Plus Token Leadership Faces Criminal Prosecution in China

PlusToken main criminal suspect is facing public prosecution.

One of the ringleaders of Plus Token is now facing criminal charges in China. Plus Token is one of the largest apparent scams in the cryptocurrency industry’s history.

According to local media, Zhou will face public prosecutors in the Court of Jianhu County, Yancheng City, Jiangsu Province. As the local government only supplied Zhou’s family name, at press time we can’t confirm exactly which Zhou this refers to.

Zhou reportedly publicized and promoted the PlusToken wallet App, a so-called crypto currency financial management application, through Wechat and other avenues over the internet.

By registering four different accounts with SIM cards in the wallet, he allegedly lured more than 1.9 million people into the pyramid scam.

A pyramid Ponzi scheme

According to local authorities, the PlusToken wallet disguises itself as a cryptocurrency financial management app, but allows criminals to recruit members by promising high returns baked on the amount of other investors they can pull in.

Local police said that they received reports from the public regarding the scam as early as last year, explaining:

“In the name of providing a cryptocurrency appreciation service, the platform falsely claims that it has the function of mining cryptos, and requires members to pay certain value of cryptocurrencies such as Bitcoin, Ethereum, EOS, etc., so as to obtain high static income.”

Other criminals involved

As Cointelegraph reported previously, members of the Chinese police touched down in Vanuatu and detained six people involved with the PlusToken project and extradited them back to mainland China last year. It could be the biggest crypto scam ever, with an estimated loss of around $2.9 billion.

Crypto Exchanges Speak Out as Binance Takes CoinMarketCap’s Top Spot

Binance taking the top spot on recently purchased CoinMarketCap has raised concerns among executives from other top crypto exchanges.

For an industry that is supposed to be based upon decentralization, it appears to be getting crowded at the top, with a number of companies transforming into unspoken oligarchs, each wielding huge influence — or at least that’s what some critics argue.

One of the most remarkable crypto companies operating today is Binance. In only three short years, Binance has enjoyed a meteoric rise to the top. Criticism of Binance, philosophical or otherwise, can’t fail to take into account the impressive stream of innovation the firm seems to channel. Headed by Changpeng Zhao, the Twitter-happy CEO better known as CZ, Binance has a carefully crafted image of a firm hoping to make crypto a better place.

Such an unspoken narrative also helps set the scene for the company’s expansionist activity. With the firm reporting in 2018 that it had opened an office on the historic Mediterranean fortress island of Malta — known to some as “Crypto Island” — Binance’s struggle against Chinese fiscal policy could be seen by historically minded analysts as a 21st-century sequel to one of Malta’s most defining historical moments: the failed siege of Suleiman the Magnificent against the embattled Knights Hospitaller, in which one small group stood its ground on the tiny island, just beyond the clutches of a fearsome power.

But history is written by the victor, and true to the confusing nature of a post-truth world, it’s hard to tell the same tale as a simple story of good versus evil. In keeping with the natural character arc of any hero becoming a villain in the eyes of their detractors, Binance’s recent actions have strayed into a gray area, putting its fairly clean image under scrutiny following the purchase of exchange ranking platform CoinMarketCap.

Binance and CoinMarketCap become one

Against the backdrop of a global economy existing in a petrified stasis thanks to COVID-19, the two firms announced the deal on April 2. In fitting with the firm’s narrative, CZ championed the collaboration, telling Cointelegraph that the two companies share a mission of bringing crypto to the masses. CZ prophesied that the two companies would play to each other’s strengths and make the industry more transparent.

Almost two months later, it seems that only one of those aspirations has come to fruition. CoinMarketCap is now moored in a safe harbor after Binance’s takeover. Binance, on the other hand, now occupies the precarious position of being a major international exchange and owner of the most prominent ranking platform.

In business, reputation matters. Thanks to the unique development of Big Tech in Silicon Valley, companies now enjoy messianic levels of support from employees and companies alike, and when the companies led by these influential figures reach the top, they begin to shape the agenda in their own favor.

Taking a quick look at how much the so-called “Big Four of Tech” spend on political lobbying confirms this fact. Again, the crypto industry is a microcosm of the wider world around it, with companies, individuals and tokens commanding fierce and partisan support. But for many in the industry, the purchase of CMC was a brazen example of a conflict of interest. Jack Purdy, an analyst for Messari, told Cointelegraph that the takeover sets a negative precedent for the industry, no matter how well either company behaves:

“It does represent a fundamental conflict of interest that has negative externalities for the space. It's like if Joe's Pizza came out with the top 10 pizza slices in New York and everyone that uses that list happens to be those least informed to make the decision on where to go. Even though Binance/CMC can be completely well-intentioned, it's impossible for ratings not to be influenced by the underlying bias of the creators. If there are objective weightings to a system that would hurt Binance's standing, it's more likely than not that it won't be implemented.”

Cryptocurrency’s own origin story is shrouded in mystery, founded by its very own pseudonymous figure, Satoshi Nakamoto. While the arguments justifying this probably number in the thousands, the result is that intrigue and conspiracy are consequently innate to the makeup of the industry. As a result, regardless of how much Binance tries to distance itself from its newly acquired aggregator, it seems that suspicion is likely to remain. Jay Hao, the CEO of major crypto exchange OKEx, outlined his view to Cointelegraph that a company owning any kind of rating agency that oversees its own field of business is unethical:

“Ethical issues tend to arise should there be a participant happened to be owning a ranking/rating company. It's perceived to be inappropriate for a major shareholder of a credit rating agency to also be a shareholder in a bank who handles millions of bond insurance. Not to mention there are lack of sufficient firewall requirement defined by regulator as in crypto space.”

Ciara Sun, the head of global markets at Huobi Group, also voiced her concern to Cointelegraph that the Binance buyout was a conflict of interest:

“Ethics is only a concern when there’s a clear conflict of interest involved. In CMC’s case, Binance’s involvement has compromised its neutrality. I wouldn't go as far as to suggest any malicious intent behind the acquisition but it does raise some ethical concerns given the benefits Binance stands to gain if they were to manipulate the ranking system.”

But criticism of the purchase was not universal, even among Binance’s competitors. Paolo Ardoino, the chief technology officer at Bitfinex, outlined to Cointelegraph that the action, as far as he is aware, is not illegal and could provide an opportunity for Binance to improve the ownership structure and ranking metrics:

“Owning an exchange and a ranking platform raise potential conflict-of-interest concerns, but we are not aware of any illegality and, again, people are free to come up with a better ownership structure and set of metrics if they want.”

Anndy Lian — a blockchain advisor, investor and prolific Twitter commentator — told Cointelegraph that while an exchange owning a rating platform is far from perfect, there are potential benefits to be had if good corporate governance and firm regulations are in place:

“Take Binance for example, people will start to gossip that Binance is on top of the charts because they are the owners. But is this true, we are not sure. I believe as well, if there are proper compliance and governance and also arm length relationship would be good enough too for this example for Binance and Coinmarketcap. They have to properly address this to all the stakeholders to assure them of the independence between the 2 companies. They can also look at having all the data is stored in a decentralised platform to ensure data integrity.”

Traffic jam: CoinMarketCap’s ranking metrics get sticky

As the weeks rolled on, it became apparent that the controversy surrounding CMC and Binance would not be contained to the takeover alone. Just six weeks after its new owners moved in, a high-profile change took place: Binance shot to number one on the exchange rankings.

It meant that CMC was enveloped in its second controversy over its ranking methodology in just over a year. The first instance took place in late March 2019 when research from cryptocurrency index fund provider Bitwise claimed that CMC hosted vastly over-exaggerated volume statistics. According to the report, the volumes deceived investors and inflated the profiles of certain tokens.

CMC quickly issued a statement in which it assured that it was diligently taking note of feedback and working on ways to develop a more effective metric system. The revelation sent shockwaves across the industry, undermining for investors the belief that the sector was evolving at an impressive rate. Many business leaders and prominent industry figures expressed their displeasure at the news. One, in particular, took issue with the fact that this metric allowed individual listings to rapidly climb the ranks, arguing that it would lead experienced investors to be suspicious. His name? Changpeng Zhao.

After months of head-scratching behind closed doors, CMC announced in November 2019 its new metric that compared crypto exchanges and token pairs based on liquidity. What was set to be the default metric for the ranking platform only survived six weeks into its new ownership.

On May 14, CMC announced that it had once again changed its methodology to rank exchanges based on web traffic by default. In an exclusive statement to Cointelegraph, CMC elaborated on the rationale behind the much-discussed “Web Traffic Factor,” stating that it is only one aspect of its overall process:

“Rather than wait for the perfect solution, our team has decided to take an iterative approach. The Web Traffic Factor is only one of many steps that we will continue to take as we iterate on algorithms that will best serve our users. With the faster speed of release, we hope to be able to take more feedback that will factor into the next iteration. This way, we can monitor how well each iteration addresses our users’ concerns, and adapt more optimally for the next iteration, and at the end of the process, produce products that our users believe in and will find most useful.”

While this may go some way toward providing an explanation for the rating change, for some observers the timing of Binance’s rise to the top-ranking spot on CMC is no coincidence. This is a view cautiously put forward by Huobi Group’s Sun:

“Like many in the community, I suspect that it has something to do with CMC’s new ownership. I can’t say for sure that Binance intentionally influenced the new ranking system to its benefit but it’s likely no coincidence that they’re now ranked number one.”

OKEx’s Hao wasn’t afraid to mince his words, telling Cointelegraph that the circumstances clearly pointed to the true reason for Binance’s rise to the most coveted spot on CMC’s index:

“A partnership with a clear conflict of interest. Or just a very convenient coincidence that soon after being bought, the go-to authority on exchange rankings changes its ranking criteria to a metric that happens to favor its buyer.”

In a statement shared with Cointelegraph, CMC sought to assure that it remains a separate entity, despite its new ownership: “CoinMarketCap will continue to be run as an independent entity. The team at CoinMarketCap will continue to make decisions that are in the best interests of CoinMarketCap users.”

But only a few days before on May 14, CZ appeared to admit to some degree of involvement in managing CMC, tweeting that the “ranking is currently heavily biased towards web traffic, not 100% accurate, but better than before. Will continue to iterate.”

While CZ is known for his seemingly unparalleled engagement with customers and critics alike on social media, it begs the question of why he would make public the managerial decisions of CMC, an institution that supposedly operates free of interference from its new owners. Regardless of whether or not this is an Elon Musk-style gaffe or evidence of a lack of separation, it has left the crypto community with further questions.

How should ranking be carried out?

Questions of ownership aside, the whole CMC fracas once again places the role of algorithms and ranking methodologies on center stage. While it’s easy to pass this off as a squabble between competitors in a niche financial sector, this has real consequences for investors and smaller businesses that depend on the crypto infrastructure. So, what do the top exchanges think about CMC’s web traffic metric?

The responses from some of the industry’s leading exchanges have not been overly supportive. Bitfinex’s Ardoino said that liquidity, volume and volatility should take precedence when ranking exchanges:

“We believe that liquidity and the ratio between volume and volatility are the two most important factors both because they are highly relevant for exchange businesses and difficult to fake. Web traffic is interesting but not particularly important.”

OKEx’s Hao maintained that using web traffic as the default for ratings is not effective because the data is easily manipulated, and he echoed Ardoino’s recommendation that volume and liquidity are more reliable:

“The data can be skewed by mobile and VPN-directed traffic. Website traffic is just one metric but can never be the default ranking metric. This is why exchanges have not been ranked by traffic alone but by more robust metrics that can give a far more accurate and transparent score based on volume, liquidity, and market depth.”

Huobi Group’s Sun also added her criticism of CMC’s decision to make web traffic its default methodology, going as far as to label it a “vanity metric” and pointing out that CMC itself had announced it did not think it was effective:

“Ranking exchanges by web traffic is very limiting and CMC seemed to maintain a similar view up until now. At its core, web traffic is not a good indicator of an exchange’s user base, activity, or adoption. It’s a vanity metric that can be easily manipulated and does not factor in other user access points like mobile applications, which account for a significant amount of total user activity.”

But rather than simply taking issue with the fact that CMC favors web traffic, Sun added that “the way CMC measures web traffic is highly flawed,” telling Cointelegraph that the global distribution of service users, search engine optimization and language choice all play an important role in creating a balanced measurement:

“It only measures traffic from a single domain per exchange, which means they’re not presenting an accurate and global standing. We have different domains for different jurisdictions and markets we support all over the world but they aren’t being accounted for. I have a similar issue with the way they measure SEO and keyword searches. Despite CMC supporting multiple languages, they only weigh English keywords so there’s some bias there. If you’re going to use web traffic and SEO as a factor, you should be much more inclusive because all communities matter.”

How can data be made more public/trustworthy?

Now that a light has been shone on how exchanges are ranked on CMC and its struggles to strike the right balance of factors in its algorithms, how much other data is trustworthy, and how can it be made more public? Joshua Frank, the CEO of analytics platform The Tie, outlined his view to Cointelegraph that data remains inflated on the majority of exchanges, as well as that ranking platforms do not seem to be doing a thorough job vetting exchange volumes, citing previous analysis conducted by The Tie that reported 87% of volumes to be suspicious. Frank gave an insight into the motivation for exchanges to inflate or mislead data:

“Exaggerating volume exists as a mechanism for illiquid exchanges to attract new clients to their platform. No one wants to trade on a platform without liquidity. Without liquidity, users can’t execute trades or get the best price for an individual asset. Faking volumes also enables exchanges to rank highly on data sites given the current ranking structure for many data platforms, increasing the exchanges’ referral traffic.”

If so many exchanges are able to get away with fudging the numbers, there is clearly an issue with transparency. For a sector that is supposed to pride itself on the open availability of information, this is not a good indicator of industry health. While acknowledging that transparency is an issue, OKEx’s Hao said that exchanges are improving in this respect: 

“Over the years, Exchanges are getting increasingly transparent. Basically all major exchange's trades, filled orders, orderbook are all publicly retrievable via API. Hence the liquidity and volume dynamics of the exchange can be evaluated by everyone. Some of the major exchanges like OKEX and Kraken would disclose in real-time its status of matching engine or wallet availability.”

For Sun, the way that information is presented can also create problems when trying to analyze it or make it available to the public. Sun said that independent analysis is necessary for exchange data, but not at the expense of compromising sensitive user data:

“There’s already a lot of exchange data that is publicly available but the problem is that the way it’s analyzed and presented can lack transparency. Data can be manipulated to benefit or harm and it can offer a facade of transparency. That’s why we need an impartial analysis of the data that’s already available before we introduce more data into the equation.”

Finding a way back

No matter what measures Binance and CMC claim to have put in place to ensure that they are separate entities, it appears that the damage has been done, as far as critics are concerned. Regardless of whether there is managerial influence between the two, rumors will continue to circle that CMC is simply a proxy for Binance to further its business aims.

For many, the timing of Binance’s leap to the top is far too convenient for it to be anything other than an example of the firm’s invisible hand behind the scenes, which is something that will not be swept under the carpet by the crypto community. But for now, it remains to be seen whether this instance will mark a turning point in an industry that prides itself on transparency and decentralization or pinpoint the moment when a pantomime of good intentions finally falls to pieces.

Russia Proposes 2M Rub Fine and 7 Years in Jail for Illegal Crypto Use

Russian politicians suggest fines and prison terms of up to 7 years for illegal issuance and use of cryptocurrencies.

Russian lawmakers have suggested punishments of up to 2 million rubles ($27,800) and seven years in prison for illegal turnover of digital assets and cryptocurrencies.

As reported by the Russian business channel, RBC, the draft amendments to the administrative and criminal offences codes were confirmed as genuine, but have not yet been agreed into law.

Sliding scale of punishment

The punishments suggested are on a sliding scale, starting with administrative offences for violating proposed rules governing transactions using digital currencies in payment for goods or services rendered.

In this case assets can be seized, along with fines issued from 20,000 to 200,000 rubles ($278 to $2,780) to individuals. Officials face fines of 50,000 to 400,000 rubles, and legal entities can be fined between 100,000 and 1 million rubles.

Fines roughly double for organizing illegal turnover of digital assets or providing means to issue digital currency from within Russian territory.

The same acts can be considered criminal violations if they cause major damage to citizens, organizations or the state. These will incur larger fines, along with up to five years hard labor or seven years of prison time.

There is also a penalty for buying digital assets for cash on Russian territory, and for transferring funds from cryptocurrency to Russian bank accounts.

Cryptocurrency companies will move elsewhere

Yuri Pripachkin, President of the Russian Association of Crypto-economics and Blockchain, claims that the new package of laws essentially comprise a complete ban on cryptocurrency, and will not allow Russian businesses to benefit from this technology.

He believes that the new rules, if brought into law, could lead to a mass exodus of companies out of Russia to relocated in neighbouring countries with more crypto-friendly jurisdictions, saying:

In fact, [the Russian government] is proposing to build a new iron curtain in the digital economy with its own hands

Russia has been uncertain as to which direction to take on cryptocurrencies for several years, although it has recently been taking more concrete steps regarding regulation of digital assets.

Dev Status Update — May, 2020

Dev Status Update — May, 2020

Published by the IOTA dev team every month, this update will provide you with news and updates about our key projects! Please click here if you want to see the last status update. You can also view our complete tech roadmap here.

The IOTA research department also releases a monthly update that you might want to see.

Chrysalis

Earlier this month, we released our strategy around Chrysalis (IOTA 1.5), a series of upgrades to the protocol that achieves enterprise-readiness before Coordicide. Since then, the research and engineering teams, together with the Hornet team, have been working on finalizing the specifications for the first Chrysalis changes. You can see the specifications in the linked RFCs, as well as comment and contribute yourself:

The remaining Chrysalis specifications will be drafted in the upcoming weeks.

Bee

The Bee team has recently merged 2 RFCs (‘configuration’ and ‘protocol-messages’) and is working in some more (‘network’, ‘sponges’, ‘ternary’, ‘signing’). The team has, with the help of a community member, put together the Bee RFC Book. This will document all the RFCs that have been merged and that make up Bee. This is an approach you may be familiar with from the Rust project.

The RFCs being finalized means that the associated code PRs will be done shortly after.

The Bee team has also started working on White flag implementation in the Bee node.

We are also finalizing the work on the prototype, which we will be releasing in the upcoming weeks.

You can find all Bee RFCs in their respective GitHub repository.

IRI

The last RC version of IRI 1.8.6 has been released. We plan on publishing the full release of 1.8.6 in the upcoming days. As noted in this blog post, IRI 1.8.6 will be the last release of IRI that we are actively planning.

With the exception of DB migration capability from IRI to Hornet and general maintenance and support of IRI until the first phase of Chrysalis, no further development work will happen on IRI.

Hornet

The Hornet team is currently testing the RC version of Hornet 0.4.0. In the past weeks, the team has worked on switching Hornet from using BadgerDB to BoltDB. The current plan is to release Hornet 0.4.0 in the upcoming weeks.

The team has also started on implementing Weighted Uniform Random Tip selection (Protocol RFC #8) and White-flag (Protocol RFC #5) Chrysalis changes. The upcoming release of Hornet 0.4.0 already contains Autopeering, which is also part of Chrysalis.

Smart contracts

We have recently published an Introduction to IOTA Smart Contracts article, outlining the functionality of our layer 2 Smart Contracts capability. We have expanded the Smart contracts team and its development has been completely decoupled into a separate node called Wasp. Wasp will connect to GoShimmer to access the Tangle.

The team has been integrating the Communication, State Manager and Consensus Operator components of Wasp. Processing requests in batches was introduced to improve smart contract throughput. Mocking the value transaction flow from GoShimmer and UTXO ledger was implemented to test the main features until Value Tangle is completely ready.

Trinity

The Trinity team has just released Trinity Desktop 1.5.0. This build includes some important bug fixes and dependency updates and addresses the message spam users have been facing. Download it from Github. The team has also released Trinity Mobile 1.5.0. Again, this build includes important bug fixes and dependency updates, as well as adding a transaction filtering and search feature. Download it from the iOS and Android app stores. We have also added an Android APK for users that don’t wish to use Android Play Store.

Meanwhile, the team is working on research, prototyping and specification for the new wallet. Attention has been on devising the underlying Rust libraries, the interaction between Rust and js layers and UI design. The first version of the new wallet will be very much a minimal, core wallet, doing only what is critical to store, send and receive IOTA smoothly. We look forward to sharing our progress here soon.

GoShimmer

The GoShimmer team is currently working on integrating and writing tests for FPC with the value Tangle. You can read more about the development of the last research update.

We currently plan on releasing the new version of GoShimmer in June.

You can follow the project on its GitHub repository. If you want to get involved, check out our updated contributing guidelines.

IOTA Streams

We have published the documentation for IOTA Streams alpha at our documentation portal. The team is now working on improving the implementation to run on existing hardware and exploring how we can reuse some of the components already built for Bee.

We welcome any feedback and suggestions both on the documentation and the functionality of IOTA Streams.

Permanode

The Permanode team is currently finalizing the first version of the API for the permanode and importing functionality for existing .dmp files.

The plan is to then start testing the implementation as a whole, and begin the IOTA Experience Team process so that we can release the new version of the permanode in a few weeks.

Roadmap updates

We have made the following updates to our roadmap:

  • The timeline for Chrysalis has been updated so the end date is October 2020.

We have launched our roadmap in December and have received a lot of feedback since. We plan on going through all the suggestions and improve the website in the coming weeks!

As always, we welcome everyone to stop by on Discord — every project mentioned here has a channel (or more) for discussion with the devs!

Follow us on Twitter to keep track of all the latest news: https://twitter.com/iotatoken


Dev Status Update — May, 2020 was originally published in IOTA on Medium, where people are continuing the conversation by highlighting and responding to this story.

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Bitcoin Will Create a New Economic Elite in 2020

The COVID-19 pandemic has revealed serious problems of the currently existing financial system as well as the Bitcoin’s benefits over it.

As many economies slowly begin opening up again, their stability remains uncertain. ​2020 will go down in the history books as the year financial markets suffered their worst day since 1987 and oil’s value went negative​ for the first time.

Bitcoin (BTC) continues to increase in popularity across the globe, particularly as ​emerging markets ​with populations counting billions begin to recognize its potential. The asset has proven extraordinary resilience in the worst economic crisis of our living time — even overtaking gold as the ​best performing asset​ of 2020.

The COVID-19 pandemic has pulled the breaks on the world economy, with the United States Federal Reserve — the world’s most powerful central bank — being left with no option but to print unlimited money from their magic money tree. The damage is estimated to cost at least​ $1 trillion​, its flow-on effect causing​ ​widespread unemployment​.

The crisis won’t be over when the pandemic is, and it will reveal to the traditional financial system that there is a lot to learn. This year, Bitcoin will create a new economic class, and it’s time for all to pay attention to it — or miss out.

Traditional finance needs to be revamped

The moment the Federal Reserve announced “​infinite money​” and oil’s value went into decline, the​ ​value of Bitcoin grew​.​ ​People are beginning to realize that we can no longer continue relying on traditional forms of finance. For decades, indebtedness across the world has grown, and asset bubbles have continued to enlarge. It appears we have learned nothing from the 2008 Global Financial Crisis. This health crisis is the icing on the already crumbling cake that our society is built on. But with Bitcoin, 2020 could be a different story.

Bitcoin’s ability to ​ride traditional financial markets upward ​is a telling sign not only of its resilience but its role as a somewhat safe haven. On Jan. 3, 2009, when the Genesis Block​ of Bitcoin was mined, the mysterious creator, Satoshi Nakamoto, left a message in the block’s raw data: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Twelve years later, the message has never been clearer: Bitcoin was invented to foster complete reformation of a volatile financial system by separating money and state. If you look at Bitcoin’s ability to exist without centralized control, you will see a glimmer of hope.

Bitcoin will come out of this crisis even stronger

Tim Draper had merit when he​ ​said​, “It will be Bitcoin, not banks and governments that save the day.” The assets that investors have historically relied on can no longer be trusted, and macroeconomic forces are proof that existing forms of trade may not withhold another crisis.

There is a very simple reason why Bitcoin is a reliable asset compared to traditional fiat: There is now officially an “infinite” amount of USD, but there will never be more than 21 million Bitcoin. The “money printer go brrr” meme went viral because it’s true. Hyperinflation will continue to plague our economic systems as long as many traditional assets do.

By design, Bitcoin is anti-inflationary — this is a part of its code. But recent drops have left many believing the opposite is true. When Bitcoin’s​ ​price dropped​ to $3,600 on March 12 this year, it was the direct result of an overall market interest drop in assets and overleveraged longs being liquidated. The many benefits of Bitcoin is that it is an easy asset to liquidate, as it is very accessible.

We have a lot to learn from Bitcoin. We need to look at the way Bitcoin is built and mined to make our predictions. Unlike fiat, Bitcoin is immutable and decentralized. At the moment, its volatility is a consequence of its small market capitalization, its function as a speculative currency, and the fact that many people are treating Bitcoin like they treat their stocks.

The real problem is that economies are being powered by inflationary currencies. In a crisis like today’s, this can collapse like a house of cards. When money keeps losing value, there’s no point in saving any of it. Bitcoin is only solidifying its role in the market as governments continue to print money.

It’s time to give Bitcoin the spotlight it deserves

It is evident that negative interest rates are just around the corner, with the ​U.S. Federal Reserve cutting interest rates to zero. It’s time for the world to see Bitcoin as humanity’s Plan B.

Bitcoin investors are ​multiplying​ and online searches for Bitcoin activity are on​ the rise​. The bullish outlook is back, and we need to wake up to the asset maturing into a globally recognized store of value.

The world is heading into dangerous territory, as the market slowdown is just getting started​. The global economy hasn’t seen anything like this since WWII;​ there will be more damage, and there will be more casualties, both figuratively and literally.

Bitcoin needs to be used for the true purpose and function it was invented for: To safeguard people from the downfalls of the traditional global financial system.

We cannot continue relying on century-old forms of finance where hyperinflation is used as a means of survival. It’s time to take back control of our financial freedom.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Jonathan Leong is the CEO and co-founder of BTSE, with more than 20 years of experience in developing high performance, mission-critical systems. Over the past six years, he has built many successful ventures by fusing his deep knowledge of technology with business opportunities.

Play-to-Earn Crypto Gamers Flip Virtual Properties for Fiat Rewards

A blockchain game adopts a play-to-earn model that lets users receive fiat for virtual property transactions.

As the world discovers more ways to implement blockchain technology, the billion-dollar gaming industry is leveraging the technology to bring transparency, trust and ownership of digital assets to players. A new vision for blockchain games is emerging — one that aims to bridge the gap between virtual worlds and reality through user commerce.

This notion is being demonstrated by blockchain game developer Uplandme. On May 21, Uplandme announced a partnership with Linden Lab’s Tilia division for leveraging Tilia Pay to enable fiat payments for virtual properties traded within the Upland game marketplace. Currently, the virtual San Francisco properties listed on Upland are traded and purchased by players using the in-game cryptocurrency UPX. Upland’s co-founder, Dirk Lueth, told Cointelegraph that when Upland was initially built, the goal was to create an ecosystem representing a real-world open economy. He said:

“Upland is a virtual version of Monopoly. It’s a trading game based on the EOS blockchain that features real-world addresses in San Francisco. These addresses are all tokenized as nonfungible tokens (NFTs), which can be traded and bought using the in-game cryptocurrency, UPX.”

However, in order for Upland to flourish into a truly open economy, a monetization method that would allow players to earn real-world commerce was required. Upland was launched in January 2020 with the promise to exchange in-game tokens for fiat money, which has now become a reality.

According to Leuth, Upland’s vision of a functioning open economy is now achievable through the partnership with Tilia. Linden Lab initially created Tilia Pay to support commerce for its Second Life virtual world, which conducts 1.5 million transactions per day and has an annual GDP of over half a billion dollars. Upland represents the first third-party customer for Tilia, which serves as a registered money service provider and licensed money transmitter.

Upland’s co-founder, Idan Zuckerman, mentioned that the service from Linden Lab will finally allow players to obtain real-world value from digital goods earned through in-game purchases, adding:

“We strongly believe that the future of games and digital property is true ownership; giving players full control over the digital goods they spend time and money acquiring and allowing those goods to retain value in a fair and open marketplace. This partnership helps us fulfill that true ownership promise.”

Bridging the virtual world with reality

Tilia CEO, Aston Waldman, told Cointelegraph that allowing users to extract real-world value within virtual worlds greatly increases engagement, benefiting both players and game developers. Yet in order for this to be achieved, Waldam explained that regulations and licenses are required to move real-world value:

“Tilia has licenses in every state in the U.S., which gives us a unique advantage since no other company has this currently. This is what allows us to move real-world value, like USD, any type of fiat, or cryptocurrencies, between users on a virtual platform.”

Waldman further noted that these licenses allow for a wallet to be integrated within online games, functioning as “in-game bank accounts” that can hold fiat or cryptocurrencies. He added: “The ultimately allows users to extract USD or any other currency out of their accounts, or convert cryptocurrencies to USD to gain profits from goods on the virtual platforms.” Tilia Pay will be implemented into Upland in the coming weeks, putting the platform one step closer to bridging the gap between a virtual world and reality.

Play-to-Earn is the future of blockchain games?

The partnership with Upland and Tilia is also noteworthy, as it demonstrates another instance where a play-to-earn model is adopted by a blockchain game. This is important, as there are certain features naturally built into blockchain games that cannot be offered by centralized platforms. For instance, blockchain games provide true digital asset ownership through nonfungible tokens. On this matter, President of Blockchain Game Alliance, Sebastien Borget, told Cointelgraph:

“Play-to-earn is possible in fiat, without using cryptocurrency, but blockchain, NFTs and cryptocurrencies are facilitators for the payment part, allowing to trade, exchange in a decentralized manner. The game company is not the custodian of a player’s funds and assets.”

Borget further noted that play-to-earn blockchain games are the future of the industry, predicting that this will become a mainstream business model over the next five years, adding:

“I am positive we are getting closer to this mass-adoption moment, as the unfortunate conditions of current world pandemic are pushing players to look for (new) ways to escape the reality of their closed home and apartments by playing video games. Games allow them to express themselves socially in digital spaces, share and interact together.”

Indeed, play-to-earn blockchain games are becoming more common. For instance, Borget mentioned that the flagship game Axie Infinity is growing an active community through sharing tips on how to earn money from crypto gaming. He also shared that popular online games such as Angry Birds, Fortnite and Minecraft are working to enable blockchain features to provide players with the benefits of true ownership and play-to-earn models.

Related: Fungible Tokens Turn Monopoly Money Into Cryptocurrency

Moreover, Borget shared that The Sandbox decentralized gaming platform, of which he is a co-founder and the chief operating officer, is moving forward with the vision of building out an ecosystem where creators can truly own and monetize their games and creations.

Is it better to earn fiat or crypto?

Interestingly, while blockchain games like Upland are moving toward play-to-earn models based on fiat, some skepticism remains. Venture capitalist Tim Draper told Cointelegraph that these games may be more successful if they stick with cryptocurrency monetization models:

“Upland looks like an awesome game and Second Life has been around for a long time with very loyal customers. However, they might be even more successful if they didn’t worry about converting back to fiat currency. Bitcoin/crypto is just better, and fairly easy to spend now if anyone wants to spend it.”

While it may be too soon to determine which model will reign supreme, Upland did mention big plans for the future now that Tilia Pay is being leveraged. According to Lueth, Upland aims to create an entirely new genre of gaming, one where people interact in digital worlds to generate commerce that can be used in real life. He mentioned plans to eventually bring businesses onto the platform, saying:

“We are in talks with a car manufacturer now, as we want to tokenize cars so they can be traded and sold virtually. We are also thinking about going global and listing properties in places other than San Francisco. The grand vision is for the entire world to be open and accessible from anywhere.”

Related: Nonfungible Tokens, Explained

Renowned Analyst Claims Bitcoin Heads to $6,300, But Is it Realistic?

Bitcoin is back in the spotlight after a 50 BTC transaction potentially owned by its creator Satoshi Nakamoto. As speculation mounted about Satoshi dumping his holdings, the flagship cryptocurrency took an 11% nosedive that saw it dip below $9,000. Even though it seems like Bitcoin may have stabilized over the last few hours, one of the most prominent analysts in the cryptocurrency industry estimates that it is poised for a steeper correction. Bitcoin Could Be Bound for Further Losses The trading aficionado, who is well-known for his bold price predictions, maintains that after the most recent rejection from the $10,000 resistance zone, the bellwether cryptocurrency is “back on track” to reach $6,300. The massive retracement that Bitcoin suffered during March’s Black Thursday resembles the “capitulation of the previous bottom” of January 2015, according to the chartist. For this reason, in combination with several technical indexes that estimate Bitcoin is sitting in overbought territory, he believes that a $3,000 pullback is underway. But how realistic is this bearish scenario? Major Resistance rejects Bitcoin. (Source: Twitter) In a recent blog post, Santiment affirmed that after analyzing the emotions across more than 1,000 social media channels, it seems like investors and market participants alike are still bullish. From the point of view of “counter-sentiment trading,” one may argue that “there could be more downward market movement,” said the behavior analytics platform. This might be the reason why the number of addresses with millions of dollars in Bitcoin, colloquially known as “whales,” have begun dumping their holdings on the market. Santiment’s “holders distribution” chart shows that since May 14 the number of addresses with 1,000 to 10,000 BTC has decreased by nearly 1%. This drop may seem insignificant at first glance, but when considering that these whales hold between $9 million and $90 million worth of Bitcoin, a 1% decline translates into $1.2 billion. Bitcoin’s Holders Distribution. (Source: Santiment) Sitting on Top of Weak Support A look at IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals that over 50% of Bitcoin addresses are “Out of the Money,” and 49.3% are “In the Money.” These figures indicate that the investor base behind BTC could be losing confidence about what the near-term future holds. If the pioneer cryptocurrency manages to decisively close below the $9,000 support level, investors who have been sitting in the red may unload their holdings, pushing prices further down. Under such circumstances, the supply wall between $8,600 and $8,800, where 1.13 million addresses bought over 730,000 BTC must hold. Otherwise, Bitcoin could indeed plummet to $6,300 since there is not any significant barrier in-between. In/Out of the Money Around Price. (Source: IntoTheBlock) With such a pessimistic scenario in mind, it is important to remain cautious and wait for confirmation before entering a trade. Employing a robust risk management strategy will help avoid adverse market conditions. Featured Image from Unsplash

Binance and Eosfinex Join EOS DeFi Protocol to Handle Smart Contract Upgrades

An EOS DeFi project wants to make use of the blockchain’s smart contract upgrade features, enlisting the help of Binance, Eosfinex and others to oversee the process.

Equilibrium, an EOS-based decentralized finance, or DeFi, project similar to MakerDAO (MKR), is adding four block producers to its governance system, most notably Binance.

Other members include Eosfinex, an EOS decentralized exchange affiliated with Bitfinex, as well as stand alone block producers EOS Nation and EOS Cannon.

The group of four will act as “governance supervisors” for the system. Their primary purpose is to sign off on smart contract upgrades for Equilibrium.

As Alex Melikhov, the CEO of Equilibrium, told Cointelegraph, this leverages a distinctive EOS feature:

“One of the main advantages of EOS lies in updatable smart contract code. In other words you can migrate to new versions of your application seamlessly without hard stop of the whole system.”

This approach is different from Ethereum, where new iterations of DeFi protocols generally require a complex migration procedure. The old versions may eventually be shut down to avoid security risks, as was the case with Maker’s single collateral Dai, or they may be left to their own devices, like with Uniswap V1.

Reputation-based decentralization

Supervisors hold portions of a multi-signature key that is used to authorize upgrades to the ecosystem. They are chosen among “the most known and reliable ecosystem participants who could bid their reputation on the integrity and relevance of the smart contract updates,” Melikhov said. The decision to include new entities rests with all existing council members, and not just Equilibrium, he noted.

This approach is an interesting middle ground in the world of DeFi. In many Ethereum-based projects, the founders of the protocol hold admin keys that give them special rights over the contract, a practice that the community frowns upon. This is usually done with the promise of destroying those keys once the protocol is mature enough.

Equilibrium’s governance is instead “already decentralized,” Melikhov said, though he conceded that it is not a fully trustless process that is secured by economic incentives or algorithms.

The project went for an alternative approach of “creating a proof-of-authority framework which consists of trusted counterparts that are independent according to their background,” he explained. There are no plans to destroy these upgrade keys, as that would imply missing out on EOS’ added possibilities.

This approach fits within the wider context of EOS governance, which is based on agreements between specific stakeholders.

Binance wants more uses for BNB

A Binance representative told Cointelegraph that the exchange considers EOS a “promising blockchain for DeFi development,” especially for its cross-chain capabilities. Given that EOSDT recently integrated Bitcoin (BTC) as a form of collateral, the company sees a place for the exchange’s token as well:

“We hope to see our BNB token as an asset integrated into more DeFi apps, and we think it can be introduced as a new type of collateral for the EOSDT stablecoin at some point.“

Binance’s addition as a supervisor does not require the ownership of Equilibrium’s governance token, NUT, as the spokesperson explained. Nevertheless, the exchange seems to be incentivized to see the project succeed.

Bitcoin Survived Halving, but Death Spiralists Still Say BTC Is Doomed

Bitcoin survived last week’s halving, but it’s only a matter of time before BTC miners flee, say “death spiralists.” Are they right?

Bitcoin (BTC) halvings are a little spooky, sort of like the witching hour, and one of the prophecies being murmured about last week was something about a Bitcoin network death spiral. This idea, which isn’t really new, premises a mass exodus of BTC miners whose work creating new parts of the blockchain no longer pays because of a reduction in their rewards.

As put forth most recently by Zach Resnick, a managing partner at venture capital firm Unbounded Capital and a prominent supporter of Bitcoin SV (BSV), and summarized by Cointelegraph:

“As the halving cuts the block reward, a large number of miners will leave the network. As the network hash rate drops, the block time increases, the network becomes congested. This, in turn, makes Bitcoin less attractive, as participants do not want to wait forever to have their transactions processed. This leads to the Bitcoin price falling, which pushes more miners off the grid. This process repeats itself until the network dies.”

The May 11–12 halving reduced miners’ block reward from 12.5 BTC to 6.25 BTC and came and went without any calamity, of course. But some of Resnick’s predicted market behavior — falling hash rates, peaking transaction fees, lengthening block time and a congested mempool — were still evident a week after the event. Maybe there was something to the “death spiral” hypothesis?

Just business as usual

Christopher Bendiksen, the head of research at asset manager Coinshares, told Cointelegraph: “Lower hash rates, increased block times and, in the absence of some exogenous immediate drop in transaction demand, increased fee pressure, are very well-known effects of drops in mining reward.”

Moreover, this has happened “at significant scale” before, on Black Thursday, March 12, 2020, for instance, when BTC’s price fell dramatically, which was fueled by coronavirus fears. Miners are paid in Bitcoin; therefore, when the BTC market price drops 50%, so does their block reward. “Another great example is November 2018” — when Bitcoin fell below $4,000, after losing almost one-third of its value in a week. No death spirals resulted in either case.

Related: Lots of Action but No Bull Rally: Here’s How the Bitcoin Halving Went Down

Are miners feeling the pain?

Resnick isn’t the first to predict a death spiral. Santa Clara University Finance Professor Atulya Sarin wrote about it in December 2018 shortly after BTC’s November sharp tumble. Miners’ work in recording and confirming new operations in the distributed public database — which is the blockchain — is crucial. Sarin explained: “Bitcoin is, after all, a set of encrypted numbers that cannot establish the ownership of anything — Bitcoin will become worthless.”

“The miners are a critical piece of the Bitcoin puzzle,” Sarin told Cointelegraph this week. “And halving the hash rate has driven many of them out of business — the revenue that they generate by mining Bitcoins and the transaction fees is lower than the cost of operations for them.”

This argument hasn’t gone unchallenged, however. Gerald Dwyer, a professor at Clemson University and BB&T scholar, maintained that it doesn’t give proper credit to Bitcoin’s transaction fees — the second reward for miners in addition to the block reward. Asked about this fee supplement, Sarin told Cointelegraph:

“While it is correct that increases in the transaction cost can be a source of additional revenue, as professor Dwyer suggests, there is a limit, to which the transaction cost can be increased beyond which it does not remain commercially viable to have Bitcoin transactions.”

That is, BTC users might flee the network if fees get too high. And, as a matter of fact, the average BTC transaction fee rose from $2.52 to $6.65 from May 11 to May 21, though Mati Greenspan of Quantum Economics, for one, downplayed the significance of this in his May 18 newsletter:

“Who thinks that a fee of $3.75 is a valid reason to jump ship or switch to another standard for digital money, it’s something that most people transferring Bitcoin aren’t even going to think twice about. There are at least three dozen cryptos that are cheaper and faster, but none of them have the security, digital scarcity, immutability or liquidity that BTC does.”

Bendiksen also took issue with the idea that transaction fees are a net negative for the Bitcoin network. “They are not,” he told Cointelegraph, adding:

“In fact, increased fees increase the mining reward, which increases the hash rate, directly counteracting the ‘death spiral.’ Over the past week [ending on May 20], fees have contributed an additional 1.22 BTC to the block reward on average, making it almost 7.5 BTC instead of 6.25 BTC. Fees are entirely necessary to secure the blockchain, as subsequent halvings grind the coinbase towards zero. The fact that fees are already 15% of the block reward is extremely encouraging.”

Another weakness in the death spiralists’ stance, in Bendiksen’s view, is they often “seem unaware of the difficulty adjustment algorithm” that occurs roughly every two weeks. As he wrote in a recent Coinshares research report: “The difficulty adjustment ensures that no amount of added hashrate could make bitcoins be produced any faster than prescribed. The opposite is also true.”

An important net effect of Bitcoin’s biweekly difficulty adjustment, he added, “is that the cost of mining always tends towards the market price of Bitcoin.” This makes it less likely that miners will abandon BTC mining en masse due to the death spiral scenario. Resnick, for his part, told Cointelegraph that he wasn’t saying a death spiral was likely, explaining:

“My view up to the halving was that a large price drop or a death spiral were both unlikely to occur but that the price of BTC and especially BTC options did not properly price these meaningful risks to the network. Given that the hash rate has not seen a meaningful drop, that risk still exists.”

Furthermore, before the halving on May 11, the hash rate stood at 137.571EH/s — i.e., the average hash rate per day in hash/seconds — according to BitInfoCharts.com. The rate fell 30% in the first three days after the halving. Eight days after the halving, but before the difficulty adjustment, on May 19, the hash rate stood at 98.555 EH/s. The day after the difficulty adjustment, on May 20, it was even lower, at 86.996 EH/s.

Comparison of Bitcoin network hash rate, mempool and average transaction fee since the halving

Meanwhile, the total number of unconfirmed transactions in the mempool — a measure of network congestion, suggesting how long a BTC user might have to wait to complete a transaction — appeared to be improving. The seven-day average has been decreasing, and the raw daily totals dropped by some 10,000 unconfirmed transactions between May 18 and May 20.

The Mempool seven-day average

Surviving the week after the halving

The fact that the Bitcoin mining network survived the week is a good sign, according to Resnick, who elaborated for Cointelegraph: “The most likely point for a coordinated drop in hash rate was immediately following the halving. Because that didn’t occur, the chance of a death spiral directly related to the halving is much lower.”

A bullet dodged, then? Nothing so dire, according to Bendiksen. The network was designed to handle these exact situations. A death spiral is a theoretical possibility that, at best, “do not actually happen in real life,” as he wrote in his March research report. Resnick countered by saying: “Time will tell. Like all bubbles, they typically pop violently and quickly.”

Related: As Bitcoin Halving Dust Settles, Network Awakens to Costly New Reality

Kevin Dowd, a professor of finance and economics at Durham University in the United Kingdom and a BTC bear, when asked for his own assessment of a Sarin-version death spiral within the next five years, told Cointelegraph:

“One scenario would be where mining becomes increasingly difficult due to BTC halving, so driving up transactions fees to keep mining profitable and thereby undermining BTC’s attractiveness as a means of payment, leading eventually to a loss of confidence in the system. Another would be where people drift across to superior competitors, with the same eventual outcome — i.e., loss of confidence in the system and collapse.”

Dowd’s own view is that a fundamental flaw exists in the Bitcoin mining model — namely, it is a natural monopoly. Whether through monopoly or miners rushing for the exits, “the collapse itself will happen because the system is inherently fragile.” Resnick added on the matter: “Whether that death is specifically from a death spiral as I’ve described or simply the product of dramatically lowered price and relevance,” the probability of a collapse in the next five years “is quite high — well over 50%.” SCU’s Sarin added: “The death spiral is not a question of if, but when.”

Clemson’s Dwyer, for his part, rejected both Sarin’s and Dowd’s arguments. “There is no reason to think that cryptocurrencies will disappear.” Bendiksen, however, added that the death spiral is just “not a very well-thought-out hypothesis, and it keeps getting rejected by actual observations.” This was the third halving, after all, “and we’ve had a whole host of price drops that were 50% or larger.” But there are still no hints — let alone sightings — of a network death spiral. Asked about the probability of a Bitcoin network death spiral occurring within the next five years, Bendiksen answered: “Zero,” adding:

“I do not believe the hash rate will ever spiral to zero because of some vicious cycle supposedly inherent to the design of Bitcoin. It could only go to zero if every single current and prospective miner on the planet were firmly convinced that the long-term value of Bitcoin was zero.”

So, Bitcoin’s ingenious rewards mechanism survived last week’s halving event, but it’s only a matter of time before BTC miners flee en masse for the exit, say death spiralists. To be taken seriously, though, the death spiralists still need to produce some observational evidence to support the theory of the weakness in Bitcoin’s network.

New Baseline Protocol Demo Hints at the Future of Big Business On Ethereum

Baseline

Earlier this year, mainstream firms like Microsoft, AMD, and EY joined forces with cryptoeconomy stalwarts like ConsenSys and Chainlink to create OASIS, a non-profit standards body for contributing enterprise-friendly Ethereum code to the public domain.

At the time, the collaborators unveiled their flagship initiative would be Baseline Protocol, an open-source system aimed at providing “secure and private business processes at low cost” atop Ethereum’s public mainnet.

Since Baseline’s reveal, it’s become an increasingly high-profile project around Ethereum. That’s not just because of the impressive cast of contributors behind the effort but also because of the initiative’s potential to make Ethereum mainstream financial infrastructure.

That’s why heads turned anew this week when the Baseline Protocol published a promising proof-of-concept demo that shows the the initiative is poised to be a major contributor to the Ethereum ecosystem in the years to come.

A Dream System for Enterprises

Baseline Protocol’s new demo illustrates a novel process dubbed baselining, a technique that entails using Ethereum to “prevent data inconsistencies” across mainstream Enterprise resource planning (ERP) systems, i.e. automated back-office software.

Notably, then, Baseline’s fresh proof of concept shows how baselining can be used in tandem with two of the most popular ERPs around. On this point, the project’s press release explained:

“The procurement use case in the demo … highlights how two Enterprise Resource Planning (ERP) systems, Microsoft Dynamics and SAP can maintain consistency with each other using blockchain technology without exposing information about business activities or relationships to competitors or the public. Its use of the public Mainnet reduces capital expense while increasing operational integrity when automating business processes across multiple companies.”

Making Ethereum More Accommodating

Ethereum’s ran away with the lead in the smart contract platform rat race in recent years, to be sure.

Yet when things were still more wide open in that regard, more than a few debates unfurled about whether big enterprises would be able to stomach using a public blockchain like Ethereum or whether they would congregrate to private blockchain’s like J.P. Morgan’s Quorum.

The discussions have brokenly decisively in Ethereum’s favor as the project’s ecosystem has continued to rapidly mature, and the arrival of things like Baseline Protocol and the baselining process are certainly factors in the general warming to the mainstream possibilities of public blockchains.

To this end, Blockchain Research Institute co-founder Alexander Tapscott said upon the baselining unveil:

“The Baseline approach is a windfall for global enterprises looking to boost security and performance. Data is secured, contracts are governed digitally and companies can collaborate seamlessly without changing their current systems. This will change how enterprises interact in a digital setting.”

Moreover, the technique is only the latest work by the Baseline Protocol team. It most certainly won’t be the last. Beyond the project’s other solutions to come, the protocol’s inaugural release is “expected in Fall of 2020.” At that point, the system’s wider possibilities are only set to grow.

Big Companies Already Building on Ethereum

As time goes on, Baseline Protocol should make Ethereum increasingly attractive as enterprise infrastructure. But what’s notable is that big companies are already experimenting with the reigning smart contracts platform in the here and now.

For example, just this month Reddit rolled out an Ethereum-powered community tokens pilot program and Visa had a patent application come to light for a “digital currency” that could be implemented on Ethereum.

These initial forays are on the more simplistic end of the activity spectrum when compared to the more advanced processes that tech like Baseline Protocol can open up for enterprises. Even still, these developments show there is early demand for using a maturing Ethereum.

The post New Baseline Protocol Demo Hints at the Future of Big Business On Ethereum appeared first on Blockonomi.

Watch Out Libra: Stablecoin Backed by Major Asian Currencies Could Be Coming

Facebook LIbra

Last summer, Facebook brought the concept of basketcoins, i.e. stablecoins backed by multiple assets rather than just one, into the limelight with its reveal of the Libra project.

Since then, Facebook and the other 26 members of the Libra Association have notably backed away from plans for a pure basketcoin product. The retreat isn’t because basketcoins aren’t viable, to be sure, but rather because multiple regulators have made it clear they don’t want Facebook releasing its own de facto stab at a world currency.

Zooming out, this retreat has paved the way for another, more nimbler institution to outmaneuver Facebook in releasing a major basketcoin project similar to what the Libra was originally envisioned as. According to news out of China this week, among the institutions to do so first could be the People’s Bank of China (PBoC).

Regional Asian Basketcoin Proposed

Cryptoeconomy chatter around China’s central bank has lately centered on the institution’s in-progress digital yuan, the highest-profile central bank digital currency (CBDC) initiative in the world right now. Yet the bank may help release a separate basketcoin project first.

That’s per a proposal delivered this week amid China’s “two sessions,” which are the national legislative and advisory conferences held annually in the Asian superpower.

The advisory session, dubbed the Chinese People’s Political Consultative Conference (CPPCC), is not akin to a meeting of the U.S. Senate or the U.K. House of Lords. And at the body’s latest session, Neil Shen, a founding partner of Sequoia Capital China and member of the CPPCC, joined with 9 other specialists to call for the creation of a PBoC-backed basketcoin.

In particular, Shen and his peers suggested the new digital currency should be underpinned by reserves of the Chinese yuan, the Hong Kong dollar, the Japanese yen, and the Korean won. The proposed basketcoin’s reserves would be weighted according to the performance of the economies of China, Hong Kong, Japan, and South Korea as such.

Why a basketcoin, then? The initiative’s proposers said the digital currency could spur trade and optimize cross-border payments for the participating nations. They also said it could be launched in close coordination with Hong Kong Monetary Authority and alongside a regulatory sandbox aimed at boosting related innovations.

It’s entirely possible this basketcoin proposal doesn’t move any further in China’s contemporary landscape, but it’s live for consideration now and demonstrates once again that digital currencies are becoming a mainstream topic at China’s highest political levels.

A Sore Spot for Facebook?

There’s no question that with Facebook’s global reach, the Libra basketcoin as originally envisioned could have come to rival traditional world currencies. That’s why the Libra effort hit a regulatory firestorm early on, and that’s why rumors swirled earlier this year that Libra’s initial model was going to have to be reconfigured.

That’s why analysts in the cryptoeconomy weren’t surprised back in April when the Libra Association published an update to the Libra’s whitepaper for the first time. Per the redesign, the body was henceforth going to be releasing multiple single-currency stablecoins, e.g. one pegged to the dollar, another pegged to the euro, and so forth.

With that said, the Libra Association said it would still back a Libra offering, just in indirect fashion and thus not in token form.

“Under this change, ≋LBR will simply be a digital composite of some of the single-currency stablecoins available on the Libra network,” the new whitepaper explained.

The retreat will likely leave the Libra Association thinking what could have been. That is especially true if the PBoC does end up bringing a real basketcoin product to market while avoiding widespread international regulatory pushback.

The post Watch Out Libra: Stablecoin Backed by Major Asian Currencies Could Be Coming appeared first on Blockonomi.

Immunity Passports May Be Blockchain’s Killer-App, Says Overstock CEO

Overstock CEO Jonathan Johnson said that immunity passports to prove lack of coronavirus infection may push blockchain technology out of Bitcoin’s shadow.

Overstock CEO Jonathan Johnson has claimed that private, consumer-controlled immunity passports may be the killer-app that propels blockchain technology into the mainstream.

In an interview with PYMNTS, he said that the company’s investment arm has turned to two startups creating blockchain-based apps allowing consumers to download and control their health records.

Making people feel safe again...

Johnson suggests that we must consider what will make an average consumer feel safe to use air travel, restaurants or even stores again after the coronavirus pandemic subsides. Ultimately, he believes this hinges on the knowledge that everyone around them is uninfected with virus:

"An immunity passport is what that is going to look like for a lot of industries. If I can prove that I’ve got the antibodies or have steered clear of infection entirely, and I can show that on an immunity passport, that’s pretty powerful."

… while maintaining privacy

A major hurdle with such an app is how to encourage adoption. Potential users may be put off amid concerns about data privacy or illicit usage. And stories about totalitarian regimes like China enforcing such a scheme on its citizens do nothing to calm fears.

The key difference between the blockchain-based apps in which Overstock is investing, and a state-enforced scheme, says Johnson, is that of choice. Consumers must choose to access their health data through the app, and can then choose who to share the information with.

Johnson also thinks that adoption will improve when certain businesses start to require such an immunity passport, for example to watch a sports match, enter a plane, or dine at a restaurant.

This will force consumers who want to participate in such events to sign up.

Bringing blockchain out of Bitcoin’s shadow

Overstock has been a long-time advocate of cryptocurrency and blockchain, but Johnson feels that the technology has so far been overshadowed by its first use case of digital payments.

He says that a solution which enables consumers and businesses to regain confidence in transacting face-to-face, utilizing the secure and immutable transfer of data by blockchain, could bring the technology out of that shadow and into the mainstream consciousness — even if many don’t understand the technology behind it.

New Report Suggests U.S. Military Is Losing Blockchain Race to China & Russia

USA

Recent war game scenarios suggest the U.S. is ill-prepared to contend with the combined military might of China and Russia. Now, a new report suggests the U.S. is also increasingly lagging behind its biggest geopolitical rivals when it comes to militarizing blockchain technology.

That report, titled “Potential Uses of Blockchain by the U.S. Department of Defense,” was published on May 20th by the Value Technology Foundation, a non-profit think tank centered on blockchain tech.

The publication, which counted among its contributors major firms like Amazon Web Services and IBM as well as cryptoeconomy mainstays like ConsenSys and Wachsman, is aimed at educating U.S. Department of Defense (DoD) officials on how blockchain can be used to enhance multiple elements of America’s military activities.

Land of the Free, Home of the Blockchain?

In recent years, U.S. Representative Darren Soto has established himself as one of America’s most pro-blockchain legislators. It’s no surprise, then, that Rep. Soto wrote the foreword for Value Technology’s new blockchain report.

In that foreword, Rep. Soto warned that China and Russia have already respectively “invested millions of dollars worth of research and development” into blockchain initiatives, whereas American legislators were “still trying to understand what the technology is” and “still trying to enforce old laws” around the tech.

With that said, Rep. Soto noted Value Technology’s report was a step in the right direction for the U.S. and pointed toward progress to come:

“When I see the creativity of thought in ways of applying blockchain technology to support the Department of Defense in this paper, I am reminded of what a free and democratic society can do when called into action.”

Toward Optimizing U.S. Military Operations

The DoD is a sprawling organization involved in a sprawling range of activities, and its leadership routinely focuses on making the expansive U.S. armed forces more efficient. Value Technology’s report argued that blockchain could particularly increase DoD’s efficiency in the following areas:

  • “multi-domain command and control”
  • “acceleration of procurement”
  • “management of mobile device assets”
  • “enhancement of supply chains”
  • “additive manufacturing,” e.g. 3D printing vehicle parts

The supply chain suggestion is hardly surprising, as enhanced logistics have long been touted as one of blockchain’s most promising use cases, and the U.S. military has no shortage of logistical problems when it comes to fraud, waste, and abuse that blockchain could help mitigate.

However, what’s really interesting is seeing the report’s comments on blockchain’s ability to boost “multi-domain command and control,” i.e. implementing command structures that don’t have single points of failure and can operate with multiple heads.

This area is of huge concern to DoD, as a hypothetical war with a near-peer ally like China or Russia would likely entail these adversaries taking decisive strikes at the U.S. military’s key command structures. The body would fail without the brain, as it were.

Accordingly, Value Technology argued that blockchain tech can bring “antifragile properties” across DoD’s key operations, a dynamic that would be hugely advantageous during times of crisis:

“When it comes to the decision-making process during emergency and catastrophic events, it is critical that the state and effectiveness of large operational networks and ecosystems remain functional, which [blockchain] can help to ensure.”

Whether the U.S. military’s leaders will take such recommendations and run with them remains to be seen, but the mere fact that this kind of paper was produced and presented in the way that it was suggests blockchain could play a much bigger role in the defense sector in the years ahead.

Logistics use cases will probably come first, naturally. But more advanced possibilities are becoming increasingly imaginable as time goes on.

The post New Report Suggests U.S. Military Is Losing Blockchain Race to China & Russia appeared first on Blockonomi.

Bitcoin Price Bulls Have Only One Objective Before Next Week Starts

Bitcoin is now facing three scenarios with the 20-week moving average likely playing a key role in determining which way the market goes in the next few months.

Bitcoin (BTC) price is up 1.23% for today’s session at $9,175 having reclaimed the $9,000 handle, after briefly losing it and finding lows of $8,800. Overall, the biggest cryptocurrency by market capitalization is down 1.8% from where it was at the same time on Thursday.

Ether (ETH), the second-biggest crypto, is holding the $200 handle, and at $204 representing a 2.69% recovery from yesterday’s lows of $191. XRP — the third-biggest by market cap — has regained the $0.20 level and is also up 3.8% for the day’s session.

Cryptocurrency market 24-hour view. Source: Coin360

Cryptocurrency market 24-hour view. Source: Coin360

1-month chart

With a week remaining before the close of May, the monthly chart of bitcoin clearly demonstrates that Bitcoin has a long-term challenge to overcome, which is reclaiming the $10K handle. But more specifically, it must record a ~$9,300 monthly close that has eluded Bitcoin for the last 10 months, which sets the tone for the current price action. This is likely to take place over the course of the next week.

BTC/USD 1-month chart. Source: Tradingview

BTC/USD 1-month chart. Source: Tradingview

1-day chart

The 1-day chart for Bitcoin shows that trading today is still occurring below resistance and that Bitcoin has currently posted a lower high on a macro level after forming a lower low. This market structure will need to change before Bitcoin can be declared bullish with more confidence.

The high level of spot volume occurring at the $10K level shows that there is potentially more external interest around this price point, which is a positive for the bulls, despite the high timeframe resistance of $9,300 being temporarily lost as support.

BTC/USD 1-day chart. Source: Tradingview

BTC/USD 1-day chart. Source: Tradingview

Following yesterday’s selloff, the chart shows a loss of momentum with the MACD crossing bearish, indicating that there is a stall in the upward momentum and that further consolidation may be necessary before continuation. The MACD line is above the zero line, meaning that the underlying trend has not turned bearish yet.

The RSI is currently still at above 50, which is generally considered to be bullish and there is arguably a small hidden bearish divergence developing. But clearly, the trend is currently down and is similar to that has been seen previously when there has been a rejection at the $10K level.

BTC/USD 1-day chart. Source: Tradingview

BTC/USD 1-day chart. Source: Tradingview

1-hour chart

The 1-hour chart shows that the drop to the mid $9,000s was met with textbook-like support at the 61.8% retracement from the move that started at $8,178 and found highs at $9,953.

The downtrend, which took Bitcoin to the lows, has now been broken from. Meanwhile, a so-called Adam-and-Eve bottoming pattern has formed and is being broken out from ahead of the East coast open and the final session for the week at the CME, which can typically result in a volatile afternoon.

The MACD and RSI are also both implying that there is momentum on lower time frames to move up. The target of the Adam-and-Eve bottom is around $9,500, which is also the 61.8% of the move down. So there is reason to believe that there’s momentum to at least retest the mid-$9,000s over the weekend. Failure to maintain the bottom for Bitcoin here would likely lead to a retest of the lows of $8,200 which is also the 20-week moving average.

BTC/USD 1-hour chart. Source: Tradingview

BTC/USD 1-hour chart. Source: Tradingview

3 scenarios for the price of Bitcoin

Three scenarios can be proposed — due to the nature of the market currently having a fairly defined market structure — which can work as a framework for what may occur beyond the lower timeframe.

BTC/USD 4 -hour chart. Source: Tradingview

BTC/USD 4 -hour chart. Source: Tradingview

Reclaim the high timeframe resistance

If Bitcoin can quickly reclaim the high timeframe resistance of $9,300 and close the month above, there would most likely be an ascending triangle to also support the strength of the move.

This scenario implies that the selloff action has been a sophisticated attempt to keep prices below $10K to enable accumulation before a move higher. This is somewhat unusual given previous selling interest at these prices and that there has been a long time to accumulate lower.

However, the change in the economic climate and the comments from traditional finance figureheads such as Paul Tudor Jones may be indicative of a change of sentiment. Should this occur, a relatively fast move to $11.5K could be expected as sell-side liquidity dries up and is only available on the book above $10K.

Test 20-week moving average — broken

If Bitcoin is unable to reclaim the levels aforementioned, the likely inevitable breakdown would be to retest the May lows and 20-week MA, currently around $8,160. Typically this is the line in the sand between continuation higher and a more meaningful bearish downturn. Should support be found here, a slower move to retest $10K could be expected, but it would be the first time that the mid $8K range has acted as support and would be a very bullish sign.

Test 20-week moving average – rejected

A breakdown at the 20-week MA would be and has been previously, indicative of lower prices and a longer-term correction. This would also suggest that there is a diamond-shaped topping target that would have a target of around $6,500, which is also the critical mid-range that Bitcoin has spent most of the past few years in.

This may be argued as being wishful thinking by many bulls at this stage and is preemptive of a more fundamental breakdown. But while these scenarios are useful for planning ahead, the main focus for traders over the next week is printing a higher high on the monthly close.

Inflation-Busting Cryptocurrency Zimbocash Receives Listing on Bithumb

Zimbabwe’s Zimbocash project got closer to its goal of providing a sound-money alternative to the hyperinflation of the local currency.

A project developing a national decentralized currency network in Zimbabwe has received a big boost with the listing of its Zimbocash (ZASH) token on the Bithumb Global exchange. 

According to a May 22 report in the Zimbabwe Independent, the listing will enable the currency to grow substantially, providing a sound-money alternative to the crumbling Zimbabwean Dollar.

Coronavirus adds to Zimbabwe’s economic woes

The Zimbabwean economy already faces a crisis, with an inflation rate of around 500%. As Cointelegraph reported, the Reserve Bank of Zimbabwe was earlier this year considering a  fintech sandbox, whilst also focusing on stabilizing the local currency.

However, the impact of the coronavirus pandemic has dealt a devastating blow, with many believing that the government is now insolvent with little borrowing capacity left. Zimbocash’s  head of communications Philip Haslam said in a statement:

"The government has admitted that it is going to print money on a large scale to fund itself, which could push the country into hyperinflation […] We believe that Zimbocash is perfectly positioned to solve this problem by fixing the amount of money in the country using blockchain technology. Our aim is to provide sound money."

Global listing provides much need liquidity

In order to succeed, Haslam says that Zimbocash needs a network of scale and a liquid market price to use as a reference in daily trade.

While work on the former has been continuing for some time, the new listing both provides the liquidity required and validates the work done thus far on network growth. Haslam believes that the project is realizing some of Bitcoin’s (BTC) potential:

"We are fulfilling the dream of Bitcoin — we’re developing a peer-to-peer payments platform and facilitating on-the-ground trade in a country."

Zimbabwe desperate for sound money

While the prospect of launching an alternative national currency may seem daunting to some, Zimbabwe is crying out for such a solution to its economic problems. Head of the Zimbocash subscriber network Laswet Savadye explained:

"Zimbabwe is perhaps the only country where you would be able to establish a decentralised currency network of scale. Zimbabweans are desperate for a sound-money solution and there is no other alternative like Zimbocash."

Zimbocash is offering free tokens to Zimbabwean residents who register, along with referral bonuses. The reward halves every three months, and currently stands at 3125 ZASH.

While the Bithumb listing will allow users to cash-out, its main goal is to establish a market price and facilitate daily trade.