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Bitcoin Price Drops following news that Satoshi allegedly send 50 BTC and the bitcoin price got rejected at the historical price level of 10k USD. This level is a significant psychological barrier in the bitcoin price. Expected to have a small correction before bulls retry to breakout.
Bitcoin Price Drops following news that Satoshi allegedly send 50 BTC and the bitcoin price got rejected at the historical price level of 10k USD. This level is a significant psychological barrier in the bitcoin price. Expected to have a small correction before bulls retry to breakout.
Bitcoin Price Drops following news that Satoshi allegedly send 50 BTC and the bitcoin price got rejected at the historical price level of 10k USD. This level is a significant psychological barrier in the bitcoin price. Expected to have a small correction before bulls retry to breakout.
What causes an inverse USD to Bitcoin relationship in historical charts?
Having a little difficulty understanding LBRY's historical data and am looking for some insight. What would cause an inverse relationship between USD and BTC value in the most recent months of LBRY. If you take a look at the chart, the dollar value far exceeds the btc value which seems to be the counter to currency standards. LBRY HISTORICAL CHART
Historically, Bitcoin price has been roughly proportional to the *square* of Bitcoin volume (blocksize) - due to the "network effect" or "Metcalfe's Law". This table suggests we could get to 1 BTC = 1 million USD in just 8 years - with no code changes, and moderate blocksize growth and price growth.
Here's how the actual numbers would look each year - starting from a "baseline" of 1000 USD price and 1 MB blocksize in 2017:
Blocksize (up 1.54x per year)
Price (up 1.542 = 2.37x per year)
Where do the "magic numbers" 1.54 and 2.37 come from? We want to see whether the following growth rates seem realistic / feasible:
Bitcoin volume ie blocksize would increase roughly 32x in 8 years
Bitoin price would increase by the square of that in 8 years - ie, roughly 1000x in 8 years - from 1,000 USD to 1,000,000 USD.
So, we take the "8th root" of 32 (to get the annual blocksize increase) and the "8th root" of 1000 (to get the annual price increase):
321/8 = 1.54x annual blocksize increase
10001/8 = 2.37x annual blocksize increase
Also, as we know, 32 * 32 = 1024. So 32 is roughly the square root of 1000 - ie price increasing 1000x in 8 years is roughly proportional to the square of blocksize increasing 32x in 8 years. This is of course just a rough projection! "Past performance does not guarantee future results." However, this kind of rough projection can be useful to provide a concrete illustration of how a safe and simple on-chain scaling roadmap could easily get us to 1 BTC = 1 million USD within the next two 4-year "halvings" - based on actual historical growth trends, and without any controversial code changes. Below are some previous posts showing that Bitcoin price has been roughly proportional to the square of Bitcoin volume (blocksize) - and showing that Bitcoin should be able to support gradual blocksize growth:
Bitcoin has its own E = mc2 law: Market capitalization is proportional to the square of the number of transactions. But, since the number of transactions is proportional to the (actual) blocksize, then Blockstream's artificial blocksize limit is creating an artificial market capitalization limit!
This trader's price & volume graph / model predicted that we should be over $10,000 USD/BTC by now. The model broke in late 2014 - when AXA-funded Blockstream was founded, and started spreading propaganda and crippleware, centrally imposing artificially tiny blocksize to suppress the volume & price.
Bitcoin Original: Reinstate Satoshi's original 32MB max blocksize. If actual blocks grow 54% per year (and price grows 1.542 = 2.37x per year - Metcalfe's Law), then in 8 years we'd have 32MB blocks, 100 txns/sec, 1 BTC = 1 million USD - 100% on-chain P2P cash, without SegWit/Lightning or Unlimited
Core/Blockstream is living in a fantasy world. In the real world everyone knows (1) our hardware can support 4-8 MB (even with the Great Firewall), and (2) hard forks are cleaner than soft forks. Core/Blockstream refuses to offer either of these things. Other implementations (eg: BU) can offer both.
Gavin Andresen: "Let's eliminate the limit. Nothing bad will happen if we do, and if I'm wrong the bad things would be mild annoyances, not existential risks, much less risky than operating a network near 100% capacity." (June 2016)
21 months ago, Gavin Andresen published "A Scalability Roadmap", including sections called: "Increasing transaction volume", "Bigger Block Road Map", and "The Future Looks Bright". This was the Bitcoin we signed up for. It's time for us to take Bitcoin back from the strangle-hold of Blockstream.
I am having trouble finding detailed pricing information going back further than 30 days. I know there are many different exchanges, pairs, and their isn’t 1 true list price. However, I am very interested in obtaining detailed pricing/listing data from a reputable sources, hopefully downloadable in spreadsheet form, from 1-12+ back. Any help is appreciated!!
When we are faced with a new technology, we often look for analogies to understand and describe it. To bridge the knowledge gap, we seek analogies from the universe concepts familiar to us. In our search for the right analogies, we often risk misunderstanding this new technology. Blockchain technology has introduced a paradigm shift in the way we organize ourselves to generate, account for, transfer and store value. Yet, we are still in early stages of understanding its importance. In this post I will try to shed light on the top 5 major misconceptions about digital assets and about the open blockchain—a technology that underlies them. 1.Blockchain, not bitcoin This misconception stems from failing to realize why blockchain exists in the first place. In essence, blockchain is a shared ledger designed to function in an extremely hostile, open environment. It derives its value from the security of its tamper-proof records. In the blockchain networks powered by proof-of-work (PoW) algorithms, that security is achieved by miners competing to solve a computationally intensive puzzle. The miners do this with the expectation of receiving a digital token as a reward. This digital token can be freely redeemed for fiat currency to cover their operating costs and generate profits. These open systems are designed in such a way that value of their token ultimately dictates the level of security of their network. When we decouple the concept of blockchain from its underlying token, it simply wipes out most, if not the entire, value proposition the blockchain as a concept. Implementing blockchain as a token-less system of recordkeeping within a single company is perhaps the prime example of this misconception. Such an endeavor fails to use one of the most valuable properties of the open blockchain. Implementing a blockchain solution in such settings may even be counter-productive especially when better alternatives exist, in the form of databases with proper access control. Blockchain could be useful in a commercial setting where a consortium of companies decides to use a single ledger to keep track of important transactions. An example of such transactions could be shares of companies that are traded on Wall Street millions of times each day. These transactions are reconciled periodically between the financial institutions by a trusted third-party entity, which could be ultimately replaced by a blockchain-based protocol at a fraction of their cost. That said, these systems may never become as secure and tamper-proof as the open blockchain as the security of the network depends on the number of its minestaking nodes. 2.Exchange Hacks = Digital Assets Are Not Secure Centralized digital asset exchanges are popular avenues for exchanging digital assets for currencies such as USD or other digital assets. However, their design creates a system of incentives for external or internal actors to compromise them. When we hear about exchange hacks in the digital asset space, it almost always involves compromising the security of an entity that operates within the traditional server-client architecture. However, the mainstream consciousness conflates the digital exchange security with that of technology that underlies digital assets. Holding a digital asset in a cold storage is extremely secure. Holding it in an exchange is not. 3.Blockchain has low TPS, hence it will never compete with or replace traditional financial infrastructure Traditional financial systems process a vast number transactions every day. This transaction processing capacity is called throughput and is measured by a metric called transactions per second (TPS). Payment networks such as Visa claim to process up to 56,000 TPS, while traditional exchanges are likely to have much higher capacity to process transactions to accommodate high-frequency trading. Today, the Bitcoin network processes around 4-5 transactions per second while the second largest digital asset network—Ethereum processes around 15. If we compare the current state of the blockchain technology to the demands of the global financial industry, it is easy to see why such claims could be justified. However, this is a myopic view of this new technology, very much akin to the way Kodak dismissed digital cameras as a potential threat to its business model. It failed to recognize (i) the speed at which digital cameras would develop and (ii) the fundamental shift the digital cameras introduced in the way we take and store pictures, despite being the company that invented digital cameras in 1975. As the history shows, that was Kodak’s grave mistake. It is hard to ignore the historical parallels here. The digital asset space is evolving fast. The next-generation networks, which operate under the proof-of-stake consensus mechanism, preserve the securities of proof-of-work, but do away with its capacity limitations. A notable example of that is Cardano. These new networks also represent a shift in the global economic paradigm that many do not seem to notice. 4.Digital Assets Have No Intrinsic Value The concept of intrinsic value, or lack thereof, is often used to describe digital assets as a purely speculative asset class. While this may apply, with some justification, to digital assets which only claim to function as money, such claims fail to capture the wider nature of platform-based digital assets, which derive their value from the direct use of their networks. In digital asset platforms like Cardano or Algorand, the native token gives the holder the right to participate in the consensus of the network through the process of staking. The consensus mechanism secures the network, maintains the decentralized ledger, enables participation in the governance of the network and can sustain myriads of decentralized applications with real-world utilities. Put simply, digital tokens may derive their value from the economic activity that takes place on their networks. The economic activity on such networks, in turn depends on the security of the network, its technical capabilities, its transaction fees and the real-world utility of decentralized applications that reside on them. In that respect, they can be thought of as a new kind of financial instrument. The kind that seamlessly combines the properties of currencies, commodities, and shares of ownership into a single digital token. These new instruments require that we develop and apply new analytical frameworks to value them, much like the concepts of equities and derivatives did when they first emerged as new financial instruments. 5.Developed Economies Do Not Need Blockchain Technology Because They Have Well-Established Financial/Commercial Solutions. While it is easy to see how the blockchain technology could unlock a lot of value in the emerging markets, the idea that developed economies do not benefit from this technology is short-sighted. It is akin to saying that cell phones are a great technology for emerging markets, but developed markets already have land lines, hence do not need them. In a similar vein, we could argue that developed countries do not need internet because most of what internet could do already exists in analog form. We have to realize that (i) at its core, blockchain is a paradigm-shifting infrastructure/technology and (ii) despite its nascent stage, blockchain is extremely cost-effective… To a degree that it has the capacity to fundamentally disrupt a slew economic sectors out of existence, from banking to real estate, and create new ones. When we accept this eventuality, we will have to face some uncomfortable truths that many sectors will not exist in their current form or entirely disappear. Currently these sectors provide economic value, employment and generate taxes. If some blockchain-based solution is to replace them in 3-5 years, where would that value migrate? Losing them to open blockchain networks would not be acceptable politically or economically for many developed countries. One way out of this could be for developed countries to invest in national networks, allowing them to reap the benefits of this new technology, while retaining value from economic activity of their citizens and companies within their jurisdictions. Another, more realistic way, would be to invest heavily into friendly legal frameworks that would encourage both individuals and companies that would ultimately develop or maintain open blockchain protocols migrate to these jurisdictions, drawing in talent, capital and innovation. One thing is becoming increasingly clear: we can no longer ignore the elephant in the room. Much like digital cameras and internet itself, blockchain is unstoppable. If you like this article and would like to have access to our in-depth research in the future, please consider staking with skylight pool (tickers SKY and SKY2). We are working hard to create a suitable space on pooltool.io to disseminate our research to our verified stakeholders. Connect with us: Twitter: u/RealSaidov TG: u/SkyLightPool Website: skylightpool.com
Price fluctuations in the bitcoin spot rate on cryptocurrency exchanges are driven by many factors. Volatility is measured in traditional markets by the Volatility Index, also known as the CBOE Volatility Index (VIX). More recently, a volatility index for bitcoin has also become available. Known as the Bitcoin Volatility Index, it aims to track the volatility of the world's leading digital currency by market cap over various periods of time. Bitcoin's value has been historically quite volatile. In a three-month span from October of 2017 to January of 2018, for instance, the volatility of the price of bitcoin reached to nearly 8%. This is more than twice the volatility of bitcoin in the 30-day period ending January 15, 2020. But why is bitcoin so volatile? Here are just a few of the many factors behind bitcoin's volatility.
Bad News Hurts Adoption Rate
News events that scare bitcoin users include geopolitical events and statements by governments that bitcoin is likely to be regulated. Bitcoin's early adopters included several bad actors, producing headline news stories that produced fear in investors. Headline-making bitcoin news over the decade or so of the cryptocurrency's existence includes the bankruptcy of Mt. Gox in early 2014 and, more recently, that of the South Korean exchange Yapian Youbit. Other news stories which shocked investors include the high-profile use of bitcoin in drug transactions via Silk Road that ended with the FBI shutdown of the marketplace in October 2013. All these incidents and the public panic that ensued drove the value of bitcoins versus fiat currencies down rapidly. However, bitcoin-friendly investors viewed those events as evidence that the market was maturing, driving the value of bitcoins versus the dollar markedly back up in the short period immediately following the news events.
Bitcoin's Perceived Value Sways
One reason why bitcoin may fluctuate against fiat currencies is the perceived store of value versus the fiat currency. Bitcoin has properties that make it similar to gold. It is governed by a design decision by the developers of the core technology to limit its production to a fixed quantity of 21 million BTC. Since that differs markedly from fiat currency, which is dynamically managed by governments who want to maintain low inflation, high employment, and satisfactory growth through investment in capital resources, as economies built with fiat currencies show signs of strength or weakness, investors may allocate more or less of their assets into bitcoin.
Uncertainty of Future Bitcoin's Value
Bitcoin volatility is also driven in large part by varying perceptions of the intrinsic value of the cryptocurrency as a store of value and method of value transfer. A store of value is the function by which an asset can be useful in the future with some predictability. A store of value can be saved and exchanged for some good or service in the future. A method of value transfer is any object or concept used to transmit property in the form of assets from one party to another. Bitcoin’s volatility at the present makes it a somewhat unclear store of value, but it promises nearly frictionless value transfer. As a result, we see that bitcoin's value can swing based on news events much as we observe with fiat currencies.
Large Currency Holder Risks
Bitcoin volatility is also to an extent driven by holders of large proportions of the total outstanding float of the currency. For bitcoin investors with current holdings above around $10M, it is not clear how they would liquidate a position that large into a fiat position without severely moving the market. Indeed, it may not be clear how they would liquidate a position of that size in a short period of time at all, as most cryptocurrency exchanges impose 24-hour withdrawal limits far below that threshold. Bitcoin has not reached the mass market adoption rates that would be necessary to provide option value to large holders of the currency.
Security Breaches Cause Volatility
Bitcoin can also become volatile when the bitcoin community exposes security vulnerabilities in an effort to produce massive open source responses in the form of security fixes. This approach to security is paradoxically one that produces great outcomes, with many valuable open source software initiatives to its credit, including Linux. Bitcoin developers must reveal security concerns to the public in order to produce robust solutions. It was a hack that drove the Yapian Youbit to bankruptcy, while many other cryptocurrencies have also made headlines for being hacked or having stashes of cryptocurrencies stolen. As an early example, in April 2014, the OpenSSL vulnerabilities attacked by the Heartbleed bug and reported by Google security's, Neel Mehta, drove Bitcoin prices down by 10% in a month. Bitcoin and open source software development are built upon the same fundamental premise that a copy of the source code is available to users to examine. This concept makes it the responsibility of the community to voice concerns about the software design, just as it is the responsibility of the community to come to consensus about modifications to that underlying source code as well. Because of the open conversation and debate regarding the Bitcoin network, security breaches tend to be highly publicized.
High-Profile Losses Raise Fear
It is worth noting that the aforementioned thefts and the ensuing news about the losses had a double effect on volatility. They reduced the overall float of bitcoin, producing a potential lift on the value of the remaining bitcoin due to increased scarcity. However, overriding this lift was the negative effect of the news cycle that followed. Notably, other bitcoin gateways looked to the massive failure at Mt. Gox as a positive for the long term prospects of bitcoin, further complicating the already complex story behind the currency’s volatility. As early adopting firms were eliminated from the market due to poor management and dysfunctional processes, later entrants learn from their errors and build stronger processes into their own operations, strengthening the infrastructure of the cryptocurrency overall.
High-Inflation Nations and Bitcoins
Bitcoin’s use case as a currency for developing countries that are currently experiencing high inflation is valuable when considering the volatility of bitcoin in these economies versus the volatility of bitcoin in USD. Bitcoin is much more volatile versus USD than the high-inflation Argentine peso versus the USD. That being said, the near frictionless transfer of bitcoins across borders makes it a potentially highly attractive borrowing instrument for Argentineans, as the high inflation rate for peso-denominated loans potentially justifies taking on some intermediate currency volatility risk in a bitcoin-denominated loan funded outside Argentina. Similarly, funders outside Argentina can earn a higher return under this scheme than they can by using other debt instruments, denominated in their home currency, potentially offsetting some of the risks of exposure to the high inflation Argentine market.
Tax Treatment Lifts Volatility
According to the Internal Revenue Service (IRS), bitcoin is actually considered an asset for tax purposes. This has had a mixed impact on bitcoin's volatility. On the upside, any statement recognizing the currency has a positive effect on the market valuation of the currency. Conversely, the decision by the IRS to call it property had at least two negative effects. The first was the added complexity for users who want to use it as a form of payment. Under the new tax law, users would have to record the market value of the currency at the time of every transaction, no matter how small. This need for record keeping can understandably slow adoption as it seems to be too much trouble for what it is worth for many users. Secondly, the decision to call the currency a form of property for tax purposes may be a signal to some market participants that the IRS is preparing to enforce stronger regulations later. Very strong regulation of the currency could cause the adoption rate of the currency to slow to the point where it is not able to achieve the mass adoption that is critical for its overall utility in society. Recent moves by the IRS are not clear as to their signaling motives and therefore have mixed signals to the market for bitcoin.
Is Dogecoin worth buying? My cousin and some of my friends came asking me if it’s worth buying
To so many of you who also have this question in mind, here is your answer!!! The crypto space is crowding quickly. However, Dogecoin managed to turn a fun joke into a real investment opportunity. Dogecoin is worth buying as a personal collection cryptocurrency for long-term portfolios. Anyone who wants to make more money should look at the bigger cryptocurrencies like Bitcoin and Ether. Anyone who wants to make more money should look at the bigger cryptocurrencies like Bitcoin and Ether. Taking a look at Dogecoin, one notices its thriving community. Although its price is considerably low, it is still worth a shot. Dogecoin crypto started as a joke but it has grown leaps and bounds and today it has a market cap of $393,731,463 USD. Dogecoin cryptocurrency blockchain icon. Virtual electronic, internet money or cryptocoin symbol, logo Based on its historical path, the crypto has traversed a bumpy ride so far. It is currently trading at $0.003140 USD.
It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
Global internet / internet everywhere is being worked on with Space-x "StarLink", thousands of satellites connecting everyone globally to the internet. Therefore infrastructure for the digital currencies,
Too private makes it ideal for illegal activities. / Can't be controlled as easy, taxed as easy.
All of the above is a partial list of factors devaluing the Dollar and trust in it from several ways and views. At the end of the day it has a huge amount of enemies, that are all looking for ways to get out of it. Some of what I'm seeing personally.
Prices are outpacing wages.
Education is required for a good job vs how things used to be, jobs are getting more technical for same wage value.
Real Estate has been rapidly climbing in price, even homes that haven't been remodeled. A $80,000 home in my area is now $180k in the last 6-7 years. Wages haven't moved.
Rents have been climbing with the real estate prices.
Taxes have increased on said real estate
Insurance cost are up
Repair costs are up
It is a death spiral for the working person, where it used to be "No more than 30% of your wage going to housing" It is now well over 50%....Just look at this recent post in Frugalhttps://www.reddit.com/Frugal/comments/ifqah1/is_it_normal_for_a_third_to_a_half_of_you?utm_source=share&utm_medium=web2x&context=3 This death spiral I foresee getting worse. And historically any "tax" / regulation cost will just be passed down to the consumer in form of increased prices until people / businesses move elsewhere as we've seen in several cities around the US. So what can we do? Buy Gold! Silver! Bitcoin! Stocks! I hear people roar, They aren't exactly wrong as history shows... but have you considered the 30-40% tax on the "gain"? Even when that asset buys the same value before tax? What if the government makes it illegal like the 1933 order: 6102 Where you couldn't own gold for nearly 50 years? You're frozen out, or even out on taxes (which will likely be more strict and controlled later in time). I'd say Invest in things that will
Help you be independent
Can help you save
That you will use anyways in normal living
Things that can be productive not only for you, but for others $
Bonus points if its easy to trade off / has demand
Extra bonus if it is durable (lasts many years)
Helps your health
Metals are the next step when a person has plenty of the above. You get to a point where you have hundreds of thousands, if not millions that you need to condense into something real. It is all about the savings or productivity gain of the investment. For instance I would wager that many preppers have gotten more use / value out of a $800 clothes washer than a $800 rifle. (have you ever had to do manual laundry???) Sure the rifle will hold value...but it often doesn't pay you back with time / what it saved and / or what it has produced during its life unless you are using it. Same can be said of security cameras, a generator, a tractor, trailer, garden, tools, ect. Look at history even, in countries that have experienced hyperinflation people that already had tangibles they regularly use were way ahead. It could even be honey, a tool, extra maintenance parts, can of food, that bottle of medicine, a computer to keep your intel on point, (cough # PrepperIntel plug) use of your equipment to do or make something for someone. Real Estate is good too, it rides inflation well and has many ways of being productive. Your metals could be sitting there like the rifle, and could be subject to hot debate and laws. Meanwhile that garden is paying back, chainsaw is helping saw up wood, or your tractor is helping a job, your tools just helped you fix something / saved you much loss, Your security stopped a loss not by a person, but an random animal stealing things. Or that $25,000 solar array is paying you back by the day in spades...while making you independent...running all your tools you're using to make things to sell, and even heating / cooling some of the house with the extra juice while places around you experience rolling blackouts. You were even smart and took the current 24% tax benefit the government has saving you $5000 on it for batteries. Don't get me started if you have an electric vehicle with solar... I'm rambling at this point...and all those stealthy / direct and passive background savings...even if the crap doesn't hit the fan. So anyways, With out of control central banks and big governments, digital currencies, How do you think it will play out? Are we heading to dystopia?
BTC/USD hourly chart Last week, the Bitcoin was able to break the $10,600 resistance and stay above $10,200, thus establishing a bullish trend in the short term. The BTC price reached as high as $11,185 and then formed a sideway channel, with support near $10,800. In order to continue with the bullish trend, the price needs to stay above the current support and break the new resistance at $11,200. Due to the low volatility in the past 2 weeks, the BTC price is not expected to reach $12,000 within this week. Review of the week： The CEO of Elitium published an article on Cointelegraph, expressing his views on the future of DeFi. As mentioned in the article, DeFi is the next evolution of the financial system, but there are many factors that affect the future of DeFi. For example, one is Ethereum 2.0 and its attempt to solve the scalability of Ethereum. Its success or failure will affect everything related to the Ethereum blockchain. Another factor is the response of banks and regulators to DeFi. Currently, DeFi must supervise itself as an industry. It must act in an ethical manner and develop solutions, such as insurance, to protect people. Unless we develop and meet these standards, DeFi will not be able to compete with traditional banking systems. There is also that practitioners in crypto industry should educate the public about DeFi and help them understand why this new technology can benefit people’s daily lives. In addition, DeFi alone is unlikely to be adopted on a large scale. Some people simply don’t want to deal with completely decentralized technology. Disclaimer: The above market commentary is based on technical analysis using historical pricing data, and is for reference only. It does not serve as investment or trading advice. https://preview.redd.it/zmek7j3r3ho51.jpg?width=260&format=pjpg&auto=webp&s=b2b622d2539e6d78480755a5598618e316db86d1
The Next Crypto Wave: The Rise of Stablecoins and its Entry to the U.S. Dollar Market
Author: Christian Hsieh, CEO of Tokenomy This paper examines some explanations for the continual global market demand for the U.S. dollar, the rise of stablecoins, and the utility and opportunities that crypto dollars can offer to both the cryptocurrency and traditional markets. The U.S. dollar, dominant in world trade since the establishment of the 1944 Bretton Woods System, is unequivocally the world’s most demanded reserve currency. Today, more than 61% of foreign bank reserves and nearly 40% of the entire world’s debt is denominated in U.S. dollars1. However, there is a massive supply and demand imbalance in the U.S. dollar market. On the supply side, central banks throughout the world have implemented more than a decade-long accommodative monetary policy since the 2008 global financial crisis. The COVID-19 pandemic further exacerbated the need for central banks to provide necessary liquidity and keep staggering economies moving. While the Federal Reserve leads the effort of “money printing” and stimulus programs, the current money supply still cannot meet the constant high demand for the U.S. dollar2. Let us review some of the reasons for this constant dollar demand from a few economic fundamentals.
Demand for U.S. Dollars
Firstly, most of the world’s trade is denominated in U.S. dollars. Chief Economist of the IMF, Gita Gopinath, has compiled data reflecting that the U.S. dollar’s share of invoicing was 4.7 times larger than America’s share of the value of imports, and 3.1 times its share of world exports3. The U.S. dollar is the dominant “invoicing currency” in most developing countries4. https://preview.redd.it/d4xalwdyz8p51.png?width=535&format=png&auto=webp&s=9f0556c6aa6b29016c9b135f3279e8337dfee2a6 https://preview.redd.it/wucg40kzz8p51.png?width=653&format=png&auto=webp&s=71257fec29b43e0fc0df1bf04363717e3b52478f This U.S. dollar preference also directly impacts the world’s debt. According to the Bank of International Settlements, there is over $67 trillion in U.S. dollar denominated debt globally, and borrowing outside of the U.S. accounted for $12.5 trillion in Q1 20205. There is an immense demand for U.S. dollars every year just to service these dollar debts. The annual U.S. dollar buying demand is easily over $1 trillion assuming the borrowing cost is at 1.5% (1 year LIBOR + 1%) per year, a conservative estimate. https://preview.redd.it/6956j6f109p51.png?width=487&format=png&auto=webp&s=ccea257a4e9524c11df25737cac961308b542b69 Secondly, since the U.S. has a much stronger economy compared to its global peers, a higher return on investments draws U.S. dollar demand from everywhere in the world, to invest in companies both in the public and private markets. The U.S. hosts the largest stock markets in the world with more than $33 trillion in public market capitalization (combined both NYSE and NASDAQ)6. For the private market, North America’s total share is well over 60% of the $6.5 trillion global assets under management across private equity, real assets, and private debt investments7. The demand for higher quality investments extends to the fixed income market as well. As countries like Japan and Switzerland currently have negative-yielding interest rates8, fixed income investors’ quest for yield in the developed economies leads them back to the U.S. debt market. As of July 2020, there are $15 trillion worth of negative-yielding debt securities globally (see chart). In comparison, the positive, low-yielding U.S. debt remains a sound fixed income strategy for conservative investors in uncertain market conditions. Source: Bloomberg Last, but not least, there are many developing economies experiencing failing monetary policies, where hyperinflation has become a real national disaster. A classic example is Venezuela, where the currency Bolivar became practically worthless as the inflation rate skyrocketed to 10,000,000% in 20199. The recent Beirut port explosion in Lebanon caused a sudden economic meltdown and compounded its already troubled financial market, where inflation has soared to over 112% year on year10. For citizens living in unstable regions such as these, the only reliable store of value is the U.S. dollar. According to the Chainalysis 2020 Geography of Cryptocurrency Report, Venezuela has become one of the most active cryptocurrency trading countries11. The demand for cryptocurrency surges as a flight to safety mentality drives Venezuelans to acquire U.S. dollars to preserve savings that they might otherwise lose. The growth for cryptocurrency activities in those regions is fueled by these desperate citizens using cryptocurrencies as rails to access the U.S. dollar, on top of acquiring actual Bitcoin or other underlying crypto assets.
The Rise of Crypto Dollars
Due to the highly volatile nature of cryptocurrencies, USD stablecoin, a crypto-powered blockchain token that pegs its value to the U.S. dollar, was introduced to provide stable dollar exposure in the crypto trading sphere. Tether is the first of its kind. Issued in 2014 on the bitcoin blockchain (Omni layer protocol), under the token symbol USDT, it attempts to provide crypto traders with a stable settlement currency while they trade in and out of various crypto assets. The reason behind the stablecoin creation was to address the inefficient and burdensome aspects of having to move fiat U.S. dollars between the legacy banking system and crypto exchanges. Because one USDT is theoretically backed by one U.S. dollar, traders can use USDT to trade and settle to fiat dollars. It was not until 2017 that the majority of traders seemed to realize Tether’s intended utility and started using it widely. As of April 2019, USDT trading volume started exceeding the trading volume of bitcoina12, and it now dominates the crypto trading sphere with over $50 billion average daily trading volume13. https://preview.redd.it/3vq7v1jg09p51.png?width=700&format=png&auto=webp&s=46f11b5f5245a8c335ccc60432873e9bad2eb1e1 An interesting aspect of USDT is that although the claimed 1:1 backing with U.S. dollar collateral is in question, and the Tether company is in reality running fractional reserves through a loose offshore corporate structure, Tether’s trading volume and adoption continues to grow rapidly14. Perhaps in comparison to fiat U.S. dollars, which is not really backed by anything, Tether still has cash equivalents in reserves and crypto traders favor its liquidity and convenience over its lack of legitimacy. For those who are concerned about Tether’s solvency, they can now purchase credit default swaps for downside protection15. On the other hand, USDC, the more compliant contender, takes a distant second spot with total coin circulation of $1.8 billion, versus USDT at $14.5 billion (at the time of publication). It is still too early to tell who is the ultimate leader in the stablecoin arena, as more and more stablecoins are launching to offer various functions and supporting mechanisms. There are three main categories of stablecoin: fiat-backed, crypto-collateralized, and non-collateralized algorithm based stablecoins. Most of these are still at an experimental phase, and readers can learn more about them here. With the continuous innovation of stablecoin development, the utility stablecoins provide in the overall crypto market will become more apparent.
In addition to trade settlement, stablecoins can be applied in many other areas. Cross-border payments and remittances is an inefficient market that desperately needs innovation. In 2020, the average cost of sending money across the world is around 7%16, and it takes days to settle. The World Bank aims to reduce remittance fees to 3% by 2030. With the implementation of blockchain technology, this cost could be further reduced close to zero. J.P. Morgan, the largest bank in the U.S., has created an Interbank Information Network (IIN) with 416 global Institutions to transform the speed of payment flows through its own JPM Coin, another type of crypto dollar17. Although people argue that JPM Coin is not considered a cryptocurrency as it cannot trade openly on a public blockchain, it is by far the largest scale experiment with all the institutional participants trading within the “permissioned” blockchain. It might be more accurate to refer to it as the use of distributed ledger technology (DLT) instead of “blockchain” in this context. Nevertheless, we should keep in mind that as J.P. Morgan currently moves $6 trillion U.S. dollars per day18, the scale of this experiment would create a considerable impact in the international payment and remittance market if it were successful. Potentially the day will come when regulated crypto exchanges become participants of IIN, and the link between public and private crypto assets can be instantly connected, unlocking greater possibilities in blockchain applications. Many central banks are also in talks about developing their own central bank digital currency (CBDC). Although this idea was not new, the discussion was brought to the forefront due to Facebook’s aggressive Libra project announcement in June 2019 and the public attention that followed. As of July 2020, at least 36 central banks have published some sort of CBDC framework. While each nation has a slightly different motivation behind its currency digitization initiative, ranging from payment safety, transaction efficiency, easy monetary implementation, or financial inclusion, these central banks are committed to deploying a new digital payment infrastructure. When it comes to the technical architectures, research from BIS indicates that most of the current proofs-of-concept tend to be based upon distributed ledger technology (permissioned blockchain)19. https://preview.redd.it/lgb1f2rw19p51.png?width=700&format=png&auto=webp&s=040bb0deed0499df6bf08a072fd7c4a442a826a0 These institutional experiments are laying an essential foundation for an improved global payment infrastructure, where instant and frictionless cross-border settlements can take place with minimal costs. Of course, the interoperability of private DLT tokens and public blockchain stablecoins has yet to be explored, but the innovation with both public and private blockchain efforts could eventually merge. This was highlighted recently by the Governor of the Bank of England who stated that “stablecoins and CBDC could sit alongside each other20”. One thing for certain is that crypto dollars (or other fiat-linked digital currencies) are going to play a significant role in our future economy.
There is never a dull moment in the crypto sector. The industry narratives constantly shift as innovation continues to evolve. Twelve years since its inception, Bitcoin has evolved from an abstract subject to a familiar concept. Its role as a secured, scarce, decentralized digital store of value has continued to gain acceptance, and it is well on its way to becoming an investable asset class as a portfolio hedge against asset price inflation and fiat currency depreciation.Stablecoins have proven to be useful as proxy dollars in the crypto world, similar to how dollars are essential in the traditional world. It is only a matter of time before stablecoins or private digital tokens dominate the cross-border payments and global remittances industry. There are no shortages of hypes and experiments that draw new participants into the crypto space, such as smart contracts, new blockchains, ICOs, tokenization of things, or the most recent trends on DeFi tokens. These projects highlight the possibilities for a much more robust digital future, but the market also needs time to test and adopt. A reliable digital payment infrastructure must be built first in order to allow these experiments to flourish. In this paper we examined the historical background and economic reasons for the U.S. dollar’s dominance in the world, and the probable conclusion is that the demand for U.S. dollars will likely continue, especially in the middle of a global pandemic, accompanied by a worldwide economic slowdown. The current monetary system is far from perfect, but there are no better alternatives for replacement at least in the near term. Incremental improvements are being made in both the public and private sectors, and stablecoins have a definite role to play in both the traditional and the new crypto world. Thank you. Reference:  How the US dollar became the world’s reserve currency, Investopedia  The dollar is in high demand, prone to dangerous appreciation, The Economist  Dollar dominance in trade and finance, Gita Gopinath  Global trades dependence on dollars, The Economist & IMF working papers  Total credit to non-bank borrowers by currency of denomination, BIS  Biggest stock exchanges in the world, Business Insider  McKinsey Global Private Market Review 2020, McKinsey & Company  Central banks current interest rates, Global Rates  Venezuela hyperinflation hits 10 million percent, CNBC  Lebanon inflation crisis, Reuters  Venezuela cryptocurrency market, Chainalysis  The most used cryptocurrency isn’t Bitcoin, Bloomberg  Trading volume of all crypto assets, coinmarketcap.com  Tether US dollar peg is no longer credible, Forbes  New crypto derivatives let you bet on (or against) Tether’s solvency, Coindesk  Remittance Price Worldwide, The World Bank  Interbank Information Network, J.P. Morgan  Jamie Dimon interview, CBS News  Rise of the central bank digital currency, BIS  Speech by Andrew Bailey, 3 September 2020, Bank of England
BTC/USD hourly chart The Bitcoin price had low volatility ever since it dropped from $12,000 to $10,000. There was buying activity as the price tested the $10,000 support multiple times. The BTC price rose slowly to $10,600 but was met with resistance, and is settling at around $10,300 without a strong sense of direction. In order to resume the bullish trend, the BTC price needs to build up the momentum to break the $10,600 resistance, as well as staying above $10,200. The support remains at $10,000. A break below this level would indicate a downturn and could test $9,000. Review of the week： Jay Hao, OKEx CEO, shared his views on DeFi that the decentralized finance space has grown exponentially over the last few months, to the point where more than $9 billion worth of crypto assets were locked in its protocols before crypto prices started dropping. This exponential growth in the last few months appears to be mainly related to a yield farming trend that started when lending protocol Compound began distributing its COMP governance token to users who interacted with the protocol. Yield farming or liquidity mining allows DeFi users to generate rewards with their cryptocurrency holdings by interacting with protocols that distribute governance tokens. Farming yield can be a profitable venture on its own, but the tokens being farmed often see their price surge as well (YFI and YFII’s success). Meanwhile, there are various risks that aren’t immediately clear (YAM’s unaudited protocols and SUSHI’s scam) Diversification is very often recommended by investors because not “putting all your eggs in one basket” helps ensure you don’t lose everything to scams, unexpected market moves or technical issues, and invest in potential gems while it’s still early. Disclaimer: The above market commentary is based on technical analysis using historical pricing data, and is for reference only. It does not serve as investment or trading advice. https://preview.redd.it/d8fnjquhr2n51.jpg?width=260&format=pjpg&auto=webp&s=2f07c65be29ed63da2d7fb564833f919fc74243b
the year 2020 in Bitcoin Cash so far: a detailed history
the year 2020 in Bitcoin Cash so far: a detailed history What follows at the bottom is a four page long chronological overview of what happened in BCH in 2020 so far. To make it more digestable and fun to read I start with my narrating of the story. My attempt was to remain as objective as possible and "let the facts speak for themselve" with everything sourced. I also link to manyread.casharticles, the decision of which are the important ones to include is certainly not easy, I count on the rest of the community if I overlooked anything important. summary & my narrating of the story: The year started out relatively calm, with cashfusion in "the news" and an older ongoing controversy between Amaury and Roger Ver being worked out. Starting Jan 22nd all debate broke loose with the announcement of “Infrastructure Funding Plan for Bitcoin Cash” by Jiang Zhuoer of BTC.TOP. To illustrate this point 2 days later coinspice ran the title " Roger Ver Praises Vigorous Debate, [...]" and 6 days, less than a week, later Chris Pacia made a read.cash post titled "The 253rd "Thoughts on developer funding" Article" which might have been only a slight exaggeration or he might have been counting. Part of the reason of the tsunami was the lack of worked out details. By the time of Pacia's post a lot had changed: Both BU, Bitcoin Verde and a group of miners had made announcements not to go along with "the plan". On feb 1st, the second version of the IFP was announced by Jiang Zhuoer in a post “BCH miner donation plan update”. Two weeks later on Feb 15th, the third iteration was announced by Bitcoin ABC which was to be activated by hashrate voting and on the same day Flipstarter was introduced, a sign of the search for alternative solutions. After a few more days and a few more people coming out more against the IFP (including Jonald Fyookball, Mark Lundeberg & Josh Ellithorpe), BCHN was announced on feb 20th with a formal release a week later. Also feb 27th, the DAA was brought back into the conversation by Jonathan Toomim with his " The BCH difficulty adjustment algorithm is broken. Here's how to fix it." video. By early march the IFP was effectively dead with its author Jiang Zhuoer vowing to vote against it. This became clear to everyone when ABC, a day later sudddenly shifted gears towards non-protocol, donation based funding: the IFP was dead. End march ABCs 2020 Business Plan was announced as a way to raise $3.3 million. Mid april to mid may was the high time for voluntary funding with four node implementations and General Protocols, a BCH DeFi Startup successfully raising funds. By May 15th, the 6th HF network upgrade things had pretty much cooled down. The upgraded included nothing controversial and even saw an unexpected doubling in the unconfirmed transaction chain. June 15th a month later things started to heat up again with the BCHN announcement to remove the "poison pill" or "automatic replay protection". 8th Jul Jonathan Toomim posted "BCH protocol upgrade proposal: Use ASERT as the new DAA" which promised the solution to the long dragging DAA problem. Jul 23th however an unexpected twist occurred when Amaury Séchet posted "Announcing the Grasberg DAA" an incompatible, alternative solution. This, again, sparked a ton of debate and discussion. Grasberg lasted just two weeks from Jul 23th to Aug 6th when ABC announced its plans for the november 2020 upgrade but it had successfully united the opposition in the meanwhile. ABCs plan for november included dropping grasberg in favour of aserti3–2d and introducing IFPv4. Now we're here August 8th, the IFP which was declared dead after just over a month (Jan 22-Mar 5) is now back in full force. The rest of the history is still being written but if p2p electronic cash is to succeed in any big regard it's very thinkable that these events will get into history books. Important resources:coinspice IFP timeline&Compiled list of BCH Miner Dev Fund posts, articles, discussions History Jan 13th : “Do CoinJoins Really Require Equal Transaction Amounts for Privacy? Part One: CashFusion” article by BitcoinMagazine [source] Jan 13th : “Clearing the Way for Cooperation” Read.cash article by Amaury Séchet [source] on the controversy with Roger Ver about the amount of donations over the years Jan 22nd : “Infrastructure Funding Plan for Bitcoin Cash” IFPv1 announced by Jiang Zhuoer of BTC.TOP [source] IFPv1: 12.5% of BCH coinbase rewards which will last for 6 months through a Hong Kong-based corporation & to be activated on May 15th Jan 22nd : ”Bitcoin Cash Developers React to Infrastructure Fund Announcement: Cautiously Optimistic” coinspice article including Amaury Séchet, Antony Zegers, Jonald Fyookball & Josh Ellithorpe [source] Jan 23rd : Jiang Zhuoer reddit AMA [source] [coinspice article] Jan 23rd : Vitalik weighs in with his take on twitter [source] Jan 23rd :” On the infrastructure funding plan for Bitcoin Cash” article by Amaury Séchet [source] [coinspice article] in which he proposed to place control of the IFP key in his hands together with Jonald Fyookball and Antony Zegers. . A group of 7 to 12 miners, developers, and businessmen in total would get an advisory function. Jan 24th : “Bitcoin.com's Clarifications on the Miner Development Fund“ which emphasizes, among other things, the temporary and reversible nature of the proposal [source] [coinspice article] Jan 24th : “Little Known (But Important!) Facts About the Mining Plan” Read.cash article by Jonald Fyookball in which he defended the IFP and stressed its necessity and temporary nature. Jan 25th : massive amounts of public debate as documented by coinspice [coinspice article] with Justin Bons, Tobias Ruck and Antony Zegers explaining their take on it. Jan 26th : public debate continues: “Assessment and proposal re: the Bitcoin Cash infrastructure funding situation” Read.cash article by imaginary_username [source] which was noteworthy in part because the post earned over Earns $1,000+ in BCH [coinspice article] and “The Best Of Intentions: The Dev Tax Is Intended to Benefit Investors But Will Corrupt Us Instead” by Peter Rizun [source] Jan 27th : “We are a group of miners opposing the BTC.TOP proposal, here's why” article on Read.cash [source] [reddit announcement] Jan 27th : Bitcoin Unlimited's BUIP 143: Refuse the Coinbase Tax [source][reddit announcement] Jan 28th : “Bitcoin Verde's Response to the Miner Sponsored Development Fund” read.cash article by Josh Green in which he explains “Bitcoin Verde will not be implementing any node validation that enforces new coinbase rules.” [source] Jan 28th : “Update on Developer Funding” read.cash article from Bitcoin.com [source] in which they state “As it stands now, Bitcoin.com will not go through with supporting any plan unless there is more agreement in the ecosystem such that the risk of a chain split is negligible.” And that “any funding proposal must be temporary and reversible.” This announcement from bitcoin.com and their mining pool lead the anonymous opposition miners to stand down. [source] Jan 28th : The 253rd "Thoughts on developer funding" Article – by Chris Pacia, to tackle the “serious misconceptions in the community about how software development works”. He ends on a note of support for the IFP because of lack of realistic alternatives. [source] Feb 1st: “BCH miner donation plan update” IFPv2 announced by Jiang Zhuoer of BTC.TOP [source] Which changes the donation mechanism so miners directly send part of their coinbase to the projects they wants to donate to. It would be activated with hashrate voting over a 3-month period with a 2/3 in favour requirement. The proposal also introduces a pilot period and a no donation option, Jiang Zhuoer also says he regards 12.% as too much. Feb 7th: Group of BCH miners led by AsicSeer voice scepticism about the IFP during a reddit AMA [source] Feb 15th: “On the Miner Infrastructure Funding Plan” article by Bitcoin ABC [source] In which they announce they will implement IFPv3 in their upcoming 0.21.0 release. This version has amount reduced to 5% of block reward and will go in effect with BIP 9 hashratevoting and a whitelist with different projects. Feb 15th : “Introducing Flipstarter” [source] Feb 16th :” Bitcoin.com’s stance on the recent block reward diversion proposals” video by Roger Ver on the Bitcoin.com Official Channel. [source] > Ver called Zhuoer’s IFP “clever” but ultimately “problematic.” [coinspice article] Feb 16th :” BCH miner donation plan update again” read.cash article by Jiang Zhuoer of BTC.TOP [source] In which he briefly outlines the details of IFPv3 Feb 17th : “Latest Thoughts On Infrastructure Mining Plan” post by Jonald Fyookball [source] Feb 17th : “Regarding the Bitcoin Cash Infrastructure Funding Plan, I am certain now that it should be scrapped immediately.” tweet by Mark Lundeberg [source] Feb 19th : “Thoughts on the IFP - A Dev Perspective“ read.cash article by Josh Ellithorpe [source] Feb 20th : “Bitcoin Cash Node” post announcing the new node implementation [source] Feb 20th : First “Bitcoin Cash Developer Meeting” After IFP Proposal [source] Feb 24th : “Flipstarter 500k, 6 independent campaigns” post announcing the goal to “fund the BCH ecosystem with 6 independent campaigns and an overall 500,000 USD target” [source] Feb 27th : BCHN Formally Released [source] Feb 27th : “The BCH difficulty adjustment algorithm is broken. Here's how to fix it.” Video by Jonathan Toomim [source] Mar 3th :” Bitcoin Cash Node 2020: plans for May upgrade and beyond” post by BCHN [source] Mar 4th :”Author of the Bitcoin Cash IFP [Jiang Zhuoer] Vows to Vote Against It, Using Personal Hash in Opposition” [source] Mar 5th :Bitcoin ABC announces their 2020 Business Plan Fundraising for later in march [source] Mar 15th : “EatBCH campaign funded! Next: node campaigns.” campaign funded after 11 hours [source] Mar 30th : Bitcoin ABC 2020 Business Plan [source] $3.3 Million Fundraiser [source] Apr 17th : Five flipstarter node campaign launched. [source] Apr 26th : BCHN flipstarter campaign successfully funded. [source] Apr 27th : VERDE flipstarter campaign successfully funded. [source] May 4th : KNUTH flipstarter campaign successfully funded. [source] May 7th : “BCH DeFi Startup General Protocols Raises Over $1 mil“ [source] May 8th : BCHD flipstarter campaign successfully funded. [source] May 9th : Deadline for node campaigns, ABC flipstarter campaign not funded. [source] May 14th : “With IFP Defeated, Bitcoin ABC, ViaBTC & CoinEX CEO Publicly Consider a Bitcoin Cash Foundation” [source] May 15th : deadline for ABC fundraiser campaign, ends at 55% completed. [source] May 15th : 6th HF network upgrade -> new opcode op_Reversebytes, increased of the chained transaction limit from 25 to 50, and the improved counting of signature operations using the new “Sigchecks” implementation [source] with the “Controversial Funding Plan Rejected by Miners” [source] May 25th : “Announcing the SLP Foundation” [source] Jun 15st : “BCHN lead maintainer report 2020-06-15” announcement to remove the Automatic Replay Protection (a.k.a. the Poison Pill) from BCHN in november [source] Jun 16st : “So [BCHN] is going to fork off from BCH at the next upgrade. Same old story. […]” tweeted Vin Armani [source] Jun 21st : “Why Automatic Replay Protection Exists” post by Shammah Chancellor [source] Jul 7th : “The Popular Stablecoin Tether Is Now Circulating on the Bitcoin Cash Network” [source] Jul 8th : “BCH protocol upgrade proposal: Use ASERT as the new DAA” post by Jonathan Toomim [source] Jul 18th : “$6M Worth of Tether on the Bitcoin Cash Chain Highlights the Benefits of SLP Tokens” [source] Jul 23th : “Announcing the Grasberg DAA” post by Amaury Séchet[source] Jul 24th : “Thoughts on Grasberg DAA” post by Mark Lundeberg [source] Jul 29th : CashFusion security audit has been completed [source] Jul 31st : Electron Cash 4.1.0 release with CashFusion support [source] 4th year, august 2020 – 2021 Aug 1st : “Bitcoin Cash: Scaling the Globe“ Online conference for ForkDay Celebration [source] Aug 2nd : >“Is there going to be a fork between ABC and BCHN?” > “IMO it is very likely. If not in November, then next May.” – Amaury Séchet Aug 3rd : “Dark secrets of the Grasberg DAA” post by Jonathan Toomim [source] Aug 3rd : “Joint Statement On aserti3-2d Algorithm“ post by General Protocols, including Cryptophyl, Read.cash, Software Verde & SpinBCH [source] Aug 3rd : Knuth announces they will be implementing aserti3-2d as DAA for november. [source] Aug 3rd : Amaury rage quit from the developer call [source] Aug 4th : “But why do people care about compensating for historical drift? Seems like a tiny problem and if it's causing this much social discord it seems not even worth bothering to try to fix.” Tweet by Vitalik [source] Aug 5th : “Bitcoin Cash (BCH) November 2020 Upgrade statement” signed by BCHD, electron cash, VERDE, BU members, BCHN developers, Jonathan Toomim, Mark B. Lundeberg and many others [source] Aug 5th : “BCHN FAQ on November 2020 Bitcoin Cash network upgrade” [source] Aug 6th : “Bitcoin ABC’s plan for the November 2020 upgrade” [source] the announcement that they will drop Grasberg in favour of aserti3–2d (ASERT) and will also include FPv4 in which 8% of the blockreward goes to ABC as development funding. Aug 7th : “Joint Statement from BCH Miners regarding Bitcoin ABC and the November 2020 BCH Upgrade.” Read.cash article by asicseer [source] stating “Over recent months, most miners and pools have switched to BCHN, and presently operate a majority of BCH hashrate.” Aug 7th : “Simple Ledger Protocol's Joint Statement Regarding Bitcoin ABC on BCH's November 2020 Upgrade” read.cash post by the SLP-Foundation [source]
‘Time to go up’ — Bitcoin price due for a push to $100,000, says PlanB
This post was originally published on this siteThis post was originally published on this siteIt’s high time for Bitcoin (BTC) to begin its next significant price rise, the creator of one of the best-known BTC price models says. In a tweet on Sep. 14, quant analyst PlanB highlighted increasing signs that BTC/USD is due to repeat historical gains. PlanB on BTC price: […]
How To End The Cryptocurrency Exchange "Wild West" Without Crippling Innovation
In case you haven't noticed the consultation paper, staff notice, and report on Quadriga, regulators are now clamping down on Canadian cryptocurrency exchanges. The OSC and other regulatory bodies are still interested in industry feedback. They have not put forward any official regulation yet. Below are some ideas/insights and a proposed framework.
Typical securities frameworks will cost Canadians millions of dollars (ie Sarbanes-Oxley estimated at $5m USD/yr per firm). Implementation costs of this proposal are significantly cheaper.
Canadians can maintain a diverse set of exchanges, multiple viable business models are still fully supported, and innovation is encouraged while keeping Canadians safe.
Many of you have limited time to read the full proposal, so here are the highlights:
Effective standards to prevent both internal and external theft. Exchange operators are trained and certified, and have a legal responsibility to users.
Regular Transparent Audits
Provides visibility to Canadians that their funds are fully backed on the exchange, while protecting privacy and sensitive platform information.
Establishment of basic insurance standards/strategy, to expand over time. Removing risk to exchange users of any hot wallet theft.
Background and Justifications
Cold Storage Custody/Management After reviewing close to 100 cases, all thefts tend to break down into more or less the same set of problems: • Funds stored online or in a smart contract, • Access controlled by one person or one system, • 51% attacks (rare), • Funds sent to the wrong address (also rare), or • Some combination of the above. For the first two cases, practical solutions exist and are widely implemented on exchanges already. Offline multi-signature solutions are already industry standard. No cases studied found an external theft or exit scam involving an offline multi-signature wallet implementation. Security can be further improved through minimum numbers of signatories, background checks, providing autonomy and legal protections to each signatory, establishing best practices, and a training/certification program. The last two transaction risks occur more rarely, and have never resulted in a loss affecting the actual users of the exchange. In all cases to date where operators made the mistake, they've been fully covered by the exchange platforms. • 51% attacks generally only occur on blockchains with less security. The most prominent cases have been Bitcoin Gold and Ethereum Classic. The simple solution is to enforce deposit limits and block delays such that a 51% attack is not cost-effective. • The risk of transactions to incorrect addresses can be eliminated by a simple test transaction policy on large transactions. By sending a small amount of funds prior to any large withdrawals/transfers as a standard practice, the accuracy of the wallet address can be validated. The proposal covers all loss cases and goes beyond, while avoiding significant additional costs, risks, and limitations which may be associated with other frameworks like SOC II. On The Subject of Third Party Custodians Many Canadian platforms are currently experimenting with third party custody. From the standpoint of the exchange operator, they can liberate themselves from some responsibility of custody, passing that off to someone else. For regulators, it puts crypto in similar categorization to oil, gold, and other commodities, with some common standards. Platform users would likely feel greater confidence if the custodian was a brand they recognized. If the custodian was knowledgeable and had a decent team that employed multi-sig, they could keep assets safe from internal theft. With the right protections in place, this could be a great solution for many exchanges, particularly those that lack the relevant experience or human resources for their own custody systems. However, this system is vulnerable to anyone able to impersonate the exchange operators. You may have a situation where different employees who don't know each other that well are interacting between different companies (both the custodian and all their customers which presumably isn't just one exchange). A case study of what can go wrong in this type of environment might be Bitpay, where the CEO was tricked out of 5000 bitcoins over 3 separate payments by a series of emails sent legitimately from a breached computer of another company CEO. It's also still vulnerable to the platform being compromised, as in the really large $70M Bitfinex hack, where the third party Bitgo held one key in a multi-sig wallet. The hacker simply authorized the withdrawal using the same credentials as Bitfinex (requesting Bitgo to sign multiple withdrawal transactions). This succeeded even with the use of multi-sig and two heavily security-focused companies, due to the lack of human oversight (basically, hot wallet). Of course, you can learn from these cases and improve the security, but so can hackers improve their deception and at the end of the day, both of these would have been stopped by the much simpler solution of a qualified team who knew each other and employed multi-sig with properly protected keys. It's pretty hard to beat a human being who knows the business and the typical customer behaviour (or even knows their customers personally) at spotting fraud, and the proposed multi-sig means any hacker has to get through the scrutiny of 3 (or more) separate people, all of whom would have proper training including historical case studies. There are strong arguments both for and against using use of third party custodians. The proposal sets mandatory minimum custody standards would apply regardless if the cold wallet signatories are exchange operators, independent custodians, or a mix of both. On The Subject Of Insurance ShakePay has taken the first steps into this new realm (congratulations). There is no question that crypto users could be better protected by the right insurance policies, and it certainly feels better to transact with insured platforms. The steps required to obtain insurance generally place attention in valuable security areas, and in this case included a review from CipherTrace. One of the key solutions in traditional finance comes from insurance from entities such as the CDIC. However, historically, there wasn't found any actual insurance payout to any cryptocurrency exchange, and there are notable cases where insurance has not paid. With Bitpay, for example, the insurance agent refused because the issue happened to the third party CEO's computer instead of anything to do with Bitpay itself. With the Youbit exchange in South Korea, their insurance claim was denied, and the exchange ultimately ended up instead going bankrupt with all user's funds lost. To quote Matt Johnson in the original Lloyd's article: “You can create an insurance policy that protects no one – you know there are so many caveats to the policy that it’s not super protective.” ShakePay's insurance was only reported to cover their cold storage, and “physical theft of the media where the private keys are held”. Physical theft has never, in the history of cryptocurrency exchange cases reviewed, been reported as the cause of loss. From the limited information of the article, ShakePay made it clear their funds are in the hands of a single US custodian, and at least part of their security strategy is to "decline to confirm the custodian’s name on the record". While this prevents scrutiny of the custodian, it's pretty silly to speculate that a reasonably competent hacking group couldn't determine who the custodian is. A far more common infiltration strategy historically would be social engineering, which has succeeded repeatedly. A hacker could trick their way into ShakePay's systems and request a fraudulent withdrawal, impersonate ShakePay and request the custodian to move funds, or socially engineer their way into the custodian to initiate the withdrawal of multiple accounts (a payout much larger than ShakePay) exploiting the standard procedures (for example, fraudulently initiating or override the wallet addresses of a real transfer). In each case, nothing was physically stolen and the loss is therefore not covered by insurance. In order for any insurance to be effective, clear policies have to be established about what needs to be covered. Anything short of that gives Canadians false confidence that they are protected when they aren't in any meaningful way. At this time, the third party insurance market does not appear to provide adequate options or coverage, and effort is necessary to standardize custody standards, which is a likely first step in ultimately setting up an insurance framework. A better solution compared to third party insurance providers might be for Canadian exchange operators to create their own collective insurance fund, or a specific federal organization similar to the CDIC. Such an organization would have a greater interest or obligation in paying out actual cases, and that would be it's purpose rather than maximizing it's own profit. This would be similar to the SAFU which Binance has launched, except it would cover multiple exchanges. There is little question whether the SAFU would pay out given a breach of Binance, and a similar argument could be made for a insurance fund managed by a collective of exchange operators or a government organization. While a third party insurance provider has the strong market incentive to provide the absolute minimum coverage and no market incentive to payout, an entity managed by exchange operators would have incentive to protect the reputation of exchange operators/the industry, and the government should have the interest of protecting Canadians. On The Subject of Fractional Reserve There is a long history of fractional reserve failures, from the first banks in ancient times, through the great depression (where hundreds of fractional reserve banks failed), right through to the 2008 banking collapse referenced in the first bitcoin block. The fractional reserve system allows banks to multiply the money supply far beyond the actual cash (or other assets) in existence, backed only by a system of debt obligations of others. Safely supporting a fractional reserve system is a topic of far greater complexity than can be addressed by a simple policy, and when it comes to cryptocurrency, there is presently no entity reasonably able to bail anyone out in the event of failure. Therefore, this framework is addressed around entities that aim to maintain 100% backing of funds. There may be some firms that desire but have failed to maintain 100% backing. In this case, there are multiple solutions, including outside investment, merging with other exchanges, or enforcing a gradual restoration plan. All of these solutions are typically far better than shutting down the exchange, and there are multiple cases where they've been used successfully in the past. Proof of Reserves/Transparency/Accountability Canadians need to have visibility into the backing on an ongoing basis. The best solution for crypto-assets is a Proof of Reserve. Such ideas go back all the way to 2013, before even Mt. Gox. However, no Canadian exchange has yet implemented such a system, and only a few international exchanges (CoinFloor in the UK being an example) have. Many firms like Kraken, BitBuy, and now ShakePay use the Proof of Reserve term to refer to lesser proofs which do not actually cryptographically prove the full backing of all user assets on the blockchain. In order for a Proof of Reserve to be effective, it must actually be a complete proof, and it needs to be understood by the public that is expected to use it. Many firms have expressed reservations about the level of transparency required in a complete Proof of Reserve (for example Kraken here). While a complete Proof of Reserves should be encouraged, and there are some solutions in the works (ie TxQuick), this is unlikely to be suitable universally for all exchange operators and users. Given the limitations, and that firms also manage fiat assets, a more traditional audit process makes more sense. Some Canadian exchanges (CoinSquare, CoinBerry) have already subjected themselves to annual audits. However, these results are not presently shared publicly, and there is no guarantee over the process including all user assets or the integrity and independence of the auditor. The auditor has been typically not known, and in some cases, the identity of the auditor is protected by a NDA. Only in one case (BitBuy) was an actual report generated and publicly shared. There has been no attempt made to validate that user accounts provided during these audits have been complete or accurate. A fraudulent fractional exchange, or one which had suffered a breach they were unwilling to publicly accept (see CoinBene), could easily maintain a second set of books for auditors or simply exclude key accounts to pass an individual audit. The proposed solution would see a reporting standard which includes at a minimum - percentage of backing for each asset relative to account balances and the nature of how those assets are stored, with ownership proven by the auditor. The auditor would also publicly provide a "hash list", which they independently generate from the accounts provided by the exchange. Every exchange user can then check their information against this public "hash list". A hash is a one-way form of encryption, which fully protects the private information, yet allows anyone who knows that information already to validate that it was included. Less experienced users can take advantage of public tools to calculate the hash from their information (provided by the exchange), and thus have certainty that the auditor received their full balance information. Easy instructions can be provided. Auditors should be impartial, their identities and process public, and they should be rotated so that the same auditor is never used twice in a row. Balancing the cost of auditing against the needs for regular updates, a 6 month cycle likely makes the most sense. Hot Wallet Management The best solution for hot wallets is not to use them. CoinBerry reportedly uses multi-sig on all withdrawals, and Bitmex is an international example known for their structure devoid of hot wallets. However, many platforms and customers desire fast withdrawal processes, and human validation has a cost of time and delay in this process. A model of self-insurance or separate funds for hot wallets may be used in these cases. Under this model, a platform still has 100% of their client balance in cold storage and holds additional funds in hot wallets for quick withdrawal. Thus, the risk of those hot wallets is 100% on exchange operators and not affecting the exchange users. Since most platforms typically only have 1%-5% in hot wallets at any given time, it shouldn't be unreasonable to build/maintain these additional reserves over time using exchange fees or additional investment. Larger withdrawals would still be handled at regular intervals from the cold storage. Hot wallet risks have historically posed a large risk and there is no established standard to guarantee secure hot wallets. When the government of South Korea dispatched security inspections to multiple exchanges, the results were still that 3 of them got hacked after the inspections. If standards develop such that an organization in the market is willing to insure the hot wallets, this could provide an acceptable alternative. Another option may be for multiple exchange operators to pool funds aside for a hot wallet insurance fund. Comprehensive coverage standards must be established and maintained for all hot wallet balances to make sure Canadians are adequately protected.
Current Draft Proposal
(1) Proper multi-signature cold wallet storage. (a) Each private key is the personal and legal responsibility of one person - the “signatory”. Signatories have special rights and responsibilities to protect user assets. Signatories are trained and certified through a course covering (1) past hacking and fraud cases, (2) proper and secure key generation, and (3) proper safekeeping of private keys. All private keys must be generated and stored 100% offline by the signatory. If even one private keys is ever breached or suspected to be breached, the wallet must be regenerated and all funds relocated to a new wallet. (b) All signatories must be separate background-checked individuals free of past criminal conviction. Canadians should have a right to know who holds their funds. All signing of transactions must take place with all signatories on Canadian soil or on the soil of a country with a solid legal system which agrees to uphold and support these rules (from an established white-list of countries which expands over time). (c) 3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7. (d) A security audit should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the audit will be made public. Canadians must be able to validate the right measures are in place to protect their funds. (e) There is a simple approval process if signatories wish to visit any country outside Canada, with a potential whitelist of exempt countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. All exchanges would be required to keep a compliant cold wallet for Canadian funds and have a Canadian office if they wish to serve Canadian customers. (2) Regular and transparent solvency audits. (a) An audit must be conducted at founding, after 3 months of operation, and at least once every 6 months to compare customer balances against all stored cryptocurrency and fiat balances. The auditor must be known, independent, and never the same twice in a row. (b) An audit report will be published featuring the steps conducted in a readable format. This should be made available to all Canadians on the exchange website and on a government website. The report must include what percentage of each customer asset is backed on the exchange, and how those funds are stored. (c) The auditor will independently produce a hash of each customer's identifying information and balance as they perform the audit. This will be made publicly available on the exchange and government website, along with simplified instructions that each customer can use to verify that their balance was included in the audit process. (d) The audit needs to include a proof of ownership for any cryptocurrency wallets included. A satoshi test (spending a small amount) or partially signed transaction both qualify. (e) Any platform without 100% reserves should be assessed on a regular basis by a government or industry watchdog. This entity should work to prevent any further drop, support any private investor to come in, or facilitate a merger so that 100% backing can be obtained as soon as possible. (3) Protections for hot wallets and transactions. (a) A standardized list of approved coins and procedures will be established to constitute valid cold storage wallets. Where a multi-sig process is not natively available, efforts will be undertaken to establish a suitable and stable smart contract standard. This list will be expanded and improved over time. Coins and procedures not on the list are considered hot wallets. (b) Hot wallets can be backed by additional funds in cold storage or an acceptable third-party insurance provider with a comprehensive coverage policy. (c) Exchanges are required to cover the full balance of all user funds as denominated in the same currency, or double the balance as denominated in bitcoin or CAD using an established trading rate. If the balance is ever insufficient due to market movements, the firm must rectify this within 24 hours by moving assets to cold storage or increasing insurance coverage. (d) Any large transactions (above a set threshold) from cold storage to any new wallet addresses (not previously transacted with) must be tested with a smaller transaction first. Deposits of cryptocurrency must be limited to prevent economic 51% attacks. Any issues are to be covered by the exchange. (e) Exchange platforms must provide suitable authentication for users, including making available approved forms of two-factor authentication. SMS-based authentication is not to be supported. Withdrawals must be blocked for 48 hours in the event of any account password change. Disputes on the negligence of exchanges should be governed by case law.
Continued review of existing OSC feedback is still underway. More feedback and opinions on the framework and ideas as presented here are extremely valuable. The above is a draft and not finalized. The process of further developing and bringing a suitable framework to protect Canadians will require the support of exchange operators, legal experts, and many others in the community. The costs of not doing such are tremendous. A large and convoluted framework, one based on flawed ideas or implementation, or one which fails to properly safeguard Canadians is not just extremely expensive and risky for all Canadians, severely limiting to the credibility and reputation of the industry, but an existential risk to many exchanges. The responsibility falls to all of us to provide our insight and make our opinions heard on this critical matter. Please take the time to give your thoughts.
09-07 17:55 - 'Bitcoin Market— Week of 09/07/2020' (self.Bitcoin) by /u/Coinviva removed from /r/Bitcoin within 573-583min
''' [ ]1 BTC/USD hourly chart The Bitcoin price had a volatile week, which started off with reaching $12,000 and then quickly dived to $10,000 within 2 days, as the stock market experienced a big drop in the beginning of September. The BTC price settled at around $10,250 the moment. As seen in the hourly chart, a sideway channel has formed and there is some support at $10,000, possibly due to profit taking by the short sellers. If the BTC price becomes volatile again and drops below $10,000, it would indicate a bearish market and could test the next support level, which is at $9,000. Disclaimer: The above market commentary is based on technical analysis using historical pricing data, and is for reference only. It does not serve as investment or trading advice. [link]2 ''' Bitcoin Market— Week of 09/07/2020 Go1dfish undelete link unreddit undelete link Author: Coinviva 1: *re*i*w.r**d.it/fjy*27*tool51.png?wid*h*1149*amp;f*rm*t**n*&*auto=web*&a**;*=03b3c8782*08*072f*318f48*d1*56c*4*d0***b 2: p*eview.*edd*it/*6*ytzb*p*l*1.*p**width*260*am*;*orma*=*jpg&*mp*auto*web*&a*p;s=b9*42f50*f8f**0f4e76efdb96**e0dbee7*b*a3 Unknown links are censored to prevent spreading illicit content.
The end of faith in the dollar and the beginning of digitalization
Hello. 🤗 Today we will tell you about the fall of faith in the dollar. 💵 The US dollar is considered a symbol of reliability, security, and economic prosperity. It has held an undeniable dominant position in the international financial system since the mid-20th century and comes across as an invincible titan. 📉 However, the era of the dollar's dominance as the world's main reserve currency is slowly coming to an end. The largest banks predict a sharp decline for him next year, and the famous economist Stephen Roach is confident that the American currency may depreciate by a third. 📉 The dollar is losing its dominant position in world markets. “Political leaders who once recognized the dollar's hegemony, on the contrary, are abandoning it,” Bloomberg writes. 📉 Political leaders say openly that the time has come to reduce dependence on the American currency. In particular, the EU, Russia, and China are discussing the creation of a payment system to bypass the next US sanctions against Iran. 📉 Economists interviewed by the publication point to the similarity of the current situation with 1985 and 2002, when there was a decrease in the flow of foreign investment and a weakening of the American currency. 📈 The USD continues to decline amid low rates in the US, while the price of the main digital coin has tripled since March. In the last month, an inverse correlation has appeared between USD and BTC. In the second half of 2020, the US economy will face problems, which may have a positive effect on the quotes of digital money. 📌 “Limiting emissions is an important factor that unites gold and Bitcoin, allowing these instruments to be potentially defensive assets against inflation. Gold has historically proved its applicability, but if it was logical for the older generation to buy gold as a protection against inflation, then it is easier for the modern generation to buy Bitcoin than gold, ”explained Anton Kravchenko, CEO of Xena Financial Systems. 💰 Several countries, including China, are already developing and testing their own digital currencies. The age of digitalization of finance has come. 🔥 Step into the digital age of finance with BITLEVEX ➡️ bitlevex.com https://preview.redd.it/hvrlxr9fmom51.png?width=1920&format=png&auto=webp&s=8ab2f4c08234fa7131ebe35525c3bdf6bfbcc166
09-03 06:47 - 'Bitcoin Market— Week of 08/31/2020' (self.Bitcoin) by /u/Coinviva removed from /r/Bitcoin within 4179-4189min
''' [ BTC/USD hourly chart ]1 Last week, the Bitcoin price bounced to $11,847, which formed a lower high compared to the previous week. It then dipped to $11,137 and formed a double bottom two days later. It slowly climbed to $11,600 and resumed the upward trend after breaking the resistance at $11,600. The current price is at $11,724. If the BTC price is able to hold above $11,600, it has a chance to break above the previous high at $11,847 and test $12,000 again. The chart indicates that there is a strong support near $11,150 where the double bottom pattern was formed. Review of the week： Hayden Adams, the founder of the decentralized trading protocol Uniswap, tweeted that Uniswap’s 24-hour trading volume was higher than Coinbase for the first time in history. Uniswap’s 24-hour trading volume was US$426 million while Coinbase Pro’s 24-hour trading volume was US$348 million. Crypto analyst Joseph Young commented that it is unbelievable that who would have thought a year ago that a decentralized exchange (DEX) would exceed the trading volume of Coinbase. The explosive growth of DeFi in the past year is inseparable from the greed of human nature. YFI founder Andre Cronje at this year’s Smart Contract Summit said: “the reason there is such a massive influx of money right now is because people are making money in insane amounts, and people are snapping up and selling governance tokens (assets designed to allow people to make decisions on DeFi protocals) to promote the explosion of DeFi. However, this is not the sustainable development part of DeFi. When the “greedy phase” is over, valuable protocols in the DeFi field (such as Synthetix, Compound and Chainlink) will still exist.” Disclaimer: The above market commentary is based on technical analysis using historical pricing data, and is for reference only. It does not serve as investment or trading advice. [link]2 ''' Bitcoin Market— Week of 08/31/2020 Go1dfish undelete link unreddit undelete link Author: Coinviva 1: pre*iew*r*dd.it/s34*1***yak51.png?***th=*150&fo**at=*n**am*;**t**webp&*=5e2*ab0378e61e**75c8*2268*9*3def66d9*6*e 2: pr*vie***edd.*t*nrce0*4v*a*51*png?w*d**=*00*amp**o*ma*=p*g*amp;auto=we***a*p;s=2*38f5dc0d33*823ba16952*7fd021**d6a647e9 Unknown links are censored to prevent spreading illicit content.
BTC to USD historical currency prices including date ranges, indicators, symbol comparison, frequency and display options for Bitcoin USD. Discover historical prices for BTC-USD stock on Yahoo Finance. View daily, weekly or monthly format back to when Bitcoin USD stock was issued. Get Bitcoin (BTC) USD historical prices. Date Market Cap Volume Open Close; 2020-10-05: $197,494,664,454 $16,029,160,488 Bitcoin Price (BTC USD): Get all information on the Bitcoin to US-Dollar Exchange Rate including Charts, News and Realtime Price. About Bitcoin. Bitcoin price today is $10,713.70 USD with a 24-hour trading volume of $49,414,705,760 USD. Bitcoin is up 0.25% in the last 24 hours. The current CoinMarketCap ranking is #1, with a market cap of $198,304,875,370 USD.
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