The World’s Largest Asset Manager, BlackRock, Seeks Potential Interest in Bitcoin Futures BlackRock, the world’s largest asset manager announced the formation of a working group
Mt Gox, the bankrupt cryptocurrency exchange, has now entered civil rehabilitation proceedings according to their official announcement on June 22. According to the proceedings documentation, Nobuaki Kobayashi will act as the civil rehabilitation trustee.
Kobayashi was formerly responsible for selling huge amounts of Bitcoin reserves at the beginning of Q4 last year. This selloff was used to reimburse Mount Gox users of the money they lost within the exchanges massive hack back in late 2013. This had a profound effect on the market as Bitcoin’s price tumbled immediately following the transaction.
Due to the new bankruptcy proceedings, Kobayashi will no longer be able to sell Bitcoin into fiat currency. Users will receive compensation in BTC as opposed to fiat currency which had been the original intended method of distribution.
Court approves Mt. Gox civil rehab. Mostly good news:
1) Trustee won’t sell more BTC
2) Creditors receive BTC (not JPY) in early-mid 2019
3) Everyone must refile claims by Oct
4) Bad news: some creditors will sell BTC, so that will hang over market next yrhttps://t.co/gc8SW5tnER https://t.co/3AC49MvEVI
— Yuji Nakamura (@ynakamura56) June 22, 2018
A group of claimants who had reacted to the news stated that the progress is considered a mixed blessing.
“The victory is not been finalized yet. It will come once the creditors actually receive payment from this catastrophic event.”
Mt. Gox has since become infamous within the cryptocurrency industry after suffering one of the largest hacks in the history of crypto. The resulting loss of $473 million worth of customer’s money was only second to the funds lost from this year’s Coincheck’s hack of $534 million.
Around 16,000 Bitcoin, which are associated with the infamous Mt. Gox cryptocurrency exchange, was moved earlier this morning on April 26, causing speculation regarding the estate’s trustee preparing to liquidate more coins.
The transactions, which were flagged by CryptoGround, which is a service that monitors Mt. Gox wallets, reported that the coins came from multiple addresses and were consolidated into a single wallet that had 0 BTC in it.
— Alistair Milne (@alistairmilne) April 26, 2018
There was also 16,000 Bitcoin Cash that were moved to the same address. Those coins are worth approximately $21 million at the current exchange rate.
The transaction has those in the crypto sphere questioning whether this transaction is in preparation to sell the funds in order to compensate the bankrupt company’s creditors.
Kobayashi, the Mt Gox bankruptcy trustee, sold more than 400 million in Bitcoin and Bitcoin Cash to cover the exchanges liabilities. He was criticized by many for not utilizing over-the-counter channels (OTC) which most large institutional traders use. This would ensure that there would be no rapid price swings that could ripple throughout the global marketplace, thus affecting all crypto traders.
Some are speculating that the sharp market decline that occurred on April 25, in which $1000 worth of Bitcoin was sold in less than 24 hours, was spurred by Kobayashi. However it is possible that he is consolidating assets and is preparing to sell them or has already done so is pure speculation at this point.
In the meantime, many Mt. Gox creditors who have been affected by the shutdown of the exchange are advocating that the bankruptcy be moved into “civil rehabilitation”. This would allow the affected to be compensated in Bitcoin.
At the moment, they stand to be compensated in fiat at the rate of $480/BTC, which is around the rate of which Bitcoin was trading at when the firm entered bankruptcy.
The remaining funds, which are estimated to be around several billion dollars, would most likely be dispersed to Mt. Gox ex-CEO Mark Karpeles. He recently stated within a Reddit AMA that he does not want any of the remaining funds and is seeking to have the exchange move to civil rehabilitation.
Mark Karpeles, the ex-CEO of Mt Gox, the bankrupt Bitcoin exchange who lost billions of dollars’ worth of the exchanges user cryptocurrency, states he “doesn’t want 160,000 BTC” that will be left after the exchange repays its creditors.
During the Reddit Ask Me Anything (AMA) session Wednesday, Karpeles stated that he found the 160,000 BTC turnout “distasteful” which comes as a result of the Japanese bankruptcy procedures.
Japanese bankruptcy law works in a way where if any assets are remaining after creditors have been paid, the assets are distributed out to the shareholders as part of the liquidation process.
Karpeles looked after the long process of refunding users who lost their fines back in 2014 during the Mt. Gox fiasco.
Criticism of Karpeles and the refund process intensified months after the board trustee was found selling vast amounts of Bitcoin on Main exchanges. The volumes were so massive that stations remained the sales unfairly influenced Bitcoin processes internationally.
Brian Kelly, the CNBC fast trader host, outlined three major reasons why Bitcoin will recover to its of previous support levels at $10,000.
Kelly noted, referring back to the basic rule of investing, where a period in the market is extremely overoptimistic, it’s better to sell. Always look for an opportunity to enter a market when it’s overly pessimistic.
Given that investor sentiment is primarily negative towards cryptocurrency, a major correction of the market which will likely bottom out in the near future, Kelly explained. It’s likely that in the next 2 to 3 months we’ll see a midterm rally in the fourth quarter of the year.
Kelly also stated that the tightening of Japanese government regulation along with their proactive commitment to cleaning up the cryptocurrency market and legitimizing their cryptocurrency sector is an extremely positive development in the long term.
This would prevent another major hack like the one witnessed with Coincheck exchange, therefore allowing investors to have more trust in local exchanges.
South Korea, the third largest cryptocurrency market behind US and Japan has also prepared stricter cryptocurrency regulations for their exchanges in order to prevent future hacks and money laundering attempts. South Korea intends to legitimize cryptocurrency in order to protect investors and set an industry wide standard.
Mt. Gox executed several selloffs equaling tens of thousands of Bitcoin, which led to quite a few market crashes throughout 2018. This prevented Bitcoin from gaining momentum at certain key levels.
Kelly reiterated that the delay of any further Mt. Gox selloff until 2019 is very optimistic towards the short term future of Bitcoin. Future potential market selloffs should be eliminated in the midterm due to this event.
The 3 factors outlined by Kelly could fuel a midterm Bitcoin rally. With South Korean and Japanese developments enabling the market to grow with stability and trust from investors returning, this should lead to a beneficial growth for Bitcoin.
This extensive beginners guide to cryptocurrency trading will introduce you to a wide range of fundamental investment and trading strategies you’ll need to learn before moving onto more intricate topics like technical analysis.
I hope this guide can help serve as an introduction to those looking to get into crypto trading. Many of its lessons I had to learn the hard way, so buckle up and try not to make the same mistakes I did. Regardless of how careful you are, just know that you’re going to make mistakes. As long as you learn from them, and move forward, you’ll be successful in this new and highly exciting cryptocurrency era.
If you’re just starting out, I highly recommend you bookmark this guide and start from Step 1. If you consider yourself a moderate to experienced trader, by all means, use the table of contents below to zip down to exactly what you need to know!
Ready? Good! Let’s get started…
Don’t just join one, join them all. You’ll find that one exchange will be slower to transfer fiat currency than another during certain times of the year. It’s always good to have backups of your backup.
You’ll need to submit a driver’s license, passport, etc in order to get into most serious crypto exchanges. You might as well kill two birds with one stone and apply to all these exchanges, at once.
|PRO TIP: there’s no need to purchase a whole number of a cryptocurrency. You can own small fractions of any denomination, so don’t really worry about fulfilling an entire Bitcoin for example. There are millions of investors and traders who only own fractional amounts of multiple coins.|
|If you’re impatient like me and don’t feel like waiting several days for your deposit to complete, check out LocalBitcoins This place accepts everything from cash, credit card, and even Walmart card payments into crypto.|
Everything on this site is sold through third-party sellers so be careful and make sure you purchase through a reputable one who has reviews on their local user ID (think eBay for crypto).
With this option you’re not paying ridiculously high fees. However, you will have to get up off your ass and make the transaction yourself either through bank account transfer or cash in hand.
4. Set up a direct deposit or wire transfer from your bank account for the quickest possible deposit into any one of these exchanges. Depending on the time of day, alignment of the stars, season of the year, etc… it can take anywhere from 1 to 7 days for the funds to reach your account.
To be quite honest, it really depends on how busy your current exchange is at any given moment. Coinbase tends to be the busiest and most widely used so if you’re in a hurry, you may not want to use this one immediately…unless you have time to kill.
|Now that your deposit has hit your account, and you have that beautiful cryptocurrency on-hand (because I know it’s burning a hole in your digital pocket) let’s move on to the next step, trading on crypto exchanges.|
PRO TIP: – when you sign up to Coinbase or any other “US-based” exchange, your transactions will be reported to the IRS. Do yourself a favor and make sure you’re tracking all transactions.
A great service that provides this for you, without having to do it manually (which is an extreme headache) is CoinTracking. I highly recommend this service to everyone who intends on trading more than a few coins per year.
This is where the rubber meets the road. If you want to invest or trade in a cryptocurrency other than Bitcoin, Litecoin, Ethereum, or Bitcoin Cash then you’re going to need to get real familiar with a cryptocurrency exchange trading platform.
These exchanges can be a bit intimidating to the weary newcomer, however believe me when I say, once you learn one, you’ll know how to use all of them.
I’ll go over the intricacies of how to use each one, however let’s stay on course and get you signed up to a few of these beginner friendly exchanges.
Also worth mentioning is GDAX, however you essentially get access to that exchange when you get accepted to Coinbase. It’s the official trading platform for their users. I don’t currently use that platform but realize that there are a lot of other beginners that do, so it’s worth checking out.
|PRO TIP: learn what “dollar cost averaging” is before you start trading. This basically means that if you want to invest $1000 total into a coin, you want to split that up into segments of 4 ($250).|
For example…let’s say you want to invest in Litecoin (LTC). You invest $250 to start. After a month, you want to invest another $250. Keep repeating this process every month, until you have fully invested your full $1000 capital.
This strategy ensures that you get the best price over time. To ensure you get the lowest price, invest on monthly dips. Over the course of 4 months, you’ll end up investing at a much lower price than you would have dumping your entire investment in one lump sum.
|PRO TIP: – Stay tuned to our Youtube channel where I’ll cover more details behind trading and technical analysis on different platforms as well as several different beginner trading strategies.|
Watch this video to get acquainted with the Binance trading interface
Be sure to check out our Technical Analysis, Candlesticks, and Chart Patterns section of our site where I cover all the standard details of crypto trading.
Trading Platform Order Types
There are 3 different order types you’re going to use when buying or selling at any crypto exchange. You should be comfortable with each one in order to be a successful trader.
Note that all orders, both buy and sell, have fees attached to them. They are relatively small (fractions of a percent), so don’t worry about them too much.
Market Orders – these orders allow you to get into a trade right away at the current market price. Orders are immediately filled within an order book at the best available rate. The advantage of this order is, it’s completed immediately. On the other hand, you don’t always receive the best price..
Limit orders – This order type allows you to set a specific price. The market can then fill that order at the specific price. The drawback to this order type is, your order may not always be filled before the price inevitably increases. You may notice that the order book is full of buy and sell orders. Once you place a limit order you’ll be able to view where your order is within the order book, usually indicated by an arrow pointing to your exact order. On other exchanges your order is in bold print.
Stop Orders – (AKA – “stop losses”) The disadvantage to having a stop order is that there are cases where a price will drop significantly during a small period before it rallies (increases) to meet your original goal. This is a way for market-makers to eliminate stop losses before increasing price action for a more prominent bullish run.
I cover more intricate details about stop losses within this guide. I highly recommend you read it before implementing this feature into your trades.
PRO TIP: Trading is all about minimizing losses and maximizing your gains. No one and I mean no one is going to win them all (not even close). You just have to make sure that your losses are small while keeping your gains relatively large. Obviously this is an oversimplified statement, but it covers the basis of trading.
Many technical strategies and money management techniques go into making this statement a reality.
Candlesticks and Trading Patterns – you want to get yourself familiar with these indicators as they are the basic foundation of trading cryptocurrency. We cover a wide variety of these patterns on our candlestick and trading patterns section. I highly advise that you check these out now and study them while you’re waiting for your exchange approvals to facilitate.
|If you’ve been in the crypto world for more than a week, then I’m sure you’ve heard of the website CoinMarketCap.com. This handy crypto tool should be your ever-loving sidekick when it comes to checking on the latest trends, prices, exchange listings, and news for anything crypto coin related.|
The only real issue that I’ve had with a CoinMarketCap is that it’s not updated in real time and can showcase older prices (by an hour). However if you want to view real time cryptocurrency price updates, I highly recommend you check out our live crypto chart page for up to the minute price updates.
So let’s just pretend you’ve been living under a rock for the past few months and heard about a new cryptocurrency that’s bound to change the way we view reality. I know, tough sell. The very first thing you want to do is check CoinMarketCap and place a search for that coin.
Once you find it, click on the link and look under the tab labeled “Markets” to view what exchanges sell the coin. You’ll typically notice that it’s being traded on several exchanges, unless it’s brand new.
You can also view other relevant information on the coin like their website, latest news release, forum gossip, market value over time (charts), and so much more. There’s a ton of information for you to dissect on CoinMarketCap, so you have no reason to not do your due diligence before investing.
This should be one of the very first places you explore before trading or investing in a new altcoin. Alternatively, our CCJ Live Trading Charts give you the same information offered on CoinMarketCap.
Transfers seem to be common occurrence for cryptocurrency trading, even more than any other trading commodity in the world (forex, stocks, options, etc), so let’s make sure you do it right, ok?
One aspect to coin transfers that you really need to get acclimated to our the fees. Transfer fees from one cryptocurrency exchange to another can vary greatly.
For example, at the time of this release, Bitcoin transfer fees are fairly high, whereas Litecoin offers a much cheaper rate. Always make sure you check the transfer fees before submission. They are displayed within a pop-up box right before you submit the transfer.
Also take note of the transfer time, which is equally as important as the fees. Check out bitinfocharts to see what the current coin transfer rates and fees are before setting up a transfer.
Once the transfer is complete, you can easily purchase the cryptocurrency that you intend to trade pairs with (typically BTC, ETH, or USDT).
Deposits and Withdrawals
These both work in the same manner and are fairly easy to accomplish. Once you complete the process once, you’ll most likely be able do it again without hesitation. In this example, we’ll be depositing BTC into Binance from Coinbase. You want to start out by retrieving your deposit address (the exchange you will be sending coins to). From here you want to click on the deposit button and copy your deposit address.
Take that deposit address and place it into the Coinbase Send/Request tab under Recipient. Once you click the “Send Funds” button, the transfer is complete. Now that wasn’t too hard was it?
Important Note – If you want to check on the status of your transfer, keep your deposit address handy and place it into the search bar located on blockchain.info
|PRO TIP : Always, and I mean always enable the two factor authorization for all exchanges you currently use. Most exchanges use the authenticator app or Authy app which reside on your smartphone. This will ensure that no unwanted guests have access to your account without also having access to your smartphone. This little added security feature is what you want to have when there are thousands of dollars on the line.|
Congratulations young grasshoppa! You’re one step closer to becoming the next crypto millionaire. However, there is one aspect to crypto that you want to make sure you adopt in the early stages of your career. SECURING YOUR PROFITS!
Weekly news regarding exchange hacks and crypto scams are prevalent within this budding industry. Cryptocurrency is in its “Wild West” stage of adoption so everyone’s out to grab a little piece of your digital nuggets.
Many of the low level hacks that tend to go under reported however occur on at daily basis are spoof sites scams. These are websites that look like real crypto exchanges you frequent. The scammer requests that you login to the fake exchange and once you login with your credentials, you can say goodbye to your precious crypto coins. That’s why utilizing 2 factor authentication is so important. Make sure you have that feature turned on before you start trading.
You can also utilize sites like HaveIBeenPawned and input your information there so the site can scan for security breaches to see if your username, password, or other information has been leaked. Sign up for their notifications so they can let you know of future breaches as well.
Securing Your Profits via Digital Wallet
Now that you’ve acquired your little stake of currency within the crypto sphere, you need a secure place to store. There are 4 mediums in which you can do just that.
Crypto Exchanges – this is the easiest option, however the most risky as well. It allows for fast liquidation of assets. You don’t have to wait for your crypto to transfer to your exchange of preference. You can easily exchange your coins for others altcoins and diversify your portfolio from within these virtual crypto shopping malls.
The biggest disadvantage to these venues is the fact that you don’t have full control over your wallet. If the exchange is hacked (many of the newer and less established exchanges are) and they declare bankruptcy, you might end up holding the bags for it. Mt Gox is a great example of this. This infamous exchange is constantly being referred to when it comes to these types of scenarios. [LATEST: they are currently in process of returning customer funds]
Soft wallets – this solution includes storing your crypto on a computer software program like Exodus. All your coins will be stored on your desktop or laptop computers for safekeeping.
When using the solution, you need to make sure you keep your private key safe in case something happens to your computer, like a virus or hardware malfunction. This private key will enable you to retrieve your funds if an unfortunate event like this occurs.
Make sure that this private key is secured in a safe place. Like other utilities that have private keys, you’re still the susceptible to having them stolen if you’re not careful where you place it.
Online Wallets – this offers users you way to keep your cryptocurrency online, within a secure environment, without the worry of being hacked or shutdown. Services like My Ether Wallet (MEW) offer an option to access your wallet from anywhere in the world, while maintaining full control of your funds. You’ll always have access to your private key when needed.
The main advantage of this service is, portability of funds. The disadvantage is that your private key is still susceptible to being stolen if you keep it on your computer or somewhere easily found within your home. It’s a very small chance, but still a chance.
Hardware Wallets – the introduction of wallets like Ledger Nano S can take care of your private keys for you so that you’re off the hook with regard to keeping your key in a safe place. This ultimately means that hackers will never be able to steal your private key via key loggers, file scanners, etc.
If that wasn’t good enough, you’ll have a backup of your secret key, which you can access if you ever lose sight of your Ledger Nano. The only disadvantage (if you’re really reaching for one), is that you’ll have to pay a transfer fee when you decide to transfer your coins from your wallet to an exchange. I wouldn’t really categorize that as a disadvantage as it simply comes with the territory regardless of what wallet you decide to use
In order to get you moving in the right direction I want to cover a few proven ways to make money trading cryptocurrency. Many of these techniques have been carried over from traditional stock market trading, however, unlike traditional stocks you won’t find the volatile swings we see every day with cryptocurrency. This means more opportunities for us.
A Little Technical Analysis Goes A Long Way
First and foremost, you’re going to want a get a good grasp on technical analysis and trading patterns. Please check out the technical analysis section of our site where I cover all the fundamental chart patterns, candlesticks, as well as indicators. You’ll need to study these in order to achieve a high chance of success with trading. I also cover more detailed technical analysis over on our YouTube channel along with several different trading strategies.
If you’re more of the investor type and you plan on investing in numerous altcoins for the long haul, it’s still good to have a fundamental understanding of technical analysis.
So what exactly is technical analysis?
Technical analysis is the study of past price patterns in order to receive a high probability of a potential outcome. This tends to equip us with a unique ability to identify future opportunities of profit. The cryptocurrency market, more than any other traditional trading marketplace, have a herd like mentality. The tendency for inexperienced traders is to buy when the price is high (rallying) and sell when the price is low. We can take clear advantage of this with proper technical analysis.
It’s much easier to nail down fundamental analysis, simply because everyone has the ability to stay up-to-date on the latest cryptocurrency news due to all the information we have at our fingertips. In order to become a successful trader, we need to utilize fundamental and technical analysis at all times.
Note: technical analysis is not an all-in-one strategy. It is only one of the tools we use to help execute our overall strategy.
Be careful to not dump 100% of your funds into one single coin. Spread your funds out over several different coins or use dollar cost averaging, which I covered above.
Trading Tools For Technical Analysis
Tradingview, in my honest opinion, is the very best charting platform on the net. They not only offer you a free chart to hone your technical analysis skills with, but it’s also a great social networking site for beginner and advanced traders. You can really learn a lot by following how other traders are plotting their trades.
Plotting chart patterns, as if you had real money in the coin, helps a lot with learning the basics of technical analysis, however it can never prepare you for the emotional side of trading when using your own money.
Once you feel comfortable with technical analysis and think your skills are up to snuff, I highly recommend starting out with very small amounts to trade, in your beginning stages. This will ensure you are actively trading, perfecting your TA abilities, as well as honing your emotional skills which greatly come into play when trading with currency.
Build Your Strategy and Be Consistent With It
One of the easiest ways to lose money trading is to bounce around from one strategy to the next without really using one particular strategy for any decent amount of time. Crypto traders need strategies and need to be consistent with them.
A solid strategy will always answer these questions…
Just remember, a solid strategy will allow you to win only half of your trading battles, and still keep you in profit.
|PRO TIP: This is definitely worth repeating. Finding a proven strategy that has worked for you and sticking to it is the most important thing you can do along your crypto trading journey.|
With that being said, it also might be one of the toughest. You’re not going to win them all, but if you can at least win close to half of them, you’re going to come out ahead (as well as using proper money management skills). Remember; don’t fix it if it ain’t broke!
We’re almost done, so I congratulate you for sticking with me so far (unless you cheated and skipped to the end). By now, you should have a fundamental understanding on cryptocurrency trading. Hell, you might even think this was more simple than you had originally thought. Better start preparing for that “lambo life” by the end of the year right?
Yeah, yeah….don’t get too far ahead of yourself young grasshoppa. Even though some of these more simplified concepts may sound easy to grasp, the truth of the matter is, the emotional part of trading is a lot more difficult.
You might think you’re a Zen master now, but just wait till you start trading with your own hard earned income. It’s going to take some solid work (and pain) before you really master the concepts within this guide. The only way to do it is through experience and trade discipline.
When trading with real money, you’ve rightfully earned, you’re going to make mistakes. Just realize that now and be ok with it. There’s not a trader out there that hasn’t lost a ton of trades. So let’s close this guide out with a few of the most common mistakes beginner traders (yes you) will make.
Keep Your Cool
Perhaps one of the most frequent and careless mistakes a trader can make is letting their emotions get the best of them. If you have the wrong mindset, you will always lose in the long run. Set a clear goal for the profit goal you wish to obtain for the day or week and just “walk away” once that goal is met. Set up the same for losses to ensure you don’t keep digging yourself a hole.
If your losses for a particular day become too great, walk away and come back another day when opportunities are more present.
2-3% profit per day is a great goal for an initial investment of $1000. Reinvest that money and compound interest to allow your profit to work for you.
Protect Your Investment
Let me sum this up in one word, stop loss! That’s all there really is to say. If you don’t know what a stop loss is, read this article. To me traders fail because they don’t set proper stop limits. This is an easy fix so don’t let it happen to you.
Let Opportunity Come To You
Use technical analysis in order to determine when a particular trading strategy is open, in order for you to take up a position. If you find a chart pattern that’s about to break out and have two or three indicators confirming the pattern, you should feel confident about taking the position.
Also make sure to set trading alerts for when your favorite coins reach an all-time low or break out of a major support. Wait for the trade to come to you as opposed to forcing one. This will save you many painful days of regret.
Watch For Paralysis By Overanalysis
Technical analysis is not a prediction into the future. If that was the case we’d all be billionaires by now. Studying charts for hours is not going to produce consistent income. If certain charting patterns and signals don’t feel right or indicators are not confirming your strategy, then it’s best you trust your gut. Save your money to trade another day.
There will be plenty of times where chart patterns and indicators point to a potential breakout and it doesn’t happen. Don’t let it get to you as the market is made up of too many irrational factors for it to be too predictable. Continue to use a strategy that works for you and implement it on a consistent basis.
Only Invest What You Can Afford To Lose
I realize you’ve heard this statement 100 times over but it does bear repeating. There are too many stories of novice traders investing in a trade, in which they take money out from their bank account (or worse savings) that they can’t afford to lose.
This is not only a bad idea for trading but for any investment opportunity as well. You’ll also realize that your emotions get the best of you when you’re trading money that you can’t afford to lose. Trading with the mindset of not giving a damn is one of the most powerful mindsets that you can bring to the table.
I hope this guide helps you on your journey towards wealth and independence. Be sure to check out our other guides related to technical analysis, trading fundamentals, and crypto trading tools. They’ll help you along your path to crypto millions. Good luck and happy trading!
For an updated list on trading guides, visit our crypto trading section here.
A congressional hearing before the U.S. House Committee on Agriculture today struck a positive tone towards the impact that cryptocurrency and digital assets can have for the economy and processes.
The hearing included academics, engineers, and entrepreneurs in the cryptocurrency industry. They included:
The recent indictments of 12 Russia-linked hackers related to their alleged involvement in the 2016 U.S. elections was brought up. Bitcoin was mentioned as the means the hackers used to fund their activities and whether this helped hide their indentities.
However, committee members were informed that bitcoin’s public ledger allowed investigators to pinpoint the movement of funds much more easily than cash. The committee chairman, Michael Conaway, said, “As long as stupid criminals keep using bitcoin, that’d be great.”
With the numerous subject matter experts on the panel, the discussion went into much more detail than others, like the ones at the SEC.
Amber Baldet made a good case for current blockchain technology as an early open framework built on open-source technology, much like the infrastructure of the Internet. In its early state currently, blockchain technology has the potential to grow into new, foundational technologies like the SMTP email protocol. Baldet thus recommended a sensible and moderate regulation.
Baldet said, “the committee can take a more proactive approach to regulation” as a means to support a blockchain becoming a global infrastructure, as the United States did with the internet. This is in contrast to “reactionary” regulations.
The questions from some committee members did keep the common concerns over bitcoin’s price volatility and ICO scams. Gorfine, of the CFTC, conceded that there were a large amount of bad actors in the space and that upwards of 80% of the ICOs have gone bankrupt.
However, Daniel Gorfine stated that his work is focused very much on a “fintech primer”, which ultimately helps educate investors and regulators understand the technology and avoid scams. The lack of education is a large source of fraud in the industry for market participants, in addition to still-murky regulations.
Gary Gensler, Senior Lecturer at the MIT Sloan School of Management, encouraged speeding up decisions about sensible regulations in order to keep innovators in the United States.
Gensler believes that strict or unclear regulations could move innovation and economic benefits offshore. If other countries get ahead of the United States in the industry, this could be a concern. History from other sectors has shown that once innovators leave the country, it’s more difficult to bring them back once the regulatory decisions are made.
Chairman Conaway concluded that “the hearing was very elucidating for them on different issues.”
However, a recurring concern throughout the hearing is the centralization of capital and mining in bitcoin. One problem is that only a few wallets contain over 90% of all circulating bitcoin. Another point is that the largest miners of bitcoin are in China and Russia, both of which make up about 50% of mining power. Bitmain is rapidly expanding its business globally.
Overall, it is encouraging to see that the committee brought experts in private industry and academics to inform regulators on the complexities of blockchain technologies. The group appeared to synergize their specialties in the industry. The committee members could do well to bring more experts on board in the future, since many still appear to be learning about the technologies.
With recent changes in regulation as well as customer sentiment rapidly shifting, it’s no surprise that cryptocurrency exchanges are embracing changes within this constantly fluctuating industry.
It’s important to note that there are only a few key players that handle the overwhelming bulk of crypto trading volume.
There are 3 types of cryptocurrency exchange groups. Custodial, noncustodial, and decentralized exchanges (also known as DEXs).
Custodial exchanges are those that act as a crypto wallet managers. They maintain user assets through an internal ledger. Customers therefore don’t have direct access to their wallets that the exchange holds for them. Only when the user decides to transfer his currency does he have a resemblance of control.
An example of these exchanges would be Coinbase, Bitfinex, Gemini, Bittrex, Bitfinex, etc. These are, by nature, centralized exchanges. An overwhelming number of trading volume (73%) runs through these custodial exchanges.
One of the most notable advantages of using these exchanges is the ease of use at which they come with. Nonetheless, this still provokes concern over the exchanges centralized nature. With hackers breaching their internal systems and attaining private keys to the exchanges, a user’s funds can be lost overnight.
It’s worth noting that more exchanges these days have been proactively taking measures to store funds in “cold storage” (storage without connection to the Internet) which provides an extra layer of security. However, what happened with the infamous Mt. Gox, Bitfinex, and recent CoinCheck hacks still have users weary when it comes to storing large amounts of cryptocurrency on their chosen exchange.
These types of exchanges also face a major concern over price manipulation as reflected in the recent probe by the US Department of Justice.
– Pros: easy to use interface, instant fiat to cryptocurrency conversion, customer support
– Cons: lack of privacy, high fees, and major target for hackers.
Most of these concerns over the custodial exchanges have prompted many users to push for more decentralized exchanges.
These exchanges, although still centralized, do not manage user wallets. They simply match orders through an internal order book and then take a fee on top for providing their services.
Some of the more popular noncustodial exchanges are Changelly and ShapeShift. The more popular exchange of the 2, Shapeshift, roughly takes in around 15,000 orders a day and averages around $10-$15 million in transaction volume.
The exchange’s internal mechanics are still not transparent, which is why they are still considered centralized. Foul play is still possible within these exchanges. Also worth noting, non-custodial exchanges tend to have low liquidity which scares away more sophisticated investors.
Last but not least, we have the decentralized exchanges, also known as DEXs. Many within the crypto community are rooting for their success. After all, isn’t the whole appeal behind cryptocurrency the idea of having a decentralized currency as well as a platform that no single party controls?
If that’s the case why do centralized platforms control so much of our crypto assets? On paper, decentralized exchanges are the perfect solution for concerns raised over centralized exchanges. They are extremely light in fees (if there are any fees at all), they are transparent in nature, and are highly secure as they allow you to control your own wallet.
There are several DEXs which execute orders under smart contracts. The chart below lists some of the current players in the space including companies that are building protocols around decentralized exchanges.
There are a few downsides to decentralized exchanges in their current state. Many of these downsides mimic the challenges of non-custodial exchanges.
Many within the crypto community agree that decentralized exchanges will take a more prominent role in the future. Megan Hernbroth, Head of Communications for Coinbase, stated that the decentralized exchanges are “very important to the ecosystem of cryptocurrency trading by acting as a middle ground”.
Also note, custodial exchanges play a major role in the future of crypto trading as they offer more convenience for the casual trader. Many enthusiasts believe that the future of crypto will contain more of a hybrid approach in which both centralized and decentralized exchanges are combined. These newly developed hybrids will utilize the benefits of both exchanges.
It’s inevitable that decentralized exchanges will continue to rise in popularity. With that said, it’s highly doubtful that they match the scale and popularity of custodial exchanges anytime soon. If the awareness of security and privacy continues to grow, we may witness the birth of these “hybrid solutions”.
With regulation concerns looming over the industry, presently those within the crypto community should not entirely comfortable with storing or trading their cryptocurrency with one particular exchange.
Blockchain has revolutionized the way we look at monetary transactions and banking, however the 9 year existence of cryptocurrency has been peppered with some monumental hacks.
Blockchain technology will always push the envelope when battling against such cyber-attacks while the space is constantly evolving. Unfortunately, the criminal empire will always evolve alongside these changes.
Let’s take a look at some of the biggest exchanges over the past 9 years.
Mt. Gox, one of the most notorious incidences since bitcoin’s inception, which has set the bar very high in terms of its effect it had within the cryptocurrency community.
The incident claimed over 850,000 Bitcoin, which made headlines over the last 4 years and has been a major talking point during this time. At the height of its popularity, in 2013, Mt. Gox was the largest exchange in the world, responsible for over 80% of all Bitcoin transactions.
This resulted in $473 million worth of Bitcoin stolen. The details surrounding the hack are still not clear; however a large number of people were arrested for the involvement with these stolen funds.
Take note that it’s hard to refer to Mt. Gox as a pure cyber hack, as the CEO Mark Karpeles was indeed charged with embezzlement of these Bitcoin funds for his involvement in this case, not to mention various associates of his which were also involved.
Fast forward to 2018, where this most recent hack, which was unfortunately titled as the largest cryptocurrency hack in modern history, with regard to value, was stolen by hackers.
It’s not entirely clear how this happened, however the hacker gained access to private keys of Coinchecks online wallet and moved approximately $523 million worth of NEM coins.
The exchange was condemned for its horrible security standards. Those within the cryptocurrency community could not believe that all these funds were stolen from a single wallet address.
Nonetheless, the exchange worked diligently to reduce the damage done by eradicating the transactions, in an attempt to undo the damage as well as manage to create a tagging system that allowed them to track these stolen NEM coins.
Since these stolen coins were flagged, the hackers were not able to sell or convert these coins on different exchanges. In an attempt to make good with their customers, Coincheck vowed to commence repaying users for these lost funds.
Known as one of the largest cryptocurrency exchanges by volume, Binance is the most recent exchange to be hit by an attempted cyber-attack.
Unlike some of the other hacks that occurred in the past, Binance was completely perplexed by a far more sophisticated operation. With that said, the exchanges security systems picked up on the suspicious activity and the hackers were not able to make off with any of the stolen cryptocurrency.
On March 7, numerous users complained to Reddit and other social media outlets that the unauthorized transactions were taken out of their accounts.
According to Binance members, those hackers used phishing websites to hijack user logins. Once they acquired enough user login accounts, they created trading API keys within the stolen accounts.
On March 7, the cyber hackers utilized these keys to place buy orders on the VIA/BTC market, which pumped the price to an all-time high. These coins had been moved to 31 different accounts, sold at the highest price, and then moved back into the corresponding BTC accounts.
The Italian based exchange, Bitgrail, lost 17 million dollars worth of Nano tokens, estimated at around $187 million. The founder of Bitgrail, Francesco Firano blames the Nano development team and its blockchain technology, while the Nano team refuted those claims, thus blaming the founder Francesco Firano.
Since the inception of this news, Bitgrail has announced that these funds will be returned to their users, however the users of this exchange have to sign an agreement that rules out any future legal action against the Italian exchange.
This mining service had over 4000 bitcoin stolen, worth around $63 million at that time, by hackers who had allegedly hacked the company’s wallet.
The popular service did very well to recover after the attack, by displacing the current CEO. After several weeks, they resumed their service and pledged to refund all users affected by the cyber-attack, which started back in February 2018
We have certainly come a long way since the Mt. Gox debacle. We’re still in dealing with the effects and aftermath of the infamous incident, however last weeks news was announced that Mt. Gox trustees had been liquidating large amounts of Bitcoin to reimburse creditors.
If that wasn’t bad enough, the sales of these funds were in excess of 400 million dollars and is currently being blamed for the markets lows in early 2018.
The FBI continues to investigate, focusing on a UK-based company that is believed to have laundered 650,000 Bitcoin.
Fortunately those responsible for the Coincheck and Binance hacks have been far more proactive, which is a good sign for newer exchanges which tend to take measures regarding the stoppage of these cyber-attacks as well as the return of funds to their customers.
Binance has promised will award anyone with information that would lead to the arrest of the cyber hackers responsible for the attack, who would be awarded $250,000 worth of Binance Coin bounty for the offer.
These two exchanges have given users a bit more confidence with regard to cyber tax as a whole. They’ve gone to great lengths to ensure that the affected community is reimbursed as quickly as possible.
Bitgrail has come under heavy scrutiny from the cryptocurrency community due to the fact that the CEO of the company had never admitted full responsibility for the theft, unlike Binance and Coincheck which immediately announced future plans to refund all customers that were affected by the attack, most of which have been refunded.
Taking all these previous scenarios into account, it seems that these cryptocurrency exchanges are reacting to future cyber-attacks in a more proactive manner, however this is completely dependent upon the ethics and credibility of the CEOs of said companies and their respective management teams.
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