Monumental Challenge with Universal Benefits – OEM Apps on Mobile Devices or Embed Crypto Tools into Browsers

Colleagues, the Cryptocurrency Academy has written extensively about the need for digital assets to cross the chasm from early adopter to mass-market adoption. We see several financial management firms launch crypto trading and custody services for institutional clients. We would like to offer two potential approaches, which could dramatically accelerate individual trader transactions and dollar value. One strategy is to OEM a crypto trading app onto all smartphones, tablets and laptops – a simple pre-install placing the app on the ‘home’ screen alongside email, weather, search and IM. Second, a much more challenging approach would be to embed a crypto trading API pre-installed in Chrome, Firefox, IE and Safari. This is precisely what the World Wide Web Consortium (W3C) is considering with regard to Bitcoin’s Lightning Network. Bitcoin averages some 275k transactions and $3.7B+ in market value per day (CoinMarketCap). The implementation of either or both of the above techniques could help Bitcoin, Altcoin and Stablecoins truly reach escape velocity. We predict implementation led by W3C along with tier 1 browser and device vendors for industry-leading BTC within 24 months. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Can Blockchain deliver security, performance and dependability for Japan’s new Payment Clearing Network?

Colleagues, Blockchain technology is about to meet once of its biggest challenges to date – the Japanese Banks' Payment Clearing Network consortium. The critical success factors include performance, security and dependability when processing of low-cost transfer of small-scale transactions using RTGS.for nine commercial banks. Fujitsu has been selected to develop the new Blockchain-based system. If this test proves successful, it will clearly distinguish Japan as a “first mover” when it comes to the industrial use of Blockchain technology among the world’s leading economies. One advantage here is the fact that all the players are Japanese owned and operated entities and may benefit from both technological and well as cultural synergies. China, South Korea and the US will closely monitor this stress test as they seek to implement comparable systems. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Does Blockchain’s DLT hold the key to Central Bank Digital Currency Adoption?

Colleagues, we have written extensively on the propensity of central sovereign banks to issue their own cryptocurrencies. The US Federal Reserve and the PBoC appear to be on opposite ends of the adoption continuum. New research published by the OMFIF (Official Monetary and Financial Institutions Forum) and IBM point us to the Occam’s razor of CBCD adoption: Distributed Ledger Technology (DLT). Download the CBDC report here. Private sector ICOs continue to rise with no end in sight. While they understand that their underlying Blockchain technology likely has bugs and security vulnerabilities, financial institutions in particular – such as JP Morgan, Fidelity, BlackRock, etc. – clearly see the benefits of trans-border remittances, increased transaction speed and lower OPEX. In aggregate central bankers have major reservations on the security and dependability of DLT. The report states that the goal is to “construct a convincing RTGS replacement that can be properly benchmarked against existing systems and meet the high standards for security, robustness, efficiency and speed.” The PBOC is hiring staff to develop its CBDC as we speak, whereas the US Fed is cautiously assessing its options. Many other central banks are somewhere in between. Our prediction: By 2023, most G20 nations will have launched their own CBDC. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Security Lies in the Balance as Blockchain’s LockBox Wallet Uses the SWAP Crypto-to-Crypto Brokerage

Colleagues, does the global cryptosphere truly need another hardware wallet? The CEO of Blockchain clearly believes the answer is yes, indeed. The firm has announced plans to begin shipping its new LockBox device this November. LockBox’s distinguishing features is that it enables the exchange between different cryptocurrencies in partnership with SWAP brokerage. The value proposition is that traders can exchange Bitcoin for Ethereum, XRP for LiteCoin, Ripple for Ether … you get the idea. Two key factors will determine the success of LockBox. First is the Total Addressable Market from “crypto-to-crypto” transfers. With a global market cap of some $209B we anticipate that roughly 10% of crypto traders will need to make such a transfer during their financial careers. Second is the infamous security challenge – how secure is the hardware wallet when connected to the Internet as well as the security of LockBox’s interface with the SWAP brokerage when making transactions. Our recommendation: Proceed with caution. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Japan’s Financial Services Agency Grants Third Party to Self-Regulate Cryptocurrencies – Is a Similar Move Likely in the US?

Colleagues, the Financial Services Agency of Japan has granted approval for the Japanese Virtual Currency Exchange Association (JVCEA) to self-regulate the exchange of cryptocurrencies. Officially referred to as a "certified fund settlement business association” (aka the Association of Certified Fund Settlement Business Operators). The scope of the JVCEA appears to encompass the definition of crypto exchanges policies, enforcement and impose unspecified penalties on violators. This surely comes as music to the ears of Coincheck, Bitbank, GMO and other exchanges based in the island nation. Bottom line: Would Japan’s self-regulation model be acceptable to the US SEC or CFTC? Answer: Not a chance. Both US regulatory bodies – while seeing the potential value of cryptocurrencies – have major reservations regarding the security of crypto exchanges, illicit activity performed on crypto exchanges (such as money laundering, contraband and the undermining of economic trade sanctions) as well as the legal categorization of digital assets as bona fide “securities” or “commodities”. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Tether and Bitcoin: David vs. Goliath – A Match Made in Hades?

Colleagues, Bitcoin without doubt is the poster children for cryptocurrencies. Despite its flaws and dramatic price decrease, since December 2017 it commands some 51% market share of the $209B global cryptocurrency value based data from CoinMarketCap. By all accounts Tether is a third-tier Stablecoin pegged to the US dollar … currently trading at 0.985 cents to the greenback. Tether does rank as the eighth largest cryptocurrency by weighted market cap with a little over 2B tokens in circulation. The central issue is whether Tether has been used to manipulate the value of Bitcoin – a $2B fiat-back Stablecoin influencing the industry leading BTC weighing in at $112B market cap. In a paper released by a University of Texas professor entitled Is Bitcoin Really Un-Tethered? The report makes a compelling case that “Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin.” A bevy of articles by respected publications including the New York Times, CCN, Coin Telegraph, Coin Desk and CryptoSlate appear to validate the U of T statistical thesis of Dr. John Griffin. The unanswered question concerns motive. We will explore this issue further and report our conclusions. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

What can the US SEC and PBoC learn from the EU ESMA regarding the regulation of cryptocurrencies?

Colleagues, while the US SEC has an ongoing debate whether crypto assets are securities or commodities, the European Securities and Markets Authority’s (ESMA) central focus is on the “transferability” of the asset. Transferable assets may fall under the jurisdiction of the ESMA’s existing Markets in Financial Instruments Directive II.  Herein we have two of the world’s three geo-economic regions with different approaches to the potential regulation of digital assets. Which leads us to East Asia – Japan, South Korea and China – which have be the vanguard of cryptocurrency adoption (ICOs, exchanges and mining). The PBoC definitely anticipates a sovereign bank-sponsored cryptocurrency in its future, however, has major reservations about the impact of digital assets in general on the price of the yuan. The Cryptocurrency Academy predicts that the world’s three geo-economic regions will resolve the regulatory ambiguity over the next 24-26 months. The fundamental question remains: Will the EU, US and East Asia arrive at similar or conflicting regulation frameworks? We will continue to scrutinize and report on regulatory developments affecting crypocurrency adoption. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

How does North Korea’s cyber warfare unit Lazarus Group use gains from crypto exchange attacks to its military?

Colleagues, under mounting political and economic pressure from the US – and to lesser extent China and Russia – North Korea’s infamous Lazarus Group appears to have cryptocurrency exchanges in the center of its radar screen. The highly respected Group-IB cyber intelligence firm reports that the DPRK was the source of some 14 cyber attacks targeting cryptocurrencies exchanges during the past one and a half years yielding $571m in illicit digital assets. Allow us to make two rather obvious assumptions: One, the cash-starved North Korean government has no viable exports other than the sale of rogue military hardware. Two, despite its economic deprivation, the DPRK funnels as disproportionate level of the financial resources it does have to the Lazarus Group’s cyber warfare ventures. These assumptions lead us to a fundamental question: How does North Korea use the crypto assets acquired by Lazarus? We believe the answer is two-fold. First, to build and acquire the country’s military arsenal. Second, the widespread and ongoing disinformation campaign needed to prop-up the ill-fated Kim political dynasty. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

How effective will Coinbase’s Salus open source security software be in protecting crypto exchanges?

Colleagues, we return once again to the Achilles heel of cryptocurrency mass-market adoption – security. The Coinbase exchanges’ new open source software Salus purportedly will eliminate the need having to configure a scanner for each different project. Instead, crypto exchanges IT staff should be able to centrally managed security scans across a large number of software repositories. The US-based Coinbase exchanges shares highest quality ranking among Bitcoin trading platforms along with ChangeBelly and Binance according to Bitcoin Exchange Guide, which boosts its credibility in the global cryptosphere. Two key questions emerge. First, how widely will Salus be used by other exchanges? Second, what level of incremental security will Salus deliver? Our assumption is that other exchanges will closely monitor the Salus rollout before deploying it on their platforms. Separately, we are not likely to know true value of Salus in preventing – or at least mitigating – security threats for 4-6 months. Nevertheless, given the plight of security in the cryptocurrency ecosystem we believe that more security can only help strengthen investor confidence in crypto exchanges. Review and download the Salus code at GitHub. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Does Crypto Smart Contract Predictive Code Violate US CFTC Policies?

Colleagues, as the debate continues regarding whether cryptocurrencies are securities or commodities, a parallel debate is emerging which concerns the legality of including predictive code in smart contracts. The Commodities Futures Trading Commission governs the use of binary options, derivatives and event contracts for US-based traders and investors. The centerpiece of CFTC enforcement is protecting the “public interest”. Crypto smart contract security issues, which may lead to financial losses, are under particular scrutiny by the CFTC. Best practices concerning smart contracts vary by the Blockchain used by each cryptocurrency.  If your prediction is right, the contract automatically sends you the remittance as long as it is in the public interest. The issue of nefarious uses of cryptocurrencies let alone betting on illicit financial transactions (e.g. money-laundering, evading economic sanctions and payment for drug trafficking). Smart contract security audits are key to uncovering vulnerabilities in the underlying Blockchain. The CFTC’s chief concern is the prohibition of so-called “prediction markets”. Bottom line: When it comes to US-based cryptos and developers including predictive code in smart contracts raises a red flag by the CFTC. Until the CFTC issues formal guidelines, our recommendation is to avoid predictive code in crypto Blockchain. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Fiat to Digital Deposits and Withdrawals for Cryptocurrency Exchanges – Can Binance’s third party method work for smaller exchanges?

Colleagues, unlike Bitfinex the market cap leading Binance exchanges requires investors to convert their fiat currencies using third party portals localbitcoins.com, otcbtc.com or Bitfinex. By contrast Bitfinex does allow direct fiat currency deposits which are then converted to cryptocurrencies … which if desired can then be transferred to other crypto exchanges. Here is the issue: What happens to Binance market cap and trading volume if one or more of their fiat currency “on-ramps” fails? Case in point is the bug in the Bitfinex deposits processing system last week which rendered their deposits on ramp unavailable. Fortunately, they have resolved this problem with the implementation of a new “distributed banking solution”. Ease of use – for both fiat to crypto deposits and crypto to fiat withdrawals – is yet another critical success factor (primarily for individual investors) which needs resolution if cryptocurrencies are to penetrate the mass market. The development of user friendly processes will greatly benefit the global crypto ecosystem. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Fidelity Digital Asset Services – One Small Step toward Cryptocurrency Mass Market Adoption

Colleagues, we at the Cryptocurrency Academy view Fidelity’s announced its new Digital Assets Services as one important, albeit fully anticipated, step toward mass-market adoption of cryptocurrencies. Unlike most other moves by leading financial institutions this announcement is noteworthy for two key reasons. First, DAS will provide custody and trading services for institutional investors trading millions+ of crypto market cap (in stark contrast to individual consumer traders). Second, we applaud the vision articulated by Fidelity’s Tom Jessup that DAS will grow into “a full-service enterprise-grade platform for digital assets”. We fully expect that the next 12-24 months will see similar announcements coming from BlackRock, Schwab, Templeton and BNP Paribas … just to name a few. We also foresee that the private sector firms will far outpace sovereign central bank adoption of digital assets … with the US Federal Reserve, ECB and PBoC topping the list. So what comes next in the global cryptosphere? Look for one or more global 100 firms such as Amazon, Facebook or AramCo to introduce their own “private labeled” cryptocurrencies. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

What is the scope and impact of Bitcoin time warp attacks cyber criminals? Should the software bug be fixed?

Colleagues, crypto time warp attacks occur when miners collude to report incorrect timestamps that are farther apart, messing with the rate at which blocks can be mined. Incorrect timestamps are do occur and can be innocuous. Chain Analysis reports that timestamp errors have steadily decline since 2018. However, specific manipulation by miners who bends the rules with the goal of creating illegitimate tokens is cybercrime … pure and simple. Bitcoin (along with Litecoin) are most susceptible to time warp attacks. However, some argue that the same Blockchain bug which allows these attacks have favorable unintended positive side effects … faster transaction speeds and attraction of more users. By contrast, if the difficulty of creating a new block is low, a cyber-criminal can mine many fast coins, or in the case of a small chain, a criminal with 51% hash power could reduce the difficulty to one and mine a new fork from the original block. The debate continues within the Bitcoin developer community. While consensus will be hard to reach, the community needs to reach at least a majority vote or risk a division, which split BTC into Bitcoin and Bitcoin Cash in 2017. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

PBoC vs. US Federal Reserve - Will China outpace the US in central bank cryptocurrency adoption?

Colleagues, last week we reported that the US Fed’s Jim Cunha, Vice President for Treasury and Financial Services, speculated that the US central bank could issue a digital asset within the next five years. By contrast the People’s Bank of China is aggressively entering the R&D phase of a planned launch of a sovereign digital asset in the next 2-3 years. Herein we see two very different perspectives on cryptocurrencies. The US is understandably concerned about security of the underlying Blockchain technology. The PBoC is actively hiring technical staff to build and test a cryptocurrency and has filed 41 patent applications. This situation has many similarities with the two countries’ race to adopt 5G telecommunications infrastructure. Bottom line: Despite a highly centralized bureaucracy and conservative political system, China seems poised to be the move mover when it comes to central bank cryptocurrency. Do first movers necessarily have a competitive advantage? When it comes to a sovereign digital asset this trend may not be valid. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Cryptocurrencies with lower market capitalization have the greatest risk of 51% mining attacks

Colleagues, the threat of 51% attacks loom large in the global cryptosphere. However, findings suggest that the potential for a 51% mining attack has an inverse correlation to the market cap of a given cryptocurrency. Attacks by a group of miners controlling more than 50% of the network's mining hashrate or computing power of the currency’s Blockchain. Two factors drive the propensity of a cryptocurrency 51% attack. First, cryptos with smaller market caps typically have fewer active miners. It is easier to gain control over 1000 miners of ZCoin, which ranks 100^th in market cap by CoinMarketCap at some $60m USD #1 ranked Bitcoin valued at roughly $114t USD with perhaps 1,000,000 active miners worldwide. Second, the availability of relatively low-cost mining pools enable cyber criminals the opportunity to “rent” GPU power from multiple pools simultaneously while subtly approaching the 51%+ threshold for controlling hashrates. Pre-emptive measures include making code changes at the Blockchain protocol level, boycotting likely attackers, increasing the number of confirmation requirements and unleashing a DDoS attacks on suspected hackers. Bottom line: There is no fail-safe strategy become a victim of a 51% Attack, however, investing in Tier 1 cryptocurrencies (e.g. the CoinMarketCap’s top 10 cryptos) provides optimal security and peace of mind. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Will Stablecoins help transform cryptocurrencies from early adopter to mainstream stable in trans-border transactions?

Colleagues, price volatility has been the Achilles heel of cryptocurrencies in 2018 and a major impediment to their mass market adoption … particularly among institutional investors. Enter Stablecoins (SCs). Unlike pure play cryptos which are essentially fiat digital assets, Stablencoins are pegged to an underlying asset – gold, silver, crude oil or sovereign bank currencies such as the US dollar and Japanese yen. Stability is the key driver behind the launch of a wave of Stablecoins including an Australian dollar-pegged SC, Gemini US dollar pegged SC, GMO’s planned yen-pegged SC which is scheduled to come to market in early 2019. All of these developments lead to the obvious question: If SCs are pegged to an underlying asset why not simply invest directly in the asset (e.g. oil futures) itself? Let us offer a two-fold answer: First, investors in SCs are legally entitled to the underlying assets if a problem occurs with the digital asset. Second, SCs offer big benefits to the remittance market. Remittances are trans-border transactions made by people who work overseas who send their wages to their families in their country of origin. In turn, SCs, like regular cryptocurrencies are Blockchain-based which increase the speed of transactions and lower costs. Bottom line: The Cryptocurrency Academy believes Stablecoins appear to have a viable real world use case, yet will in no way undermine or limit the adoption of cryptos such as Bitcoin, Ethereum and Litecoin. Post your comments today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

The future of public corporation funding – equities, debt and ICOs? Consider the UAE, Philippines and Malta.

Colleagues, the UAE is considering a new law that would allow corporations to issue ICOs as an additional method of raising capital. For most investors in the Western hemisphere and the Pacific Rim this seems to be a radical move. Moreover, is raises two fundamental questions: First, would you invest in the equity and/or debt of a company that “needs” to raise funds via an ICO? Second, which corporations are most likely to issue a successful ICO? One may argue that only companies that have troubled balance sheets would turn to an ICO as a desperate move to raise capital. However, in response to the second question, what if that company was itself a successful global leader in the financial or technology sectors – companies such as Goldman Sachs, JP Morgan, Apple, Amazon or Google come to mind. To take this scenario one-step further, what if such companies also offered crypto custody services or as some have speculated, owned and managed their own crypto exchanges. (Note: Facebook has be rumored to fall into this category). We at the Cryptocurrency Academy prefer to focus on facts and not idle speculation. Ii is not unfathomable that what we observe in Malta, the UAE and the Philippines could be precursors to a brave new crypto world in the next decade. Food for thought. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Can “Forward Blocks” Propel Bitcoin Toward Mass Market Adoption in Lieu of Hard Forks?

Colleagues, establishing consensus among developers and users alike has been a critical success factor necessary for emerging technologies to cross the chasm from early adopters to mass market acceptance for decades. Bitcoin, with its roughly 51% crypto market cap share, faces a crucial junction as it seeks to increase block size without losing is faithful followers. Changes to BTC’s proof-of-work and block size are inevitable if the cryptocurrency is to maintain its technical and market leadership. However, Bitcoin needs to avoid dissension among its developers and users, similar to the infamous hark for of 2017 that splintered BTC into Bitcoin and Bitcoin Cash. Enter so-called “Forward Blocks”. Proposed by developer Mark Friedenbach, in theory this technique can make future changes to block size and POW backward compatible. If successful “Forward Blocks” would eliminate the technical and market carnage that are typically caused by “Hard Forks”. The trillion-dollar question remains: Will “Forward Blocks” be successful? Share your comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Security and buy-in from millennials cited as the two big drivers influencing the US Fed’s position on cryptocurrency

Colleagues, the US Fed’s Jim Cunha, Vice President for Treasury and Financial Services, offered up a prediction that the US government could adopt a Blockchain-based cryptocurrency within the next five years. We have previously stated such a move could take place within three years. Perhaps the reality of US Fed-backed cryptocurrency lies somewhere in between. Cunha’s remarks at a recent conference in Boston (akin to an East Coast version of South by Southwest) reveal some insight to the US Fed’s thinking. The major reservation shared by Fed officials is security of a central bank crypto and its underlying Blockchain. By contrast, the 30-year Fed veteran recognizes that millennials in aggregate have concerns about the old-school financial establishment – presumably government and private sectors alike – which makes them much more open to a national cryptocurrency than their gray haired “over 50” financial leaders of our current era. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

US DOJ Incites Russians Who Are Claimed to Have Used Cryptocurrencies to Fund Disinformation Campaign

Colleagues, by now it should come as no surprise that the US government has filed charges in absentia against seven Russian nationals suspected of engineering a disinformation effort to influence (read the indictment). The defendants are alleged employees of Russia’s infamous GRU Main Intelligence Directorate. In addition, it is no surprise that the defendants purportedly used Bitcoin and other un-named cryptocurrencies to fund their illicit tactics. Bottom line: The goal of this campaign was to influence and undermine the credibility of US-based sports “anti-doping” entities including the US Anti-Doping Agency (USADA), which claims Russian illegally, allows doping among its athletes to boost their performance and stature. Cryptocurrencies, chief among them being Bitcoin, were the means used to fund these illegal actions. Why use cryptocurrencies? Two reasons emerge. First, the defendants are believed to have “mined” their own digital assets (akin to printing their own money). Second, the lack of transparency when acquiring computers and related infrastructure to implement their disinformation efforts to move public opinion in their favor. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Will a bug in Bitcoin’s software lead to double-spend exploits of Altcoins which use BTC’s public code?

Colleagues, a recent bug in Bitcoin’s public code has led to the illicit printing of some 235 million Pigeoncoins. Although Bitcoin has released a software patch which altcoins, exchanges and mining pools can install to mitigate this bug, the specter of crypto double-spend cyber-attacks looms large. Double spending is a problem unique to digital currencies because digital information can be reproduced with relative ease. Bitcoin transactions take some time to verify because the process involves intensive computational power and complex algorithms, which can be measured in seconds or milliseconds. Two fundamental questions emerge. First, just how many exchanges, pools and altcoins use BTC’s public code? Given the size, complexity and global diversity of the crypto ecosystem this question is almost impossible to answer. Second, how many of these crypto entities will expeditiously implement the software patch before cyber criminals can perform double-spend transactions? Sadly, this question is equally difficult to answer. When in doubt we once again offer our baseline guidance: Stay with established (aka Tier 1) currencies, exchanges and pools that typically have more comprehensive security measures in place. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)