Tag Archives: Cryptocurrency

It’s a Cryptocurrency Bloodbath

It’s a Cryptocurrency Bloodbath

 

    

The market correction that a number of analysts have predicted

has hit, with leading cryptocurrencies losing in double digits in the last 24 hours. Market leaders bitcoin and Ethereum were not among the biggest losers, dropping 12.81% and 16.04% in the last 24 hours, respectively, but their market cap losses were in the billions, falling to $37.4 billion and $28.9 billion, respectively.

Ripple, a distant number three in market capitalization at just under $10 billion, lost over 12%. NEM, number four, lost over 17%, while Ethereum Classic, number five, lost 13.77%. Litecoin, number 6, suffered the least among thbillion-dollarar players, losing just over%. Eighth placed IOTA was the biggest loser among the cryptocurrencies with more than $1 billion in market capitalization, falling 36.5% when its price fell to $0.38.

Survivors A Few

All top 100 cryptocurrencies tumbled in the last 24 hours, according to marketcap.com, except for four: Quantum Resistant Ledger, the number 41 cryptocurrency with $81.4 million market capitalization, jumped 19.43%; LBRY Credits, number 57, posted an 18.24% gain; Xarum, number 62, gained 10,4%, and ZCoin, number 69, gained 9.58%. The correction that began Monday continued after a breather yesterday, as bitcoin failed to launch a new rally towards all-time highs and rolled over after the bounce. Correlations are high once again, as is usual for a correction, and it’s likely that bitcoin and Ethereum will dictate the trend of the coming days, with small cap coins following the majors lower.

Further Losses Expected

Bitcoin continues to trade near its lows from Monday, and it will likely head for a test of the $2375 level, as it clears its overbought momentum readings. The rising long-term trendline is found near $2200, providing further strong support. The long-term picture remains bullish, but there is room for further correction after the strong rally since the end of March.

A 30%-50% correction, that has been the normal for bitcoin in the past, is a huge psychological burden that makes a panic sale likely, usually just before the bottom. Because of this, buyers are advised to wait for the correction and oversold readings, even for those planning to buy it at a higher price later on. Analyst Nicola Duke of Forex Analytix predicted hefty price corrections for both bitcoin and Ethereum in late May. Duke said bitcoin could experience a 46.5% price correction at $2,800 after witnessing a record $2,791.70 high in late May. After reaching $2,800, Duke predicted it would fall and reach as low as $1,470, marking a 46.5% drop from the late May price.

Duke expects the correction to be temporary, with the price recovering, and continue its upward movement through 2018. An analysis called the Fibonacci retracement examines the peaks through different periods of up and down movements to determine future asset prices. In “wave two,” in the fall of 2013, bitcoin bottomed out in January 2015 before rebounding for several months and then declining again. It rebounded again in January of 2015. Duke said bitcoin is now in a third wave.

Recovery Expected

Duke expects the fourth wave will see bitcoin stay at 61.8% of the time the second wave lasted. This means the rally following the correction will begin in January. Short-term traders are advised to wait until the correction runs its course and the short-term trend turns higher again, while long-term investors should prepare to add to their holdings heading towards the targets of the move, and buying opportunities emerge. This holds true for long-term investors who plan on holding on to the coins and adding to their core holdings on the dips. Short-term traders should still wait for the short-term trend to turn higher before buying.

Chuck Reynolds

Marketing Dept
Contributor

Please click either Link to Learn more about
-Bitcoin.

 

Thomas Prendergast

World’s First Blockchain Insurance Marketplace To Launch Ambitious ICO

World’s First Blockchain Insurance Marketplace To Launch Ambitious ICO

  

The world’s first Blockchain-based insurance marketplace,

InsureX, is set to launch an ICO in July 2017 in a bid to raise at least 2200 ETH. The first in a large number of token sales set to launch in the next few weeks, London-headquartered InsureX intends to use the funds to create a trading platform specifically for insurance products.

“Blockchain technology presents an exciting opportunity to disrupt the insurance industry,” CEO Ingemar Svensson said in a press release Thursday. Citing Allianz insurance data, he continued: “Preliminary estimates are that gross written premiums generated by insurers contribute 3.5 trillion or 5.7 percent of the global GDP – that is a massive opportunity.”

In addition to finding products themselves, InsureX will offer a secure exchange of confidential documents and other data on the platform, which operates in the Software-as-a-Service (SaaS) format. The insurance industry is already slated for change, thanks to Blockchain solutions with products such as IBM Blockchain built on a hyperledger seeking to streamline common processes.

“Currently, insurance is traded and processed in traditional ways, often manually and with layers of intermediaries,” Svensson continues. “As part of the typical insurance deal, a large amount of documents and data have to be exchanged, which in a manual system introduces cost, delays and errors to the process.” The ICO will go live on July 11, with IXT tokens initially sold at an ambitious rate of 1.125 IXT per ETH, increasing to 1.757 per ETH as the sale continues through until July 31.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

U.S Judge Upholds Vote To Confiscate Family’s $80mln Gold Coins

U.S Judge Upholds Vote To Confiscate Family’s $80mln Gold Coins

 

The family who found ten gold coins allegedly worth $80 mln

has again lost the battle to stop the US government confiscating them. Acc Mag reported on Wednesday June 14 that Judge Legrome Davis of the Eastern District Court of Pennsylvania upheld the position of the state: the coins originally belonged to the state, therefore the discoverers would not be offered compensation.

The story is a timely reminder about the lack of control over state-issued means of exchange in an age where decentralized assets are flourishing. Ten 1933 Saint-Gaudens double eagle coins were found by the Langbord family, descendants of a U.S cashier, locked in a safety deposit box. Originally coined by the Philadelphia Mint, most were destroyed when the US abandoned the gold standard. However, the few that have slipped through the net have fetched huge sums; in 2002 an identical coin went for $7.5 million at auction.

Nevertheless, when the cache was handed over to the Mint for verification, lawmakers said that they were originally illegally removed from circulation and therefore still belonged to the state. The Langbords have appealed the original decision from 2011 several times without success, yet will continue to challenge the ruling after their latest setback. Cryptocurrency’s rise has seen attempts to increase state control of its value in recent months. The European Union, for example, is attempting to pass legislation obliging wallet holders of Bitcoin and other assets to link these to their real identity.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Bitsquare: Our Support For UASF Requires Trading Halt

Bitsquare:
Our Support For UASF
Requires Trading Halt

    

P2P marketplace Bitsquare has confirmed support

of a user-activated soft fork (UASF) and signalled its opposition to Bitmain. In a blog post on Wednesday, Bitsquare reiterated its desire for SegWit activation while condemning Bitmain’s user-activated hard fork (UAHF) proposal. “This announcement of Bitmain is great news for Bitcoin, as it removes a lot of uncertainty and gives a lot of support for the UASF side,” founder Manfred Karrer said.

Karrer announced that as part of the process of supporting UASF, Bitsquare would “halt trading” until the issue of a hard fork was resolved. “We can expect that Bitmain will use its hash power to attack the UASF chain if they feel the need for that. This might lead to all kind of unpleasant situations like long confirmation times, an unclear amount of confirmations to be considered safe, very volatile tx fees and more,” stated Karrer. He continued, “For an exchange that means undefined and uncontrollable risks … there would likely be a huge effort for support and arbitration which would kick us back with our road map. For all those reasons, we need to halt trading on Bitsquare.”

In what he labelled as an ‘exit strategy’ for users, Karrer added that support for alternative base currencies for Bitsquare – Dogecoin and Litecoin, perhaps with Dash and others to follow – would appear ‘with the next release’ of the project. Despite the problems facing the community due to the escalating debate, Bitsquare nonetheless saw new weekly trading highs in several markets, according to data from Coin Dance.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Litecoin’s Charlie Lee Quits Coinbase, Receives $12,000 Donation

Litecoin’s Charlie Lee Quits Coinbase, Receives $12,000 Donation

    

A $12,000 donation has accompanied Litecoin creator Charlie Lee leaving Coinbase

to work on his creation full-time. After Lee announced he was stepping down from Coinbase duties to dedicate himself to Litecoin development, his Litecoin Foundation received a donation of 438 LTC – around $12,000 at Tuesday’s rates. The donor, known by his handle JoeyBTC, made himself known following a Twitter request. Litecoin proceeded to come down from circling $35 per coin as Bitcoin itself slumped, with Lee’s optimistic announcement having little effect on investor opinion.

The move is the first major event for the Litecoin community since SegWit activation caused a giant price rise in May. While a long time ago in terms of 2017’s cryptocurrency price action, Litecoin just six weeks ago was the star of altcoin markets, regularly outperforming other top 10 assets and bucking downward trends. Responses to Lee on Twitter were therefore keen to forecast a new surge upwards in a market currently dominated by Ethereum (ETH). Last week, Trezor became the first Litecoin hardware wallet to support SegWit.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Network Costs Bite As LocalBitcoins Introduces Deposit Fees

Network Costs Bite As LocalBitcoins Introduces Deposit Fees

    

LocalBitcoins has announced it is introducing Bitcoin deposit fees

from June 21 due to rising Bitcoin network fees. In an email to users on Tuesday, the P2P marketplace explained that the Blockchain space required to manage deposits outweighed withdrawals and that fees, therefore, needed to be levied on the process. “In the Bitcoin network managing deposits uses up a lot of blockchain space while handling a withdrawal uses up much less space.

This means that a large part of the old Bitcoin transaction fee was for covering costs related to deposits,” the email reads. “By introducing deposit fees customers who make many small deposits will pay a larger share of the overall transaction costs and customers who send out transactions will enjoy lower fees.” LocalBitcoins is only the latest Bitcoin business to introduce increased rates as a result of network usage costs.

While withdrawal fees are decreasing, a similar move this week from exchange Kraken came as a result of user backlash over its previously proposed fixed-rate Bitcoin withdrawal fee of 0.025 BTC ($6.20). LocalBitcoins’ new fee schedule will be dynamic, equal to “about 3x the amount of sending fees” – the reduced withdrawal fees. “LocalBitcoins is committed to improving the situation,” the platform continued on the topic of future developments. “We'll invest resources towards developing various offchain technologies, transaction batching and other tools to make using Bitcoin cheaper for our customers.”

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

An Introduction to Cryptoeconomics

An Introduction to Cryptoeconomics

The Concept of Cryptoeconomics

In this guide, you will be introduced to the concept of cryptoeconomics and how it has given birth to an entirely new digital multi-billion dollar industry.

What is Cryptoeconomics?

Cryptoeconomics is a concept as well as a new term and, hence, has no official definition yet. According to Ethereum developer Vlad Zamfir, cryptoeconomics is “a formal discipline that studies protocols that govern the production, distribution and consumption of goods and services in a decentralized digital economy. Cryptoeconomics is a practical science that focuses on the design and characterization of these protocols.” The Ethereum Wiki defines cryptoeconomics as “the combinations of cryptography, computer networks and game theory which provide secure systems exhibiting some set of economic dis/incentives.”

While the founder of TheControl, Nick Tomaino, explains cryptoeconomics as “the study of economic interaction in adversarial environments. In decentralized P2P systems that do not give control to any third party, one must assume that there will be bad actors looking to disrupt the system. Cryptoeconomic approaches combine cryptography and economics to create robust decentralized P2P networks that thrive over time despite adversaries attempting to disrupt the network.” In simple terms, cryptoeconomics is a new field of study that analyses economic interactions in the decentralized digital economy that was pioneered by bitcoin. It is the foundation on which cryptocurrencies and digital assets are built on.

How Cryptoeconomics Changed Peer-to-Peer Networks

The Bitcoin network was not the first decentralized peer-to-peer network. Before Bitcoin, we had peer-to-peer file sharing platforms such as Morpheus, and Kazaa, where users from across the world would share files with other members of the decentralized peer-to-peer network. However, what these file sharing platforms were missing was an economic incentive. Without economic incentives, there was little reason for users to keep seeding files that take space on their computers so that other users can download them. Aside from the legal aspect of sharing copyrighted material, a lack of economic incentive is what contributed to the demise of the above-mentioned platforms.  

Satoshi Nakamoto, the anonymous creator of Bitcoin, however, managed to create an economic incentive to uphold Bitcoin’s peer-to-peer network. He introduced Bitcoin mining rewards for those who used their computing power to secure the blockchain and to process bitcoin transactions. This was the birth of cryptoeconomics. Before bitcoin was created, it was believed that it was impossible to achieve consensus among nodes to develop a decentralized digital currency system due to the Byzantine General’s Problem. However, due to the implementation of the proof-of-work consensus mechanism that allows Bitcoin network participants to receive new bitcoins for enabling the network to function, this previously “unsolvable” challenge was resolved. Today, the Bitcoin network has become an internationally thriving peer-to-peer payment system that has a market value of over $45 billion dollars and a single bitcoin is worth more than a troy ounce of gold.

The Evolution of Cryptoeconomics

Bitcoin was the first technology to implement a rewards system to a cryptographically secured peer-to-peer network. Due to the network’s open-source nature, many other cryptocurrencies followed that were built on top of the technology that Satoshi Nakamoto has created. Many new “altcoins” were merely bitcoin clones while some had new features that improved on their pioneering predecessor. Litecoin, for example, provides faster transaction times than bitcoin while DASH and Monero provide complete transaction anonymity. These cryptocurrencies, however, all use a proof-of-work mechanism similar to that of their predecessor, bitcoin. A new blockchain that has introduced new concepts into the world of cryptoeconomics is the Ethereum Project. Ethereum was developed by Vitalk Buterin and officially released on July 30, 2015. Ethereum differs bitcoin in three key ways, which are also helping to reshape the dynamics of cryptoeconomics.

Proof-of-Stake vs. Proof-of-Work

The bitcoin network uses a proof-of-work consensus mechanism, which means that participants who want to earn rewards through bitcoin mining need to use their computational power to maintain the network by validating and processing transactions. For this work, they receive financial rewards in the form of new bitcoins. However, the proof-of-work mechanism is very inefficient. Not only is it expensive to maintain bitcoin mining hardware, it also requires a substantial amount of energy to keep the bitcoin network running. According to Vice Motherboard, the bitcoin network is projected to consume as much energy as the entire country of Denmark by 2020.

Ethereum, however, is addressing this cryptoeconomic inefficiency by moving towards a proof-of-stake consensus. A proof-of-stake consensus mechanism enables users that hold the cryptocurrency ether, to receive rewards for validating transactions without the need for electricity-intensive mining hardware to be used. Ethereum still runs on proof-of-work but it is expected to switch to a proof-of-stake consensus mechanism within the next two years.

Monetary Policy

Bitcoin has a hard coded monetary policy built into its network, which allows for 21 million bitcoins to be created in total and, thereby, limits the supply of bitcoins. Furthermore, the rate at which bitcoin are created halves every four years. Bitcoin miners (those who enable the network by validating and processing transactions) are rewarded with the newly created coins. Ethereum’s monetary policy does not involve a finite number of ether that can ever be created, which could be seen as a negative. However, as Ethereum moves towards proof-of-stake, the holders of ether will be the ones to receive new ether for validating transactions. This is considered a more inclusive way of distributing coins than Bitcoin’s proof-of-work approach, which favour large well-funded centralized mining operations.

Different Script Language

Ethereum also uses a different scripting language than bitcoin, which allows for decentralized applications and smart contracts to be developed on top of its blockchain. This makes Ethereum and much wider applicable blockchain than Bitcoin's and adds entirely new layers to the field of cryptoeconomics.

The Future of Cryptoeconomics

It is hard to predict the future of such a new field of social science. However, the developments in cryptoeconomics in the past decade or so are suggesting that cryptoeconomics has the potential to play a major role in society. Through the use of trustless peer-to-peer payment networks and self-executing smart contracts, intermediaries can be alleviated while payment speed and security can be increased. As technology becomes an increasingly important part of our day-to-day lives it would only make sense for economics to become part of that too.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Instant Bank Payments Will End Bitcoin Binge: German Central Bank Chief

Instant Bank Payments Will
End Bitcoin Binge:
German Central Bank Chief

Digital Currencies could worsen future financial crises, Wiedmann says.

    

Digital Currencies could potentially worsen financial crises in the future

Jens Wiedmann, the president of Germany’s Bundesbank, has warned that digital currencies could potentially worsen financial crises in the future. He also stated, in his personal opinion, that ‘instant payments’ would put an end to the public interest in digital currencies like bitcoin. Germany’s top central banker was speaking in Frankfurt today in a speech predominantly on the European Central Bank’s quantitative easing (QE) program when he touched on the subject of digital currencies.

Instant Payments to Dampen Bitcoin?

Wiedmann, who is one of the most powerful figures in European and the global economy, claimed that the ongoing digitization of finance is and will remain the most significant challenge faced by central banks. He offered a solution toward taking on popular growing financial technologies like bitcoin and other digital currencies.

In quotes reported by the Financial Times, he stated:

My personal take on this is that central banks should strive to make existing payment systems more efficient and still faster than they already are – instant payment is the buzzword here. I’m pretty confident that this will reduce most citizens’ interest in digital currencies.

‘Digital Currencies Could Worsen Financial Crises’

Wiedmann admitted that central banks are likely to create their own official digital currencies in the future. A move toward digitization which would, according to the central banker, provide citizens with the reassurance that their money would be safe. In doing so, however, Wiedmann claimed that private banks would risk bank runs during times of future crises. A bank run occurs when a large number of customers panic to make withdrawals from financial institutions at the same time. In their attempt to safeguard their cash while losing faith in the institution, the withdrawal en masse from customers could lead to banks losing liquidity and struggle to make their loans, leaving them insolvent.

Wiedmann said:

Allowing the public to hold claims on the central bank might make their liquid assets safer, because a central bank cannot become insolvent. This is a feature which will become relevant especially in times of crisis – when there will be a strong incentive for money holders to switch bank deposits into the official digital currency simply at the push of a button. But what might be a boon for savers in search of safety, might be a bane for banks, as this makes a bank run potentially even easier.

The central banker is a known critic of digitization brought on by financial technologies, questioning the promise of FinTech revolutionizing financial services and infrastructure earlier in March this year. However, he did add that technologies like blockchain ‘could’ have the potential to make financial processes faster, inexpensive, more efficient and convenient. Meanwhile, the Bundesbank has been developing a blockchain-based settlement infrastructure system, based on a concept of the open source www.cryptocoinsnews.com/tag/hyperledger-project/.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Dubai Announces Digital Blockchain Passport for ‘Borderless’ Airport

Dubai Announces Digital Blockchain Passport for ‘Borderless’ Airport

The Government of Dubai has announced its collaboration

with UK-based blockchain startup ObjectTech to create digital passports for quick and efficient entry at the Dubai International Airport. Working closely with Dubai's Immigration and Visas Department (GDRFA – General Directorate of Residency and Foreigners' Affairs), ObjectTech seeks to create the world's first ‘gate-less border’ through the use of the blockchain and biometric technology. This announcement is in accordance with Dubai's 10x strategy, which is essentially an initiative that aims to ensure all public services are ten years ahead of the rest of the world technologically, thus cementing Dubai's position as the “city of the future.”

Dubai's Blockchain Strategy

The semi-autonomous Emirati city of Dubai has been at the forefront when it comes to creating a conducive environment for business. Through its impressive infrastructure, near-zero taxes and secure political climate, Dubai has been able to transform itself from a small fishing village to a major trade hub globally. Now, the Government of Dubai seeks to make the city the world's first blockchain-powered city by the year 2020. The plan, called Dubai Blockchain Strategy, is spearheaded by the Smart Dubai Office (SDO). The SDO is the governmental agency dedicated to pushing forward innovation in the city. Speaking at the launch of the strategy in March this year, the Director General of The Smart Dubai Office Dr.Aisha Bin Bishr said, “Today’s announcement marks an important step forward in our commitment to delivering Dubai’s Blockchain Strategy announced late last year by His Highness Sheikh Hamdan Bin Mohammad Al Maktoum,

Crown Prince of Dubai."

"We are working towards our goal of making Dubai the first blockchain-powered government in the world by 2020. Collaborating with IBM and ConsenSys will help expedite this process, attaining Smart Dubai’s overall vision of making every-day experiences more safe, seamless, efficient and impactful for all residents and visitors of the city.”

The Dubai Blockchain Strategy seeks to unlock the opportunities that the blockchain presents through the adoption of blockchain technology in public services, being at the forefront of global thought on blockchain technology and, lastly, by helping the blockchain industry grow through its support to blockchain-based startups and business. The city hopes that these three pillars will put it in the lead with regard to the blockchain tech industry.

Wesam Lootah, CEO of Smart Dubai Government Establishment added:

“This effort will position Dubai as the pre-eminent blockchain powered government. Smart Dubai looks forward to working closely over the coming months with all government entities to identify and prioritize the services and user experiences that would yield the most impact from the application of blockchain technology. This collaborative effort is crucial to ensuring that the city as a whole is moving in the same direction, taking advantage of synergies, and avoiding duplication of efforts and costs.”

Since this initiative was launched in March, Dubai has been working on its vision of having all government services powered by the blockchain by 2020. The government has also created the Dubai Future Accelerators program which works by pairing leading companies and promising startups with government agencies in order to innovate and create working solutions. In April, after participating in the Dubai Future Accelerator program, blockchain startup Avanza Solutions announced the Dubai government’s plan to utilize its blockchain-based Cipher platform to facilitate citywide payments. This move was seen as the first step in laying the foundation for a blockchain-powered city.

Speaking of the partnership, Bin Bishr said, “I am confident with Avanza’s expertise in payment solutions combined with their Cipher blockchain platform, they will support the Smart Dubai Office with technology that not only bridges current gaps but also becomes a vital piece in Smart Dubai’s roadmap for payment processes in the near future.” Smart Dubai intended to roll out the platform across all of its 38 partner government entities, partner financial institutions, and departments. The Dubai Economic Department has also revealed plans to move its entire business registration and licensing process to the blockchain with industry leaders stating that blockchain technology is gaining traction in the city.

ObjectTech and The Dubai International Airport

The Dubai International Airport is the world's busiest airport in terms of international passenger traffic. The Dubai Government is aiming to speed up the processing speed of travelers using ObjectTech’s biometric blockchain-based technology. The partnership was signed after ObjectTech was chosen to participate in the Dubai Future Accelerators program where its technology was deemed workable. In keeping with its 10x initiative, the city aims to create the first border in the world lacking a traditional gate. Instead, travelers are to walk through a short biometric corridor that will ascertain identity, and other pertinent variables, using the traveler’s facial biometric data. The data will be checked against a pre-approved and completely digital passport.

Combining the blockchain’s immutability and the power of biometric identification, the startup hopes to completely eliminate the need for paper passports. “Seamless entry at international airports has been an idea for many years, but it is the advent of the identity trust framework provided by blockchain technology which means for the first time, this is now possible.” the startup explains in their press release. Speaking of the city's commitment to growing and supporting the blockchain industry, ObjectTech CEO Paul Ferris said, "Dubai is really committed to improving the lives of their citizens and visitors through technology, and we’re very excited to be a part of making that a reality." ObjectTech has also revealed that it is working closely with the International Organization for Standardisation (ISO) on blockchain technology uniformity regulation. Paul Ferris is currently serving as chair of the identity working group. The startup believes that:

“Standardization is vital for a global identity system which will stand the test of time, and expand our collaborative approach worldwide.”

It remains to be seen how the technology will perform with the large numbers that are processed through the Dubai International Airport. However, if it is a success, then seamless entry in and out of the world’s borders could soon become a reality thanks to blockchain technology.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about
-Bitcoin.

Thomas Prendergast

Chinese Exchanges to Lessen Bitcoin Fees by Building Lightning-Like Tech

Chinese Exchanges to Lessen Bitcoin Fees by Building Lightning-Like Tech

An insider source told Chinese cryptocurrency news agency

On June 3, an insider source told Chinese cryptocurrency news agency CnLedger that two of the largest Chinese bitcoin exchanges Huobi and OKCoin are currently working on the development of an off-chain payment channel similar to the Lightning network to lower transaction fees.

CnLedger reported:

“Chinese exchanges Huobi and OKCoin are working on building a Lightning Network-like channel, to lower transaction fee and alleviate congestion.”

The utilization of private blockchain networks and off-chain solutions is not a new concept. Popular platforms such as Coinbase and many mobile applications such as BTCC’s Mobi have utilized private blockchains to increase the flexibility of their applications. On March 20, BTCC released a mobile app called Mobi designed to increase liquidity and ease trading for casual traders and users. The app offers a bitcoin debit card service that allows users to purchase items and service from both online and offline merchants. In its official press release, BTCC emphasized that Mobi operates on top of a private blockchain which can be used to send money instantly to 2 billion smartphone users. If the money is sent as a bitcoin transaction, it is first processed within Mobi’s private blockchain network and then broadcasted onto the Bitcoin public blockchain.

“Mobi accounts are linked to users’ mobile numbers; all that is needed to use Mobi is a smartphone. Mobi users can instantly transfer funds to any of the two billion other global smartphone users using Mobi’s private blockchain. Mobi also supports bitcoin transfers on the Bitcoin public blockchain,” explained the BTCC development team. There exist many reasons why companies including Coinbase and Mobi utilize private blockchains, but the major factor is speed and functionality. The presence of an off-chain solution and a private blockchain allows apps to operate on top of a more flexible platform. For instance, Coinbase serves just over seven and a half million users on its platform. In April, Coinbase CEO Brian Armstrong highlighted that Coinbase stored ten percent of all bitcoins in circulation. The sheer magnitude of bitcoin transactions and trades Coinbase deals with makes it impractical for the platform to process all transactions on-chain. Thus, to deal with the increasing activities, Coinbase stores and processes transactions in a separate ledger.

On non-custodial bitcoin wallet platforms such as Blockchain, only users have access to private keys, and therefore, even if accounts are hacked, hackers cannot gain access to user funds. However, on platforms like Coinbase and other exchanges as seen in the case of Bitfinex, the circumstances are different. In fact, Armstrong encouraged users to log all activities in the event of a breach of an efficient auditing process. “It is critical to have a good audit trail if there ever is an incident. The only thing worse than being hacked, is being hacked but not knowing how it happened,” said Armstrong. CnLedger’s inside source stated that the two Chinese exchanges are working hard to create a Lightning-like payment channel that will likely operate similarly to Coinbase and Mobi’s private blockchains to address increasing demand for bitcoin and trading activities.

“Details are still unknown. But one insider told me that they've been working hard on this. The result will be only one settlement each day,” revealed CnLedger. Some experts including Andrew Keys of Consensus Systems (ConsenSys) recommended networks like the Raiden Network, a high-speed asset transfer platform for Ethereum, to go with the two exchanges’ recent Ethereum integration. The activation of Segregated Witness (SegWit) is expected to drastically improve the infrastructure for two-layer solutions like Lightning and also, the Lightning-like payment channels that are being built by companies like Huobi and OKCoin.

Chuck Reynolds


Marketing Dept Contributor
Please click either Link to Learn more about -Bitcoin.

Thomas Prendergast