Blockchain Redefines Emerging Markets: Capital, Assets and Securities

Less than 0.001 percent of global venture technology funding went to African startups in 2016. It is no secret that entrepreneurs in emerging markets have a harder time coming by capital funding than do their counterparts in developed markets. Among the many reasons for this are inefficient capital market systems that create obstacles for entrepreneurs in emerging markets, who face barriers to cautious investors.

The ‘leapfrogging’ phenomenon

Thankfully, tokenized equity and initial coin offering (ICOs) strategies can redefine capital markets and how startups issue securities and create corporate structures in emerging markets. Entrepreneurs and governments can leapfrog inflexible capital market systems created by developed market economies and instead create entirely new tokenized, flexible and accessible capital markets.

From virtually no access to a flexible capital markets system, entrepreneurs in emerging markets can benefit from a new generation of democratized and tokenized investments in private companies, and this could be made possible by the implementation of ICO strategies.

Tokenized capital markets in emerging markets can accelerate a leapfrog effect for growing startup ecosystems by placing young entrepreneurs and their businesses at the center of their countries’ growth. He notes that despite the potential, ICOs still have their training wheels on and need to find a meeting ground between existing conventional equity/debt systems and new and innovative tokenized ones.

There are two major ways that ICOs can transform capital markets and leapfrog economic growth in emerging markets.

Digital incorporations

Digital Blockchain-enabled capital markets will bring a wave of necessary innovation around private company incorporation and management. It is expensive, slow and inefficient to incorporate and manage a corporate structure in most emerging markets. In Nigeria, it can take $19,400 and two months to incorporate a private company. Whereas in Canada, it costs CAD$200 and takes 24 hours. After incorporation, the company management, fees and reporting requirements are all paper-based and can balloon administrative costs, time and filing requirements.

By creating digital corporate incorporation and management software that rely on Blockchain technology and smart contracts one can securely create, manage and track a startup activity. Digital corporate structures are a natural precursor to digitized tokenized securities and could significantly lower the barrier to entry for entrepreneurs in emerging markets. This could save resources and securely store intellectual property in corporate structures. Digital incorporations could transform the ease of doing business in emerging markets. As a real-life example, the Republic of Georgia recently made top 10 in the ease of doing business ranking thanks to its recent innovations, including a more efficient land titles system.

Imagine if Nigeria created a similar corporate registry system, where companies could be incorporated in a few minutes, at the click of a button and for little cost? This is the leapfrog effect: a sudden opportunity to lower barriers to entry into the economic system.

Tokenized securities

According to Savills Global Research Report “Trends in Global Real Estate Market in 2016,” the total market cap of global real estate is approximately worth $217 tln. This roughly equals 2.7 times of global GDP, 36 times of global gold mining worth (six tln) and accounts for 60 percent of global main assets, hence rendering real estate the top saving and investment choice for countries, corporations and individuals.

Smart contract and distributed accounting technology enable the connection of assets and financial institutions effectively. This technology allows a system where large assets can be split and distributed to multiple financial institutions through the smart contract, enabling users, through these financial institutions to invest in smaller fractions of real estate. This technology ensures the non-tampering of processes once they are initiated.

A more versatile system

Traditional transactions are a series of corporate steps, well-drafted contract templates and tons of paper. As such, they are rigid and create illiquid capital structures for investors and entrepreneurs. Tokenized securities represent an evolution to a flexible securities system, where share issuances can happen with the click of a button.

Blockchain and tokens know no borders, and tokenized securities could form the backbone of a decentralized global stock market. This is an especially added benefit to emerging market entrepreneurs, where local angel and venture capital groups are more scarce. Tokens empower entrepreneurs with access to backers from around the world, democratizing access to finance for their products.

True financial inclusion

Financial inclusion is about more than bank accounts and stores of value. Capital markets and the ability to easily incorporate and manage a company can ease barriers to entry for entrepreneurs and make it easier for them to build their businesses. Blockchain technology and tools like smart contracts, decentralized oracles and tokens create the possibility to create a new kind of capital markets system throughout emerging market countries.

Zclassic Spikes 100x in December with ‘Bitcoin Private’ Fork Approaching

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The price of Zclassic is moving quite quickly, as it intends to host an upcoming fork of Bitcoin that is privacy-centric.

On December 8th, Zclassic developer and founder Rhett Creighton tweeted that he was going to be teaming up with another Zclassic founder in order to plan more active development for the project. Following that tweet, Creighton posted an entire manifesto one week later on the Zclassic Subreddit, detailing his plan for a new Bitcoin fork called “Bitcoin Private.”

The fork would create a derivative of Bitcoin that utilizes the same privacy protocols as Zclassic, which would enable users to send shielded transactions that hide transacting individuals and values.

Zclassic – Zcash Minus the Founder’s Share

Zclassic originally forked from Zcash to eliminate the 20% founders reward that Zcash put in place for the first four years. Although Zcash is limited to 21 million coins, a percentage is allocated to founders, investors, employees, and advisors to the company. The founders’ reward allocation will eventually be dropped in 2020 due to it being limited to the first set block reward, however, this still accounts for 10% of the entire supply.

This move was similar to the Ethereum Classic and Bitcoin Cash splits, in which the original codebase was forked due to an ideological difference. It contains the same nuts and bolts as the original blockchain, with a few tweaked parameters.

Price Gains

Since news of the fork grew in mid-December, Zclassic has seen significant price movement from a recent low in December of $1.64, to an all-time high of over $123.00 within a span of just over two weeks.

Many are attributing the price action to individuals who wish to capitalize on the derivative produced from the fork without having to pay the exorbitant price for Bitcoin. Investors may see Zclassic as an easier way of obtaining more of the forked cryptocurrency at a cheaper rate, considering that Zclassic is currently trading at a fraction of the price of Bitcoin.

Fork-Support

The popularity of recent Bitcoin forks have had both exchanges and wallets in a frenzy due to user requests for support. After Bitcoin Cash forked in August, and Bitcoin Gold forked in October, derivative attempts have been commonplace with December hosting at least five of them.

Some have even likened the strategy to an initial coin offering by calling the process an “initial fork offering” due to the increase in frequency.

Currently, the only known way to receive this new form of Bitcoin derivative is by storing Zclassic in the project’s official wallet.

No exchange has signaled support for the fork at the current moment, but this might change as the date of the actual split approaches. Many exchanges recently have been ‘fork-friendly,’ with Binance and Kucoin supporting multiple forms of the recent Bitcoin derivatives. Although Zclassic isn’t currently supported on these mentioned exchanges, Bitcoin holder demands might lead to full-fledged support if the project is deemed legitimate enough by internal standards.

The fork is expected to occur towards the end of January, and Zclassic and Bitcoin holders will be granted Bitcoin Private on a one to one basis. The supply is expected to be 18.5 million coins (capped at 21 million), resulting from the combined supply of Bitcoin and Zclassic.

 Disclaimer: The author of this article currently holds Zclassic.

Featured image from Shutterstock.

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Forks in the Road: 2017 Bitcoin Forks

2017 has come and gone, shaking up the cryptocurrency world with a swathe of newcomers interspersed with stellar highs and some sobering price corrections.

Bitcoin ended the year having grown over 1,000 percent in value over 12 months. However, that didn’t stop the community forking away from the preeminent currency.

These forks had varying degrees of success, as they looked to solve some of the major shortcomings of the original Bitcoin protocol.

This mainly comes down to the size limit of Bitcoin’s blocks. As it stands, the size of each block on the Bitcoin Blockchain is 1 mb, which limits the amount of transactions processed each second.

Over time, that limit has caused transaction speeds to decline, while payment fees increased as users were forced to pay more to miners to prioritise transactions.

Segregated Witness

The cryptocurrency community as a whole grew increasingly frustrated with the issues plaguing the Bitcoin protocol and different solutions have been proposed over the past two years.

Segregated Witness grabbed headlines in 2017, proposing two-fold changes to the Bitcoin network. The soft-fork, which was activated in August 2017, cuts a Bitcoin transaction data in two, moving the signature or ‘witness’ data to the end of the transaction, effectively reducing the size a transaction takes on a block which speeds up the network.

The second proposed change, which was ditched at the eleventh hour, is known as SegWit2x. This is a hard-fork, which would see block sizes increased from 1 mb to 2 mb to allow a greater number of transactions to be stored on the Blockchain.

Many of the original signatories of the New York Agreement, which comprised of the world’s largest exchanges, miners and wallets, weren’t comfortable with the hard fork coming so soon after SegWit’s activation. That led to the eventual postponement of SegWit2x.

Bitcoin Cash

The decision to drop SegWit2x inevitably caused a rift between two parties. The ‘big blockers’ who were adamant that an increase in block size would further solve scalability, and ‘Core’ who strongly opposed the hard fork solution.

This led to the creation of Bitcoin Cash, which forked away from the original Bitcoin Blockchain on Aug. 1, 2017.

Bitcoin Cash has been the subject of much debate, as the literal fork has been mirrored by unending debates by parties for and against.

The likes of early Bitcoin investor Roger Ver maintains that Bitcoin Cash is the ‘real Bitcoin.’ saying it stays true to Satoshi Nakamoto’s original whitepaper.

Nevertheless, Bitcoin Cash is nearing six months of existence and fears of a pump and dump situation have subsided.

There are clear differences between the two cryptocurrencies, nevertheless it’s support on exchanges like Coinbase prove that the cryptocurrency is growing in popularity – even amid controversy of it’s launch on GDAX in December 2017.

It seems increasingly clear that Bitcoin Cash is here to stay and it’s survival could well end further debate of a proper SegWit2x revival on the Bitcoin Blockchain.

The other forks

Bitcoin Gold champions the cause of the everyday mining enthusiast, who dreams of making a steady income mining cryptocurrency with high powered graphics cards (GPU). As their website states, Bitcoin Gold aims to making ‘Bitcoin mining decentralised again.’

By simply diverging from Bitcoin’s proof-of-work algorithm SHA256 to equihash, individual miners using GPUs can mine Bitcoin Gold easily, with mid-range GPUs. The fork took place in October 2017.

Bitcoin Diamond is another hard fork from the original Bitcoin Blockchain which took place in November 2017. Created by mining pools Team EVEY and Team 007, BCD will have a total of 210 mln tokens, 10 times as many as Bitcoin and Bitcoin Cash.

Bitcoin Diamond mining uses the X13 hashing algorithm, which favors mining using GPUs much like Bitcoin Gold, opposing ASIC miners needed to mine Bitcoin, which are expensive.

Trash?

Almost tongue in cheek, Chinese Blockchain investor Chandler Guo announced the launch of Bitcoin God in December. Claiming charitable intentions, holders of Bitcoin would receive their holding of 17 mln tokes, while the remaining four mln tokes of the 21 mln cap would be donated to charity, according the the website. It was ironically due to fork on Dec. 25, 2017 – Christmas Day. We’re taking this one with a pinch of salt.

Another intriguing, albeit sketchy fork is the so-called revival of SegWit2x. A completely new set of developers have reworked the original SegWit2x code, and the hard fork was announced on Dec. 28.

The group have admitted that they have no affiliation to the original developers, and the new fork has made some outlandish promises to supporters of the fork. As this writer reported, the project seems far-fetched and it’s progress will be monitored with skeptical eyes over the next couple of weeks.

The list goes on

While we’ve narrowed our focus to the four major Bitcoin forks of 2017, namely Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond and Bitcoin God, there are many more hard forks to mention.

The list is extensive, including Bitcoin Clashic, Super Bitcoin, Bitcoin Hot, Bitcoin X, Oil Bitcoin, Bitcoin World, Lightning Bitcoin. There are more, with at least 14 forks in December 2017.    

It’s hard to believe that many of these forks will survive or provide any real value to the wider cryptocurrency community. However, the discourse and ideas generated by developers looking to improve cryptocurrency protocols will inevitably benefit the community and drive the evolution of Blockchain technology into the future.

The Next Wave of Crypto Investments Are Coming – Legal and Compliant ICOs

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This is a submitted sponsored story. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the content below.

It’s easy for traditional financiers to write off cryptocurrencies and initial coin offerings (ICOs); the SEC has repeatedly said ICOs are securities, can be regulated, and transactions that have already transpired may be riddled with legal holes. What many don’t know, though, is that the there is a new wave of ICOs coming in a few months that are fully SEC compliant, for well established, profitable companies, and have the potential to make traditional investors a ton of money

These new ICOs are called Reverse ICOS. Whereas regular ICOs are for unproven startups and avoid being classified as a security, Reverse ICOs are quite the opposite. They are intended for existing, successful midsize to even large companies that have been in business five years or more, and make $20M in revenue. per year, and are assumed to be securities from the start.  They follow same prescribed pathways full public offerings, Reg A+, Reg D, and Reg CF, and requiring all the same audits, disclosures, prospectus, filings, etc. In other words, Reverse ICOs are almost identical to traditional IPOs.

So why do a Reverse ICO instead of regular IPO or Reg D? The answer is simple: there is a HUGE new pool of cryptocurrency investors who have tens of billions of dollars fresh winnings in their pockets. They love and respect American technology firms, but distrust traditional institutions. Reverse ICOs are a way of bridging that gap to provide these new wealthy investors a friendly way to invest in legal and high-powered deals.

More importantly, token-based equity combined with token economic modifications to company business models will offer significantly better valuation for the mid-size technology ventures not yet large enough for a traditional IPO, or larger companies that have not gone public due to the rising challenges doing so. Through using a Reverse ICO, an increasing number of companies can exit and create value.  

Traditional IPOs are down a whopping 50 percent over the last two decades – leaving a large gap in the economy. If Reverse ICOs take even a small bite out of this lack of IPOs, it could have a huge impact on the economy as well as bolster the portfolios of many investors.

The benefits for non-traditional investors and the economy makes the Reverse ICO approach an inevitability. Performed within regulations and nearly identical to IPOs, jumping into the next wave of ICOs is a no brainer.

Tom Benson is CEO of Pathfinder Equity SystemsPathfinder helps companies launch Reverse ICOs using artificial intelligence coupled to expert analyst teams, to create the optimal token economic designs and product/market fit, matched to the world’s top ICO investors.

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Bitcoin, Ethereum, Bitcoin Cash, Ripple, IOTA, Litecoin, Dash, Cardano: Price Analysis, Jan.2

The views and opinions expressed here are solely those of authors/contributors and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The cryptocurrency mania can be gauged from the fact that Bitcoin, with its 1300 percent plus gains, doesn’t find a place among the top 10 best performing cryptocurrencies of 2017. The top performer was Ripple, with more than astounding 30,000 percent increase over a year.

In comparison, the traditional investors consider themselves lucky if they outperform the S&P 500, which rallied 20 percent last year.

While no one can predict what will happen in 2018, one thing is certain; if the traders can spot the setups, they can reap a rich reward.

As we already saw both cryptocurrencies rallying collectively and them going separate ways, it might be a good idea to diversify your portfolio with more than one cryptocurrency.

Our attempt should be to trade the best setups that can offer us the maximum profits with the minimum risk.

So, let’s find out the probable candidates to buy this week.

BTC/USD

Bitcoin is finding strong buying support at the 50-day SMA; but, unlike before, it is not able to pullback with strength. The bears are strongly defending the $14,000 levels. The daily range has been shrinking for the past two days.

BTC/USD

On Dec. 30, though the BTC/USD pair broke below the neckline of the bearish head and shoulders pattern, it could not break below the 50-day SMA. It quickly climbed back above the neckline on the next day.

The bulls are finding it difficult to break out of the overhead resistance from the down trendline and the 20-day EMA; and we don’t find any buy setup between $12,000 and $14,000.

Still, Bitcoin is likely to rally to $16,000, once the cryptocurrency breaks out of the down trendline. On the other hand, if it breaks down of $12,000, it can retest the lows made on Dec. 22.

We expect a large range move within the next couple of days.

ETH/USD

We had mentioned that the digital currency will gain strength once it breaks out and closes above the downtrend line and that is what happened.

ETH/USD

The ETH/USD pair broke out of the downtrend line on December 31 and crossed the overhead resistance of $760 on January 01. Thereafter, it picked up momentum and has created a new lifetime high today.

If the bulls manage to sustain above $863, we can expect a rally to $973 levels, which is the next Fibonacci extension target. The resistance line of the ascending channel is also at this level. Therefore, we expect this level to offer a strong resistance.

On the downside, if the bulls fail to sustain above $863, the trendline of the channel close to the $760 mark, will act as a strong support.

BCH/USD

We expected Bitcoin Cash to plunge to the 50-day SMA, once it broke below the $2,300 mark. Instead, it took support at the trendline and is attempting a recovery.   

BCH/USD

If the BCH/USD pair sustains above $2,475, it should attempt a rally to $2,900 levels, which is a major resistance.

Any fall is likely to be supported at the trendline and if it breaks, the next support is at $2,072. However, the risk to reward ratio is not attractive, hence, we don’t recommend any trade on it right now.    

XRP/USD

The correction in Ripple was short lived as the buyers jumped in at the $1.61 mark; it shows strength.

XRP/USD

For the past two days, the XRP/USD pair had been facing resistance at the $2.1 mark. Today, the bulls broke out of the resistance, which can push the pair to $2.474 levels.

We already saw the cryptocurrency consolidating for six to seven days, before resuming its uptrend. Thus, we anticipate a few more days of consolidation before the price breaks out to new lifetime highs.

On the downside, $1.8 and $1.6 are the two critical support levels. The momentum loses strength only when it breaks down to $1.6.  

IOTA/USD

We had indicated in our previous analysis that long positions can be initiated on a breakout and close above the downtrend line.

IOTA/USD

As the bears were unable to sustain below the critical support level of $3.032 for the past few days, chances are that the bulls will attempt to push the price towards the upper end of the range at $5.59.

Therefore, traders who haven’t initiated a long position yet can still do at the current levels of $4.121, with a stop loss of $2.85. We are aiming to trade the large range by buying close to the support and selling at the resistance. We await  IOTA/USD pair to be volatile but with a positive bias.   

LTC/USD

The bears had the upper hand on Dec. 30, with a break of the neckline of the head and shoulders pattern. But the bulls supported Litecoin around the $200 mark.

LTC/USD

Currently, the LTC/USD pair has broken out of the downtrend line, the neckline and the 20-day EMA. This is a positive move.

Above $250, a move to $283 and thereafter to $300 is likely. On the downside, strong support exists at $200 and below this at $175, from the 50-day SMA.

As this is still a pullback, we don’t suggest a trade on it.

DASH/USD

We expected the trendline support to hold and that is what happened. The cryptocurrency fell to the trendline on Dec. 30. However, the bounce from the support has been impressive.  

DASH/USD

We believe that the DASH/USD pair can now rally to $1,220 levels, where it is likely to face some resistance. On the other hand, any fall will find support at the trendline.

Since the risk to reward ratio does not look good, we are not suggesting any trade.

ADA/USD

Cardano remained in a range from Oct. 01 to Nov. 25. Thereafter, it rallied for four days and again became range-bound until Dec. 14. It then spiked again in the next five days from $0.135375 to $0.581983. Subsequently, it entered into a correction, which ended around the $0.37 levels.  

Cardano Charts

The latest leg of the up move started on Dec. 28 and it has crossed its first target objective of $0.75. The previous rallies lasted for around four to five days. Hence, we anticipate a pullback around the current levels, which should be a good buying opportunity, as the cryptocurrency remains in a strong uptrend.

Any pullback should find strong support at $0.68 and $0.60 levels.

The market data is provided by TradingView.

Adshares’ Token Crowdsale Is Nearly Over! The Revolution of Digital Advertising Shows Potential

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The token sale on the blockchain platform that wants to revolutionize digital advertising, Adshares, approaches its end with more than 4,700,000 USD raised so far (~5600 ETH). Don’t miss out! Read more to learn how to become a part of the Adshares ecosystem, a decentralized, peer-to-peer market for programmatic advertising.

The Adshares Token Sale is LIVE until the 12th of January

The token sale has been going on since July 2017. Adshares has now reached its goal of a minimum 4000 ETH raised. The exchange rate for an Adshares token is 1 ADTS = 0,000535 ETH at the moment, and investors can purchase tokens only by using ETH.

Read more about how Adshares tokens can be purchased on: https://ico.adshares.net

The crowdsale was initially scheduled to end at the end of 2017, but the team decided, instead, to set the end date for the ICO as the 12th of January 2018 at 20:00 GMT. There are two reasons for that. First, the end of the year is not the best time for investment deadlines because it is the holiday season. Second, it will allow the company to show a more functional prototype before the end of the ICO.

One of the key advantages of this crowdsale model is the use of good incentives. The Adshares team offers extensive buyback for ADST tokens and has limits on the use of collected funds. Another advantage of the Adshares smart contracts is the good price stability of ADST, which reduces the price risk for both advertisers and publishers.

The State of the Project

The current estimate for the delivery of the Adshares MVP is in January 2018. Adshares has recently partnered with 10Clouds, a design & development firm with experience in blockchain projects, to help them with the design and engineering challenges.

You can read an update from the Adshares founder about the progress of this project and the future of digital advertising.

  • Raised: 5600 ETH / $4,744,961.40
  • Token name: Adshares token
  • Tokens sold: 13394890 ADST
  • Ticker symbol: ADST
  • Token price: Currently 0.00053 ETH, but it increases with the number of tokens sold (the earlier you buy, the more of a bonus you get)
  • Token sale goal: minimum 4000 ETH (already reached)
  • Minimum purchase: 1 token ~0.00535 ETH
  • Maximum purchase: No limit
  • Accepted currencies: Only ETH
  • End date: 2017-01-12 20:00:00 GMT
  • Adshares token sale page: https://ico.adshares.net
  • Email: [email protected]

About Adshares

The Adshares network is a decentralized, peer-to-peer market for programmatic advertising. Adshares provides better transparency, less fraud, and reduced costs for all market participants. The network runs on ESC Blockchain and uses Adshares tokens for ad payments. Fees collected from processing payments are distributed among token holders.

The Enterprise Service Chain (ESC) is a blockchain based software tool facilitating high volumes of simple transactions. In most cases, these transactions involve sending tokens between accounts, as is done with other cryptocurrencies. Its efficient architecture allows the ESC blockchain to handle large volumes of transactions with little cost (100,000 tx per second).

Almost all existing blockchains exclusively reward miners, which are not directly exposed to token price risks. The team at Adshares believes price risk should be compensated, and that is why 80% of the fees collected by the system are paid in dividends without a need for mining.

Peter Thiel’s VC Fund Invests Millions Into Bitcoin, Market Reacts

Peter Thiel’s San Francisco-based venture capital firm Founders Fund has invested millions of dollars into Bitcoin (BTC), the The Wall Street Journal (WSJ) reported today, citing sources “familiar with the matter”.

The Fund reportedly invested $15-20 million into Bitcoin, which has grown into hundreds of millions in the past year. Since Jan. 1, 2017, BTC has risen by almost 1,400 percent.

The WSJ report was unclear on whether or not Founders had sold any of its holdings to date.

Thiel, co-founder of PayPal and an early Facebook investor, also serves on President Trump’s technology advisory council. At an investment conference in October, Thiel spoke positively about cryptocurrency, and in particular about Bitcoin, saying:

“While I’m skeptical of most [cryptocurrencies], I do think people are a little bit underestimating bitcoin, specifically, because it is like a reserve form of money. If bitcoin ends up being the cyber equivalent of gold, it has great potential.”

The market reacts

Since the WSJ reported on the Founder Fund’s BTC investments, the price of the leading cryptocurrency has gone up, growing almost 14 percent in the past few hours to a peak of $15,444 a coin. BTC has been trading sideways since, priced at around $15,000 at press time.

Bitcoin Charts

The price boost today follows a volatile past few weeks, after the coin hit an all-time high of over $20,000 in late December and then crashed to as low as $11,833 on December 22. Today, BTC dominance reached a new all-time low of 34.97 percent, reflecting an increased market interest in altcoins.

Other well-known mainstream investors to bet on Bitcoin recently include Bill Miller, who told reporters in mid-December that 50 percent of his hedge fund’s money was invested in the leading cryptocurrency.

The launch of Bitcoin futures last month on two major American exchanges has also brought more mainstream investors into the cryptocurrency market.

Jan 20: South Korea’s Reported Date to Ban Anonymous Crypto Trading

Korea won bitcoin cryptocurrency trading
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The South Korean government will reportedly enforce new rules banning the use of anonymous cryptocurrency trading accounts from January 20h.

According to Korean news agency Yonhap, the government is turning up its scrutiny on the burgeoning local cryptocurrency market to curb speculative investments in cryptocurrencies. Citing anonymous financial industry sources, the report also points to accompanying guidelines that will mandate exchanges to comply with heightened anti-money laundering norms.

The Korean government announced its intention to implement curbs among the country’s crypto trading market last week after concerns about “high losses due to excessive volatility.”

“Officials share the view that virtual currency trading is overheating irrationally … and we can no longer overlook this abnormal speculative situation,” an excerpt from the government’s statement added.

The new rules will only allow deposits and withdrawals to traders with matching account names at their banks and cryptocurrency exchanges. New anonymous ‘virtual accounts’ will also see a complete ban as a part of the government’s agenda to mandate and strengthen KYC (know-your-customer) rules in the industry.

Such is Korea’s cryptocurrency mania among retail investors, new adopters and everyday citizens that Prime Minister Lee Nak-yon called it a “pathological phenomenon” in late November.

The reported date to ban anonymous trading comes within a month of Korean authorities conducting onsite inspections of multiple cryptocurrency exchanges following the mid-December hack of Seoul-based exchange Youbit.

While Korean authorities haven’t banned cryptocurrency trading outright, one senior government official confirmed regulators will “consider” the shutdown of cryptocurrency exchanges, if necessary, in the future. The suggestion of an outright ban was first proposed by Korea’s Ministry of Justice in early December, although such crippling measures is reportedly certain to meet opposition from other legislators.

Featured image from Shutterstock.

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The Cream of the Crypto Crop: 10 Best Performing Assets in 2017

With 2017 now firmly in the rearview mirror, it is time to take stock of the best-performing digital currencies of the year. Bitcoin grabbed plenty headlines on its way to a brief stop at $20,000, but in terms of percentage gains, it doesn’t even crack the top 10.

Older altcoins like Dash posted impressive gains, reaching a 13,900% return at its mid-December all-time high. Dash’s price retreated somewhat, ending the year with a 9,265% gain to capture fifth place in the rankings. Likewise, Ethereum had a banner year, settling in at number six with gains of 9,162%. Litecoin, one of the oldest altcoins, closed the year with a 5,045% gain and took the number nine spot.

Newer coins also fared extremely well, with NEM and Ardor taking number two and three, respectively. Stellar, Binance Coin, OmiseGo and Golem round out the top ten. Bitcoin took fourteenth place with a 1,318% increase.

2017's Biggest Cryptoassets Ranked by Performance

Making more than a Ripple

Ripple, the centralized bank-focused digital currency, claimed the gold medal with a staggering 36,018% return over the past year. A $1,000 investment in Bitcoin on January 1, 2017 would have been worth $13,180 at the end of the year. That same $1,000 invested in Ripple would be worth an eye-popping $360,018.

While Ripple had good growth in the second quarter, the true surge happened in the last weeks of December, which saw the currency take the number two spot by market cap away from Ethereum. Though Bitcoin has seen the majority of headlines this past year, it cannot begin to compare with Ripple’s price performance.

Bitcoin Versus 2017's Biggest Cryptocurrency Gainer

What about 2018?

With the total cryptocurrency market cap hitting a record high of $673 bln today, there is no sign that 2017’s rally is coming to an end anytime soon. Digital currency enthusiast and journalist Max Keiser believes the total digital currency market cap will reach $5 trln or more, with Bitcoin itself hitting $100,000. Keiser argues that Bitcoin’s path to six figures is based on its status as digital gold. He argues that other currencies are better suited to focus on payments:

“Dash is emerging as the crypto payment rail while Bitcoin asserts itself as Gold 2.0. I suggest those frustrated by the Bitcoin scaling debate to embrace Dash for payments and leave Bitcoin Core alone to continue working on Gold 2.0.”

Famed stock picker Ronnie Moas is also optimistic about Bitcoin, believing the digital currency will see prices in excess of $28,000:

“The number (of Bitcoin available) is a lot lower than what people think it is. A lot of the Bitcoin has been lost, some of it hasn’t been mined and then you have a lot of people like myself that just won’t sell their Bitcoin at any price.”

And what of altcoins? Bitcoin’s so-called “dominance” factor is currently only 37.5%, which is near all-time lows. The Bitcoin dominance metric is a measure of how much of the total cryptocurrency market cap is “dominated” by Bitcoin. Bitcoin’s current market cap of $250 bln is divided by the $673 bln market cap of all cryptocurrencies combined. This nets the Bitcoin dominance percentage – 37.2% at press time. As recently as a year ago, Bitcoin’s dominance exceeded 90%.

Keep an Eye Out for These Bitcoin Tech Trends in 2018

In many ways, 2017 was Bitcoin’s best year yet. Most obviously, increased adoption made the pioneering cryptocurrency’s exchange rate skyrocket from under $1000 to well over 10 times that value.

But from a tech perspective, things seem to be just getting started: 2018 promises to be the year that a number of highly anticipated projects are either launched or adopted.

Here’s a brief overview of some of the most promising upcoming technological developments to keep an eye on in the new year.

segwit inter.jpg

Cheaper Transactions with Segregated Witness and a New Address Format

Segregated Witness (SegWit) was one of Bitcoin’s biggest — if not the biggest — protocol upgrade to date. Activated in August 2017, it fixed the long-standing malleability bug, in turn better enabling second-layer protocols. Additionally, SegWit replaced Bitcoin’s block size limit with a block weight limit, allowing for increased transactions throughout the network, thereby lowering fees per transaction.

However, adoption of the upgrade has been off to a relatively slow start. While some wallets and services are utilizing the added block space offered by SegWit, many others are not yet doing so. This means that, while Bitcoin is technically capable of supporting between two and four megabytes worth of transactions per ten minutes, it barely exceeds 1.1 megabytes.

This is set to change in 2018.

For one, the Bitcoin Core wallet interface will allow users to accept and send SegWit transactions. Bitcoin Core 0.16, scheduled for May 2018 (though this may be moved forward), will most likely realize this through a new address format known as “bech32,” which also has some technical advantages that limit risks and mistakes (for example, those caused by typos).

“To spend coins from the P2SH format currently used for SegWit, users need to reveal a redeem script in the transaction,” Bitcoin Core and Blockstream developer Dr. Pieter Wuille, who also co-designed the bech32 address format, told Bitcoin Magazine.

“With native SegWit outputs this is no longer necessary, which means transactions take up less data. Recipients of SegWit transactions will be able to spend these coins at a lower cost.”

Perhaps even more importantly, several major Bitcoin services — like Coinbase — plan to upgrade to SegWit in 2018 as well. Since such services account for a large chunk of all transactions on the Bitcoin network, this could significantly decrease network congestion, thereby decreasing average transaction fees and confirmation times, even for those who do not use these services.

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The Lightning Network Rolling Out on Bitcoin’s Mainnet

While further SegWit adoption should provide immediate relief of fee pressure and confirmation times, truly meaningful long-term scalability will likely be achieved with second-layer solutions built on top of Bitcoin’s blockchain.

One of the most highly anticipated solutions in this regard — especially for lower value transactions — is the lightning network. This overlay network, first proposed by Joseph Poon and Tadge Dryja in 2015, promises to enable near-free transactions and instant confirmations, all while leveraging Bitcoin’s security.

The solution has been under active development for about two years now, with major efforts by ACINQ, Blockstream and Lightning Labs. Progress on the scaling layer has been significant all throughout 2017, with early software releases of different but compatible software implementations, useable wallets interfaces and test transactions happening both on Bitcoin’s testnet and even on Bitcoin’s mainnet on a regular basis now.

“I’d say we have solved the main technical problems and have a relatively good idea on how to improve on the current system,” Christian Decker, lightning developer at Blockstream, told Bitcoin Magazine. “One last hurdle that’s worth mentioning is the network topology: We’d like to steer the network formation to be as decentralized as possible.”

Given the current state of development, adoption of the lightning network should only increase throughout 2018 — not just among developers, but increasingly among end users as well.

“Integration and testing will be the next major step forward,” Lightning Labs CEO Elizabeth Stark agreed, noting: “Some exchanges and wallets are already working on it.”

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Increased Privacy Through TumbleBit and ZeroLink

While it is sometimes misrepresented as such, Bitcoin is not really private right now. All transactions are included in the public blockchain for anyone to see, and transaction data analysis can reveal a lot about who owns what, who transacts with whom and more. While there are solutions available to increase privacy right now — like straightforward bitcoin mixers — these usually have significant drawbacks: They often require trusted parties or have privacy leaks.

This situation could be improved significantly in 2018. Two of the most promising projects in this domain — TumbleBit and ZeroLink — are both getting close to mainnet deployment.

TumbleBit was first proposed in 2016 by a group of researchers led by Ethan Heilman. It is essentially a coin-mixing protocol that uses a tumbler to create payment channels from all participants to all participants in a single mixing session. Everyone effectively receives different bitcoins than what they started with, breaking the trail of ownership for all. And importantly, TumbleBit utilizes clever cryptographic tricks to ensure that the tumbler can’t establish a link between users either.

An initial implementation of the TumbleBit protocol was coded by NBitcoin developer Nicolas Dorier in early 2017. His work was picked up by Ádám Ficsór as well as other developers, and blockchain platform Stratis announced it would implement the technology in its upcoming Breeze wallet, which also supports Bitcoin, by March 2018. Recently, in mid- December of 2017, Stratis released TumbleBit integration in this wallet in beta.

The other promising solution, ZeroLink, is an older concept: it was first proposed (not under the same name) by Bitcoin Core contributor and Blockstream CTO Gregory Maxwell, back in 2013. Not unlike TumbleBit, ZeroLink utilizes a central server to connect all users but without being able to link their transactions. As opposed to TumbleBit, however, it creates a single (CoinJoin) transaction between all participants, which makes the solution significantly cheaper.

This idea seemed to have been forgotten for some years until Ficsór (indeed, the same Ficsór that worked on TumbleBit) rediscovered it earlier this year. He switched his efforts from TumbleBit to a new ZeroLink project and has since finished an initial ZeroLink implementation.

Ficsór recently ran some tests with his ZeroLink implementation, and while results showed that his implementation needs improvement, Ficsór considers it likely that it will be properly usable within months.

“I could throw it out in the open right now and let people mix,” he told Bitcoin Magazine. “There is no risk of money loss at any point during the mix, and many mixing rounds were executing correctly. It is just some users would encounter some bugs I am not comfortable with fixing on the fly.”

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More Sidechains, More Adoption

Sidechains are alternative blockchains but with coins pegged one-to-one to specific bitcoins. This allows users to effectively “move” bitcoins to chains that operate under entirely different rules and means that Bitcoin and all its sidechains only use the “original” 21 million coins embedded in the Bitcoin protocol. A sidechain could then, for example, allow for faster confirmations, or more privacy, or extended smart contract capabilities, or just about anything else that altcoins are used for today.

The concept was first proposed by Blockstream CEO Dr. Adam Back and others back in 2014; it formed the basis around which Blockstream was first founded. Blockstream itself also launched the Liquid sidechain, which allows for instant transactions between — in particular — Bitcoin exchanges. Liquid is currently still in beta but could see its 1.0 release in 2018.

Another highly anticipated sidechain that has been in development for some time is RSK. RSK is set to enable support of Turing-complete smart contracts, hence bringing the flexibility of Ethereum to Bitcoin. RSK is currently in closed beta, with RSK Labs cofounder Sergio Demian Lerner suggesting a public release could follow soon.

Further, Bloq scientist Paul Sztorc recently finished a rough implementation of his drivechain project. Where both Liquid and RSK for now apply a “federated” model, where the sidechain is secured by a group of semi-trusted “gatekeepers,” drivechains would be secured by bitcoin miners.

If drivechains are deployed in 2018, the first iteration of such a sidechain could well be “Bitcoin Extended:” essentially a “big block” version of Bitcoin to allow for more transaction throughput. That said, reception of the proposal on the Bitcoin development mailing list and within Bitcoin’s development community has been mixed so far. Since drivechains do need a soft-fork protocol upgrade, the contention does make the future of drivechains a bit more uncertain.

“Miners could activate drivechains tomorrow, but they often outsource their understanding of ‘what software is good’,” Sztorc told Bitcoin Magazine. “So they’ll either have to decide for themselves that it is good, or it would have to make it into a Bitcoin release.”

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A Schnorr Signatures Proposal

Schnorr signatures, named after its inventor Claus-Peter Schnorr, are considered by many cryptographers to be the best type cryptographic signatures in the field. They offer a strong level of correctness, do not suffer from malleability, are relatively fast to verify and enable useful features, thanks to their mathematical properties. Now, with the activation of Segregated Witness, it could be relatively easy to implement Schnorr signatures on the Bitcoin protocol.

Perhaps the biggest advantage of the Schnorr signature algorithm is that multiple signatures can be aggregated into a single signature. In the context of Bitcoin, this means that one signature can prove ownership of multiple Bitcoin addresses (really, “inputs”). Since many transactions send coins from multiple inputs, having to include only one signature per transaction should significantly benefit Bitcoin’s scalability. Analysis based on historical transactions suggest it would save an average of 25 percent per transaction, which would increase Bitcoin’s maximum transaction capacity by about 33 percent.

Further on, Schnorr signatures could enable even more. For example, with Schnorr, it should also be possible to aggregate different signatures from a multi-signature transaction, which require multiple signatures to spend the same input. This could, in turn, make CoinJoin a cheaper alternative to regular transactions for participants, thereby incentivizing a more private-use Bitcoin. Eventually the mathematical properties of Schnorr signatures could even enable more advanced applications, such as smart contracts utilizing “Scriptless Scripts.”

Speaking to Bitcoin Magazine, Wuille confirmed that there will probably be a concrete Bitcoin Improvement Proposal for Schnorr signatures in 2018.

“We might, as a first step, propose an upgrade to support Schnorr signatures without aggregation,” he said. “This would be a bit more straightforward to implement and already offers benefits. Then a proposal to add aggregation would follow later.”

Whether Schnorr signatures will already be adopted and used on Bitcoin’s mainnet is harder to predict. It will require a soft fork protocol upgrade, and much depends on the peer review and testing process.