How to Avoid Bitcoin Fraud

Bitcoin News

Bitcoin is the single pioneer into digital assets and has attained high values of billions of dollars in virtual assets. The transaction system itself is still going through regulation processes in most of the global economies, where financial institutions advocate for governments to back digital currencies.

The delay in regulation opened up Bitcoin trading to incredible and innovative fraudulent activities. Also, the fact that the notion of digital assets was and still is fairly unfamiliar cripples a lot of ‘green investors’ and opens them up to losses through fraud. Another reason is the technology behind digital transactions. Basically, the value of Bitcoin is based on a technology that very few understand. Needless to say, all of Bitcoin fraud happens online and Cyber criminals use these innovative technological operations to serve their own purposes.

Majority of Bitcoin fraud victims are usually unsuspecting novices and occasional seasoned traders. I will highlight the most common ways in which Bitcoin scams are carried out and how to protect yourself.

1.Fraudulent Bitcoin Wallets

Fake wallets were the easiest way for scammers to defraud investors. These wallets first appeared as mobile applications on the Apple and Google Stores. Granted the majority of users are completely confident in the authenticity of the applications.  And they do not engage in sale or purchase of coins. It’s difficult to detect fake wallets and investors should avoid using third party wallets without verifying the links and adverts of such wallets on the main websites.

If you are unsure of the wallet, ask for help from someone who understands Bitcoin and wallets specifically. Looking at the reviews might also be helpful but not guaranteed.

One Trustworthy Bitcoin wallet is  Blockchain.info 

You can also Store your Bitcoins in an Exchange such as Bittrex.com

2.Non-existent Bitcoin transactions

Believe it or not, one can learn how to do fake Bitcoin transactions right from the internet: not because it’s the easiest thing to do, but Bitcoin greedy miners/scammers are very innovative in how they do these transactions. It’s practically ‘impossible’ to duplicate a Bitcoin transaction. This is because once you transfer Bitcoins from one your account to another, the distributed ledger network registers it as a submitted transaction and prevents you from doing it again and again.

The verification process alone is enough to discourage counterfeiting a Bitcoin transaction. Unfortunately Bitcoin transactions are not free of loop holes. In brief, it is a Bitcoin flipping trick, offering exchange of Bitcoins for cash and they are able to advertise the same offer to as many people as possible in a very short period of time. But the other end of the bargain is never held up.

Bitcoin faucets

Unsecured websites offering Bitcoin at discount prices

Temporary offers to sell Bitcoin for Paypal

3.Bitcoin phishing impersonators

Bitcoin fraud gave rise to one of the largest money laundering cases in 2017 when Russian citizen Alexander Vinnik was accused of laundering an estimated sum of $4 Billion in Bitcoin, part of which was obtained from a hacking scheme of a failed Bitcoin exchange Mt. Gox.

One of the easiest ways this is done is through running fake adverts on social media or impersonating the Bitcoin brand itself. The issue is that the scammers are so good at this that they even ask you to check your Bitcoin key on their website to confirm its existence. That is how Finish millionaire Aarni Saarimaa lost over 5,000 Bitcoins to fraudsters in Thailand, after falling victim to a casino project and the idea of an upcoming cryptocurrency.

4.Bitcoin Pyramid schemes

This is the oldest trick in the investment book. The working principle here is multi-level marketing. Selling an idea based on minimal investments for higher yields by signing up as many people as possible. Then like dominoes the original scammer always walks away with all the investment and the scheme collapses.

 

 

 

 

 

This week, Bitcoin mining equipment manufacturer and blockchain software firm Bitfury secured a valuation of $1 billion from billionaire investor Mike Novogratz and Korelya Capital’s $80 million investment in the firm.

The multi-million dollar funding round comes after the release of Bitfury Clarke, the firm’s new Bitcoin ASIC miner, designed to compete against Bitmain’s new equipment, the 7nm Antminer.

Valery Vavilov, the CEO of Bitfury, stated that the demand for the blockchain and crypto in general from companies and institutions had increased significantly over the past 11 months.

“We see a lot of demand from companies and public institutions to put their services or products in the blockchain — especially in emerging markets, where administrative systems can be very inefficient.”

Rising Activity in Mining and Blockchain

Throughout the past four months, despite the sideways market of Bitcoin (BTC) and the 70 percent correction experienced by the cryptocurrency market since January, the hash rate of the Bitcoin blockchain network has increased substantially from 15 million TH/s to over 50 million TH/s.

The increase in the hash rate of the Bitcoin network, which represents the strength of the blockchain’s computing power, led to a surge in the breakeven cost of crypto mining.

In July, cryptocurrency analyst Barclay James reported that the breakeven cost of mining Bitcoin is around $6,900, based on the hash rate of the Bitcoin network at the time which was 35 million TH/s.

According to Blockchain, the most popular cryptocurrency wallet platform in the sector, the hash rate of Bitcoin currently remains above 50 million TH/s, up 42 percent since July. Since the $6,900 breakeven cost of Bitcoin mining was calculated based on 35 million TH/s,  the breakeven cost of mining has well surpassed $7,500 even in regions with naturally cold climates and cheap electricity like China that reduces operational costs.

“China has some of the world’s cheapest electricity rates as well as average temperatures consistent with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage,” James wrote.

Due to the rise in the breakeven cost of mining, miners are generating BTC at a fairly large loss. Until BTC breaks out of the $7,000 resistance level and to the high region of $7,800 to $8,000, miners will continue to mine BTC with a loss of around 20 to 30 percent.

Still, the hash rate of BitcoinEthereum, and other major cryptocurrencies continues to surge, as does the demand for mining-focused ventures like Bitfury, Bitmain, and Samsung’s new foundry.

Lucrative Business Models of Mining Companies

Bitmain is finalizing a $15 billion IPO, and, earlier this year, Bloomberg reported that if Bitfury IPOs, it will target a valuation of $3 to $5 billion.

Mining companies and mining equipment manufacturers like TSMC and Samsung remain confident in the long-term development of the industry, and the investment of a major venture capital firm in Korelya is considered a confirmation of strength of the industry in a period of uncertainty and doubt.

Korelya is an investment firm financed by Naver, the largest search engine operator in South Korea that is more widely utilized than Google in the region. Bitfury is the first indirect investment in crypto from Naver.

Bitcoin on Wednesday challenged new highs as price against the US Dollar surged 1.42 percent within a few hours.

CHART FROM TUESDAY NOVEMBER 7, 2018 | SOURCE: TRADINGVIEW.COM

The BTC/USD pair built upon the near-term bullish scenario after breaking above the interim resistance explained in our previous analysis. A breakout action above 6421-fiat started attracting long positions towards 6500-fiat as the primary upside target. The pair rallied and established a new intraday high towards 6515-fiat before retreating across the exchanges. It is now trading at 6507-fiat.

The Dollar meanwhile slumped very little ahead of the US midterm elections. As of now, the Democratic party has announced its victory after winning 218 seats to control the House. The results could particularly weaken the dollar further, allowing US stocks to breathe a bullish air after the markets open today. In parallel, Bitcoin – a 24/7 open market – is already showing signs of a strong bullish bias in near-term.

BTC/USD Technical Analysis

PRESENT DAY CHART | SOURCE: TRADINGVIEW.COM

The previous resistance at 6421-fiat is now taking up the role of a support after the BTC/USD rally. The pair is hinting a small bearish correction already, with its RSI and Stochastic Oscillator situated around the overbought area. The volume nevertheless has dipped as of now, meaning the new few hours could exhibit a stable price action before a downside correction attempt.

The BTC/USD pair is already trending inside a near-term rising wedge that is usually considered bearish for the same timeframe. The pair, now testing the upper trendline, should reverse and bring the lower trendline in view of the correction. That certainly is a decent short opportunity for day traders. Both the trendlines are almost parallel, so the price should start losing volume as they begin to converge. It could be the foremost signal of a breakdown scenario below the lower trendline. That also indicates that rallies taking place inside the rising wedge will prove to meaningless unless a sharp breakout above the upper trendline changes the technical dynamics overall.

BTC/USD Intraday Analysis

Our intraday analysis enables us to make profits regardless of the direction of the Bitcoin price action. The range we are watching today has 6513-fiat serving as interim resistance and 6421-fiat serving as interim support. The range is wide enough to apply our intrarange strategy. Therefore, a pullback from resistance enables a short position towards support and a retracement from support enables a long position towards resistance. It’s that simple.

Nevertheless, the real profits lie in the breakout targets. As we are already near the resistance level, a weak US dollar is allowing us to enter a long position towards 6640-fiat, our next upside target. Meanwhile, we are also maintaining a stop loss order just 3-pips below the entry point to exit the market on a small loss, in the event of a pullback action.

Looking towards the south, a break below 6421-fiat will have us enter a short position towards 6372-fiat, the bottom of the November 5 trading session. In this position, maintaining a stop loss order just 4-pips above the entry point would ensure that our risks stay lesser.

For techincal analysis beginner tutorials, click here

Balaji Srinivasan, a prominent venture capital investor and the chief technical officer at Coinbase, said that crypto is entering the tech mainstream.

“Sundar Pichai & Sergey Brin’s sons are both mining crypto; Facebook is doing blockchain; Square open sourced some nice cold storage code; Microsoft, Amazon, Google Cloud all have blockchain efforts; crypto is entering the tech mainstream.”

Since early 2018, unreflective of the 73 percent correction in the cryptocurrency market which saw the combined valuation of cryptocurrencies drop from $800 billion to $210 billion, the cryptocurrency market and blockchain sector have shown significant progress in terms of institutionalizing an emerging asset class, improving market structure, and strengthening the underlying technologies of cryptocurrencies.

Increasing Awareness of Blockchain

As a data processing technology, the blockchain enables the segregation and storage of data in a series of blocks in a peer-to-peer process. But, to ensure that bad actors with malicious intent are penalized accordingly for engaging in fraudulent activity, an incentive system in the form of a cryptocurrency is necessary on a blockchain network.

To better understand the necessity, structure, and decentralized nature, an increasing number of institutions, technology conglomerates, and enthusiasts have started to mine cryptocurrencies that support major blockchain networks.

Coinbase cryptocurrency exchange
Source: Shutterstock

Recently Google co-founder Sergey Brin and CEO Sundar Pichai have publicly said their sons have been mining ETH, the native cryptocurrency of the Ethereum blockchain protocol.

Pichai noted that his 11-year-old son understood the concept of Ethereum and consensus currencies better than fiat currency, possibly due to the complexity of connections and centralization involved in the creation, distribution, and operation of fiat money.

“Last week I was at dinner with my son, and I was talking about something about bitcoin and my son clarified what I was talking about was ethereum, which is slightly different. He’s 11 years old, and he told me he’s mining it. I had [to] explain to him how paper money actually works. I realized he understood ethereum better than how paper money works. I had to talk to him about the banking system, the importance of it. It was a good conversation.”

Previously, Fidelity Investments, the fourth largest asset manager in the world with more than $7 trillion assets under management, also mined Bitcoin and Ethereum to grasp the concept of mining and the necessity of cryptocurrencies.

Fast forward one year and five months, Fidelity Investments established Fidelity Digital Assets, providing custody services around the asset class to help institutional investors invest in the market.

Open-Source Revolution

Square, the $30 billion payment giant operated by Twitter CEO Jack Dorsey, has recently open-sourced its code that processes cold storage funds.

As a decentralized and peer-to-peer network, the blockchain is developed and maintained by an open-source group of developers that proposed code changes and improvements on code repositories like GitHub.

Last month, Octoverse reported that Ethereum had become the fifth fastest growing open-source project in the world alongside Microsoft Azure and Spyder.

ethereum
Source: Octoverse

The rise of cryptocurrencies as a recognized asset class and blockchain technology as one of the core pillars of the fourth industrial revolution has led institutions and individuals to rethink how the global monetary system works and the way information can be processed in a peer-to-peer manner.

It’s not Thursday, but this story sure feels like a throwback to headlines from last year’s cryptocurrency mania: crypto enthusiasts have begun using their tokens to take out real mortgages on virtual land.

Decentraland & Ripio Partner for Crypto Mortgage Service

This phenomenon has been made possible through a partnership between Decentraland, an Ethereum-based virtual reality platform, and Ripio Credit Network (RCN), a borderless peer-to-peer cryptocurrency lending network.

Decentraland is a decentralized application (dApp) that hopes to provide the infrastructure for a 3D-virtual world. That world, which has finite space, has been divided into 10m² parcels, each of which is represented by a non-fungible Ethereum token called LAND that can be bought and sold in the platform’s marketplace.

decentraland crypto
Genesis City, the first Decentraland city, contains ~90,000 parcels. | Source: Decentraland Atlas

Developers can build games and other applications on their parcels using the Decentraland SDK, and, once the platform receives a full release, users will be able to use VR to explore the virtual world and interact with these applications.

Decentraland is still several major releases away from fulfilling this goal, but developers and speculators have nevertheless been sinking serious cash into virtual LAND. Just this week, one user set a record by paying $215,000 for a 126-parcel estate.

Decentraland crypto

Now, thanks to Decentraland’s partnership with Ripio, users will not necessarily have to plunk down all of that cash — specifically MANA, the platform’s native Ethereum token — at once.

“Decentraland is dedicated to making the exciting new world of virtual reality decentralized—ruled by open standards as opposed to one central organization. This partnership will help us fully commit to that mission, as the buying and selling of land—the basis of all the exciting things our users can create in VR—will not just be decentralized, but done on the leading global blockchain-based credit network,” stated Decentraland CEO Ariel Meilich.

RCN CEO Sebastian Serrano added that the decision to support LAND mortgages was an “exciting new horizon for Ripio” and noted that it serves as an example of how Ethereum dApps can work together to improve their services.

“The partnership between RCN and Decentraland…is one of the first examples that highlights how different smart contracts-based applications can work together,” said Serrano. “At RCN we drive our efforts to connect lenders and borrowers and offer them. Doing so in virtual reality is an exciting new horizon.”

Applying for a Virtual Mortgage

decentraland mortgage application ripio
Source: RCN

To register for a mortgage in Decentraland, prospective “real” estate purchasers must complete a short application form and place a down payment of at least 10 percent of the market value of the property. The RCN dApp will then publish the loan request so that interest lenders can claim the mortgage; the request will remain live as long as the land parcel is for sale.

Once a lender claims a mortgage request, the platform will create a smart contract that locks the land parcel and transfers partial ownership to the purchaser, who can use the parcel as he or she sees fit throughout the duration of the mortgage and may claim full ownership from the smart contract upon repaying the loan. Borrowers can even establish an RCN credit rating by consistently paying off their mortgages on time, likely enabling them to receive more favorable interest rates in the future.

However, if the borrower fails to pay off the mortgage within seven days following its expiration date, the lender may request the mortgage back through the smart contract, which will move the borrower into default and transfer full ownership of the parcel to the lender.

But, while select LAND purchases have begun to rival the cost of actual real estate, buyers are unlikely to find the borrower-friendly interest rates or 30-year payoff dates available from traditional mortgage providers. At present, active RCN loans feature annual interest rates ranging from 28 percent all the way up to 78 percent, with most lenders opting to fulfill loan requests with payoff dates denominated in months — not years.

Ripple (XRP) on Tuesday established a bullish setup after rising more than 10 percent against the US dollar.

The pair broke above the October peak to set a new one-month high at 0.569-fiat. It was previously stuck in a narrow trading range for multiple weeks amidst lower volatility. While the lack of bias-defining price action is itself not significant, the absence of solid bullish momentum, coupled with failed rally attempts of the recent weeks, confirms XRP’s overall downtrend. The latest rally marks the asset’s latest attempt to break above a strong resistance trendline.

Source: TradingView.com

However, nothing concrete is backing the XRP rally at this moment. The coin’s fundamentals have remained strong even in the times of bearish actions. The launch of xRapid, the presence of Bill Clinton and the financial market’s key players at Ripple’s Swell Conference, and many strategic partnerships are all favoring XRP’s rise in the long term. The company has also expanded its operations to the Middle East, with its Global Head Dilip Rao confirming that banks in the region would be using XRP to settle cross-border payments.

The volume indicators in the last 24 hours point to a massive traffic coming from Japanese and Korean markets. At the same time, tether is also contributing about 18% of the volume in XRP markets, hinting the influence of USDT traders on the altcoin.

XRP/USD Technical Analysis (4H Chart)

The latest upside breaks in the XRP/USD chart now look to correct some of its action. Those who closed their long positions already could allow the rally to step back for a while before confirming an extended bullish momentum. That said, the pair could likely repeat the September 26 action, while targeting its low at 0.496-fiat as the potential support.

The corrective action is further confirmed by the RSI momentum indicator and the Stochastic Oscillator, both of which are inside their oversold areas and should attempt a pullback anytime.

To the upside, the XRP/USD pair is testing the falling upper trendline in red as a potential breakout threshold. The pair has previously failed to break above the said level, so its invalidation could fuel the bullish bias further. Any such upside action could put XRP traders’ long position towards 0.624-fiat.

A full-fledged assault on bears could be confirmed once the XRP/USD pair breaks above 0.93-fiat, the April high. Until then, sharp corrections on every near-term rally should not surprise traders.

Bitcoin has been unusually stable in recent weeks, and the decrease in volatility has now reached historic levels in the futures markets.

Bitcoin Volatility Hits Record Level in Futures Markets

That’s according to Kevin Davitt, senior instructor for The Options Institute at CBOE Global Markets, who said that Chicago-based derivatives exchange saws record low volatility in its bitcoin futures market during the month of October.

Speaking on the subject during CBOE’s latest weekly bitcoin futures roundup, he said:

“Last week, which ended on October 26, saw the least volatility yet with a 3 percent weekly high-to-low range,” he said, “if we look at the weekly range over the course of October, it’s a mere 6.6 percent, which is far and away the lowest monthly average.”

CBOE’s XBT futures product had seen an average weekly volatility of 15.65 percent since their launch in Dec. 2017, more than double what the market saw in October. Remarkably, even bitcoin’s most volatile week during October saw a lead-month range of just 8 percent.

bitcoin futures price chart cboe

“The high settle was 6630, and the low settle was 6105. That move occurred in the second week of the month of October, between the 8th highs and the lows on October 11,” he said. “That works out to a lead-month range for the calendar month of less than 8 percent.”

Previously, Davitt had noted in his regular futures analysis that bitcoin’s 20-day historical volatility (HV) had become comparable to some of Wall Street’s most liquid stocks. At the time, bitcoin’s 20-day HV was below those of Amazon, Netflix, and Nvidia, and it was quickly approaching the HV of Apple, the world’s most valuable company.

Reflecting on this phenomenon, Davitt said, “Anyway you carve it, bitcoin volatility is relatively low and has been declining.”

Crypto Prices are Stable, But is That a Good Thing?

bitcoin futures volatility CBOE
Source: CBOE

However, analysts disagree about whether the crypto market’s newfound stability is a positive sign. Tom Lee, one of Wall Street’s earliest and most well-known crypto advocates, said that he has been “pleasantly surprised” by how stable bitcoin has proven to be relative to the choppy equities markets.

BitMEX CEO Arthur Hayes, on the other hand, argued in recent market commentary that bitcoin would never see mainstream adoption unless volatility ramps back up.

“Contrary to popular belief, Bitcoin requires volatility if it is ever to gain mainstream adoption. The price of Bitcoin is the best and most transparent way to communicate the health of the ecosystem,” he wrote. “It advertises to the world that something is happening–whether that is positive or negative is irrelevant.”

Andreas M. Antonopoulos, the author of “Mastering Bitcoin” and a self-proclaimed “computer geek” who has dedicated his career to bitcoin, has a bone to pick with Bitly, the web-link shortening service.

Bitly has seemingly blacklisted cryptocurrency sites from its service, prompting readers with a warning prior to redirecting to the original website, a Twitter thread between the bitcoin expert and one of his readers reveals.

Antonopoulos is close to publishing his fourth book, which is comprised of hundreds of crypto-related bit.ly links that Bitly is blocking. A reader seemingly brought this to his attention, questioning why Bitly was issuing a warning when the sites “don’t point to any harmful location at all.”  Antonopoulos asks the company for an explanation, threatening to remove and replace all of the bit.ly links with a competitor. The fourth book he references appears to be “Mastering Ethereum”, which comes out in less than four weeks.

The “Mastering Bitcoin” author went on to canvas the crypto community for a solution, asking: “What (reliable, neutral, established) link-shortening service can I use that doesn’t filter/block links based on a broken blacklisting service? I need to replace all @Bitly links in my book ASAP.” While he wasn’t looking for “roll your own” suggestions, this is largely what he received from the Twitter sphere.

Other followers suggested that Antonopoulos avoid shortening links in his new book altogether, saying that readers aren’t keen on clicking on a link shrouded in mystery anyway. Others still suggested taking a more decentralized approach by using an archive system at the end of the page or chapter to avoid relying on a third-party altogether.

Crypto Ban Deja Vu

Antonopoulos is an influencer in the cryptocurrency community and probably someone that Bitly doesn’t want to alienate, as it would likely trigger a ripple effect among blockchain-content publishers.  He is an early bitcoin investor who previously sold his holdings to pay his rent, in response to which he became in a millionaire thanks to donations by the crypto supporters inspired by Roger Ver.

His books, which also includes “The Internet of Money”, are best sellers. Most recently, “Mastering Bitcoin” has made its way into China’s media programming, though they replaced Bitcoin in the title with Blockchain. Antonopoulos said that “even with a slightly sanitized title…the content is the same.”

Meanwhile, tech leaders including Facebook and Google earlier this year attempted to officially block crypto-related ads but those bans have since been lifted. Investors cried foul at the time, pointing out how tech giants continued to allow ads for other risky sites like gambling. Meanwhile, ads are a key component to the tech revenue model.

It’s unclear if Bitly has taken an official position on crypto-related links, and the company has yet to respond to an email seeking comment.

LXDX, the high-speed cryptocurrency exchange founded by a former SpaceX engineer, has announced that it will issue stock through a security token offering (STO).

Institutional Crypto Exchange to Issue Stock on the Blockchain

LXDX, which was co-founded by former SpaceX engineer Joshua Greenwald, will become one of the first companies to issue stock through a security token offering, allowing investors to purchase cryptocurrency tokens that represent ownership in the exchange.

Security token offerings are essentially the suit-and-tie version of the initial coin offering (ICO), through which blockchain startups have collectively raised billions of dollars in startup capital while also entering sometimes-murky regulatory waters.

Most ICOs have purportedly issued “utility tokens,” which are functionally akin to service coupons or prepaid gift cards. Nevertheless, many regulatory agencies including the US Securities and Exchange Commission (SEC) have said that many so-called utility token ICOs are actually investment contracts since contributors generally purchase them on speculation that their value will increase in the future, rendering them liable to securities issuance and trading guidelines.

Given that many ICO tokens could be classified as securities anyway, a growing number of companies have decided to comply with securities regulations fully — and embrace the wide range of possibilities that registering as a security provides.

In LXDX’s case, its tokens will represent direct ownership in the exchange, complete with dividend rights. LXDX will issue 5 million tokens that collectively represent a 10 percent ownership share in the exchange and will entitle token holders to 10 percent of the exchange’s quarterly adjusted gross revenue.

Tokens will each be priced at 1 euro, so this financing round will be conducted at a valuation close to $57 million. LXDX co-founder and COO Will Roman said that this was the only STO funding round the firm would conduct in the “foreseeable future.”

‘Million Token Future’

ethereum token LXDX
The LXDX token will be an ERC-20 standard or equivalent, but it will have some trading restrictions.

Roman stated that, bolstered by the advent of cryptocurrency technology, the world is on the cusp of a “million token future.”

“You will wake up one day, on a day not so different and not so far from this one, and there will be tens of millions tokens for trade. You’ll login to your IB, your TD Ameritrade account and instead of 4,000 or so equities to select from, you’ll be in a gateway to direct investment in a truly inconceivable number of opportunities,” he said. “Of course, there will be small businesses, there’s already 5 million of those in the US alone. But, there will also be tech startups, bonds, art collections, real estate projects, usage rights, royalties, and, yes, still funds that aggregate and index all of this coming chaos.”

“As blockchain technology proliferates, we expect to see increased tokenization of tangible assets like real estate, commodities, and even art. The million token future is just around the corner,” added CEO Joshua Greenwald in a press release. “We are excited to provide our community a chance to experience the benefits of a true security token.”

The LXDX STO is being made available to the general public under Malta’s crypto-friendly regulatory framework, though investors will have to comply with their local regulations. This means that US investors, for example, must secure accreditation to purchase LXDX security tokens.

Due to regulatory restrictions governing securities trading, the token will not be freely-tradable. The firm hopes to initially facilitate trading between investors who contributed to the STO, deploy a smart contract to manage trading “in a Bancor-like manner,” and ultimately list the token on secondary markets in six months.

LXDX: ‘We Don’t Crash’

The exchange, which will begin signing up customers in mid-November ahead of a December launch, aims to compete for the attention of the increasing number of institutional investors who are diversifying into the still-nascent cryptocurrency space.

The platform will offer a wide range of cryptocurrency derivatives, including some that Roman said “are not available anywhere else.” Significantly, the exchange won’t feature automatic liquidations or “socialized losses,” whereby a platform forcibly recoups profits from winning traders to cover losses that are too large for it to cover. This occurred at major exchange OKEx in August when a trader lost an “enormous” gamble in the exchange’s bitcoin futures market.

“We don’t like auto-deleveraging and we don’t like socialized losses,” Roman said. “We’re going about that differently than others in the crypto space; we don’t do auto liquidations.”

He further claimed that LXDX would operate with “radical transparency” to avoid accusations of market manipulation, wash trading, and other ethically-dubious practices that some analysts believe are pervasive within the cryptocurrency exchange market.

“With respect to ethos, we operate under radical transparency and operate according to all applicable regulations. We don’t secretly trade on our platform or sell your order flows to high frequency shops. We take a ‘seriously, don’t even try it’ attitude with respect to wash trading, pumps, and other market abuses.”

cryptocurrency exchange security bank vault lxdx

Platform development has been led by CTO Steven Thomas, a former US Navy cryptologic technician who most recently ran the performance and experimental technology teams at Tower Research Capital.

“Between our software, hardware custody solutions, and real-time trade surveillance, we are setting the standard for security and trust in the industry,” Thomas said in the announcement. “We’ve structured the LXDX system to enable ultra-secure information compartmentalization.”

Roman told CCN that the platform would offer a basic feature that has nevertheless proven to be elusivefor cryptocurrency traders: “we don’t crash” during periods of peak volatility, he said, adding that the exchange can handle “massive amounts of orders and assets” with “very low latencies.”

“On the tech side, we do everything on our, custom-tuned hardware in our own data centers. Coded from scratch in C++, best possible NIC cards and servers you can buy,” he said. “We push orders through our entire network in single digit microseconds.”

Regarding security, he said that “where possible,” every LXDX wallet is secured by multi-signature technology, geographic distribution of private keys, layers of redundancy to prevent unauthorized withdrawals. LXDX’s core systems are housed in a company-run data center, not the cloud, and he said that the firm would “run our own clusters to protect against double spends and eclipse attacks.”

Exchanges Compete for Institutional Attention

In August, LXDX announced that it had received funding from a group of investors including Dymon Asia Venture Capital Fund and Arianna Simpson of Autonomous Partners. Nevertheless, Roman said that the competitive nature of the space necessitated a second round of financing to ensure that LXDX is well-positioned to become a market leader.

That competition is indeed stiff, and increasingly so. ErisX, launched in 2010 as a traditional futures market, recently rebranded as a cryptocurrency exchange with backing from TD Ameritrade and Virtu Financial. Bakkt, the crypto subsidiary of Intercontinental Exchange (ICE), is just weeks away from launching its first bitcoin trading product. Goldman Sachs is preparing to roll out its first crypto derivative, and Fidelity has spun-off a cryptoasset subsidiary — though at present it is focused on custody, not trading.

“The space in which we operate is competitive, and given all the moving pieces, both technically and regulatory, expensive. We are not looking to be another exchange to trade crypto assets; we’re here to win,” Roman said in an emailed statement. “We will be the crypto exchange on which to trade and to do so requires the appropriate capitalization.”

IBM has filed a patent for a blockchain-based system which will prevent players of augmented reality games entering physical spaces that are undesirable.

They cite as examples “high-risk locations, culturally sensitive locations, locations marked by property owners.” Augmented reality is a technology which adds layers to physical reality. An example is Zombie GO, an AR game which places zombie in real life or perhaps the most famous example, Pokemon Go. AR can have other applications than games, however, such as displaying historical views of locations.

The aim of the technology IBM seeks to patent is to improve the political and actual use of AR in physical space, in an effort to prevent collisions of AR with locations that are not desirable by either party. An attack vector in location-based AR games is when “actors or users may maliciously profile a location for different purposes (e.g., misleading game players by falsifying the profile of a location where the ARC can be placed).”

IBM Uses Blockchain to Keep AR Players Out of Trouble

Blockchains will be used in the patented system to accurately document information about locations used in such games and systems.

Thus, it is important for the system to verify/validate any location related transaction. Accordingly, the method 300 includes tracking 310 or verifying recommended locations, labels, or tags using a location/label/tag blockchain-based system.

The blockchain system securely tracks, stores, and maintains location related transactions along with other location metadata. A blockchain is a distributed database that maintains a continuously-growing list of data records hardened against tampering and revision. It consists of data structure blocks–which hold exclusively data in initial blockchain implementations, and both data and programs in some of the more recent implementations–with each block holding batches of individual transactions and the results of any blockchain executables. Each block contains a timestamp and information (e.g., a hash of a previous block) that links it to a previous block.

The system will also include a neural network which will learn the results of interactions in various locations and record the data in the blockchain used.

Thus, risk prediction can occur based on rules learned by the cognitive neural network from past transactions in the blockchain, for example, a pattern of many user movements combined with discrete results such as incident reports, complaints against users, etc. By running the learned rules on more recent patterns of user movements, it is possible for the cognitive neural network to identify potential risks to users with varying degrees of confidence.

The patent process can be lengthy and it could be years before IBM releases a product based on the new patent. IBM has for years been involved in the blockchain space to varying degrees, targeting mostly enterprise clients, but its involvement in entertainment has been rare.

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Coinbase CTO: Crypto is Entering the Tech Mainstream

Balaji Srinivasan, a prominent venture capital investor and the chief technical officer at Coinbase, said that crypto is entering the tech mainstream. “Sundar Pichai & Sergey Brin’s sons are both mining crypto; Facebook is doing blockchain; Square

Using Crypto to Take out a Real Mortgage on Virtual Land

Using Crypto to Take out a Real Mortgage on Virtual Land

It’s not Thursday, but this story sure feels like a throwback to headlines from last year’s cryptocurrency mania: crypto enthusiasts have begun using their tokens to take out real mortgages on virtual land. Decentraland &

Bitcoin Futures Volatility Hit Record Low in October

Bitcoin has been unusually stable in recent weeks, and the decrease in volatility has now reached historic levels in the futures markets. Bitcoin Volatility Hits Record Level in Futures Markets That’s according to Kevin Davitt,

IBM Files Patent for Blockchain-Based AR Helper System

IBM has filed a patent for a blockchain-based system which will prevent players of augmented reality games entering physical spaces that are undesirable. They cite as examples “high-risk locations, culturally sensitive locations, locations marked by property owners.”

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Breaking: Coinbase Pro Lists Ethereum Token BAT

Coinbase has just announced that trading of the Basic Attention Token is soon to be enabled on the Coinbase Pro platform, and deposits of the token are now being accepted.  Trading in the token — which runs on Ethereum

morgan-stanley-bitcoin-futures

Morgan Stanley: Bitcoin is a New Institutional Investment Class

There is a rapidly growing interest in bitcoin and other cryptocurrencies among institutional investors while there seems to be lethargy in the number of retail buyers operating within the space. As such, bitcoin and altcoins now constitute a new

Ron Paul Says Crypto Could Prevent Recession

Ron Paul Says Crypto Could Prevent Recession

Retired US Congressman Ron Paul, a one-time bitcoin skeptic, called for a tax exemption on all cryptocurrencies, saying the move could prevent an economic recession. Ron Paul, the father of current United States Senator Rand Paul,

Tether Found a New Bank, and it Might be in the Bahamas

Tether Opens $1.8 Billion Bank Account in the Bahamas

Tether Limited, the issuer of controversial USD-pegged cryptocurrency stablecoin tether (USDT), has confirmed that it has established a banking relationship with a small financial institution based out of the Bahamas. The cryptocurrency firm, notorious for its opaque operations,

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2
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