a little over half a year), getting to that point was certainly not an easy task. The Lightning Network first hit 50 BTC capacity back in July this year which seemingly pointed to the fact that the network is finally scaling the way it was intended.

More Nodes and Channels

Also, the total network capacity of 101.7 BTC is contributed to by 3,350 nodes and more than 12,000 channels. The number of nodes has increased by 11 percent in the past 30 days with the capacity and number of channels going up 4 and 7 percent respectively. Reports from the past month reveal that recent experimentation on the network account has influenced certain accounts to markedly increase their individual capacity to process payments.

As mentioned earlier, July was a pivotal escalation point for the network – overall capacity shot up 85 percent when compared to the month of June. There is still a lot more that has to be done in terms of the node count before the Lightning Network is at full speed but from the looks of it, everything is certainly headed in the right direction.

Dealing with Scaling Problems

All of the mentioned improvements are indications that many developers and crypto enthusiasts are committed to ensuring that the Lightning Network is a success – some of them include SatoshiLabs and Bitrefill who have been working diligently to improve the network. Unfortunately, we may have to cope with a few discrepancies which will hopefully be addressed as development progresses.

One of the most prominent of these issues is the user-friendliness of the network, or rather its non-user-friendly nature. To put this into perspective, many of the transactions on the network still fail and this affects the overall usability and outlook of the network. Hopefully, this should be fixed sooner than later if mainstream adoption is the ultimate goal. Till then, so far so good.