volatility

New Zealand Watchdog Issues Warning on Crypto Investments Following Bitcoin’s Latest Price Drop

13/01/2021 by Idelto Editor

New Zealand’s financial regulator issued a warning alert to local cryptocurrency investors and traders amid the recent bitcoin’s price action. The Financial Markets Authority (FMA) asks people to remain cautious because cryptos are “high risk and highly volatile assets.”

FMA Warns About Unregulated Overseas Crypto Exchanges

According to an official statement published in the NZ Herald, New Zealand’s financial watchdog is concerned about the latest “rollercoaster move” seen in the bitcoin (BTC) price. “Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers,” said an FMA spokesman.

But the regulator’s warning is not the only one seen over the last few days. In fact, the FMA quoted its U.K. counterpart, the Financial Conduct Authority (FCA), as saying:

The FMA shares the FCA’s concerns that some crypto exchanges are promising high returns and customers should be prepared to lose all of their money.

The advisory includes a warning on unregulated overseas crypto exchanges. Per the FMA spokesman, exchanges with no connection to New Zealand make it “hard to find out who is offering, exchanging, buying or selling” cryptos.

The Cryptopia’s Saga

The watchdog issued a reminder when dealing with a crypto exchange, stating:

You should also check if the exchange holds your New Zealand dollars in a trust account.

The FMA said that locals need to make sure if the exchange is registered in the Financial Service Providers Register (FSPR). That’s a requirement to access a “dispute resolution scheme,” it added.

NZ Herald’s article also references Cryptopia’s heist — a Christchurch-based crypto exchange that suffered a major hack in January 2019. That year, the Cryptopia team estimated they lost almost 9.5% of their total holdings, and the article noted that “crypto deposits are not guaranteed.”

What do you think about the FMA’s crypto warning? Let us know in the comments section below.

Economist Discusses What Would Happen if the Masses Ditch Fiat Currencies for Bitcoin

10/01/2021 by Idelto Editor

American economist Brian Wesbury has shared his thoughts on what would happen if the masses were to ditch fiat currencies and adopt bitcoin instead. He discussed whether the government would allow it to happen and how bitcoin can become a true currency.

Economist Brian Wesbury Answers Question About the Masses Ditching Fiat Currencies for Bitcoin

Brian Wesbury is an economist with a focus on macroeconomics and economic forecasting. He is currently the chief economist at First Trust Advisors, a financial services firm headquartered in Wheaton, Illinois.

He was asked on Fox Business News last week about what would happen “if the masses were to ditch fiat currency,” whether it will “trigger a financial collapse,” and “could bitcoin ever replace the dollar?” Wesbury began by acknowledging:

A lot of people who are buying bitcoin and other cryptocurrencies believe that they are going to replace the dollar.

He explained: “if they were to replace the dollar, if you take all the of the M1 — its all of the checking accounts and cash — in the system, you divide it by all the bitcoin that can exist — 21 million of them — you end up with over $300,000 worth of worth if it replaced the dollar.”

However, he raised a number of questions: “Will the government allow that to happen? Can you pay your taxes in bitcoin? Can you buy anything you want with bitcoin?” The economist opined:

That’s what has to happen for you to have a true currency … so it’s a long way away from that.

The chief economist did not mention that a growing number of jurisdictions are already embracing bitcoin for tax payments. For example, the canton of Zug in Switzerland announced that it will start accepting bitcoin for tax payments this year. Several other local governments in Switzerland have made a similar announcement, such as Zermatt.

Recently, the mayor of Miami said that he is working on allowing payments for city services in bitcoin. Furthermore, a growing number of stores are accepting bitcoin payments. Payments giant Paypal, for example, is planning to allow people to use cryptocurrency to pay for goods and services at 2.8 million merchants in its network this year.

Wesbury also claimed that the volatility of bitcoin is one of the problems. As an example, he said he hopped into his car with two bitcoins in his pocket. “When I got to the car dealer, I didn’t know if I could buy two cars or half a car and that’s one of the problems with bitcoin.” He concluded:

It’s so volatile that we don’t know really what it’s worth.

However, many experts have argued that the volatility of bitcoin decreases with rising adoption. Alliance Bernstein’s Inigo Fraser-Jenkins said in December that bitcoin’s volatility has significantly declined over the past three years, making it a more attractive store of value, and its relative volatility to both gold and stocks has fallen to historically low levels. In July, BTC’s volatility hit a three-year low. In addition, billionaire investor Bill Miller said Friday that bitcoin becomes less risky the higher the price goes.

Do you agree with Wesbury? Let us know in the comments section below.

Is Defi Coming to Bitcoin Cash? An Overview of Detoken and the Anyhedge Protocol

30/12/2020 by Idelto Editor

Maybe you’ve heard of Anyhedge. Last April, news.Bitcoin.com published an article about its announcement, but what is it really? What does it do, and how’s it work?

The Anyhedge Protocol

Anyhedge is an open-source protocol. It is simply a way to use the blockchain (in this case, the Bitcoin Cash blockchain) to create a specific type of smart contract. The smart contract here is a “hedge” where the hedge is between Bitcoin Cash (the underlying asset of the BCH blockchain) and any other asset. Hence, the name “Anyhedge”.

I wanted to understand more about this, so I took a look at the Anyhedge whitepaper. Whitepapers can be intimidating documents, mostly I think because people have grown accustomed to information being spoon-fed to them. The art of sitting down, focusing, and burrowing in mentally to understand something is becoming a lost art. But, I digress.

The first part of the whitepaper attempts to explain why Anyhedge is important and what problem it is trying to solve. In a word: volatility. Cryptocurrencies have always been volatile, and it’s one of the long-standing issues that crypto naysayers frequently bring up.

The whitepaper then mentions some solutions that have been tried in the past, including exchanging crypto into fiat or using various kinds of stablecoins. Each of these solutions has its own advantages and disadvantages, which are also enumerated.

Anyhedge takes a market-based approach by attempting to enable peer-to-peer “risk trading.” One big advantage of something like Anyhedge, is that there is no single point of failure, unlike, for example, a fiat-backed stablecoin.

But creating decentralized tools for trading does more than just handle volatility issues. It also offers opportunities to speculators, and we know that speculation makes up a large part of the market today, for better or for worse. This will attract more users to the Bitcoin Cash chain.

Oracles

To understand how Anyhedge works, first we need to understand oracles, as they are a key component.

Oracles in Bitcoin are an idea that goes back years. The Bitcoin Wiki talks about “using external state” as part of its operations, but this is always done indirectly in Bitcoin. Why? It’s because the node software isn’t capable of “polling an external server” or importing a state of conditions. If Bitcoin were to be set up in such a way, it would drastically impact the entire system and compromise certain properties — for example, the Nakamoto consensus system that ensures that a majority of honest nodes will always outpace attackers.

But the way the Wiki suggests using an oracle is a more primitive method, as it involves the oracle evaluating the specifics of the contract and then interactively providing a signature.

In many ways, this is inferior to using a blind oracle that doesn’t require any interaction and in fact doesn’t have any awareness of the smart contracts utilizing the oracle signature. The blind oracle set up uses OP_CHECKDATASIG, which is a relatively new innovation on Bitcoin Cash (BCH), which doesn’t exist on Bitcoin (BTC).

In 2018, an op_code was added to the Bitcoin Cash protocol called OP_CHECKDATASIG. There’s a good article about this opcode here. What this opcode allows is for a Bitcoin script to check a digital signature of any arbitrary piece of data. This allows oracles to be used in a much more powerful way, as the smart contract can be set up ahead of time without any interaction or permission from the oracle.

One common problem with oracles, is that they introduce a point of failure and require trust. However, with the blind oracle setup, the potential for misuse is reduced. In addition, participants using Anyhedge could choose from different oracles, and could theoretically only participate in contracts where the users trust the oracle. In theory, smart contracts could be set up that allow multiple oracles to be used in various ways, thus further minimizing risk and reliance on trusted parties.

How Anyhedge Works

Now that we understand a bit about oracles, how does Anyhedge work? There are two parties to the smart contract, which the paper calls “Hedge” and “Short”. I find that terminology slightly confusing, so let’s just call them “long” and “short”. Since Anyhedge can be used with any asset (such as USD), it’s this external asset that the long and short refer to. Example: If Alice thinks BCH will go up and USD will go down, and Bob thinks the opposite, then Alice is short the dollar, and Bob is long the dollar.

The smart contract also has a maturity date. The whole thing goes like this: Alice (short on USD) and Bob (long on USD) both put their bitcoin cash (BCH) into the smart contract. At the time of maturity, they both are allowed to withdraw bitcoin cash. If the BCH/USD price goes up, Alice gets more BCH and Bob gets less. The opposite would happen if the BCH/USD price had gone down.

The trusted oracle provides a signed message with a price and time stamp, and the smart contract funds can be unlocked when the oracle signature is valid. This is the normal way that the smart contracts function — they get closed out at the time of maturity. However, there is another way that the contract can be redeemed, and that is if the price of the asset (such as USD) goes unusually high or unusually low.

The smart contract allows the users to specify a liquidation price on both the low and the high side. Again, if the oracle provides a signed message and the contract validates it, the funds can be withdrawn. The early liquidation is possible because price has reached one of the two boundaries.

There is a third way to close out the contract, which is a failsafe mechanism. The two parties can close out the contract any way they want (as long as they both agree). This would happen if the oracle stops operating, for example.

That’s it. It’s pretty simple, really. Users lock their funds in the smart contract address, and only can withdraw under the right conditions.

Creating the Market and Liquidity

It’s one thing to create an open-source protocol on paper, and another thing to have a working prototype. And it’s yet another thing to have a fully functioning ecosystem, which requires liquidity in terms of a sufficient number of participants.

The paper discusses a few different types of “matchmaking setups”.

One option is using a centralized order book. Although decentralized exchanges are great in theory, they don’t necessarily provide the most responsive system. Centralized exchanges have their advantages — namely the ability to attract liquidity. In this model, access to the order book itself is permissioned. However, this can be combined with a noncustodial client-side setup that preserves the advantages of Anyhedge including having no custodial risk.

For this reason, it makes sense that the first deployment of Anyhedge will be on a centralized exchange.

Another method utilizes the “Federated” model in which exchanges can communicate with each other via APIs. In theory, Anyhedge contracts could be trustlessly coordinated between exchanges. Cooperation between exchanges can grow along with a global and trustless pool of demand.

But it is also possible to use Anyhedge contracts between any two willing parties. An exchange is not even necessary. In practice, order books are necessary to create an efficient market. Just as OTC trading is common, tools can be released for ad-hoc contracts. These tools may have lower liquidity and speed, but they are also more private, as well as potentially more flexible. They are also impossible to censor and offer more privacy.

Defi and the Bitcoin Cash Advantage

Defi was a huge buzzword in 2020, but are ordinary users getting involved? One of the most praised applications is the Uniswap smart contract on the Ethereum blockchain, which is providing true decentralized exchange (dex) capabilities.

Similar decentralized services can be built on Bitcoin Cash. One major advantage that BCH has is that fees are still low, while they are getting quite high on Ethereum. That may change in the future as ETH 2.0 is rolled out, but it is unclear how long that process may take. In the meantime, BCH is a good low fee option for many applications.

Enter Detoken

Detoken is about to be launched. It’s an implementation of the Anyhedge protocol.

The folks who ran the Cryptophyl token exchange are busy working on the release of this upcoming product, and the fact that there is a business-driven initiative behind the rollout of this technology is promising, since it will likely receive the attention and resources necessary to bootstrap liquidity in this nascent ecosystem.

Detoken is planning to allow SLP token support shortly after launching and says they will allow zero-confirmation trades, which means users don’t have to wait for block confirmations before their transactions are created. They also mention combining atomic swaps with Detoken so that trustless and noncustodial trades can be accomplished with users having full control of their private keys.

What do you think about Anyhedge and Detoken? Let us know what you think about this subject in the comments section below.

The post Is Defi Coming to Bitcoin Cash? An Overview of Detoken and the Anyhedge Protocol appeared first on Bitcoin News.

Market Update: Bull Trap Warnings After Bitcoin Shoots Above $18k Handle

29/11/2020 by Idelto Editor

Digital asset markets have recaptured some of the losses taken three days ago, as a great majority of the crypto economy has started to rebound after the market rout. Bitcoin has climbed above the $18k handle once again and a myriad of crypto assets are up between 1-6% during the last 24 hours.

After dropping to a low of $16,300 per coin, bitcoin (BTC) has rebounded 11.3% to where the price stands today at $18,138 per unit. BTC is still up 33% for the last 30 days, 54% for the last 90 days, and 139% against USD for the last 12 months. Bitcoin’s dominance index, in comparison with the 7,500+ crypto assets’ market caps, is currently just above the 63% handle.

The entire crypto-economy on Sunday, November 29, 2020, is hovering around $526.5 billion and there’s roughly $30.50 billion in global trade volume today. The biggest cryptocurrency gains today were captured by zap (ZAP), which is up 71% in 24 hours. The largest losses today stem from carvertical (CV), which is down over 59% on Sunday morning (EST).

The second-largest market cap held by ethereum (ETH) is up 5.17% today, but ETH is still down a touch less than 1% for the last seven days. ETH is swapping for $555 per ether and holds a $63 billion market valuation.

XRP is trading for $0.61 per coin and is up 0.39% on Sunday morning. Still, XRP commands a $28 billion market capitalization and is up 39% during the last seven days.

Bitcoin cash (BCH) holds the fifth-largest market cap below the stablecoin tether (USDT) and is currently trading for $281 per unit. BCH is still down some during the past 24 hours, but is up 7.5% for the week. The crypto asset bitcoin cash (BCH) has a market valuation of around $5.23 billion on November 29, 2020.

As BTC jumps back to the levels gained last week, a few analysts believe that altcoins will catch up as well.

“BTC is back at its all-time high levels, but what is worth noting is the valuation of the altcoins which are on average still 50% below their all-time highs,” the Head of Trading at NEM, Nicholas Pelecanos said. “Some altcoins represent projects that are no longer functioning, yet other projects have seen tremendous development on both adoption and tech. For me, catching these undervalued altcoins is now the trade to be made,” Pelecanos added.

Other analysts assume that the demand for bitcoin (BTC) and other crypto assets stem from Millennials and the Gen Z generation.

“The steady rise of Bitcoin in 2020 has not only continued, but accelerated, during times of political and economic uncertainty. As a whole, the world is looking outside the traditional norms for how and where they manage their finances. This demand comes from Millennials and Gen Z’ers and their progressive outlook on their financial needs, both present and future, and pivoting away from traditional financial institutions as their store of value with next-to-nothing interest rates,” Derek Muhney, Director of Sales at Coinsource explained.

Some traders think that the current rise up could be a “bull trap,” which is basically a false signal in a declining trend. For instance, the crypto trader dubbed ‘@Lomahcrypto’ told his 65,000 Twitter followers that he wants to be bullish, but he is still uncertain.

“I want to be bullish so bad,” Lomahcrypto tweeted. “Please BTC just close above $17,400 or dump to $15,800. Also… Binance Futures ALTs that were performing well (market leaders) are looking kinda heavy,” he added. “I [have] to agree it looks like trash,” another trader responded.

The popular trader @Cryptocapo_ told his 25k Twitter followers that he’s ready to short BTC. “Ready to short (hedge) $17.5k-$18k,” he tweeted.

Meanwhile, even though BTC slid 15% in value the other day, many expected the crypto asset to slide a lot more than that, as it has traditionally seen slides much larger in the past (-30% or more). This has caused uncertainty among traders and analysts, as some believe that the price will drop again, but many enthusiasts still wholeheartedly believe BTC is once again targeting the 2017 all-time high.

What do you think about the crypto-economy’s recent gains? Let us know what you think about this subject in the comments section below.

The post Market Update: Bull Trap Warnings After Bitcoin Shoots Above $18k Handle appeared first on Bitcoin News.

US Regulator Charges Tech Firm, CEO in $5 Million ICO Fraud Case

17/08/2020 by Idelto Editor

The United States Securities and Exchange Commission (SEC) jointly charged Virginia-based Boontech and CEO, Rajesh Pavithran for fraud and registration violations. The charges stem from an initial coin offering (ICO) that raised $5 million from 1,500 investors around the world in exchange for Boon Coins.

In return, Pavithran and his company promised to develop and market a platform that connects employers posting jobs with freelancers seeking work. The SEC says that the alleged offenses were committed between November 2017 and January 2018.

According to the SEC order, “Boon Coins were offered and sold as investment contracts and were, therefore securities.” The order states that both Boontech and Pavithran failed to register the offering.

Furthermore, the order finds that Pavithran and Boontech made “false and misleading statements, including claims that Boon Coins were stable and secure.”

According to the SEC, Pavithran and Boontech also claimed that “their platform eliminated volatility inherent in the digital asset markets by using patent-pending technology to hedge Boon Coins against the U.S. dollar, when in fact Boontech had no such patent-pending technology.”

The US regulator also deemed Boontech’s claims that its platform “was faster and more scalable than its competitors because it was built on Boontech’s blockchain” as another representation.

Instead, the SEC determined that “the platform was being developed on the same public blockchain as its competitors.”

In a statement, Chief of the SEC Enforcement Division’s Cyber Unit, Kristina Littman said:

“Investors are entitled to truthful disclosures from issuers of securities, whether digital or otherwise. Pavithran and Boontech defrauded investors by convincing them to fund this endeavor based on the allure of innovation that simply did not exist.”

According to the SEC, Pavithran and the tech company violated the antifraud and registration provisions of the federal securities laws.

Meanwhile, the SEC order reveals that both Boontech and Pavithran, “agreed to settle the charges by consenting to the issuance of the order.”

Consequently, Boontech is now required “to disgorge the $5 million raised in the ICO plus prejudgment interest of $600,334.”

The order requires Pavithran to pay a penalty of $150,000 and bars him from serving as an officer or director of a public company.

Finally, Boontech and Pavithran must destroy all Boon Coins in their possession and issue requests to remove Boon Coins from any further trading on all third-party digital asset trading platforms.

The order also bars the duo from participating in any future offerings of digital asset securities.

What do you think of the charges against Boontech? Share your thoughts in the comments section below.

The post US Regulator Charges Tech Firm, CEO in $5 Million ICO Fraud Case appeared first on Bitcoin News.