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/)