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Davos Elites Still Don't Get Blockchain

Every year at the World Economic Forum, a handful of timely, hot-button issues overshadow the myriad other topics consuming the chatter of the attending businessmen, government officials, development professionals, celebrities, journalists and multiple other breeds of wannabe “Davos men.”

This year, as with last, a guy called Trump was on everyone’s mind. But that was hardly unexpected.

What was truly remarkable, at least for anyone who has been interested in blockchain technology since its relative obscurity only a few years ago, was the degree to which it became one of the uber-themes of #WEF2018.

In the wake of last year’s huge price surge for bitcoin, ether and many other digital tokens, and amid high-profile media coverage of the “crypto boom,” everyone wanted to know what all the fuss was about.

The newly curious trudged through piles of fresh snow to the various “blockchain lounges” set up outside the security perimeter of the main conference by outfits such as the Global Business Blockchain Council and ConsenSys.

There, they were served valuable insights into how this technology works but also, perhaps, a realization that blockchain technology’s promises of decentralized record-sharing and disintermediated trust have sweeping implications for everything from payments, international development and financial markets to the Internet of Things, energy, environmental management and identity.

But while light bulbs went off in some people’s heads, there were equally strong signs in the lead-up to and during the World Economic Forum that these concepts are still far from wide acceptance among the broad financial, economic and political establishment.

The many recent instances of people from the economic powers-that-be dismissing this technology’s relevance and over-emphasizing its risks over its potential are a reminder that those of us who believe in it still have work to do to get these influential people into the comfort zone.

Krugman’s myopia

In an interview with Bloomberg in Davos, U.K. Prime Minister Theresa May said she was looking “very seriously” at taking action against cryptocurrencies “precisely because of the way they are used, particularly by criminals.” In South Korea that same week, the government announced new rules requiring cryptocurrency traders to identify themselves.

But what struck me most was a pre-Davos tweet storm by Paul Krugman, one of a triumvirate of high-profile Nobel laureate economists who’ve been highly critical of cryptocurrencies and blockchain technology, the others being Joseph Stiglitz and Robert Shiller.

Predictably, the crypto community immediately dismissed the economist as an ignorant dinosaur. The favorite put-down was to remind him of his now notorious 1998 prediction that the “Internet’s impact on the economy [would be] no greater than the fax machine’s.”

Let’s make one thing clear: Paul Krugman is no idiot. Let’s forego the ad hominem. I think it’s more constructive to think about the ingrained mindset of otherwise intelligent mainstream economists that leads people like him to misunderstand the new social structures created by open-source communities, distributed consensus models and programmable tokenized incentive systems.

Krugman and his cohort are trapped by a rigid worldview, one that remains entrenched within the economics fraternity, despite the crisis of 2008, which painfully revealed the deep flaws of the profession’s quasi-scientific models of “rational” human behavior.

When it comes to understanding the value proposition of blockchain technology and drawing conclusions that “it’s not useful for anything,” the biggest problem of this blinkered mindset is that it fails to recognize the cost of trust.

Let me explain what I mean by that, because I think it’s key to getting skeptics to see why these ideas are so important. A few of us in the crypto community started playing with this logic in Davos. See if it works for you.

Hidden cost of trust

First, Krugman is right to say that expensive mining and the need to retain multiple copies of the same transaction record across distributed networks are “clunky” and “costly” aspects of blockchain technology. One answer to that is to say that innovations such as the Lightning Network will eventually fix the problem, but I think the better rejoinder is: “Compared to what?”

The “what” in this case is defined as the explicit and implicit costs that organizations pay to resolve shortfalls of trust. It turns out that that the cost of trust, which is passed onto consumers via higher prices and access restrictions, is very high indeed.

I don’t have a dollar number for it, but just think about the world’s skyscrapers, each filled with accountants doing endless checks and audits of other companies’ invoices, purchase orders and financial reports, and you get the idea.

They’re all trying to reconcile across each other’s separate, centralized ledgers, and all because they don’t trust each other’s records. That’s a cost of trust.

The cost of trust can also be conceived of via the old adage about electricity blackouts: that the highest cost of energy is the energy you can’t access. There are all sorts of potentially enriching transactions that we aren’t able to conduct because we can’t resolve the trust problem.

We can’t yet do peer-to-peer microtransactions between devices on the internet of things, for example, without passing them through some gatekeeping institution, be it a bank or a major cloud-service company like Google or Amazon. That not only adds costs and friction, it also constrains innovation.

And if you step outside the bubble of the developed world and consider the pervasive financial exclusion of the developing world, the cost of trust for 2 billion “unbanked” is especially high. (This is where Krugman is at his most myopic. Unable to leave the developed-world bubble, he claims that the only reason you would want to conduct electronic transactions in cryptocurrencies rather than via a bank account or some other third-party-trusted tool such as a debit card or PayPal is if “you’re buying drugs, assassinations, etc.”)

The perfect moment?

But the developed world is not at all immune from trust shortfalls.

The results of public releations firm Edelman’s “Trust Barometer,” which were released during the World Economic Forum, were scary, at least for Americans.

This annual survey showed that trust in the U.S. among the general population plunged 9 points, the largest-ever fall in the survey’s history, and by 23 points for the so-called “informed public” to post the lowest level of all 28 countries surveyed, below even Russia and South Africa.

As for what this means, let’s go to Breitbart, which many liberal Americans might argue is partly responsible for this breakdown.

It cited the PR firm’s CEO, Richard Edelman, as saying that the main factor behind the drop in trust was that “we lack common facts and have a fundamental difference of interpretation of facts.”

Common facts requires a common record of truth. I know a technology that can help with that….

Japanese Electronics Retail Giant Launches Bitcoin Payments

Major Japanese consumer electronics retailer Yamada Denki has partnered with cryptocurrency exchange bitFlyer to add a bitcoin payments service in two of its stores.

Launched this weekend, according to a press release, one of the stores to receive the new service is based in Shinjuku, an area of Tokyo that attracts large numbers of foreign visitors. The other store is adjacent to Tokyo’s main business district.

The company said:

In addition to diversifying [our services], we will implement initiatives to improve bitcoin recognition and usage promotion.

With the launch of the bitcoin payment system, the company indicated it aims to respond to the diverse needs of its customers both in Japan and overseas. “We believe that we can provide improved service and convenience,” it said.

Yamada Denki has set the settlement limit of bitcoins equivalent to 300,000 Japanese yen ($2,760) per account. Bitcoin is trading around $11,200 (1,218,016 JPY) at the time of writing, according to CoinDesk’s Bitcoin Price Index.

The moves comes after another Japanese electronics retailer, Bic Camera, said last April that it will test a new point-of-sale system (PoS) that will allow customers to purchase goods with bitcoin, also in partnership with with bitFlyer. Later in July, the firm said that it is expanding a bitcoin payment option to all of its stores nationwide.

And, in August, Tokyo-based Marui, a department store chain, tested bitcoin payments at one of its locations in Shinjuku. The trial set a cap of ¥100,000 (about $900) on bitcoin transactions.

YouTube Hack

Have you ever visited or watched a video on the Website YouTube? I’m sure most of us have at some point. Last week it was discovered that hackers have used the video streaming giant to mine cryptocurrency on users computers. Just recently the company started implementing more advertisements into its videos, as it has always had advertisements before and between videos, and it seems hackers took advantage of this. How was the YouTube hack discovered? While users were watching ads on YouTube, it automatically triggered anti-virus software on some computers. This raised a big red flag for some and they automatically contacted the company.

On investigating, the company discovered the adverts contained a mining code called CoinHive. CoinHive acted as a malware attack and secretly used up to 80% of the video watcher’s central processing computer units to mine various cryptocurrencies. The primary reason for using someone else’s computer to mine is due to the fact that it takes a lot of computing power to mine cryptocurrency. The hackers were trying to steal the power from other to mine the digital currency on their behalf.

The Largest Exchange Hack in Crypto History

Once Google (NASDAQ:GOOGL), the owner of Youtube, discovered this malware the ads were blocked in less than two hours. The anti-virus company Google hired to investigate, Trend Micro, is still in the works of compiling the list of those affected but so far it shows the countries most affected are Japan, Italy, France, Spain, and Taiwan. Trend Micro discovered that Google’s new DoubleClick advertisement caused three times greater increase in the number of people using CoinHive.

As cryptocurrencies gained mainstream momentum, “crypto jacking” has become a huge issue. Back in December, we reported that a Starbucks in Argentina was found mining cryptocurrency from its customer’s laptops. The company has kept it under wraps if it was an employee who hacked into the wifi router to implement the hack or if it was an outside source. However, the threat remains evident as many individuals want to get their hands on cryptocurrency and the electricity to mine is extremely expensive.

Is this YouTube hack just another cryptocurrency hiccup or are crypto hacks becoming something of a trend? Can companies protect themselves against such an unregulated industry? What do you think? Comment in the box below.

EtherDelta Wallet Hack

Featured Image: DIY

Bitcoin Could Alter the World - Says Former US Senator

Former New Hampshire governor and three-term senator Judd Gregg has said he believes bitcoin could alter how the world views currency.

In an opinion piece published by The Hill yesterday, Gregg outlined why he thinks people believe in bitcoin, how bitcoin could be used and what it could mean for the global economy.

Briefly comparing bitcoin to gold, Gregg noted that the latter has value because it is rare and widely accepted by banks, while the former is supported primarily by the belief of its holders. The key difference is that bitcoin is not held by central banks at this time, he wrote.

Since bitcoin is not controlled by any nation, government or central bank, Gregg said, “it sounds so good that one is tempted to say, ‘Throw in some pixie dust and it is off to never-never land.'”

He continued:

However, that would be too traditional a view. Bitcoin could indeed alter the entire world of commercial transactions.

Should people have sufficient belief that bitcoin or subsequent cryptocurrencies have real value, then it could usher in “a new era,” he said, one that would have a “staggering” potential as a world currency.

However, Gregg also noted the importance of the dollar in the world economy today, saying it was “difficult to project a time when the dollar will not stand as a core element of world commerce.”

The ex-senator’s comments come at a time when U.S. politicians are awakening to the technological and fiscal possibilities of cryptocurrencies and blockchain technology.

In June 2017, Nevada Senator Ben Kieckhefer sponsored a new law paving the way for the state’s broad bid to attract new blockchain startups. The bill prohibits the taxation of blockchain technology in Nevada, while at the same time recognizing the legality of blockchain signatures.

And in March last year, a legislative proposal submitted to Maine’s Senate, and sponsored by sponsored by the state’s senator, Eric Brakey, was aimed to create a commission dedicated to studying the use of blockchain alongside paper ballots in elections.

Hong Kong to Educate Public on ICOs and Crypto

Hong Kong authorities have launched a campaign to educate the public on the risks associated with ICO and cryptocurrency investment.

Kicking off yesterday, the campaign started on Jan. 29 and was launched by the government’s Financial Services and the Treasury Bureau (FSTB) and the Investor Education Centre (IEC), a subsidiary of the Securities and Futures Commission (SFC).

Aiming to reach citizens via a range of channels, including the city’s metro system, TV and social media, the campaign comes as the latest government-led initiative in offering the public a holistic understanding of ICO and cryptocurrency investment following the recent rise in market interest.

“Through this series of public education initiatives, the government aims to provide the public with a correct and comprehensive understanding of ICOs and ‘cryptocurrencies’, so that they can thoroughly assess the risks before making transactions or investment decisions,” said Joseph Chan, the under secretary of the FSTB.

In addition, the IEC has made ICO- and cryptocurrency-related resources available to the public through its website, called the Chin Family.

The initiative also follows recent warnings from the SFC which specified in September last year that tokens issued through ICOs could be regarded and thus regulated as securities. The financial regulator also stated last month that only licensed firms are allowed to offer bitcoin futures and other cryptocurrency-related financial instruments.

Going over Tradën Signals and how they should be approached and taken.

We offer 90% win rate NADEX Signals. You can view all of our history of our signals here:

Our signals are sent right to your phone or desktop, also members are put into a live trade room where signal discussions are held.

1176 views | Rating: 5.00 | Duration: 20:57 | 9 likes

Zane Community Manager from BFX will be joining us for the monthly update — there is a lot to cover

Google Doc Outline:

Current Events:

Grexit pretext pump – How has this affected BFX’’s business? Have you seen increased volume/signups from euro addresses? Greece?

BFX Hack Damage report — what do you we know now and what security procedures have been put in place since ? See Bitstamp hack report

Bitstamp hack report – Has this prompted any changes to your business practices? Any parallels? Similar vulnerabilities that have been patched up as a result? Does Raphael like punk rock?

Block size debate – Does this issue matter to BFX at all? Are bitcoin’s limitations becoming a dealbreaker? How does BFX feel about shared permission ledgers? How well-positioned is BFX to pivot to a black horse cryptocurrency?

BFX Status Report:

Products and integration – What is the current stage of development regarding alphapoint? How is tether integration? Is there a lot of usage? It’s a running joke that Darkcoin will never get margin on BFX – why? Competitors are offering more exotic products to keep trading interest up – SHCOMP collateral, futures, options, etc. What is next for BFX product development?

Competitive – What is BFX doing to stay ahead of the competition? When are you guys going to make an option for swap re-allocation so clients won’t have to rely on third party bots? Verification is becoming the standard for trading accounts – will BFX eventually impose KYC style verification, or will old accounts be grandfathered?

Mechanics – How adultered is the USD swap market? Any issues that you guys successfully handled recently? Why did lending payouts get changed from every hour to once a day? Swap payout issues:

BFX Bug Issues Placing orders and having them disappear is a “margin checking issue” ? what is this

BitGo What is it ? why should we like it as a trader? release date was roughly a month ago when is this going to be implement ?

BFXData Bjorn from BFX data should be joining us for this — not sure if he and/or lowstrife have anything specifically to add

Recent downtime today What happened ? 502 would indicate that proxy, apache or nginx, cannot communicate with downstream rails servers, so should just be able to restart those and off and running ?? take us through this process

1369 views | Rating: 5.00 | Duration: 51:19 | 2 likes

Google Doc Notes and Outline:

Coinut Options Platform Hangout


–Who are you and your team, what is background of yourself and your team, ?
fx background

–Why options as a new bitcoin derivative ? What makes it a fit for the current trading ecosystem?

company felt hedging instrument was needed in btc

–What kind of funding do you have backing the company?

100k usd self funded. looking for investment

–What is your target market? are BTC traders ready for options ?

market makers

–What are you using for modeling? black scholes ?

yes, alternatives are less feasible

–Why the transition from binary options to vanilla options ?

user demand forced vanilla option

Risk Graphs. ()

–Simple Call/Put
**is it best to explain options movement in terms of the individual greeks or simply intrinsic value & extrinsic

–Complex spreads as template — bull/bear spreads, straddle, strangle for now
***this is bread and butter to your marketing campaign IMO

— bitcoiners are going to have a difficult time grasping the risk profile but it is imperative to their understanding of how options fit into their trading tool box
****basically if you are unable to show why they can make more money with options they they have little to no incentive to add funds to your site and use your product


–options greeks? where are they ?

coming – easy to implement

$5 strikes ? instead of $4 — expand OUT order book — but cut down the amount strikes you offer – YES

–Weekly settlement every Friday — not this every 3 days things as well as standardizing to $5 strikes to make it easy for the new trader to understand and focus liquidity

Switched to saturday weekly and biweekly

Also why no volume and open interest ? maybe try and make it look more like ThinkOrSwim the standard in retail options

–Outside Input

I’d like the exchange to hold my hand if I want it held. Help me construct a better trade than I could get on spot and tell me why it COULD be better. Give me a reason to promote your platform to newer traders and ideally have a few tools to “bring them in”.

Index and other pairs

“About price index, we are right now calculating an average of all major exchanges’s bid and ask weighted by their bid and ask amount. Currently, we include Bitstamp, BTC-E, and Bitfinex. “

Currently you only have liquidity on your USD/BTC pair. You also have EUR/USD and CNY/USD pairs open. The index is only considers USD/BTC. Instead of segmenting the liquidity what’s the possibility of adding chinese exchanges to get a more accurate price index. **I really like this idea — otherwise you are spreading your already scant liquidity even thinner**

(also maybe change the way they calculate it to be more transparent)

138 views | Rating: 4.17 | Duration: 40:36 | 5 likes