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Blockchain is Not Trustless or Decentralized

October 27, 2019 in Bitcoin

 

If you ask the average person in the blockchain industry what the benefits of blockchain are, they’ll probably mention trustlessness and decentralization.

Three modes of decentralization are described: Architectural, political, and logical.

Architecturally, the argument goes, you can ask two questions to determine if a network is decentralized:

  • How many underlying devices are powering the network?
  • Are they geographically spread or concentrated in one area?

However, if we look at big tech players like the FAANGs (Facebook, Apple, Amazon, Netflix, and Google), they have many, many servers that are highly distributed in order to service their billions of users.

Just take a look at Google Global Cache nodes, which store public static content:

Also, every node in the world stores the same copy of the blockchain, and they hold the entire thing. When a new transaction is made, the changes are replicated across the entire network, updating every node. Blockchain is replicated, not decentralized.

The next argument is that blockchain is politically decentralized depending on your answers to these questions:

  • How many people/groups are involved in the decision making process?
  • How does the power re-partition looks like?
  • What kind of criteria is used to weight each participant influence?
  • Are they any recourse / appeal mechanisms built in the system?

Also, the way cryptocurrencies are transacted is almost entirely through centralized exchanges. Finally, the core developers have significant control over the future of the network.

The final argument for blockchain’s decentralization is that it’s logically decentralized. For example, there’s no CEO or board of Directors who get to control the network. There are no articles of incorporation, physical address, or bank accounts. While it’s true that blockchain, as a technology and not a company, doesn’t need these things, there are still stakeholders and people with power, like the core developers, mining pools, and “whale” investors with huge wallets.

Ultimately, blockchain is less centralized than traditional networks, but it’s far from decentralized. And when we have to trust the core developers with the entire future of the technology, trust users and investors not to collude to manipulate applications, and trust mining pools to validate transactions, it’s not exactly trustless.

P.S. If blockchain was trustless and decentralized, how much would it really matter? No layperson outside the blockchain bubble has ever heard of decentralization.

DApps are accessed through normal browsers like Google Chrome anyway, and the front-end can still be manipulated. Most people would never look at the smart contracts (let alone knowing what that means).

At the end of the day, you need a better reason to use blockchain than saying “we decentralize X.”

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Did the UAE just hit the gold mine for crypto regulations?

October 17, 2019 in Bitcoin


The United Arab Emirates is tackling cryptocurrency regulation on a completely different level than what we’ve seen occur in some of the richest countries of the West as well as the East.

The country has commissioned its financial regulator, namely the Securities and Commodities Authority (SCA) to gather information from entities as well as individuals involved in the industry. The feedback supplied by these people and companies will be considered in the final draft of the regulation before it’s officially passed.

Instead of creating a national agency for studying the financial and economic implications of cryptocurrencies (which would take months upon months) the UAE government has prioritized the years of experience that these industry-involved entities will bring to the table.

The companies who will be considered as suppliers of relevant feedback are cryptocurrency exchanges, financial analysts, media channel owners as well as the best forex brokers in the UAE that feature cryptocurrency CFDs for the local population.

Not only will this speed up the process of drafting the regulation, but also benefit the local market in general. It is very unlikely that industry experts will supply feedback urging the SCA to install strict regulations, that would absolutely redundant. It’s likely that the feedback provided will culminate in a slightly light regulatory framework.

It’s predicted that companies willing to delve into the crypto world will simply have to apply for a license with the SCA, ensure their compliance with AML and KYC rules, and install capital gain taxes on their customers should the regulator decide it to be so.

Is this the perfect way to introduce a crypto regulation?

No matter how refreshing this system may be for introducing a cryptocurrency regulation, we need to take a look at some of the issues that this new method could cause.

Will there be a difference in goals, beliefs, and understanding of the market? Most definitely so. Will the media lack the practical knowledge of cryptocurrency markets compared to exchanges and brokers? Also most definitely so.

Therefore, it’s likely that, not only will the feedback sometimes contradict itself, but the various parties involved in its supply could have very different, and not so altruistic views on the regulation.

Therefore, the best thing that the UAE government could do right now is segment the way they receive feedback from these companies.

For example, the media could supply feedback on things such as the promotion and sale of cryptocurrency services. That way the SCA could understand whether it’s worth limiting the processor allowing it without restrictions.

The exchanges and market experts could calculate the relevancy of a Value Added Tax on crypto transactions. At least, in this case, they will agree that it’s completely redundant, similar to how other countries have agreed.

Brokers and already registered and licensed companies could supply feedback on the ways capital gain tax could be applied to these activities and the ways new companies could comply with AML and KYC rules in the country.

Overall, the segmentation is absolutely essential for the process to deliver its purposed result, which is quickly and efficiently drafted legislation.

Should any miscommunication or contradicting feedback be supplied to the SCA, they may indeed need to create an agency for dissecting all of the information, thus dragging the draft even further.

It’s not perfect yet, but the segmentation could most likely revolutionize how legislature on tech innovation is drafted.

Will other countries follow suit?

Unfortunately, it’s too late for larger countries who have already drafted their regulations and have passed it into law. There were some misunderstandings from the lawmakers’ side, but the industry didn’t suffer too much from it.

Having the UAE display the fruit of the labor of market experts should be an extremely positive example for countries in the process of drafting their own regulation or considering to start drafting it.

Overall, the crypto community should be quite happy that a country decided to approach the crypto industry so democratically.



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Why Bitcoin (BTC)’s Near Term Weakness Could Be A Massive Bear Trap

October 17, 2019 in Bitcoin


Bitcoin (BTC) has been very bearish the past few days which has made a lot of investors worried. Ironically, some bears like me that have been short since the local top now think we have come to a point where it is not worth the risk/reward to be short on Bitcoin (BTC) for now. There are a lot of reasons that suggest that the recent weakness in the market could actually be part of a major bear trap that could lead to a massive short squeeze in the near future. The difference between the bulls and the bears is that the bulls may be native but the bears are arrogant. This means that the bears often do not give up even when they are dead wrong.

As we discussed in our last analysis on BTC/USD, it is not about the direction but the timing. A lot of people can see that Bitcoin (BTC) has to crash hard sooner or later. However, if you have entered aggressive short positions at this point anticipating a massive decline then chances are your positions might be liquidated before the downtrend actually begins. The sad part about that is that the inevitable eventually happens and you are right about the direction but wrong about the timing. If we look at the daily chart for BTC/USD, we can see that not only has the price found support within the symmetrical triangle, but it is also trading within a large falling wedge that has a very high probability of breaking to the upside.

The daily chart for EUR/USD better explains what we have been pointing to in our previous analyses. I mentioned in my last few analyses that if EUR/USD ends up breaking past the trend line resistance, we could see a retest of the previously broken support turned resistance of the descending triangle. That has finally happened which is a very bullish development for Bitcoin (BTC) and which is why I have no choice but to be bullish on Bitcoin (BTC) short term even though I do not think any moves to the upside would be a result of genuine bullish interest in the market.

Movements in EUR/USD have historically had a strong impact on the price action of Bitcoin (BTC) and that is unlikely to change. We can see that the recent move in EUR/USD past the 50 day EMA has now paved the way for Bitcoin (BTC) to rally towards its 200 day EMA testing and potentially testing the 61.8% fib retracement level. EUR/USD could also continue its uptrend to test the 200 day EMA in the near future. Regardless of this short term change of outlook, I see no reason why Bitcoin (BTC)’s bearish setup might be invalidated. It is premature to comment on that but in my opinion what is happening so far is in line with what happened in 2014 which is why I remain bearish long term on Bitcoin (BTC) and other cryptocurrencies.



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Ex-IBM Director Joins Open-Source Blockchain Platform 

October 17, 2019 in Bitcoin



Jennifer Trelewicz, the former Director of the Systems & Technology Laboratory at IBM, has just joined the open-source and fully decentralised blockchain software, Credits.

According to AMB Crypto, Trelewicz has taken the post of Chief Business Officer, under which she is responsible for the external business sector of the firm.

The former director has a lot of experience in the global business field. Previously though, she took part in working with big businesses from all over the world. Including a led interaction with IBM. 

Paul Stebbing from AMB was recently able to sit down with Trelewicz in order to understand the further goals and employee vision in the development of the blockchain platform. 

Here are some of the highlights however, if you want to read the full interview, click here.

When asked how she was able to familiarise herself with blockchain tech. Trelewicz said:

“I started working with blockchain technology as CEO of the S7 TechLab. We launched a joint project with Alfabank for selling airline tickets on Ethereum, and later, together with Alfabank and Gaspromneft-Aero, for handling payments for aviation fueling. In that role, I was familiar with both Ethereum and Hyperledger and could see the advantages and disadvantages of each for enterprise solutions.”

The former IBM Director went onto explain how she was able to fit in with the Credit platform.

She continues:

“I became familiar with the Credits platform recently, and I am impressed with the technology, including the technical layer and the commitment of the company to both the user community and to solution partners.”

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!



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Are We About To See A Mini Altcoin Season?

October 17, 2019 in Bitcoin


Bitcoin (BTC) has recently shown signs of weakness but despite all of that, I see a changing outlook and as responsible traders we need to adjust accordingly. Most of you are wondering how I turned from talking about “further downside to come” to being bullish on the market. Let me say that I still remain bearish on the market long term but it is hard to ignore present developments that signal further upside near term. The daily chart for EUR/USD shows us that it is the first time in a long time that we have seen the pair not only close above the 50 day EMA but see bullish follow up. We have now seen it face resistance at the 61.8% fib extension level but if we break past this level, then EUR/USD could rally towards the 200 day EMA.

As for Bitcoin (BTC) and other altcoins, I think there is a very high probability that we might see a bullish trend reversal. The daily chart for BTC/USD shows the price trading within a large symmetrical triangle that can be rightly characterized as a bullish pennant because the price was trading upwards when it entered the pennant. It is therefore very likely that we might see a break out of this triangle to the upside when the price exits out of the pennant. We also see the price trading within a large falling wedge which is another bullish indicator. I think there is a very strong probability that the price is not only going to break out of the falling wedge but also out of the symmetrical triangle to stage a fake out short term that would mislead many traders and investors into thinking the bull run has actually started.

Looking at ETH/USD, we see a very high probability of the price rallying not only towards $200 but even beyond that potentially above $300 before this move comes to completion. I think the next two months are going to be very bullish for the altcoin market and we might see a mini altcoin season. The ETH/BTC chart tells us that we are unlikely to see another downtrend before the pair tests the 200 day EMA. The same goes for Ethereum dominance (ETH.D) which has yet to test the 200 day EMA. Lastly, the dominance chart for medium and small cap coins other than Ethereum (ETH) which can be seen as Others Dominance (Others.D) on Tradingview tells us that we might see a strong bullish crossover in the near future that could lead to a strong uptrend in the altcoin market.



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Are stablecoins congruent with the founding pillars of Economy 3.0? 

October 17, 2019 in Bitcoin


We’ve come a long way as a society, and our progress can most easily be tracked by how we interact with one another in regard to value. Our economy is the driving factor behind all of our progress, and as we push further into globalization we are quickly realizing that we need to update our mindset. Economy 1.0 was based on the direct trading of goods, and this lasted for a long, long time – it’s more commonly known as bartering. Eventually we moved past that into Economy 2.0, which connected those goods with money as an intermediary. This type of economy introduced interest (both positive and negative) and paper money, but it still put the value of things at the forefront of our minds. 

Source: economist.com

In order for us to progress further we need to first change the way we interact with our economy; we need to upgrade to 3.0. What exactly this will look like, and what role cryptocurrencies will play, are the questions we need to start asking.

Economy 3.0

As futuristic as it sounds, Economy 3.0 is a lot closer than many of us realize. Too often, these types of ideas are romanticized and blown out of perspective, often leading to them fizzling out and doing nothing at all; Web 3.0 is guilty of this. In an effort to clarify exactly what we are talking about with Economy 3.0, let’s break it down into three founding pillars:

  1. A revision of the idea of money, specifically to help rediscover exactly what value means in our current and future societies
  2. An understanding, and implementation, of win-win-win situations
  3. The introduction of learning organisms into the economy to help us continually progress

These ideas come from keynote speaker Mushin Schilling at the Berlin Change Days, a conference that’s run in conjunction with the P2P Foundation to push progress past current roadblocks. When we look back at how civilizations have pushed past older economic models, we see a trend: mode of value. 

Before a bartering economy (Economy 1.0) there was no basis for trade metrics. When we switched to Economy 2.0 we introduced paper money, but over time realized the limits of such an idea. As we shift toward Economy 3.0 we’ll need to not only change the way we interact with money, but also change how we value money in general. And cryptocurrencies may be the answer.

From theoretical to practical

All of this doesn’t matter unless we actually move forward and take the leap that will bring us to 3.0. There are some companies currently attempting to make that leap, but it is important to look at their underlying principles to make sure they actually adhere to the three founding pillars of 3.0. One of the most obvious companies marketing itself as the future of currencies is Facebook and its Libra currency.

Source: theverge.com

Libra is, in theory, a wonderful idea. You take a bunch of money from around the world, pour it all into a conglomerate of large accounts with varying degrees of risk, and then issue a digital stable currency backed by that gigantic pool of money. But when you really think about it, all Libra will be doing is making the rich richer by treading on the backs of the regular investors. Although this will fulfill pillar one of Economy 3.0, it definitely won’t be a win-win-win nor a growing organism that will organically learn from its mistakes.

Facebook has the right idea in terms of creating a digital stablecoin, but their greed is the basis for their creation; they aren’t trying to advance humankind further along our economic path.

From practical to actual

Libra is practical, and barring any surprise legislative or regulatory pitfalls, it will come to fruition. But it isn’t what we actually need to reach Economy 3.0. In fact, it may actually set us back. The actual product we need will fulfill all three pillars and advance our economy in a natural, mutually beneficial way. We’ll need a decentralized company that has a global stablecoin currency that offers a way for users to not only change what they value, but be actively engaged in win-win-win situations. 

There are a few companies doing this that are worth mentioning: Tokenplace, Telegraph Open Network (TON), and Maker DAO. Each of these is fulfilling the pillars of Economy 3.0 in their own way, and with the added emphasis of turning users into collaborators these companies have a real shot at chauffeuring us into a new financial era.

Pillar 1: Revision of Money

Cryptocurrencies obviously fulfill this role, but only if the cryptocurrency truly changes how money interacts with itself, its users, and value. Some cryptocurrencies are too volatile and will never be used for actual payments, while others (like stablecoins) have a real chance of being adopted globally. Tokenplace, TON, and Maker are all creating marketwide stable currencies that are intended to maintain a stable price while giving users international freedoms. 

Pillar 2: Win-win-win situation

Here is where the three companies start to differ. The ideal win-win-win scenario leads to not only both parties benefiting, but also culture, society, and the surrounding ecology. These types of deals cannot be found in Economy 2.0, as the third win isn’t conceivable without first changing what we value most in our economy. For instance, with Tokenplace the emphasis is to turn crypto users into collaborators – by doing this an environment is created where not only are the users more responsible for how their currency interacts with other financial institutions, but the users are also more capable when it comes to balancing human and world needs (through more energy efficient currencies, eco-friendly global practices, and ensuring that the currency exists to benefit more than just its users – as per the suggestion of nearly 200 CEOs).

Pillar 3: Learning organisms

A learning organism, in regards to a company or currency, is an entity that not only learns from its mistakes but is able to adapt to economic and business ecology accordingly. One of the easiest ways to do this is to turn your users from random numbers into actual collaborators, listening to their input and ideas. When companies are led only by a few they do not see the greater scope of the market, especially when those few are disconnected from the base they are supposedly serving. Maker DAO solves this issue by running all of their services through a decentralized autonomous organization (DAO), TON is tailoring a business model in which Telegram might have a proportionate impact on the market value of their coins, while Tokenplace does this by tying their company’s fiat valuation to their cryptocurrency, thus letting users vote with their wallets.

Although all three of these companies are going to help push us to our Economy 3.0 in one way or another, Tokenplace is helping us get there a tad faster than the others. They are making it easy for users to trade across a wide spectrum of exchanges and investments with an assortment of cryptocurrencies, and they are tying it all together using their TOK token. By opening up the vast world of finance to users and giving them many tools to help them succeed, it will make it easy for us to finally advance beyond Economy 2.0 and reevaluate how we want to interact financially with one another. Tokenplace isn’t the end-all answer to all of our problems, unfortunately, and it won’t save us on merit alone. We have a long path ahead of us, and while these companies are helping nudge us in the right direction, they will continue to fall short until we shift how we view our economy. 

Source: azquotes.com

Considering that win-win situations are few and far between right now, it will be a lot of work before we are actively seeing win-win-win scenarios start popping up. But one thing is certain: if we ever want to achieve Economy 3.0 we need to drastically change how we see the interaction between users and profit. Only through collaboration, and not exploitation, will we advance beyond where we currently stand.



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Ripple Heads to Latin America Once More Thanks to New Partnership

October 17, 2019 in Bitcoin


In the third quarter of the year, Ripple is starting to thread a very bullish path, one that will at one point lead to an increase in adoption as time goes on. With a lot of partnerships on the horizon and many already done and dusted, Ripple is going to go that step further in an investment partnership with Latin America’s leading Cryptocurrency Exchange Bitso.

Going off the official announcement posted on Ripple Insights, the San-Fransico based firm said that the investment round with Bitso could have been finalised today, however, the plan to work together has been in the pipeline for over four years.

Written in the first person from the SVP of Product design at Ripple, Asheesh Birla said this:

“Ripple’s partnership with Bitso starts at the beginning—I met the team back in 2014 and saw the technology they had built and thought, “This four-person shop is able to send money across borders with technology faster than the big banks. That’s incredible. It reminded me of sending my first email instantly to a friend across the world.” This innovative company plays a vital role in RippleNet’s US – MXN corridor by providing critical liquidity for payments.”

As covered by ZyCrypto, remittance flow to Latin America and the Caribbean has seen a 10 per cent increase over the past two years or so but its Mexico that is the top player behind these payments with a massive $35.7 billion recorded on a yearly basis. After this was realised by Ripple, the firm went onto to completely change the remittance space by utilising its blockchain and cryptocurrency to birth ease in payment for its users.

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!



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Libra’s Backing Members Officially Sign The Projects Charter

October 17, 2019 in Bitcoin


Earlier this week, the Libra Association at long last finally wrote up the contract for its charter.

Writing in a press release which was posted on Monday, the Association confirmed the 21 member firms had signed the contract. Note that only 21 companies signed the contract, which is seven less than the original 28 highlighted in the original documentation however, after PayPal, Mastercard and other firms dropped out, this was expected. 

As reported by Ethereum World News, the companies that went onto to sign the charter include:

“Anchorage, Andreessen Horowitz, Bison Trails Co., Breakthrough Initiatives, Calibra (Facebook’s cryptocurrency subsidiary), Coinbase, Creative Destruction Lab, Farfetch UK, Iliad, Kiva Micorfunds, Lyft, Mercy Corps, PayU, Ribbit Capital, Spotify, Thrive Capital, Uber, Union Square Ventures, Vodafone, Women’s World Banking, and Xapo Holdings.”

In the backlash of the tweet, many users had different opinions on the matter.

One analyst under the name, EveryLastSat egged on the association and said, “Go all in on bitcoin and transform the world”.

Another user kindly put, “That’s a lot smaller than you started with.  But hey, thank Zeus you still have Bison Trails.”

You can take a look at the rest of the Twitter thread here. It’s interesting to see so many mixed opinions on just one project.

Nevertheless, it will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!





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Telegram Postponing TON Release As SEC Calls Them Up For a Meeting

October 17, 2019 in Bitcoin


The private messaging platform Telegram is wanting to delay the launch date of its Telegram Open Network (TON) after they have encountered problems with the United States Securities and Exchange Commission (SEC).

Telegram sent a message to investors which stated they want to push back the deadline to April 30th next year.

The release of the open network was initially set for October however, because the SEC all of a sudden declared that its $1.7 billion dollar token offering to be illegal. The messaging service raised a huge sum for its new network by selling TON’s native Gram tokens to qualified investors in two separate rounds. 

In February last year, Telegram submitted a Form D filing, which is used when a company sells a security without registering it with the securities commission. 

So this Form D states that a company is allowed to proceed with a securities offering without registering it with the commission should it offer it solely to qualified traders and investors. Nevertheless, since the investors in the Gram tokens would be able to resell their assets, the commission considered this a violation of the exemption.

In the letter to the investors, Telegram says that the moving of the deadline needed the permission of holders of a major of purchase amounts paid to the messaging service.

This would mean that one round of investors could vote to extend the deadline, while the other doesn’t.

“In the event that only one group approves the extension, then that group’s purchase agreements will remain in place while the other group of agreements will be terminated. In these circumstances, we propose to make certain limited amendments to the terms of the purchase agreements that remain in place to reflect the fact that fewer Grams will be issued and in circulation on the Network Launch Date.”

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!



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POS Blockchain Qtum Prepares Hard Fork to Add Powerful Smart Contract Functionality

October 17, 2019 in Bitcoin


On October 17, proof-of-stake blockchain Qtum will complete its first hard fork to add a string of major upgrades. The smart contract network will be reborn as Qtum 2.0, a dApp deployment blockchain with a host of powerful new features and tools. The upgrade will enable Qtum to capitalize on the demand for a low-cost, high-throughput chain that can serve the needs of dApp developers. Current smart contract platforms have struggled to match growing demand, and have been slow to evolve.

Upon completing its October 17 hard fork, Qtum will be equipped with several new Qtum Improvement Proposals (QIPs) including an upgrade of its EVM to the latest Ethereum Constantinople. Because Qtum utilizes a UTXO model rather than an account-based system, it combines the best elements of Bitcoin with the smart contract functionality of Ethereum. A specially modified proof-of-stake mechanism completes Qtum’s battle-tested architecture, comprising components that have been proven in live environments for years.

“Qtum’s first hard fork brings increased usability and stability to the platform,” stated Qtum co-founder Patrick Dai. “We believe this network update addresses a lot of the friction when using smart contracts, expands the capability of applications, and offers greater and more easily implemented privacy options for developers building on top of Qtum. The wait for a smart contract network that lives up to its creators’ promises, and works as described, is over.”

The upgraded Qtum 2.0 network will sport new features including:

  • More efficient use of gas, reducing deployment costs.
  • Wallets that do not contain QTUM will be able to send native dapp tokens.
  • Enhanced block spacing stability, increasing transaction speeds by an average of 12.5%.
  • Support for third-party gas payments, allowing new users to start using dApps immediately.
  • Support for zk-SNARKS, paving the way for developers to utilize new privacy features.

Second-generation blockchain networks have historically struggled to safely implement smart contracts or to transition from PoW to PoS. Qtum’s implementation of both of these core functions mean it is equipped to support a thriving ecosystem of dApps and decentralized finance products including enterprise applications. The revamped Qtum network will operate more efficiently, reducing gas usage, and with greater stability thanks to an improved difficulty adjustment algorithm that makes block times more consistent.

About Qtum

Qtum is an open-source smart contract blockchain platform. It leverages the security of a UTXO model while enabling multiple virtual machines including EVM. Qtum is currently in the process of developing a virtual machine interface. This will allow developers from outside the blockchain ecosystem to start prototyping their own smart contracts in familiar and mature programming languages.



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