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Author: Lars Hoffmann
Crypto exchange Bitfinex is now offering personal loans in bitcoin (BTC) and ether (ETH) via its peer-to-peer lending platform Bitfinex Borrow.
Users can borrow bitcoin in exchange for three fiat currencies and one stablecoin: US dollars (USD), euro (EUR), Japanese yen (JPY), and Tether (USDT). While for ether loans, users can only use USD as collateral.
As for loan to value ratios, bitcoin loans are available for up to 80% of the value of USD, EUR, and USDT holdings, and up to 70% for JPY holdings.
For ETH loans, the percentage is up to 80% of USD holdings.
Bitfinex charges a 4.16% and 1.14% interest rate per annum for bitcoin and ether loans, respectively. The service is available only for “fully verified” users.
The Bitfinex Borrow platform was launched in November and already offers USDT and USD loans against bitcoin and ether holdings as collateral.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Yogita Khatri
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Author: John Dantoni
Decentralized finance (DeFi) lending protocol Warp Finance has experienced a flash loan attack that resulted in a loss of $7.7 million worth of stablecoins.
Warp said the attack essentially allowed one user to borrow more funds than their collateral value, resulting in a loss for other users or lenders. Flash loans allow users to borrow funds without collateralization, provided the funds are repaid within a single blockchain transaction.
Warp did not immediately explain how the attack occurred or which stablecoins were lost, but Nick Chong of Hex Capital posted the flash loan transaction that shows the loss of DAI and USDC stablecoins.
Specifically, 3.85 million DAI and 3.92 million USDC in the Warp contracts, totaling the loss at $7.7 million (1 stablecoin is worth $1).
Warp said it plans to recover approximately $5.5 million that is “still secured in the collateral vault.” Upon successful recovery, the protocol wants to distribute the funds to users who suffered a loss.
Warp is expected to post a detailed analysis of the attack and next steps “in the coming days.”
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Yogita Khatri
The U.S. Treasury is on the cusp of putting forward a new transaction reporting rule for money services businesses (MSBs) that interact with self-hosted crypto wallets, The Block has learned.
As of press time, the actual language is not finalized and is subject to change, according to a person with knowledge of the process. It could take the form of a notice of proposed rule making or interim final rule. Unlike a proposed rule, an interim final rule goes into effect immediately upon release.
The Block is told that under the rule, money services businesses would need to file a currency transaction report (CTR) if a client conducts a cryptocurrency transaction to or from a self-hosted wallet that involves their service and above an as-yet-unknown threshold. According to the Financial Crimes Enforcement Network (FinCEN), regulated financial institutions are required to report currency transactions “conducted by, or on behalf of, one person, as well as multiple currency transactions that aggregate to be over $10,000 in a single day.”
Word of the forthcoming rule — which two sources say could be released as soon as Friday — comes after months of rumor and speculation about potential crypto-focused regulations out of the Treasury Department, led by Secretary Steve Mnuchin. Fears of a more stringent clampdown broke into public view in November when Coinbase CEO Brian Armstrong tweeted that he had heard the government planned to “rush out some new regulation regarding self-hosted crypto wallets before the end of his term.”
“For those who don’t know — self-hosted crypto wallets (also known as non-custodial wallets or self-custody wallets) are a type of software that lets individuals store and use their own cryptocurrency, instead of needing to rely on a third party financial institution,” Armstrong wrote at the time.
To be sure, the language could shift, and an expected comment period could allow industry firms to weigh in on shaping the rule as it moves toward finalization.
“The language is to be decided, but there will be a dialogue and people will have input now,” one person said of process. “It is significantly better than more severe restrictions on self-hosted wallets.”
That may represent welcome news for cryptocurrency traders nervous about the potential for heavy-handed digital asset regulations — even in the face of a historic run-up in bitcoin’s price. Market commentary from Genesis Global Trading obtained by The Block said that a move by Mnuchin has been largely ignored by the market.
“What has largely been discarded is the notion that Mnuchin and the FATF’s new self-custodial wallet regulations will have a meaning impact on price,” Genesis said.
Still, that doesn’t mean severe impact will have a long-lasting impression on the market, according to the firm. Hedge funds and pensions — which are interested in bitcoin’s use as a hedge against inflation — might be less concerned about holding the asset in a personal asset and may shrug off this news.
“Any dip caused by that is expected to be bought by institutions still waiting on the sidelines,” the trading firm said.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Frank Chaparro
Bitcoin is back in the news.
As a wave of institutional liquidity pours into Bitcoin’s markets, even some of its staunchest critics are finding it hard to dismiss the 12-year-old asset as its price surges to new all-time highs.
At the very least, these past three years have proven that Bitcoin is certainly not dead. At the most, it gives credence to the investment thesis of its most bullish proponents: that it is one of the most revolutionary technologies of its time.
But what makes bitcoin so unlike any other investment (or cryptocurrency) that blue-chip insurance funds, hedge funds and asset managers are now comfortable with buying it?
Read more: Over $20K? Why Is Bitcoin Worth Anything at All?
Bitcoin is a synthesis of decades of cryptographic technology and research with numerous precursors and false starts that predate it. For all of its predecessors, Bitcoin was the first attempt at digital cash that laid out a (more or less) completely decentralized system.
For those of you who are new, here’s what that means and the technical features that make bitcoin such a standout.
Contrary to common misconception, Bitcoin transactions aren’t kept secret or encrypted – in fact, they’re quite public.
But Bitcoin’s system is built on public-key cryptography, a branch of computer science that uses complex math (via a system of digital keys) to encode data and keep it hidden from those who don’t have the right key to decode it.
Read more: What Is Bitcoin?
With Bitcoin, users have a public key (from which they can create public addresses to receive bitcoin) and a private key; as their names suggest, the former is meant to be shared while the latter must be kept secret (if revealed, your bitcoin can be stolen, but more on that later).
The private key is what gives you a claim to the bitcoin you own. Technically speaking, wallets store private keys and not “bitcoin.” Every bitcoin exists on the blockchain – wallets just hold the keys that give users access to them.
You need your private key to approve transactions, and you need someone else’s public address to send a transaction.
If you’re familiar with PGP encryption, you may see how Bitcoin transactions are similar. The same principles that make encrypted communications so secure are baked into Bitcoin’s code, except instead of messages, Bitcoin’s design secures the bitcoin currency.
Factoid: Bitcoin with a capital “B” refers to the Bitcoin technology or protocol. We use bitcoin with a lowercase “b” when we are referring to the digital currency.
Like sending an encrypted message, Bitcoin transactions are peer-to-peer and (because of the mining process, which we’ll cover later) they can’t be obstructed by anyone.
Because bitcoin can be sent as freely as a message, Bitcoin is inclusive.
When Satoshi Nakamoto, Bitcoin’s creator, designed the system, he made it “permissionless,” meaning anyone can use Bitcoin to hold and transfer value. He also designed it to be “censorship resistant,” meaning no one can block you from joining the network and making transactions. Nobody can freeze the funds in your wallet, and no one can stop you from making a transaction with Bitcoin.
Because of the way bitcoin transactions are processed, no central party has control over your payments. Unlike PayPal, Venmo, or any other electronic transfer, bitcoin payments are made directly between the payer and recipient, thanks to the cryptography we touched on above.
The foundation of this system, Bitcoin Core, is an open source software which is an all-in-one wallet and server for the Bitcoin network. Anyone with the proper hardware can download and run Bitcoin’s software; it keeps a copy of the Bitcoin blockchain’s transaction ledger and broadcasts transactions to other servers in the network.
“Running a full node,” as this is called, is the ultimate exercise in Bitcoin control because you can fully audit the Bitcoin ledger yourself and broadcast your own transactions.
Even without running a full node, Bitcoin users can use the network at their will when they use a wallet that lets them control their own private keys, though this means that they are trusting someone else’s network node to broadcast their transactions for them.
The Bitcoin blockchain – the digital ledger which stores a record of all the network’s transactions – is immutable. It cannot be altered by a central party, and nobody can cheat the network to spend coins they don’t own.
Bitcoin transactions are processed into the ledger by a global network of “miners,” individuals and collectives who run machines to “mine” (maintain) the Bitcoin blockchain. Miners receive bitcoin as a reward for mining in the form of a “block reward,” a payout that goes to the miner(s) who finds the next block in the blockchain’s sequence and records the latest pending transactions in it.
Read more: How Do Bitcoin Transactions Work?
If you’ve know anything about mining, you probably know that it requires *a lot* of energy because mining competition is fierce. When you take bitcoin’s price into account, this makes sense – they’re not giving these things away for free!
This competition and energy expenditure helps secure the network. Miners are incentivized to process transactions and not interfere with the transaction ledger – otherwise, they risk their payday and, in the case of the big mining firms, tens of millions of dollars in hardware and operational expenses.
If a miner did want to cheat, the only way to alter Bitcoin transactions that have been recorded in the blockchain is to perform more work than roughly half of all other miners in the network – and the older the transaction, the longer you will have to work. To give you an idea of how much energy you’d need to attack Bitcoin, the network annually consumes, on average, as much electricity as a nation the size of Austria or Switzerland.
Read more: How Bitcoin Mining Works
So altering a transaction from, say, three years ago would require several hundreds of millions of dollars. Rollbacks are not theoretically impossible, but when you factor in the cost to mine with Bitcoin mining’s decentralization, they’re highly improbable (and have never happened in Bitcoin’s existence).
Of course, bitcoin can be stolen or seized if you’re not careful.
But if you take the right precautions, you can make your coins practically impervious to seizure, because so long as you keep your private key (or, the password that controls your bitcoin) in your custody and away from the eyes of others,your coins are in your complete control.
Read more: Unconfiscatable? Using Bitcoin to Resist Police Extortion in Nigeria
For increased security, you can set up “multi-signature” wallets that distribute access to your funds across multiple devices. Some wallets even include safety features like dummy passwords you can enter to show a blank account if you are at risk of being extorted, for example.
You can even memorize your private key in the form of a 12-to-24 word seed phrase, destroy the wallet associated with it, and store your bitcoin in your brain. When you want to access them again, you can download just about any Bitcoin wallet (all the good ones support these “seed phrases”), plug your seed phrase in, and you can access the bitcoin in your “brainwallet.”
You can also store your seed phrase on a piece of paper or (more to the taste of hardcore Bitcoiners) on metal sheets to protect them from the elements, or you can encrypt it on a USB drive and store it in an airgapped laptop – a computer that is never connected to the internet.
It’s even possible to send a bitcoin transaction without being connected to the internet via satellites and mesh networks.
Bitcoin is both a peer-to-peer payment network and a personal digital bank. Its economy is driven by consumers who purchase bitcoin, miners who process transactions and mint new bitcoin for circulation, node operators who audit the network and broadcast transactions, businesses who build on bitcoin and everyone in between.
This economy is also self-regulated. Every four years, a self-executing mechanism cuts the number of bitcoin that is minted via mining in half. This reward will eventually dwindle until the last bitcoin is mined over one hundred years from now. This “halving cycle” ensures that Bitcoin’s supply will never exceed 21 million and makes its inflation rate predictable.
Satoshi Nakamoto titled the Bitcoin white paper “Bitcoin: A Peer-to-Peer Electronic Cash System.” In the strictest since, Bitcoin *is* digital cash that you can spend as freely as physical cash, but some have taken this branding by Bitcoin’s creator as a signal that bitcoin is primarily meant to be used as a currency.
Bitcoin can be used this way, and new scaling technologies like the Lightning Network are providing infrastructure to process these transactions in faster, cheaper ways.
Read more: What Is Bitcoin’s Lightning Network?
But Bitcoin doesn’t care what you use it for, ultimately. Companies including Square and MicroStrategy are using it as a treasury for their company’s savings. At the same time, everything that makes Bitcoin censorship resistant and permissionless makes it an attractive donation source for dissidents protesting abusive governments, or a financial lifeline for citizens living in financially sanctioned (and economically battered) countries.
Yes, Bitcoin’s technology makes it attractive for criminals, but that’s only a small fraction of the network’s real users. (Criminals use cash, too, after all!) And since all bitcoin transactions are public, sometimes it’s easier than not to pin illicit transactions on their transactors. Of course, there are also privacy-preserving technologies to make your blockchain footprint less traceable.
Bitcoin’s core technology is rooted in principles of user freedom and financial liberty. Branching from this is a plethora of softwares, wallets, protocols and other dodads that developers are working on to make bitcoin more functional and sustainable for the long haul.
The rabbit hole is deep. If you’re ready to dive in and learn more, we’ve got you covered.
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Author: Colin Harper
Our Panelists:
Itay Malinger – Co-founder and CEO at Curv
Stani Kulechov – Founder and CEO at Aave
Phil Kelly– Head of Business Development at ConsenSys
Vance Spencer – Co-founder at Framework Ventures
___________________________________________________________________________________________________________
This event is brought to you by Curv.
Curv is the world’s most trusted digital asset security infrastructure that is delivered as a fully scalable, enterprise-grade and compliant cloud service. Curv’s multi-party computation (MPC) technology simultaneously provides institutions the protection, instant availability, and total autonomy over digital assets required to thrive in the digital economy.
The company is the only cloud-based, MPC wallet provider for institutional digital assets and the first of its kind to achieve both SOC2 Type II Certification and ISO 27001 accreditation. Curv also provides additional peace of mind by insuring up to $50M of digital assets backed by Munich Re, the only Internet-connected crime insurance policy to date and one of the largest policies in the market. Curv is swiftly being adopted by leading exchanges, custodians, OTC desks, brokers, traditional financial institutions and digital asset managers. Learn more about Curv’s new institutional DeFi solution: www.curv.co/curv-defi
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Andreas Nicolos
The Stellar Development Foundation (SDF) invested $3 million worth of Stellar lumens in Latin American cross-border payment and exchange platform Settle Network.
The investment is intended to bolster Settle’s stablecoin-centered payment tools. Settle Network recently launched StableX, a stablecoin exchange, with the goal of building a Latin American foothold in the fiat-to-crypto market as well as in its home in Argentina.
“When we started Settle, we chose to build on Stellar because its technology is designed for global interoperability and that has enabled us to create a thriving stablecoin business in LATAM and expand our product offering to launch the world’s first stablecoin exchange and stablecoin gateway, StableX,” Pablo Orlando, CEO of Settle Network, said in a press statement.
This investment marks the fourth from the SDF Enterprise Fund this fiscal year. A total of $9.3 million was given to DSTOQ, Abra, SatoshiPay, and now Settle Network.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: MK Manoylov
The Block looks at the growth of blockchain-related citations in scholarly journals using data from Google Scholar
We found that 2020 saw a boost in Bitcoin citations in scholarly journals
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Author: Steven Zheng
The team behind money market protocol Compound has released a white paper detailing Compound Chain, a new tool they say could bring more assets into the protocol from numerous ledgers.
The announcement describes Compound Chain as “a distributed ledger capable of transferring value and liquidity between peer ledgers.” In other words, users can borrow and lend cross-chain assets from different blockchains like Polkadot and Tezos, in the Compound Chain.
The blockchain will have its own native token called CASH, which will be used to pay for transaction fees.
According to the announcement, the blockchain will still be governed by the traditional Compound Governance structure via COMP tokens on Ethereum.
The team says it is building a limited-feature testnet implementation, which it expects to release in early 2021.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Saniya More
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