Microsoft’s Two New Patents Fuse Blockchain With Trusted Computing Techniques

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Two new patents from Microsoft reveal that the tech giant is looking to bolster its blockchain solutions with the use of trusted execution environments (TEEs), according to two filings published by the U.S. Patent and Trademark Office (USPTO) August 9.

Both applications outline how the use of TEEs could further improve security within a consortium blockchain network, which requires that specific nodes are endorsed to act as validator nodes (VNs) on the blockchain.

As Microsoft’s first patent filing indicates, TEEs can help to improve the security of such networks in the following way:

“In one example of the technology, a first node is endorsed. During endorsement of a first node, a pre-determined type of blockchain or other security protocol code to be authorized and a pre-determined membership list may be stored in a trusted execution environment (TEE) of the first node.”

According to the patent, not only a specified protocol or membership list, but potentially a series of further agreed-upon aspects could be stored within a TEE. The patent then outlines how using a system of TEE attestations would be able to securely verify all new participants of the system who are found to possess matching information to that which is stored within the first node’s TEE.

Microsoft’s second patent filing from August 9 outlines how a TEE may also facilitate the verification of blockchain transactions within a consortium network. The same TEE attestation system would generate a sufficiently trustless environment in which other VNS on the network would “not need to do re-computation for verification,” allowing a given pre-authorized entity to “directly” broadcast the “updated official state” of a given processed transaction:

“In some examples, the entire network accepts the transactions, including chaincode transactions, and blockchain states are directly updated. In some examples, there is no need for a copy of the transaction in order to confirm a block.”

Just last week, news that Microsoft’s Ethereum-based cloud computing platform Azure had replaced its existing proof-of-work (PoW) consensus mechanism with a new proof-of-authority (PoA) algorithm. Microsoft has proposed that the new algorithm will improve the efficiency of building decentralized applications (DApps) for private or consortium blockchain networks.

Earlier this week, the cryptocurrency markets slumped: Bitcoin (BTC) lost its $6,500 support, and Ethereum (ETC) dropped well below the $400 mark (rates stand at $6,620 and $319 respectively by the press time). While it’s important to remember that on such a volatile and scarcely regulated market, news might affect the prices to a lesser degree, and the recent drop correlated with the U.S. Securities and Exchange Commission (SEC) decision to postpone its verdict on the listing and trading of a Bitcoin exchange-traded fund (ETF) until late September.

The SEC has gained the reputation of being a major news-maker in the cryptocurrency field: The watchdog’s decisions toward the market have been associated with a number of price drops and bull runs.

SEC deems DAO tokens to be illegal securities

When: July 2017

Alleged reaction: Slightly bearish

In July 2017, the SEC came through with a major decision, putting its mark of interest on the crypto market. The regulator reviewed the infamous decentralized autonomous organization (DOA) case and concluded that DAO tokens, issued via its Initial Coin Offering (ICO) back in 2016, were in fact securities and hence had to register with the SEC beforehand.

By making that move, the SEC effectively showed that many other ICOs, which were abundant during their unregulated, ‘free run’ throughout the 2016-2017 period, might be in trouble as well. In order to determine if an ICO constitutes a security or not, the SEC usually applies the Howey Test — essentially, if a token is marketed as a profit-oriented asset, most likely it will be deemed a security being offered by the agency. However, the watchdog has explained that such decisions are made on a case-by-case basis, as the facts and circumstances of any investment transaction — including economic realities — will determine whether the transaction constitutes the offer of sale of a security.

Even though the SEC decided not press any charges that time, it gave a clear signal that the ICO frenzy could be over. Nevertheless, the market barely reacted: While the top five coins fell in price on the day of the announcement, the overall reaction wasn’t dramatic. Ethereum went down about 10 percent, but soon bounced back to its previous value. It might have been the result of market volatility rather than the SEC news, as such.

The SEC denies second Winklevoss ETF application

When: July 2018

Alleged reaction: Slightly bearish

The prospect of getting an authority-sanctioned, crypto-backed ETF has been widely discussed in the crypto community. Some believe it will provoke mass adoption, and the prices will ascend, while others remain skeptical — leaning toward crypto-anarchic sentiments. The SEC gets to decide if the industry is ready for an ETF, and the watchdog hasn’t been particularly optimistic thus far.

In either case, the market tends to react to most ETF-related news. A stark example is the recent SEC’s denial of the Winklevoss twins second application on July 26, which happened just prior to the latest ETF-induced panic in the market. The SEC wasn’t convinced by the Winklevoss’ plea that Bitcoin markets are “inherently resistant to manipulation,” which was among the primary reasons for the rejection.

As mentioned above, the Winklevoss brothers had tried registering a Bitcoin ETF before — their first attempt dates back to 2013. That time, it took the SEC four years to come up with a decision: Finally, on March 10 of last year, the agency denied the initial application based on concerns “that significant markets for Bitcoin are unregulated.”

Both times, the market reacted negatively. In March 2017, the price of Bitcoin fell from $1,300 to around $1,100 in a single day. In July 2018, BTC lost over $400 within the span of just three hours, although it managed to regain its value within the following 24 hours — SEC Commissioner Hester M. Peirce’s statement of official dissent, which was published soon after the hearing, could have helped in that rebound. In it, she opined that the agency’s move “sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of Bitcoin ETPs [Exchange Traded Products],” recognizing the SEC’s influence in the market.

The SEC denies VanEck SolidX ETF request

When: August 2018

Alleged reaction: Strongly bearish

Similarly, this catastrophic week on the crypto market is largely associated with the SEC postponing its decision on the listing and trading of a Bitcoin ETF powered by investment firm VanEck and financial services company SolidX until Sept. 30.

The VanEck SolidX ETF application was submitted in June and was generally considered to be the most promising among crypto-backed ETFs: It didn’t feature bold assumptions akin to the one submitted by the Winklevoss twins that claimed BTC markets are “inherently resistant to manipulation.” Moreover, the VanEck SolidX fund is physically backed — meaning that it will actually hold BTC — and both firms have reassured that this will protect against the loss or theft of the cryptocurrency. According to their filing with the SEC, each share of the VanEck SolidX Bitcoin Trust is set to cost a hefty $200,000. As SolidX CEO Daniel Gallancy explained to CNBC, the price is set at a higher rate to focus on institutional investors, and the fund hopes to get listed on the Cboe BZX Equities Exchange.

On Aug. 7, the SEC issued a document citing their right to extend the review period. It also stated that the agency had received more than 1,300 comments on the proposed rule change to list and trade the VanEck SolidX BTC shares. Per the document, within 45 days of the filing of a proposed rule change — the trust submitted their application on June 6 — or within 90 days, should the Commission deem necessary, the Commission will approve, disapprove or extend the period of consideration.

While the news seemed rather neutral, and essentially meant that the SEC simply needs more time to rule whether the crypto industry is suitable for an ETF at the moment, panic induced and the markets plummeted: After solid growth to break above the $7,000 mark earlier that day, BTC saw a loss of around $500 in six hours and has lost around 12 percent this week. Similarly, other coins crashed as well — e.g., Ripple (XRP) lost as much as 23 percent of its value since the news was announced.

On the other hand, bullish news on the market that came out recently, like the announcement of upcoming cryptocurrency project Bakkt by the Intercontinental Exchange (ICE), which operates 23 large global exchanges — including New York Stock Exchange (NYSE) — appeared to be largely ignored. In an interview with CNBC, Pantera Capital CEO Dan Morehead claimed that investors were “overreacting” to the SEC postponing the ETF hearing. He predicted that a Bitcoin ETF approval will take “quite a long time,” citing the nascent stage of crypto adoption. The hedge fund manager also stressed that the most recent asset that gained approval from the SEC for ETF certification was copper, a metal that “has been on earth for 10,000 years.”

SEC and CFTC held a joint meeting where they recognized cryptocurrencies’ importance

When: February 2018

Alleged reaction: Strongly bullish

On Feb. 6, the SEC — along with the Commodities and Future Trading Commission (CFTC) — held a highly anticipated joint hearing in which they elaborated on their stance toward cryptocurrencies, ICOs and blockchain technology. During the meeting, the regulators gave credit to the cryptocurrency industry for adding a new paradigm to the financial system, stressed the importance of fair regulatory frameworks and famously said that “if there was no Bitcoin, there would be no blockchain.”

Consequently, that promoted a bullish trend, and the community reaction following the hearing had a positive effect on the crypto market — which was staggering at the time, likely due to China reiteration of it’s zero-tolerance of crypto, rumors of a ban in India and some mainstream banks prohibiting cryptocurrency purchases with their credit cards. After the SEC/CFTC showed their positive stance in regard to some crypto industries features, Bitcoin and Ethereum saw 20 percent growth in value, and the rest of the cryptocurrency market rallied into the green.

SEC rules that BTC and ETH are “not securities”

When: June 2018

Alleged reaction: Slightly bullish

The SEC’s approach to cryptocurrencies is still not crystal clear. However, at this point it becomes evident that, while the agency considers most ICOs to be securities, the two leading cryptos — Bitcoin (BTC) and Ethereum (ETH) — are not seen as such. That sentiment was recently voiced by Jay Clayton, the chair of the SEC, who declared that BTC is not a security because it acts as a replacement for sovereign currencies:

“Replace the dollar, the yen, the euro with Bitcoin. That type of currency is not a security.”

Soon after the news broke, Bitcoin’s price went from $7,525 up to $7,728 within 24 hours, showing a slight growth.

A couple of days after that, William Hinman, the director of the SEC’s division of corporation finance, claimed that Ethereum (ETH) isn’t a security either, putting an end to a months-long dilemma that could have potentially ended up with Ethereum’s 2014 ICO being outlawed:

“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions[…] And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”

That signal was positive for ETH, meaning that it wouldn’t face any charges. Consequently, the coin’s price rose as much as 11 percent, up to $520.68.

Cryptocurrencies and the SEC

The SEC reminds that exchanges should be registered with the agency

When: March 2018

Alleged reaction: Slightly bearish

In March 2018, the SEC issued a public warning aimed at crypto exchanges. The watchdog explicitly stated that platforms who trade “securities” — and the SEC deems many altcoins as such — “must register with the SEC as a national securities exchange or be exempt from registration.” The announcement read:

“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not.  Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”

Hence, major crypto exchanges were urged to comply with the SEC’s regulations, entailing a strick Know Your Customer (KYC) and Anti-Money Laundering( ATL) approach, among other things — some major U.S.-based exchanges, like Coinbase, have since tried to register with the authority.

The news coincided with a noticeable downtrend in the market: For instance, BTC went down 8.6 percent from 24 hours earlier, losing its $10,000 support. However, the surge could have been initiated by other factors, such as rumours about an alleged Binance security breach that were spreading around the time.

Tether (USDT) has issued new tokens worth $50 million on August 11, according to block explorer OmniExplorer.

In late March, Tether had released 300 mln USDT tokens priced at $1 per token.

Over the past 30 days, Tether’s market capitalization lost around $300 million, down from $2.7 billion in mid-July to the current $2.4 billion, according CoinMarketCap.

Tether

Tether is now in second place after Bitcoin (BTC) in terms of highest daily trading volumes, seeing $4.2 billion in trades a day or 28.16 percent of all crypto trades, while Bitcoin’s average 24-hour trading volume is $5.7 billion, or 38.62 percent.

Yesterday, August 11, the price of Bitcoin surged by $300 over the course of just a couple of hours, following a drop to as low as $6,118. As of press time, Bitcoin is trading at $6,357, up just under one percent on the day.

Crypto exchange Bitfinex, which is the seventh ranked crypto exchange by 24 hour volume on CoinMarketCap, shares leadership with Tether. Both companies have come under fire for lack of transparency, as Tether’s USDT tokens claim to be backed one-to-one by USD, yet the company has yet to submit to a public audit.

On June 13, Tether again faced criticism following a study that blamed the company for Bitcoin price manipulation back in 2017. According to the research, Tether’s transaction patterns show it was “used to provide price support and manipulate cryptocurrency prices.”

If you’re wondering how you should treat Bitcoin, as an investment vehicle, allow me to share with you guys my non-expert opinion.

End of story, thanks a lot for reading.

See you next time.

–this article shouldn’t be taken as financial advisement as it represents my personal opinion and views. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing. Never forget: with great power, comes great responsibility. Being your own bank means you’re always responsible for your own money

Setting up the ambiance

Cryptocurrency investment is one of the hottest topics we can discuss today, as there are many different opinions on what the future might hold for Bitcoin.

Due to the regulatory bodies world-wide having different approaches towards the subject, while at the same time Bitcoin being decentralized and not belonging to a single entity/organization, investors usually feel uncertain towards the future use of digital cryptocurrencies.

An important point, however, is that from a money-making perspective, which is what matters at the end to any investor, Bitcoin is undoubtedly one of the strongest profit vehicles since it came to existence – probably the best asset ever created: digital gold.

The Bitcoin Timeline

First we grab a price level, like when Bitcoin was around USD 8200. Now, if you want to understand if that price level is interesting, consider the following: the likelihood of having invested in Bitcoin at any given point in time since its inception while actually profiting from it, is about 97%.

Sounds too good to be true, right?

Except, it’s not.

By doing a rough estimate, we can quickly see Bitcoin has only been above USD 8200 for about 137 days. As it is traded for about 1917 days, there’s a ~ 97% chance you bought Bitcoin when its price was lower than USD 8200.

Of course this also means you only had a 3% chance of selling at the right time.

There’s always a dark-side to everything, right?

My point still stands: if we only take into account price and time, you’re actually way more likely to have made a bet at the right time, than the opposite.

I know these statistics are fun to play with, but they hardly bring you any real value. Knowing when you could have bought and sold it’s important from a learning perspective, although real investor education happens in a most peculiar way; usually, by making wrong bets and suffering through bearish seasons, that is.

What you desire to know is not how much money you could have made. What you, and everyone else, really want to find out is how much you can still make.

And today, that is what I’ll be discussing.

With a few twists, some side-track topics and the usual delightful shenanigans.

Before we go any further, please remember the below warning:

Anyone who tells you they’re not in it for the money are either lying or don’t need to care about money because they have so much of it, diversified over so many assets, their risk is quite low.

Back to what matters.

Is The Future Bright?

Depending on where your political and economic view-point stand, Bitcoin can either be the world’s savior or its demise.

In my humble opinion, as an economist, I think most of us are dead wrong on how we think money works . I won’t go into too much detail about the subject, as I really want to write an exploratory paper on how (I believe) money should be earned and accessed. The point worth extrapolating is that, much opposed to general belief, I do think there are many different ways to redistribute wealth properly and to create incentive systems for everyone being able to earn cryptocurrency.

Seems illogical that the biggest problem in cryptocurrency (adoption) could be easily fixed by creating ecosystems where users earn tokens for doing things. 

Literally anything at all.

Part 1: The Bitcoin Market

When we look at how the market has been evolving, since its birth, I would expect this “bubble” like behavior to continue, maybe indefinitely.

There are many factors which will balance into the behavior of price, especially market manipulation, regulatory actions and, of course, both institutional money and other financial investment vehicles (like Bitcoin futures or ETFs).

Historically speaking, Bitcoin has been kind to long-term investors.

Short-term investors cannot complain too much, as Bitcoin is one of the most (if not the most?) volatile assets out there.

Plus, I believe smart-money is coming full force, as it usually happens after every Bitcoin bearish season.

Remember what happened after the mini-crash in March 2017?

Want an expert opinion on the real value of Bitcoin and possible triggers for mass adoption?

Check this beautiful piece from Hacked’s one and only, Mati Greenspan.

As with everything in life, there’s the good and the bad (sometimes the ugly too) and Bitcoin is not an exception.

If there are many factors that could trigger a price increase, like mass adoption, there are others that can have quite an opposite effect.

Let’s check which triggers can potentially call for bear and bull markets.

Market price manipulation

To me this is definitely the grand-master behind the major price run we’ve seen in late December 2017 and January 2018. It did take me some time to truly understand why, but due to the amazing work of so many different people, we now have a better, clearer picture of what really happened.

Tether manipulated the markets by manipulating the price of Bitcoin. It wasn’t any technology advancement in neither Bitcoin, nor the large quantities of dumb money entering the market.

The key argument pointed out by Prof. Griffin on the research paper “Bit “, was that “When Bitcoin’s price fell, purchases with Tether tended to increase, helping to reverse the decline. But during times when Bitcoin rose, Griffin said he didn’t see the reverse occur.” Seems Tether was protecting the price of Bitcoin from crashing.

To accomplish this, large quantities of Tether were issued and used to buy Bitcoin on Bitfinex. Of course this wouldn’t be such a big deal if Bitfinex wasn’t owned by the same people who own and mint Tether. But that’s not even the worse. Consider this: wouldn’t you expect a company that claims they own reserves on a 1:1 ratio between Tether and USD, to be fully externally audited and show proof of those USD reserves?

Another huge red flag if you ask me.

To those who now claim “oh but some lawyer dudes just came out and said Tether bank accounts are fully backed so it’s all good”, please, I beg you to actually do some digging.

The only thing Freeh, Sporkin & Sullivan LLP (FSS) said about Tether was: “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018.”

That doesn’t sound like a real assurance to me.

Especially when you consider the “official” news-source, that appeared unsigned by the FSS board on Tether’s website, also stated “procedures performed are not for the purpose of providing assurance”.

Bitcoin Futures

My view on futures is a bit blurry. I understand their purpose and I also recognize their effectiveness in taming markets, especially during the short-term. Does it work in the long-term?

In 1974 the first gold futures contract was traded on the COMEX exchange in New York. Trading started on December 31.

Fast-forward three years and gold was back rising to new highs.

That’s right. No one can tame the ambition of human beings to exponentially increase their wealth, time after time; there is no futures market that can ever stop speculation. Money talks louder and that means there will always be new smart-money coming into the actual asset, making its price go higher. What will happen is that those same people will have an extra incentive.

Smart-money

As we’ve seen in the past the usual trigger for adoption is smart-money coming into any market. Bitcoin, of course, is no different.

The logic is quite simple.

Smart-Money -> Media Hype -> Adoption

You might think this is oversimplifying how things work, but the logic is dictated by public perception of Bitcoin.

Is it a good investment vehicle? Should I store money in Bitcoin? Do other people actually accept it?

The answer to world-wide adoption is acceptance; but acceptance only comes with adoption.

It’s the chicken-egg dilemma. The most beautiful redundancy.

What this means is that both adoption and acceptance walk hand-to-had; one leads to the other and none can exist alone.

That is why market manipulation or Bitcoin’s futures, although being the bad are not that bad.Manipulation usually means high volatility, which in turns bring massive profits.

Sure, I get this isn’t helpful to the ultimate goal of cryptocurrencies – which to me is the ability to shift wealth redistribution.

I also can’t make exclude the hypothesis this feature of cryptocurrency won’t be the catalyst for its destruction; however, if we apply logic and reasoning taking into account the recent Bitcoin price history, we can clearly expect volatility to bring more and more people into the market.

Price Volatility

Ups and downs are usually a nice and easy way to help bubbles growing.

And, as you might know, bubbles have a certain tendency to pop.

History has taught us it usually isn’t a question of if, but when.

When downwards price movement dominates a market the only thing you can usually do is sit and wait. Cryptocurrencies, especially bitcoin, are prone to huge downfalls, yes; but we can also expect massive rebounds at some point.

There are always some unbreakable rules successful investors follow, in order to being able to succeed.

Again, please remember this is not financial advise

To me those are:

  1. Invest only what you can afford to lose;
  2. Buy when there’s fear, sell when there’s hype;
  3. The market behaves in waves. Be patient and wait.

Because I follow those rules I’m not afraid of bear-markets. Heck, just remember 2012-2013.

Whatever goes around comes around, so being passive is sometimes a better decision that getting ahead of everyone.

Just think: what are the chances you actually figured out how to beat the entire market?

That’s why I personally do not trade – yet envy those who successfully do it.

You need cunning, agility and balls of steel; otherwise emotion will most likely triumph over reason.

Anyhow, the chances you’ll get stuck at a really bad price-level (ie, if you bought bitcoin near USD 20,00.00) during an extensive amount of time, are not that great.

Yet, as time is a relative thing, our ability to be patient is also relative. Meaning what I consider to be an acceptable amount of time, you could see it as unbearable.

  • Would you wait 1 year to increase your portfolio in 100%?
  • What if you could increase it 500% over a space of 2 years?
  • Better yet, what if it grew 5000% over the course of 3 years?

Are you thinking “I’m sure could do it”?

Alright, then do a quick exercise:

Have you ever done anything long-term, during at least the amount of time you’re considering investing, which costs you time, money and doesn’t pay-off anything?

If so, then I would argue you can definitely succeed at hodling.

If not, maybe you should consider a different approach.

Patience isn’t an easy skill to learn when we live in an inflationary world: money of tomorrow will be worth less, meaning you need to keep getting more and more present value, instead of focusing on future value.

Faster Payments, fewer fees

Since the introduction of the Blockstream Store in January, the Lightning Network has grown tremendously. Around the announcement, the Lightning Network had a total of 46 open channels and 0.682 BTC in capacity. Nowadays, there are roughly 7,800 open channels with 26 BTC of capacity. That is a 16,856% increase in channels and a 4,084% increase in channel capacity in 6 months!

As the Lightning Network grows, additional integration options will become available that could provide exchanges and users with security and ease-of-use benefits beyond the two basic integration strategies described above.

  1. Exchange-specific, Lightning-driven apps

With Lightning, it can become possible to allow exchange users to make trades from within dedicated local apps, making deposits and withdrawals transparent to users. These apps can run on desktops, smartphones, or on more secure hardware devices such as the Ledger Blue. With exchange functionality integrated with a Lightning wallet, funds can be moved into an exchange’s control for the minimum time required for a trade to execute. Immediately after an order is filled or expires, the funds would be returned to the control of the user’s wallet/exchange app via Lightning. This could potentially create a simpler experience for users as well as reduce risk for exchanges in case of security breaches, as the amount of funds stored in hot wallets could be much lower.

  1. Deposits and withdrawals via the public Lightning Network

With the two integration strategies described above, it’s assumed that users will be opening channels directly with exchanges. This will be economical for larger-scale traders who move money in and out of exchanges often. However, as the Lightning network develops, it will be possible for users to have open channels into the public Lightning network and for those users to be able to route deposits and withdrawals via intermediary nodes. It will likely take some time before there is enough connectivity within the Lightning Network for this to work, but when this becomes possible, it will allow a user’s channels to be used for a variety of different kinds of payments as well as multiple exchanges. With channel setup costs spread across multiple applications and counter-parties, Lightning transactions will become cheaper and more convenient.

There are many ways to improve scalability and off-chains are a great way to accomplish that.

Why should increasing the block-size be a better solution, if it will put more stress onto small transaction due to increasing fees?

Scalability will happen, just a bit differently than you might expect.

We already have the unique piece that allows for scalability to happen: an underlying asset people can use a store of value.

Whatever is built on top doesn’t really matter if the underlying layer, bitcoin’s blockchain, is still used as the settlement layer.

From batching and Shnorr signatures, to the Lightning Network and atomic swaps, there are as many ways to improve transaction throughput, as far as our imaginations reach out. You could potentially have digital fiat-currencies redeemable for Bitcoin. You can have other side-chains that interface with a single wallet app, meaning if it’s easy to exchange your tokens and other cryptocurrencies for Bitcoin, you will still use it as a base-layer to store your “gains”.

The point is: let’s not focus too much on something that will eventually happen. Everyone (myself included, full disclosure) has been focused on technology and price so much, we forgot to take a couple of steps back and re-visit some core debates, crucial for the overall Bitcoin acceptance.

Part 2: Tokenomics, The Key To Adoption

If you wonder how tokenomics can foster user adoption, think of the best way you know to redistribute value. In Bitcoin, that is done through mining and selling the actual currency.

Right now most projects we see, spawning here and there, which actually try to implement a successful business models based in tokens, are forgetting some key aspects of the most important metric of all: purpose.

Andreas usually says: what can your business gain from decentralization?

I say: what can your business give to decentralization?

The reason is simple, if you create a system where you need to  “subscribe” or spend money for tokens in order to participate, then the system is not inclusive.

If you build a system where participants are rewarded for participating, like Bitcoin rewards miners for securing the blokchain, then you can build any incentive system which users may see as actual value.

By combining the power of fast payments with tokenomics, I can easily see a world where value is simply traded and earned through mostly everything we do.

Decentralization doesn’t mean “screw the middleman”.

Actually, decentralization depends much on the middle-man. Except we all can become that middle-man because as we spend time in a certain network, doing certain things, we get rewarded.

Decentralization means implementing systems which properly balance reward payouts, to all participants, in as many different ways possible.

The middleman is always welcomed, I highly doubt the world would survive without platforms and distributors and companies linking networks of producers and consumers, investors and start-ups, even creditors and debtors.

And all work must be paid in kind, isn’t that right?

If cryptocurrency uses its underlying technology properly, then there is no reason atomic swaps won’t allow for the emergence of many different middle-men, charging very  low fees, competing to hold the power to convert some crypto into another.

If cryptocurrency is easy to convert into other forms of monies, why wouldn’t we solely use cryptocurrency? Trust is backed by both the number of users in a network, as well as its internal ledger security.

As currently Bitcoin seems to be the most technological secure system out there, to store money, it’s just a matter of time until it also becomes the most secure and cheap way to transfer and use money.

However, do not expect the path to the bottom of the rainbow to be clear of perils.

No technological advancement, which promoted checks and balances to avoid power and decision-making centralization, has ever been received in kind.

So why would the world be different towards cryptocurrencies?

How the financial system views cryptocurrency

When we hear countries banning cryptocurrencies, exchanges being blocked by the rule of man (like India), attacks to promote hype and fear across small-time investors, that is the time we know they are afraid.

Decentralization means breaking concepts and views of the world as we never thought possible.

Companies building crypto-payments or savings apps, crypto-messaging apps, decentralized storage and infrastructure sharing crypto-tokens, or any other crypto-enabled system, will soon realize the easiest way to bring value is by giving value.

Yes, go ahead, create your own money.

It has no value, they say?

It’s of no use, they say?

Terrific! Then nobody will mind if you just give it all away. Like bitcoin did.

The More You Give To People, The Better

If a company has a product which holds value and then decides to distribute a token with a clear purpose within that product’s or organization ecosystem, why wouldn’t people consider that token valuable?

If everything holds value just because we believe it holds value, I see no reason for Bitcoin to have a limited growth.

As long as the network of users continues to grow, price will eventually grow.

Because of its deflationary properties, if people continue to say bitcoin has value (by purchasing it), then I see no reason for a price ceiling.

*Maybe we really are going to the moon!

My opinion could be wrong, Bitcoin might disappear into oblivion someday and we keep stuck with fiduciary currency.

If that is not the case, then the likelihood of Bitcoin’s pricing skyrocketing someday should be incredibly high, simply because it has happened a gazillion times in the past – and history has a tendency to go around in cycles.

I know: past performance does not indicate future performance. However, I haven’t heard of any network which grew in numbers and not in price.

If you were to gamble on the success of cryptocurrency, would you bet in a system no single nation or group of people controls, or in a fiduciary system based on a pyramid logic?

Hope you’ve enjoyed the article!

The bitcoin price in the past 24 hours has undergone a much-needed bullish correction, rising about $500 since establishing an intraday low around $6,009.

We were waiting for a bounce back from 6009-fiat to apply our intrarange strategy. As it did, our long position towards 6192-fiat made us a nominal profit. A near-term breakout followed later, upon which we placed another long position towards 6290-fiat and made another nominal return. Unfortunately, due to human constraints, we were unable to watch the rally towards 6494-fiat.

Today, we established 6500-ish area as a strong resistance level against the minor upside. The early Asian trading hour saw traders exiting their position around this area, while during the rest of the European trading session, the BTC/USD pair was consolidating sideways within a nominally wide range. Let’s see how the latest price action has rattled our technical indicators.

BTCUSD Technical Analysis

As discussed in our previous analysis, we had considered bitcoin to break above the bear trajectory (indicated in light blue) to bring medium-term upside targets in sight. And the digital currency eventually did, finally invalidating the curve and establish fresh intraday highs for our consideration. Nevertheless, we will still watch the trajectory in the event of an extended bearish momentum. We are still forming bearish pennants.

At the same time, the BTC/USD is now slightly above its 50H and 100H moving averages, while still far enough to test its 200H one. The RSI and Stochastic indicators have jumped from the oversold region, and are now treading sideways in a neutral area. This makes the near-term bias a little focused towards bulls.

BTCUSD Intraday Analysis

The latest price action has brought us inside a new range, defined by 6192-fiat as our interim support and 6454-fiat as our interim resistance, and 6500-fiat as our psychological one. It is a pretty wide range to apply put our intrarange strategy in place. With that said, we would be waiting for the price to bounce back from 6192-fiat to enable our long position towards 6500-fiat. Similarly, a pullback from 6454-6500 area will enable us to put a short position towards 6192-fiat.

If the bitcoin price invalidates either of the range levels, then we will switch to our breakout strategy for the day. Thus, a break below 6192-fiat will clear our short position towards 6009-fiat, our previous interim support level. Placing a stop loss three-pips above the entry position would help us reduce the overall risk of our trade.

Conversely, a break above 6454-fiat will allow us to put a long position towards 6550-fiat, our primary upside target. Our position can, of course, be beaten down at 6500-fiat. This is purely instinctive at this point in time. Anyway, we will keep our stops a 3-pips below the entry position should the bias reverses.

It’s not entirely clear what exactly is going on in Facebook’s nascent cryptocurrency division, but several reports suggest that something is afoot.

Facebook Meets with Cryptocurrency Project Stellar

The first comes from Business Insider, who reports that Facebook’s blockchain research group recently met with Stellar to discuss how the social media conglomerate could leverage distributed ledger technology (DLT) as it explores potentially building out a payments network.

According to unnamed sources, the two parties discussed how Facebook could fork the public Stellar blockchain, much as chat app Kik did after it decided to create an independent blockchain for its Kin cryptocurrency rather than piggyback on the main Stellar network. The task force is also said to have met with other unnamed cryptocurrency projects.

The publication also reports that Facebook has rapidly been expanding its blockchain division. One job posting said that the endeavor “is a startup within Facebook, with a vision to make blockchain technology work at Facebook scale and improve the lives of billions of people around the world.”

Facebook’s Crypto Lead Steps Down from Coinbase Board

Further stoking the coals of the rumor mill is the announcement, first reported by CoinDesk, that David Marcus, a Facebook vice president and the former head of its Messenger division, has stepped down from his post on Coinbase’s board of directors, a role he originally took on at the cryptocurrency exchange giant last December.

Marcus left his role at Messenger in May to lead Facebook’s blockchain division, where he reports directly to Facebook CTO Mike Schroepfer.

facebook cryptocurrency david marcus speculation

A Coinbase spokesperson told the publication that Marcus had stepped down to avoid the appearance of a conflict of interest, leading to speculation that Facebook is preparing to make a major announcement regarding its cryptocurrency plans.

Earlier this year, financial news outlet Cheddar reported that multiple sources had said that Facebook is “specifically interested in creating its own digital token, which would allow its more than two billion users to facilitate transactions without government-backed currency.”

Cryptocurrency has also been on the mind of Facebook CEO Mark Zuckerberg, who said that one of his personal challenges for 2018 is to learn more about technologies “like encryption and cryptocurrency.”

Kenneth A. Blanco, director of the U.S. Financial Crimes Enforcement Network (FinCEN), has revealed that the agency has seen a surge in filings of crypto-related Suspicious Activity Reports (SARs). The number of complaints now exceeds 1,500 per month, according to him.

Blanco’s remarks were made as part of a speech he delivered at the 2018 Chicago-Kent Block Legal Tech Conference August 9.

The director outlined FinCEN’s ongoing role in regulation and law enforcement for the emerging crypto space, which it coordinates in tandem with the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). He noted that,

“[While] innovation in financial services can be a great thing… we also must be cognizant that financial crime evolves right along with it, or indeed sometimes because of it, creating opportunities for criminals and bad actors, including terrorists and rogue states.”

Blanco emphasized that in order to safeguard the “incredible innovations” of the fintech frontier, actors’ compliance with specific regulatory measures is critical, given that “harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”

As indicated in FinCEN’s March 2013 guidelines, any acceptance or transfer of value that substitutes for fiat currency – including crypto – is considered to be money transmission, and entails specific regulatory obligations under the U.S. Bank Secrecy Act (BSA).

As money transmission businesses (MSBs), crypto exchanges are therefore required to report both SARs and Currency Transaction Reports (CTRs), as well as to comply with anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks.

Blanco clarified that identical obligations pertain to businesses that provide anonymizing services — often dubbed “mixers” or “tumblers” — that seek to conceal the source of the transmission of crypto. Exchanges located outside of the U.S. but that nonetheless do business in part with residents of the country are also monitored by the agency.

The director gave the example of FinCENs action in 2017 against Russian crypto exchange BTC-e for flouting AML laws as a case in which SARs had “played a critical role,” with filings by both banks and other crypto exchanges providing crucial leads for law enforcement.

He commented that while SARs are increasingly being submitted, the agency has been “surprised” to see businesses taking appropriate steps to meet their regulatory requirements “only after they receive notice [that an examination is forthcoming].” “Let this message go out clearly today:  This does not constitute compliance,” he stressed.

According to Blanco, FinCEN, BSA examiners and the Internal Revenue Service (IRS) have examined over 30 percent of all registered crypto exchangers and administrators since 2014.  

Blanco further devoted attention to initial coin offerings (ICOs), stressing that while they may fall under overlapping jurisdictions of different U.S. regulatory agencies, their AML/CFT obligations remain “absolute.”

At a recent hearing on crypto and ICOs in Washington DC, Coinbase’s Chief Legal and Risk Officer called out the gamut of American regulators —  including the SEC, CFTC, IRS, and FinCEN — over an extreme “lack of coordination” that he considered to be negatively impacting innovation.

Cayman Islands-based blockchain startup Everipedia formally launched its peer-to-peer (P2P) encyclopedia August 9, a press release confirmed.

Designed to be an “autonomous encyclopedia without the need for advertisements or donations,” the project uses the EOS network to function and will reward curators with its own token, dubbed “IQ.”

Co-founder of Wikipedia turned Everipedia CIO Larry Sanger commented in the release that they are “elated to release [their] minimum viable network which allows users to vote on and create articles in a decentralized manner for the first time.”

Talk of a blockchain-based “alternative” Wikipedia has long floated around cryptocurrency circles, with fellow co-founder Jimmy Wales’ well-known skepticism of Bitcoin (BTC) and hands-off approach to blockchain technology serving to add to the community’s motivation.

Wales stated during an interview in June that he is “not planning to do anything directly in the blockchain space,” but added

“I am very intrigued by the idea. A lot of people have pitched me on their ideas in the journalism space, I just don’t see it makes a lot of sense. I’ll continue to reflect and think.”

Speaking to Bloomberg this week, Everipedia co-founder and president Sam Kazemian highlighted IQ as one of the biggest challenges currently facing the project.

“Designing token economics that actually work and make sense is the most challenging aspect,” he told the publication,

“It’s easy to create a token and have it do nothing except act as a unit of account inside of some service. But that’s not what the IQ token does.”

U.S. satellite service provider DISH has announced it has added Bitcoin Cash (BCH) as a payment option and migrated to the BitPay payments provider, according to an official press release August 9.

The DISH Network Corporation was among the first satellite service providers in the world to accept Bitcoin (BTC) payments back in 2014.

John Swieringa, the executive vice president and chief operating officer at DISH, said in the press release that the company has “a steady volume of customers paying with cryptocurrency each month”, adding:

“We’ve added Bitcoin Cash just as we chose to accept Bitcoin to serve customers who have adopted a new way of doing business.”

According to the press release, DISH customers will be able to pay with both BTC and BCH for monthly subscriptions and pay-per-view movies by sending the exact amount of cryptocurrency in a push transaction to the company.

Sonny Singh, the chief commercial officer with BitPay, noted in the press release that they aim to have a “seamless transition” from DISH’s old payment service to the new one. Singh added that cryptocurrency purchases are becoming more popular both because they reduce the chances for credit card fraud, as well as provide a cheaper payment service option for merchants.

The CEO of cryptocurrency trading platform Binance Changpeng Zhao announced a demo of the platform’s decentralized exchange in a tweet today, Aug. 9.

In a six-minute video attached to the tweet, Zhao presented a “casual, early, pre-offer”  demo of the decentralized exchange. The CEO said not “to expect too much” for now, adding that it currently does not have a graphical user interface:

“A first (rough, pre-alpha) demo of the Binance Decentralized Exchange (DEX), showing issuing, listing and trading of tokens.  All cli based, no GUI yet. A small step for #BinanceChain, a big step for Binance.”

Zhao showed three essential features of the planned exchange, those being the creation, listing, and trading of tokens. As Zhao did not disclose the launch date, it remains to be seen when the exchange will be marketed and what volumes it will be able to handle.

Decentralized exchanges are lauded as more secure than their centralized counterparts, which are more vulnerable to hacks. Decentralized platforms are set up in a manner which allows users to retain ownership of their coins using private keys. This solution reportedly prevents cryptocurrencies from being accumulated in one centralized “honeypot,” or point of attack.

Earlier this month, Binance bought Trust Wallet, an open source, anonymous, and decentralized wallet that supports Ethereum and over 20,000 different Ethereum-based tokens. Zhao then said that Binance plans to list Trust Wallet as a default wallet on its decentralized exchange.

Binance, which moved its operations to Malta this spring, is the number one crypto exchange by trade volume, according to Coinmarketcap. In July, the exchange supported plans to create a blockchain-based bank with tokenized ownership. The future “Founders Bank” will reportedly be owned by digital token investors and be based in Malta, known for its robust and transparent crypto regulatory climate.

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