Thursday, October 25, 2018

Blockchain goes hardware

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WALLET TIE-UP: Blockchain, one of the world's oldest and largest online bitcoin wallet providers, is moving into the hardware business. The startup announced Thursday that it is partnering with Ledger to build a new hardware wallet, called the Lockbox.

To protect users' holdings, the device will come with a number of built-in security features, including a special key that only allows it to connect with legitimate websites to avoid phishing attacks.

At launch, Lockbox will support bitcoin, ethereum and bitcoin cash. If there is sufficient user demand, Blockchain's developers say they could add support for other cryptocurrencies in the future. Pre-orders open today, with the company expecting to start shipping the wallets to customers next month. Full Story

INVESTOR QUESTIONS: Potential investors in crypto mining manufacturer Bitmain may be receiving false information about the company’s backers. A CoinDesk investigation into three pitch decks promoting the company found they list two backers who have not actually invested in Bitmain.

While it is uncertain whether Bitmain had a role in building these pitch decks, the documents clearly list Digital Sky Technologies Global and GIC Private Limited as investors in the firm. Both companies have denied backing Bitmain.

If Bitmain had a role in developing these pitch decks, the penalties in Hong Kong, where the company is based, could be severe. The penalties for making false statements include up to seven years in prison, HK$1 million in fines and damages to investor claims. Full Story

BURN BABY, BURN: Tether, the company behind the USDT stablecoin, announced Wednesday that it had burned, or destroyed, 500 million tokens kept in its treasury.

The move comes after crypto exchange Bitfinex transferred 680 million USDT to Tether’s treasury from Oct. 14–23. The transfers began after USDT’s price began to slip away from its dollar peg.

There are now roughly $2 billion in USDT remaining in circulation, with 466 million tokens remaining in the Tether address for potential future issuance. Full Story

CoinDesk Research tracks many different metrics in the crypto economy. Exchange interest is important in determining the activity occurring on trading platforms.

We observed total exchange volume sourced from coinmetrics.io for each cryptocurrency for Wednesday, October 24. A cryptocurrency exchange is a private business that allows customers to trade cryptocurrencies for other assets, such as fiat money or other digital currencies. A cryptocurrency exchange can be a market maker that typically takes the bid-ask spreads as a transaction commission for its service or, as a matching platform, simply charges fees.

BTC had the highest share at 53 percent followed by ETH at 18 percent and XRP at 6 percent. While these top three match their market cap rankings, EOS jumps up from its 5th place by market cap to 4th place by trading volume. Simarily LTC, ranked 7th by market cap, ranks 5th by volume.

It's important to note that over-the-counter (OTC) markets might shield other trading information for privacy reasons. Thus, total reported trading volume isn't totally representative of all trading volume.

For more research insights, check out the CoinDesk Research section here.

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RISK RESILIENCE? U.S. stocks fell sharply yesterday, but so far the risk aversion has not affected bitcoin’s price, which continues to be directionless around $6.4K. The resilience to the sell-off in stocks could be a sign that the cryptocurrency is prepping for a bullish move above $6,500, but in the next hours prices could go either way. Full Story

BEST OF THE BEST

BREAKER: A number of cryptocurrency media organizations are willing to accept payment for sponsored content without labeling it as such, a Breaker magazine investigation found.

Writer Corin Faife explained that his team created an email account for a fictitious public relations employee, who then asked different organizations if they would accept payment for coverage. Out of the 22 outlets which responded, 12 said they were willing to publish paid content without disclosing it was sponsored.

Organizations charged between a few hundred and $4,000, depending on their audience size and prominence.

THE REST

Australian Financial Review The Reserve Bank of Australia doesn’t see the need for central banks to adopt blockchain in wholesale settlements or for a national crypto, according to a piece from the Australian Financial Review.

At the ongoing Sibos conference, Michelle Bullock, assistant governor of the RBA, offered insight into the institution’s thinking about the technology and, for now, while open to blockchain, it’s “not convinced” it has a role to play.

The current system is working well, she told the event, adding that bank runs could be worse if the RBA issued a blockchain-based digital currency.

FORBES: Despite the bear market, universities are increasingly embracing blockchain technology and cryptocurrencies, according to a piece from Forbes. Now, even Ivy League colleges are not only conducting courses on the emerging technology, but are also investing their endowments in crypto funds.

While historically major educational institutions have had a conservative approach to investments, that is rapidly changing. Recently, the endowment fund managers at Harvard, Stanford, Dartmouth College, MIT and North Carolina have recently made investments into at least one cryptocurrency fund, the article says.

We've launched our first-ever podcast, "Late Confirmation," a digest of top stories in the blockchain world, delivered daily from the team at CoinDesk.

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Burn Baby Burn 🔥

October 25, 2018

Tether Burns 500 Million USDT

Burn baby burn

Crypto's largest stablecoin, Tether (USDT), has just burned 500 million tokens. Tether Ltd., the stablecoin's issuer, moved the tokens to a wallet where they can't be removed from, taking them out of circulation.

🔥 What is a token burn? A token burn occurs when a specified amount of tokens are sent to an address where the private keys are unobtainable, thus "burning" the circulating supply and increasing the value of all outstanding tokens. In Tether's case, this is happening because investors are redeeming their USDT for U.S. dollars.

Gimme my fiat

Tether has an issuance and redemption process to maintain its token's peg to the US dollar. The company holds a "treasury wallet" of Tether tokens that are not claimed by a dollar. When people deposit dollars, Tether withdraws from this wallet. When someone wants to redeem their Tether, it goes into this wallet and the investor gets a dollar.

When the wallet becomes too large, Tether burns a portion of this "treasury wallet". This is what occurred yesterday. Since the beginning of this month, 800 million USDT have been redeemed.

Tether confirmed the burn in a statement saying:

"Over the course of the past week, Tether has redeemed a significant amount of USDT from the circulating supply of tokens. In line with this, Tether will destroy 500m USDT from the Tether treasury wallet and will leave the remaining USDT (approx 466m) in the wallet as a preparatory measures for future USDT issuances."

Competition driving Tether out of the market

Tether's woes are a result of new competition in the stablecoin market. Within the past few months, a handful of stablecoins have launched and just this week Coinbase added its first stablecoin, USDC.

Tether has had plenty of issues with transparency and trust. Investors have repeatedly asked for an external audit and Tether still has not provided concrete proof that Tether is backed one-to-one by U.S. dollars. In addition, some argue that it is actually impossible to redeem Tether for US dollars.

It is clear that investors are finding their new favorite stablecoins. For Paxos Standard Token (PAX), one of Tether's competitors, over $30 million has been added to its market cap in the last week following the Tether drama.

EXCHANGE

Coinbase Bitcoin Cash Insider Trading Case Gets Dismissed

Motion to dismiss

According to court documents, Coinbase just received a pass on the Bitcoin Cash (BCH) insider trading case that began after the popular exchange listed BCH on its platform back in December of last year.

Filed in March, the class action lawsuit accused Coinbase employees and other industry insiders benefited significantly by “[driving] up the price of BCH for non-insider traders” before BCH was officially listed.

Now, the insider trading case has been dismissed by U.S. District Judge Vince Chhabria from California because the plaintiff had “not sufficiently articulated the legal bases for his claims.”

Listing drama? Nothing new

While Coinbase was dismissed from this case, cryptocurrency listings on the exchange have come with scrutiny before.

Recently, research by Diar revealed multiple conflicts of interest - including connections with founders, investors, and advisors - between Coinbase and its latest listing, 0x Protocol (ZRX). In addition, more than a year ago Coinbase listed Litecoin (LTC), a cryptocurrency founded by ex-Director of Engineering at Coinbase.

This leaves many to wonder whether Coinbase is evaluating potential projects fairly in the space or if there really is a “Coinbase Mafia.”

This wouldn’t be a problem if...

Other exchanges don’t come under as much fire for their listings. That’s because being listed on Coinbase’s exclusive platform has enough to spark a bull run for a cryptocurrency.

Dubbed the “Coinbase effect”, all of Coinbase’s cryptocurrencies have been seen significant gains following their listing announcement and even more in the long term after the cryptocurrencies become available to purchase.

Knowing this and after the BCH drama last year, Coinbase has allegedly taken new steps to ensure each listing process is conducted in the most fair and transparent way possible.

NEWS

Nasdaq Wins Newswire Blockchain Patent

Traditional finance exchange looks towards blockchain

Nasdaq was recently rewarded with a patent involving blockchain technology. The patent, originally filed on January 27th of last year, describes a system that would use blockchain to securely distribute time-sensitive information.

The reason that blockchain was chosen to be used in this system is to have an auditable trail of which information was sent to who. Specifically, the system will use smart contracts and incorporate encryption features.

The patent file summarizes the idea:

"An information computer system is provided for securely releasing time-sensitive information to recipients via a blockchain. A submitter submits a document to the system and a blockchain transaction is generated and submitted to the blockchain based on the document (e.g., the document is included as part of the blockchain transaction). An editor may edit the document and an approver may approve the document for release to the recipients. Each modification and/or approval of the document is recorded as a separate transaction on the blockchain where each of the submitter, editor, approver, and recipients interact with the blockchain with corresponding unique digital identifiers--such as private keys."

In short, Nasdaq hopes this new system will streamline its newswire service while also maintaining transparency to make sure documents only arrive at the intended recipients.

MINING

AMD Reports ‘Negligible’ Blockchain-Related Sales in Q3

Two in a row

Yesterday, semiconductor manufacturer AMD announced its third quarter financial report and the blockchain-related sales from cryptocurrency miners don’t look pretty. So ugly, in fact, AMD’s CEO Lisa Su called them “negligible.”

This marks the second quarter in a row that AMD has announced a drop in blockchain-related sales - a figure correlated closely with the performance of the cryptocurrency markets.

Su also mentioned that blockchain technology was “a bit of a distraction in the short term” for AMD but did praise the potential that decentralized networks have.

Earnings bust

With no help from AMD’s blockchain-related sales among other issues, the stock price slumped yesterday and closed down about 9% after a disappointing earnings report.

In the past, experts argued that AMD’s share price was inflated alongside the cryptocurrency market as investors flocked to join the mining industry.

BITS

But wait, there's more...

Japan's Financial Services Agency is planning to put a cap on the leverage available to crypto margin traders to curb speculation and risk.
Binance has raised over $1.4 million USD in support for those affected in devastating West Japan floods.
The research arm of Japanese technology giant Sony announced it had created a contactless cryptocurrency hardware wallet.

COIN OF THE DAY

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