A hacker stole $31M of Ether — how it happened, and what it means for Ethereum

Yesterday, a hacker pulled off the second biggest heist in the history of digital currencies.
Around 12:00 PST, an unknown attacker exploited a critical flaw in the Parity multi-signature wallet on the Ethereum network, draining three massive wallets of over $31,000,000 worth of Ether in a matter of minutes. Given a couple more hours, the hacker could’ve made off with over $180,000,000 from vulnerable wallets.
But someone stopped them.
Having sounded the alarm bells, a group of benevolent white-hat hackers from the Ethereum community rapidly organized. They analyzed the attack and realized that there was no way to reverse the thefts, yet many more wallets were vulnerable. Time was of the essence, so they saw only one available option: hack the remaining wallets before the attacker did.
By exploiting the same vulnerability, the white-hats hacked all of the remaining at-risk wallets and drained their accounts, effectively preventing the attacker from reaching any of the remaining $150,000,000.
Yes, you read that right.
To prevent the hacker from robbing any more banks, the white-hats wrote software to rob all of the remaining banks in the world. Once the money was safely stolen, they began the process of returning the funds to their respective account holders. The people who had their money saved by this heroic feat are now in the process of retrieving their funds.
It’s an extraordinary story, and it has significant implications for the world of cryptocurrencies.
It’s important to understand that this exploit was not a vulnerability in Ethereum or in Parity itself. Rather, it was a vulnerability in the default smart contract code that the Parity client gives the user for deploying multi-signature wallets.
This is all pretty complicated, so to make the details of this clear for everyone, this post is broken into three parts:

  1. What exactly happened? An explanation of Ethereum, smart contracts, and multi-signature wallets.
  2. How did they do it? A technical explanation of the attack (specifically for programmers).
  3. What now? The attack’s implications about the future and security of smart contracts.

If you are familiar with Ethereum and the crypto world, you can skip to the second section.

1. What exactly happened?

There are three building blocks to this story: Ethereum , smart contracts , and digital wallets .
Ethereum is a digital currency invented in 2013 — a full 4 years after the release of Bitcoin. It has since grown to be the second largest digital currency in the world by market cap — $20 billion, compared to Bitcoin’s $40 billion.
Like all cryptocurrencies, Ethereum is a descendant of the Bitcoin protocol, and improves on Bitcoin’s design. But don’t be fooled: though it is a digital currency like Bitcoin, Ethereum is much more powerful.
While Bitcoin uses its blockchain to implement a ledger of monetary transactions, Ethereum uses its blockchain to record state transitions in a gigantic distributed computer. Ethereum’s corresponding digital currency, ether, is essentially a side effect of powering this massive computer.
To put it another way, Ethereum is literally a computer that spans the entire world . Anyone who runs the Ethereum software on their computer is participating in the operations of this world-computer, the Ethereum Virtual Machine (EVM). Because the EVM was designed to be Turing-complete (ignoring gas limits), it can do almost anything that can be expressed in a computer program.
Let me be emphatic: this is crazy stuff . The crypto world is ebullient about the potential of Ethereum, which has seen its value skyrocket in the last 6 months.
The developer community has rallied behind it, and there’s a lot of excitement about what can be built on top of the EVM — and this brings us to smart contracts.
Smart contracts are simply computer programs that run on the EVM. In many ways, they are like normal contracts, except they don’t need lawyers or judges to interpret them. Instead, they are compiled to bytecode and interpreted unambiguously by the EVM. With these programs, you can (among other things) programmatically transfer digital currency based solely on the rules of the contract code.
Of course, there are things normal contracts do that smart contracts can’t — smart contracts can’t easily interact with things that aren’t on the blockchain. But smart contracts can also do things that normal contracts can’t, such as enforce a set of rules entirely through unbreakable cryptography.
This leads us to the notion of wallets . In the world of digital currencies, wallets are how you store your assets. You gain access to your wallet using essentially a secret password, also known as your private key ( simplified a bit ).
There are many different types of wallets that confer different security properties, such as withdrawal limits. One of the most popular types is the multi-signature wallet.
In a multi-signature wallet, there are several private keys that can unlock the wallet, but just one key is not enough to unlock it. If your multi-signature wallet has 3 keys, for example, you can specify that at least 2 of the 3 keys must be provided to successfully unlock it.
This means that if you, your father, and your mother are each signatories on this wallet, even if a criminal hacked your mother and stole her private key, they could still not access your funds. This leads to much stronger security guarantees, so multi-sigs are a standard in wallet security.
This is the type of wallet the hacker attacked.
So what went wrong? Did they break the private keys? Did they use a quantum computer, or some kind of cutting-edge factoring algorithm?
Nope, all the cryptography was sound. The exploit was almost laughably simple: they found a programmer-introduced bug in the code that let them re-initialize the wallet, almost like restoring it to factory settings. Once they did that, they were free to set themselves as the new owners, and then walk out with everything.

2. How did this happen?

What follows is a technical explanation of exactly what happened. If you’re not a developer, feel free to skip to the next section, since this is going to be programming-heavy.
Ethereum has a fairly unique programming model. On Ethereum, you write code by publishing contracts (which you can think of as objects), and transactions are executed by calling methods on these objects to mutate their state.
In order to run code on Ethereum, you need to first deploy the contract (the deployment is itself a transaction), which costs a small amount of Ether. You then need to call methods on the contract to interact with it, which costs more Ether. As you can imagine, this incentivizes a programmer to optimize their code, both to minimize transactions and minimize computation costs.
One way to reduce costs is to use libraries. By making your contract call out to a shared library that was deployed at a previous time, you don’t have to re-deploy any shared code. In Ethereum, keeping your code DRY will directly save you money.
The default multi-sig wallet in Parity did exactly this. It held a reference to a shared external library which contained wallet initialization logic. This shared library is referenced by the public key of the library contract.


// FIELDS
address constant _walletLibrary = 0xa657491c1e7f16adb39b9b60e87bbb8d93988bc3;

The library is called in several places, via an EVM instruction called DELEGATECALL , which does the following: for whatever method that calls DELEGATECALL , it will call the same method on the contract you’re delegating to, but using the context of the current contract. It’s essentially like a super call, except without the inheritance part. (The equivalent in JavaScript would be OtherClass.functionName.apply(this, args) .)
Here’s an example of this in their multi-sig wallet: the isOwner method just delegates to the shared wallet library’s isOwner method, using the current contract’s state:


function isOwner(address _addr) constant returns (bool) {
return _walletLibrary.delegatecall(msg.data);
}

This is all innocent enough. The multi-sig wallet itself contained all of the right permission checks, and they were sure to rigorously enforce authorization on all sensitive actions related to the wallet’s state.
But they made one critical mistake.
Solidity allows you to define a “fallback method.” This is the method that gets called when there’s no method that matches a given method name. You define it by not giving it a name:


function() {
// do stuff here for all unknown methods
}

The Parity team decided to let any unknown method that sent Ether to the contract just default to depositing the sent Ether.


function() payable {
// payable is just a keyword that means this method can receive/pay Ether


if (msg.value > 0) {
// just being sent some cash?
Deposit(msg.sender, msg.value);
} else {
throw;
}
}

But they took it a step further, and herein was their critical mistake. Below is the actual code that was attacked .


function() payable {
// just being sent some cash?
if (msg.value > 0)
Deposit(msg.sender, msg.value);
else if (msg.data.length > 0)
_walletLibrary.delegatecall(msg.data);
}

Basically:

  • If the method name is not defined on this contract…
  • And there’s no ether being sent in the transaction…
  • And there is some data in the message payload…

Then it will call the exact same method if it’s defined in _walletLibrary , but in the context of this contract.
Using this, the attacker called a method called initWallet() , which was not defined on the multisig contract but was defined in the shared wallet library:


function initWallet(address[] _owners, uint _required, uint _daylimit) {
initDaylimit(_daylimit);
initMultiowned(_owners, _required);
}

Which calls the initMultiowned method…


function initMultiowned(address[] _owners, uint _required) {
m_numOwners = _owners.length + 1;
m_owners[1] = uint(msg.sender);
m_ownerIndex[uint(msg.sender)] = 1;
for (uint i = 0; i < _owners.length; ++i)
{
m_owners[2 + i] = uint(_owners[i]);
m_ownerIndex[uint(_owners[i])] = 2 + i;
}
m_required = _required;
}

Do you see what just happened there? The attacker essentially reinitialized the contract by delegating through the library method, overwriting the owners on the original contract. They and whatever array of owners they supply as arguments will be the new owners.
Given that they now control the entire wallet, they can trivially extract the remainder of the balance. And that’s precisely what they did.
The initWallet: https://etherscan.io/tx/0x707aabc2f24d756480330b75fb4890ef6b8a26ce0554ec80e3d8ab105e63db07
The transfer: https://etherscan.io/tx/0x9654a93939e98ce84f09038b9855b099da38863b3c2e0e04fd59a540de1cb1e5
So what was ultimately the vulnerability? You could argue there were two. First, the initWallet and initMultiowned in the wallet library were not marked as internal (this is like a private method, which would prevent this delegated call), and those methods did not check that the wallet wasn’t already initialized. Either check would’ve made this hack impossible.
The second vulnerability was the raw delegateCall . You can think of this as equivalent to a raw eval statement, running on a user-supplied string. In an attempt to be succinct, this contract used metaprogramming to proxy potential method calls to an underlying library. The safer approach here would be to whitelist specific methods that the user is allowed to call.
The trouble, of course, is that this is more expensive in gas costs (since it has to evaluate more conditionals). But when it comes to security, we probably have to get over this concern when writing smart contracts that move massive amounts of money.
So that was the attack.
It was a clever catch, but once you point it out, it seems almost elementary. The attacker then jumped on this vulnerability for three of the largest wallets they could find — but judging from the transaction times, they were doing this entirely manually.
The white-hat group was doing this at scale using scripts, and that’s why they were able to beat the attacker to the punch. Given this, it’s unlikely that the attacker was very sophisticated in how they planned their attack.
You might ask the question though — why don’t they just roll back this hack, like they did with the DAO hack ?
Unfortunately that’s not really possible. The DAO hack was unique in that when the attacker drained the DAO into a child DAO, the funds were frozen for many days inside a smart contract before they could be released to the attacker.
This prevented any of the stolen funds from going into circulation, so the stolen Ether was effectively siloed. This gave the Ethereum community plenty of time to conduct a public quorum about how to deal with the attack.
In this attack, the attacker immediately stole the funds and could start spending them. A hard fork would be impractical–what do you do about all of the transactions that occur downstream? What about the people who innocently traded assets with the attacker? Once the ether they’ve stolen gets laundered and enters general circulation, it’s like counterfeit bills circulating in the economy — it’s easy to stop when it’s all in one briefcase, but once everyone’s potentially holding a counterfeit bill, you can’t really turn back the clock anymore.
So the transaction won’t get reversed. The $31M loss stands. It’s a costly, but necessary lesson.
So what should we take away from this?

3. What does this attack mean for Ethereum?

There are several important takeaways here.
First, remember, this was not a flaw in Ethereum or in smart contracts in general. Rather, it was a developer error in a particular contract.
So who were the crackpot developers who wrote this? They should’ve known better, right?
The developers here were a cross-collaboration between the Ethereum foundation (literally the creators of Ethereum), the Parity core team, and members of the open-source community. It underwent extensive peer review. This is basically the highest standard of programming that exists in the Ethereum ecosystem.
These developers were human. They made a mistake. And so did the reviewers who audited this code.
I’ve read some comments on Reddit and HackerNews along the lines of: “What an obvious mistake! How was it even possible they missed this?” (Ignoring that the “obvious” vulnerability was introduced in January and only now discovered.)
When I see responses like this, I know the people commenting are not professional developers. For a serious developer, the reaction is instead: damn, that was a dumb mistake. I’m glad I wasn’t the one who made it.
Mistakes of this sort are routinely made in programming. All programs carry the risk of developer error. We have to throw off the mindset of “if they were just more careful, this wouldn’t have happened.” At a certain scale, carefulness is not enough.
As programs scale to non-trivial complexity, you have to start taking it as a given that programs are probably not correct. No amount of human diligence or testing is sufficient to prevent all possible bugs. Even organizations like Google or NASA make programming mistakes, despite the extreme rigor they apply to their most critical code.
We would do well to take a page from site reliability practices at companies like Google and Airbnb. Whenever there’s a production bug or outage, they do a postmortem analysis and distribute it within the company. In these postmortems, there is always a principle of never blaming individuals .
Blaming mistakes on individuals is pointless, because all programmers, no matter how experienced, have a nonzero likelihood of making a mistake. Instead, the purpose of a postmortem is to identify what in the process allowed that mistake to get deployed.
The problem was not that the developer forgot to add internal to the wallet library, or that they did a raw delegateCall without checking what method was being called.
The problem is that their programming toolchain allowed them to make these mistakes.
As the smart contract ecosystem evolves, it has to evolve in the direction of making these mistakes harder, and that means making contracts secure by default.
This leads me to my next point.
Strength is a weakness when it comes to programming languages. The stronger and more expressive a programming language is, the more complex its code becomes. Solidity is a very complex language, modeled to resemble Java.
Complexity is the enemy of security . Complex programs are more difficult to reason about and harder to identify edge cases for. I think that languages like Viper (maintained by Vitalik Buterin) are a promising step in this direction. Viper includes by default basic security mechanisms, such as bounded looping constructs, no integer overflows, and prevents other basic bugs that developers shouldn’t have to reason about.
The less the language lets you do, the easier it is to analyze and prove properties of a contract. Security is hard because the only way to prove a positive statement like “this contract is secure” is to disprove every possible attack vector: “this contract cannot be re-initialized,” “its funds cannot be accessed except by the owners,” etc. The fewer possible attack vectors you have to consider, the easier it is to develop a secure contract.
A simpler programming model also allows things like formal verification and automatic test generation. These are areas under active research, but just as smart contracts have incorporated cutting-edge cryptography, they also should start incorporating the leading edge of programming language design.
There is a bigger lesson here too.
Most of the programmers who are getting into this space, myself included, come from a web development background, and the blockchain toolchain is designed to be familiar for web developers. Solidity has achieved tremendous adoption in the developer community because of its familiarity to other forms of programming. In a way, this may end up being its downfall.
The problem is, blockchain programming is fundamentally different from web development .
Let me explain.
Before the age of the client-server web model, most programming was done for packaged consumer software or on embedded systems. This was before the day of automatic software updates. In these programs, a shipped product was final — you released one form of your software every 6 months, and if there was a bug, that bug would have to stand until the next release. Because of this longer development cycle, all software releases were rigorously tested under all conceivable circumstances.
Web development is far more forgiving. When you push bad code to a web server, it’s not a big deal if there’s a critical mistake — you can just roll back the code, or roll forward with a fix, and all is well because you control the server. Or if the worst happens and there’s an active breach or a data leak, you can always stop the bleeding by shutting off your servers and disconnecting yourself from the network.
These two development models are fundamentally different. It’s only out of something like web development that you can get the motto “move fast and break things.”
Most programmers today are trained on the web development model. Unfortunately, the blockchain security model is more akin to the older model.
In blockchain, code is intrinsically unrevertible. Once you deploy a bad smart contract, anyone is free to attack it as long and hard as they can, and there’s no way to take it back if they get to it first. Unless you build intelligent security mechanisms into your contracts, if there’s a bug or successful attack, there’s no way to shut off your servers and fix the mistake. Being on Ethereum by definition means everyone owns your server.
A common saying in cybersecurity is “attack is always easier than defense.” Blockchain sharply multiplies this imbalance. It’s far easier to attack because you have access to the code of every contract, know how much money is in it, and can take as long as you want to try to attack it. And once your attack is successful, you can potentially steal all of the money in the contract.
Imagine that you were deploying software for vending machines. But instead of a bug allowing you to simply steal candy from one machine, the bug allowed you to simultaneously steal candy from every machine in the world that employed this software. Yeah, that’s how blockchain works.
In the case of a successful attack, defense is extremely difficult. The white-hats in the Parity hack demonstrated how limited their defense options were — there was no way to secure or dismantle the contracts, or even to hack back the stolen money; all they could do was hack the remaining vulnerable contracts before the attacker did.
This might seem to spell a dark future.
But I don’t think this is a death knell for blockchain programming. Rather, it confirms what everyone already knows: this ecosystem is young and immature. It’s going to take a lot of work to develop the training and discipline to treat smart contracts the way that banks treat their ATM software. But we’re going to have to get there for blockchain to be successful in the long run.
This means not just programmers maturing and getting more training. It also means developing tools and languages that make all of this easier, and give us rigorous guarantees about our code.
It’s still early. Ethereum is a work in progress, and it’s changing rapidly. You should not treat Ethereum as a bank or as a replacement for financial infrastructure. And certainly you should not store any money in a hot wallet that you’re not comfortable losing.
But despite all that, I still think Ethereum is going to win in the long run. And here’s why: the developer community in Ethereum is what makes it so powerful .
Ethereum will not live or die because of the money in it. It will live or die based on the developers who are fighting for it.
The league of white-hats who came together and defended the vulnerable wallets didn’t do it for money. They did it because they believe in this ecosystem. They want Ethereum to thrive. They want to see their vision of the future come true. And after all the speculation and the profiteering, it’s ultimately these people who are going to usher the community into its future. They are fundamentally why Ethereum will win in the long run—or if they abandon Ethereum, their abandonment will be why it loses.
This attack is important. It will shake people up. It will force the community to take a long, hard look at security best practices. It will force developers to treat smart contract programming with far more rigor than they currently do.
But this attack hasn’t shaken the strength of the builders who are working on this stuff. So in that sense it’s a temporary setback.
In the end, attacks like this are good for the community to grow up. They call you to your senses and force you to keep your eyes open. It hurts, and the press will likely make a mess of the story. But every wound makes the community stronger, and gets us closer to really deeply understanding the technology of blockchain — both its dangers, and its amazing potential.
P.S. If you’re a dev and you want to learn more about smart contract security, this is a really good resource.
Errata: This article originally said that Gavin Wood was the developer of the contract, which is incorrect. Gavin is the founder of Parity and pushed the fix to the contract, but was not the original developer. It also originally claimed that $77M additional funds were vulnerable, but this doesn’t count all of the ERC20 (ICO) tokens that were vulnerable. The total amount is actually $150,000,000+ if you include all ERC20 tokens. As of the time of writing this (July 21st 4PM EST), the total value of the assets saved by the white-hats was $ 179,704,659.

This content was originally published here.

Crypto Discussions at Highest Level: The OECD’s Love of Blockchain Obscures Its Fear of Bitcoin

For several years now, the Organization for Economic Co-operation and Development (OECD) has been cautiously enthusiastic about blockchain technology. Beginning with a 2014 working paper titled, “The Bitcoin Question” the intergovernmental organization has been considering the economic possibilities opened up by distributed ledgers and cryptocurrencies — and, on the whole, it has found these possibilities exciting, even if such working papers “do not necessarily reflect the official views of the Organization or of the governments of its member countries.”

But for the most part, reports on “Blockchain Technology and Competition Policy” and “Corporate Governance” — among other subjects — have struck a largely ‘wait-and-see’ tone. They’ve outlined the areas in which distributed ledger technology (DLT) could potentially offer innovations, yet they’ve also affirmed that institutions should acquire a more complete understanding of DLT and how it works before integrating it into their operations. As June’s report on corporate governance concluded, “it may be worth exploring” is the kind of phrase often encountered in such analyses.

However, this preliminary phase in the OECD’s standoffish evaluation of DLTs is drawing to a close. On Sept. 4 and 5, it held its first-ever Blockchain Policy Forum in Paris, where a range of public officials and private leaders came together to meet, to network and, most importantly, to explore just how blockchain technology is being and will be used by businesses and governments. Over the course of the two-day conference, scores of delegates presented a wide variety of use cases of DLTs, from self-sovereign identity to competition law. And in the process, they began to map a way forward for those organizations that have entertained the notion of trialing blockchain tech without actually taking that all-important first step.

Bitcoin for central bankers

The OECD’s first foray into reports and policy recommendations regarding blockchain came with its June 2014 working paper, “The Bitcoin Question: Currency Versus Trust-Less Transfer Technology.” Like many traditional institutions that represent the mainstream global economy, the general position expressed by the report’s author was that Bitcoin is “volatile” and has “an important scalability problem,” and that “a raison d’être for Bitcoins is to carry out illegal activities.”

But as has been seen with such Bitcoin-detractors as, say, Mark Carney and Yanis Varoufakis, the report also sung the praises of the blockchain — as it referred to the underlying protocol. According to author Adrian Blundell-Wignall, the special advisor to the OECD secretary-general on financial markets:

“[The blockchain] is the key innovation in this technology — that is, a technology that removes the need for a trusted third party and the intermediary costs associated with such institutions (banks, credit card companies, payment companies, non-bank financial intermediaries).”

Expanding on the theme of disintermediation, the working paper surveyed the different benefits blockchain technology — rather than Bitcoin — could deliver for businesses, institutions and the global economy more generally. Blundell-Wignall wrote, noting that the imposition of regulation may increase costs for crypto exchanges and other blockchain-based service providers:

“This technology has the potential to reduce transactions costs for retail spending with credit cards, e-commerce costs and money transfers. But such companies are intermediaries too, and it should not be forgotten that competition in the cryptocurrency world is fierce, and new decentralized technology innovations may reduce costs dramatically.”

Having noted the scalability issues Bitcoin encountered at the time (but which are now being addressed), the paper’s author extolled Ripple as an example of a DLT-based system that enables banks to transfer remittances at a fraction of the usual cost and of the usual speed. And while it acknowledged that Ripple may not be the “ultimate winner” in the cryptocurrency race, it concluded by advising the OECD’s member states to seriously consider looking at comparable, less decentralized blockchain-based technologies.

“Policymakers do need to focus on how to ensure that the new technologies operate in the most socially-useful way. That is, it should be possible to make use of a new technology to facilitate the medium-of-exchange transporter and ledger functions and increase competition in financial services, while eliminating the ‘anonymity’ problems [of certain cryptocurrencies].”

Which blockchain?

In sum, the working paper recommended blockchains that don’t attempt to usurp the power of governments and central banks over a nation’s money supply, but that still retain certain aspects of Bitcoin’s transparency and efficiency. And since then, succeeding reports and papers from the OECD have elaborated on this blockchain-friendly approach, with more recent documents outlining particular applications of DLTs.

In June, the Directorate for Financial and Enterprise Affairs Competition Committee published an issue paper that outlined the implications blockchain tech would have for competition policy and regulation. As with virtually every other report published by or on behalf of the OECD, almost half of the paper dedicated itself to introducing just what ‘the blockchain’ is, offering an indication of how public bodies are still very much in the early stages of their flirtation with DLT. It goes, as if a sizeable proportion of its readers have never heard of either Bitcoin or blockchains before:

“The most prominent example of a blockchain thus far is Bitcoin. Bitcoin is a non-permissioned or public blockchain, meaning that there is no restriction on who can spend Bitcoin or take part in verifying the authenticity of blocks of transactions in the blockchain (an energy intensive process known as ‘mining’).”

To be fair, despite retreading what must be very familiar ground for anyone who’s even glanced at a technology website in the past couple of years, the paper does go on to examine how competition policy will have to be updated in view of blockchain adoption. In particular, it highlighted the need of a public debate on whether competition authorities should be given access to blockchains in order to police markets and corporations.

“This might enable them to monitor trading prices in real-time, spot suspicious trends, and, when investigating a merger, conduct or market, have immediate access to the necessary data without needing to impose burdensome information requests on parties.”

Interestingly, it also underlined the possibility of blockchains being used by companies to collude or “tacitly coordinate” in a way that hurts competition, perhaps by enabling members of a trade cartel to know when another member has failed to comply with the terms of the cartel, and by enabling the cartel to mete out punishment accordingly — possibly by the use of smart contacts. The report’s author, Antonio Capobianco, wrote:

“The potential transparency offered by a market-wide blockchain might also help firms in oligopolistic markets to coordinate tacitly without any direct or indirect contact, or any agreement to do so. Might full access to observe a market-wide blockchain constitute a ‘plus-factor’ that competition authorities might consider to suggest that parallel conduct was the result of coordination among the parties?”

The paper also placed specific attention on the use of blockchain to facilitate anti-competitive behavior, on monopolies in the cryptocurrency industry — e.g., companies, crypto exchanges — on setting technical standards, and on ensuring competitive neutrality in the face of subsidies for blockchain adoption. Together, such a focus reveals that the OECD has begun to grapple with how blockchain technology will affect businesses, national economies and international trade. And even if it didn’t attempt to address how any of this would be achievable on a technical level, it treats the widespread adoption of blockchain tech as if it were an inevitability, something which any startup or corporation working within the industry must welcome as an encouraging vote of confidence.

It’s not only reports and working papers that the OECD has produced with respect to blockchains. In March, its director of financial and enterprise affairs, Greg Medcraft, delivered a presentation at the OECD Friends of Going Digital Meeting in Paris. Titled, “The OECD and the Blockchain Revolution,” it urged policymakers to be “proactive and forward-looking” in how they treat blockchain from a regulatory standpoint, and to work closely with “key stakeholders” — i.e., people and groups within the industry — on drafting appropriate standards and laws. “This will help us avoid regulatory knee-jerk reactions and resist the temptation to jump in before we properly understand developments,” Medcraft explained, while still cautioning his audience on “high-profile theft of assets like Bitcoin, and scam Initial Coin Offerings.”

And aside from policy recommendations, blockchain technology has received indirect support from the OECD by way of appearing in its “Embracing Innovation in Government” reports for 2017 and 2018. In its 2017 edition, for instance, it reported on the use of blockchain-based in the Colombian 2016 peace referendum (related to the end of the conflict between the national government and the Revolutionary Armed Forces of Colombia—People’s Army [FARC] rebels).

“[The] tech nonprofit Democracy Earth Foundation set up a digital process that allowed Colombian expats, who were unable to vote through the official process, an opportunity to participate in a plebiscite on whether to approve a peace treaty. This process raised interesting questions for governments about the future use of blockchain in electoral processes, and in the public sector more broadly, and could potentially lead to new ways to ensure the integrity of the election process.”

In much the same way, other reports issued this year take a generally positive attitude toward DLT. In “Blockchain Technology and Corporate Governance” (also published in June), the author — Vedat Akgiray, professor of finance at Bogazici University — focuses on how DLT is likely to make corporate governance more accountable and efficient.

“All users on the network can see trading by managers, activists and corporate raiders. Legal insider trading channels are no longer needed. Disguised derivatives hedging, backdating and similar undesirable actions are almost impossible on a blockchain network.”

In another working paper from June, “Blockchain Technology and Its Use in the Public Sector,” Jamie Berryhill, Théo Bourgery and Angela Hanson — all present or former members of the OECD’s Observatory of Public Sector Innovation — argue that blockchain technology has the potential to increase automation, efficiency and knowledge within the public sector. In particular, the authors note “at least 46 countries around the world have launched or are in the planning stages to launch over 200 blockchain-related initiatives.”

This is another encouraging seal of approval for the adoption of DLT — and to further reinforce this point, the authors run through many of the specific areas in which blockchains are witnessing usage, writing:

“Just about every area of the public sector could benefit from blockchains in some way.”

According to the paper, these areas include , , financial services and banking, land title registry, supply chain management and logistics, benefits, public energy utilities, contractor management, , , fraud detection, and facilitating interagency operations.

The report is perhaps the most positive and encouraging the OECD has produced to date, not least because it was written by employees of the organization — rather than by outside experts who may not reflect its views. In its conclusion, its authors state:

“In the future, centralized authorities could become increasingly irrelevant in the context of blockchain technologies, or their role could shift to providing a platform and governance for decentralized services rather than being at the centre of every transaction. It is imperative that the public service builds its knowledge in this area and consider its possible applications and how it may affect its role.”

The Blockchain Policy Forum

But while such reports find the OECD taking the step of addressing specific areas in which blockchain tech can be applied, two points of caution need to be made. Firstly, these papers are still often written in decidedly general and preliminary terms: The corporate governance report, for example, failed to name any single blockchain that can or could deliver the kinds of benefits it outlined in its conclusion, while none of the above documents attempted to unpack the different types of distributed ledger — e.g., permissionless or permissioned, (PoW) or (PoS) — and explain which ones might be useful for certain functions. Similarly, the conclusion of the public sector paper offers the familiar reminder that blockchains still need “to be understood in order to understand the potential solutions to a range of challenges.”

Secondly, these reports are also fairly limited in their number, in that only four such papers have been published by the OECD this year, with each handling a limited area of application. And given that the OECD has the power only to issue model tax conventions, policy recommendations and research papers, its reports have no legal weight or official force whatsoever with respect to its member states.

However, the beginning of this month marked something of a turning point for how the OECD regards blockchain tech. On Sept. 4 and 5, it held its inaugural Blockchain Policy Forum — which, as the name suggests, had the aim of discussing the best practices and constructive policies related to the use of DLTs. Accordingly, it kicked off with a ‘high-level’ talk on how blockchain tech can be harnessed to produce ‘better policies,’ with OECD Secretary General Angel Gurría providing the opening remarks, in which he stressed the need for international cooperation and alignment on how blockchain technologies are developed, used and regulated.

“Blockchain is a tool. And the idea is, to what extent can we make the tool a standard so that, when it is a generally accepted standard, it can then become part of the regulatory process — therefore mandatory in the regulations, so that it can serve the policy purposes better.”

Yet, as Gurría quickly made clear, the OECD’s enthusiasm for blockchains does not extend so far as believing that DLT is likely to supplant the role of governments and of international institutions such as itself:

“But let’s not confuse what this is about: Again, the role of government is in setting the policy, and then seeing what they absorb into the regulations, what tools they absorb into the regulations. That is the role of government and it cannot be substituted. But once you [introduce blockchain], once you have it as a standard and you start applying it, then of course it just goes on and on and on. It just keeps giving.”

Put differently, the OECD regards blockchain as a technology governments can exploit to improve their efficiency, rather than a technology that might conceivably make governments — or at least certain governmental functions — redundant. Still, even if the vast majority of the speakers and guests at the Forum were united with Angel Gurría on this point, they nonetheless had plenty of encouraging things to say about blockchain tech, with many speakers citing multiple examples of how DLTs are already being used throughout the globe. Similarly, many spoke about how the governments they represent had already taken decisive action to foster the development of the blockchain industry, while some had even worked to nurture cryptocurrencies as well.

“Now, with the emergence of distributed ledger technology and digital assets, Bermuda is once again demonstrating its ability to be a center of innovation,” said David Burt, the Premier of Bermuda, during his speech on Tuesday morning. “As the first country anywhere to introduce comprehensive ICO and digital asset business legislation, Bermuda aims to be a model for the world […] Over the past nine months, we have delivered the first phase, which includes a robust compliance environment, with bespoke legislation for ICOs, digital asset service providers, and the banking of digital assets in Bermuda. Our legislation is designed to provide clarity, certainty and consistency, with protections for investors, consumers and service providers.”

David Burt, the Premier of Bermuda

Such positive statements were common, with the prime minister of Serbia, Ana Brnabić, as well as the state secretary of Slovenia, Tadej Slapnik, also explaining to the assembled audience how their respective nations had already begun benefiting from the emergence and harnessing of DLT and crypto. However, as the first day progressed, this initial mood of optimism was tempered with qualifications regarding the limits of what blockchain tech could do, and regarding the legitimacy of Bitcoin and other cryptocurrencies. During a Q&A discussion David Burt said:

“The challenge is that there [are] so many people who actually believe that this is a technology that can be used for bad. And the question is how do you change that from a policy perspective, to make sure that it’s something that can be used for good? And I think that’s the most important thing that can come out of the policy discussions which we’re having, is to get us to a place where that mindset can begin to change, and people can start talking about not Bitcoin, but can start talking about the different type of applications that can make lives better.”

Despite the general excitement surrounding blockchain tech, this kind of cryptocurrency stigmatization was common. During the “Blockchain at the Frontier of Trust” session on the first day, the moderator, President of the Chamber of Digital Commerce Perianne Boring, asked the audience to participate in a poll, in which attendees were asked to respond with the percentage of Bitcoin transactions they believed were ‘illicit.’ As the image below reveals, 57 percent of the audience believed that anything from 1 percent — 25 percent of BTC transactions are for illegal purposes. Meanwhile, 17 percent and 10 percent of the audience went for 25 percent — 50 percent and 50 percent  — 75 percent, respectively. Only 13 percent of the audience went for 1 percent or less, which Boring revealed was the correct answer, indicating the gulf between perception and reality — even among ‘enlightened’ leaders and experts — when it comes to crypto.

Indeed, during the “Blockchain and Economics: Global Impacts” speeches, Lord Meghnad Desai — the Emeritus Professor of Economics at the London School of Economics — presented the familiar argument that Bitcoin is not money. In fact, Desai also blamed the cryptocurrency for sowing public confusion and concern with regard to blockchains.

“I think calling the very first cryptocurrency ‘Bitcoin,’ was really very harmful, because it looked like it was money, but it’s not money. Money has to be a means of payment, and a unit of account, and a store of value. It is just a store of value. It’s not a means of payment; it’s a very expensive means of payment, and it’s an uncertain store of value. So now that we call [cryptocurrencies] ‘tokens,’ had originally Bitcoin been called a ‘ZenToken,’ which I think is my favorite word for Bitcoin, nobody would have bothered, nobody would have had these fears about blockchains and all these specters.”

Given this semi-hostility toward Bitcoin and other cryptocurrencies, it was unsurprising to find that the prevailing definitions of ‘the blockchain’ largely detached it from the kinds of decentralized ledger on which currencies such as Bitcoin are based.

“So there are technical differences, but in general parlance, we generally talk about the blockchain industry as a blanket term that includes distributed ledgers. Blockchains are a subset of distributed ledgers, the key difference being, instead of updating the decentralized ledger transaction by transaction, they do it almost in a batch process […] When people talk about blockchain or they talk about DLT, they really do so, at least in a general business purposes, as [two things] that are synonymous.”

Here, R3’s MD Charley Cooper underlined how the OECD and many of its invited guests tend to regard permissioned, even largely centralized ledgers as equivalent to decentralized, permissionless blockchains.

No panacea

Even forgetting the overly negative perception of cryptocurrencies at certain points, there was still a general, sober recognition running throughout the Forum that DLT won’t be a panacea for the all world’s ills. Correspondingly, there was also the recognition that it won’t completely live up to some of its unique selling points, such as its ability to create ‘trustless’ relationships, systems and/or networks.

“The ledger itself, or the applications that are built on top of it, allow various types of business activity or other activities to be conducted without a middle person, without a third party,” explained Charley Cooper. “That is trustless. However, trust doesn’t disappear […] you do need to trust the software and you need to trust the people that built it […] when you, as an entity, are trying to decide whether or not to deploy an application or deploy a blockchain solution within your organization, it’s not totally trustless in the sense that you need to be comfortable with the software itself, that it was built appropriately, and that it was built to the specifications that you need for your entity.”

Still, while the first day was characterized by a wide-lensed perspective on DLT that regarded it with cautious enthusiasm, the second day saw a higher number of panels and talks that specifically addressed particular applications of blockchains. From health, migration, development, SME financing and water to transport, energy, agriculture and infrastructure, the second day witnessed multiple parallel discussions, and each offered clear examples of how blockchain technology is primed to solve important problems.

“We started with 100 people, six months later we had 10,500 people, another six months after that we had over 100,000 people on the system,” explained Bernhard Kowatsch of the World Food Program, which began an initiative last year to use DLT to process cash-for-food payments to refugees. “Now, with the 100,000 people that we already have on the system, up until now we have processed more than $23 million through the blockchain system so far. Which means it’s no longer a smallish kind of thing; obviously we take this very seriously.”

And even though the first-ever Blockchain Policy Forum didn’t produce any concrete guidelines or proposals on how businesses, institutions and nations should work with DLT, the fact that it has taken place is an important step for blockchain technology. By providing a platform through which groups and institutions were able to explain how they’ve successfully used blockchains to improve their operations and services, the OECD has made it much likelier that other groups and institutions will follow in their wake. And with the idea and practice of blockchain spreading, the prospect of positive standards being introduced by the OECD and other governmental — or intergovernmental — organizations moves closer, as does that of increasing blockchain adoption more broadly.

This content was originally published here.

Bitcoin’s Theoretical Price Ceiling Is Now $100k Per Coin – Bitcoin USD (Cryptocurrency:BTC-USD)

Introduction

The question of if a floor exists in the price of Bitcoin ()()(OTCQX:GBTC), and if so, what is that figure, has become a hot topic recently.

I would argue that the floor is determined by the probability of finding a gap between the fundamentals and the price. In other words, how many standard deviations below or above the price target are we at now? Any number is possible, but the extremely low and extremely high are both very rare, and therefore much less likely to occur. That’s the best we can do with the price floor. Watch the fundamentals and the rest is statistics.

However, the price ceiling is different. This is because we know there is a strong relationship between network activity and the price. To put it more succinctly, the more network activity we have, the higher the price. But, there are limits to network throughput, and this puts a lid on the price in the short to medium term.

We have seen this limit tested recently, when the Bitcoin blocks filled up. This gave us the upper limit on the maximum number of daily transactions that people were willing to pay, because of the price of the fees. I would call this the “soft limit” because you could squeeze more out of it, but it’s just not practical because it’s expensive.

The soft limit and the hard limit change over time as new technology comes online, such as SegWit, Schnorr Signatures, and The Lightning Network.

Network Fees and Bitcoin Price

Near the end of 2017 and the beginning of 2018, we tested the soft limits of the Bitcoin network. The high price for Bitcoin was around $19,475 on December 17th, 2017. The average fee was $62.50 on December 22nd, just five days later.

The price is the red line (left axis), and the fees are the red shaded area (right axis). See below:

Image Source:

The high number in daily transactions took place on December 13th, 2017, which was four days before the peak price.

Image Source: blockchain.com

Now, what’s changed since then? Well, the price has gone down, but also we have new technology online. SegWit is the biggest change, so let’s look at that real quick to refresh our memory. Below is a chart showing SegWit adoption.

Image Source:

SegWit was active during the last bubble, but only 12.5% of the network was using it at the time. Just in the last couple weeks, we had a spike over 53%, and the trend is clearly pointed upwards.

Recall that SegWit changes the maximum block size calculation by swapping out block size for block weight. The more SegWit transactions are used, the larger the block can become, up to a maximum of around 4MB, which is 4 times the current block size. So, speaking in theoretical best-case-scenario terms, 100% SegWit adoption would enable the Bitcoin network to process 4x as many transactions per day.

If we take the max daily transactions from last year, 490k, and SegWit was being used around 12.5%, that means we were already receiving a 50% daily TX increase from the technology back then. Today, we could get a benefit of 212% from this upgrade.

The maximum number of daily transactions (soft limit) without SegWit is around 327k per day. With adoption levels around 53% as of this month, this puts the daily maximum number of transactions at 693k per day.

Now, stick with me because the number of daily transactions and the price in log scale are highly correlated. Earlier this year, we saw the price/predicted using this model hit a Z-score of over 5.

For that to happen today, the network would have to hit its maximum throughput of 693k transactions per day, and then the price would explode through the roof and top out around $100k per bitcoin before the high fees caused another price collapse.

If you’re a spreadsheet junkie and you want to follow along, these are the steps you would follow:

  1. Take the maximum network throughput of 693k daily transactions today (327k daily transactions plus 53% of a 400% increase from SegWit).
  2. Take the log base ten of that number, which is 5.8407.
  3. The predicted “fair price” (a Z-score near zero) at this level of activity would be $7,420, based off regression analysis of the price and number of daily transactions going back to 2010.
  4. The highest Z-score of price/predicted this year was just over 5, the highest price over predicted was just over 13.
  5. In order to find the equivalent price in terms of Z-score, find a number that generates a Z-score, by determining what ratio of price/predicted gives you a value slightly over 13 (which was the highest recorded this year).
  6. That figure in log scale is very close to 5.
  7. Convert 5 back into linear scale, and you get $100,000.

You should see something like this when you run the regression of log price and log daily transactions.

Image Source: Author’s Regression Analysis

When you plot the Z-scores over time, you should see something that looks like this:

Image Source: Author’s charts

What we’re essentially doing here is re-creating a bubble by rewinding history, and then mapping those findings onto today. Will there actually be a speculative bubble today, or next week? Probably not, but remember this is just an exercise to see if it did happen, what would the maximum price be; the price ceiling (in this case the soft limit).

Image Source: Author’s Excel Worksheet

Max Price and Actual Price (Year to Date)

I looked at the number of transactions per day that could be processed by the Bitcoin network, and then attempted to find the theoretical maximum number of transactions if we added in the gains from SegWit. Then, I mapped that value along with the current price divided by the max price. This was the result.

Image Source: Author’s Charts

Here we’re looking at max capacity in terms of the hard limit. Using this method, it appears that the maximum price on January 1st would be somewhere around $45k per Bitcoin. However, when we add in the extra capacity and compare it with where we are now, today’s price seems to be quite a bargain, hovering around 6% of the maximum we might expect with peak usage and the FOMO premium added on top.

Conclusion

The price of Bitcoin is strongly correlated with the network activity. You can think of this in terms of value transmitted, number of users, number of transactions, or any other way if you can find a good data source and justify your reasoning.

If the network usage exceeds, or even nears its peak capacity, fees will spike and drive people away. This is what happened in the last bubble when the network could not sustain the rapid growth.

As the network gets upgraded, a higher theoretical price becomes possible. However, since the price can also be very volatile, the price at any given point is not likely to be the exact value we predict. Therefore, using a statistical model to find probability of distance from the mean seems to make the most sense.

This article was first released to members of Crypto Blue Chips, along with other research that can’t be found anywhere else (such at the BVIPE).

Disclosure:I am/we are long BTC-USD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This content was originally published here.

Now You Can Buy Mariah Carey and G-Eazy Albums With Monero

A group of well-known musicians including Mariah Carey, Marilyn Manson and more has begun accepting the privacy-oriented cryptocurrency monero.

The list of more than 40 top recording artists – Slayer, Weezer, G-Eazy, Sia and Fallout Boy are among those also included – comes as part of “Project Coral Reef,” which was put together by entrepreneur Naveen Jain and monero lead maintainer Riccardo “Fluffypony” Spagni. The online shopping initiative lets users buy albums and merchandise at a discounted cost, including 15% reductions on items from Carey’s store as well as those for Mötorhead, Alice Cooper and others.

Backing up the initiative are Manhead Merchandise and Global Merchandise Services, both of which provide merchandising services for a range of musical artists. Payment processing service GloBee, which counts Spagni as its founder and CEO, is handling the crypto-payment side of the initiative.

“As cryptocurrencies become more popular, it’s important that my fans have choices when it comes to how they buy my songs and merchandise. Given Monero is one of the safest, most secure and most private cryptocurrencies, it’s one of the best options for my fans this holiday season — and just in time for my new album,” rapper G-Eazy said in a statement.

The news represents a decidedly mainstream moment for monero, which was one of 2016’s top-performing cryptocurrencies. And while some in the law enforcement world have cited monero’s privacy-enhancing features as ,a concern the cryptocurrency’s public market has continued attracting interest. As of this morning, XMR was trading at roughly $224 with a market capitalization of roughly $3.4 billion, according to data from CoinMarketCap.

Those behind the Project Coral Reef project are betting that the currency’s privacy features will make it more attractive for mainstream users, particularly in light of major data breaches like the one reported by Equifax earlier this year.

“Cryptocurrencies are fast becoming more popular to make purchases, but not all currencies are created equal and not all are as private and secure as people think. Project Coral Reef is a very important step towards the mainstream adoption of Monero,” Spagni said in a statement.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

This content was originally published here.

Thailand Emerges as Leading Blockchain Economy

Thailand is setting itself apart from other nations when it comes to blockchain and cryptocurrency. The South Asian nation is on track to have one of the world’s first Central Bank Digital Currencies (CBDC), and has already legalized the use of major cryptos within Thai borders. Many nations are supporting blockchain development, but Thailand is a relative rarity in their openness to cryptocurrency.

Bitcoin, Ethereum, Bitcoin cash, Ethereum classic, Litecoin, Ripple, and Stellar are all fully legal in Thailand. In addition to this, Thailand has created a definitive regulatory process for new ICO’s, which is helpful for investors who are growing wary of possible malfeasance in the burgeoning ICO market.

Totally unregulated markets can be problematic for investor confidence, and it looks like Thailand has pulled ahead of the pack in broad-based crypto regulation.

There is still a big gap between what cryptocurrency and blockchain are capable of doing for society, and what they are actually being used for. In the real world. The ASEAN region has been a leading force in blockchain development, and when neighbors like Japan, South Korea and China are added to the mix, it is easy to see why blockchain is a rising force in the broader Asian economy.

Thailand is Implementing Blockchain Technology

Contents

  • The Open Market

It isn’t hard to find a myriad of blockchain and cryptocurrency companies that are working on big ideas that may or may not be commercially successful. In Thailand, there are a few real-world use cases that are important to watch. One of the most widely known projects is the Thai Central Bank’s (Bank of Thailand (BoT) emerging CBDC, which is being built from R3’s Corda blockchain.

The BoT is calling their CBDC platform, “Project Inthanon,” and phase one is apparently already underway. Eight commercial banks are reportedly working with the BoT on Project Inthanon, and they had this to say about how the project will evolve,

“The BOT and the participating banks will collaboratively design and develop a proof-of-concept prototype for wholesale funds transfer by issuing wholesale Central Bank Digital Currency (Wholesale CBDC).”

Project Inthanon isn’t designed to be a replacement for cryptos like Bitcoin or Ethereum, and will likely only be accessible to banks. This fits in with the modern central banking model, which many leave some crypto enthusiasts unexcited. The R3 Corda architecture isn’t open in the way that other blockchain platforms are, which is a source of criticism. Central banks may not care about this aspect of blockchain, as they have an entrenched position that is created by government mandate.

The Open Market

Another blockchain project that is expected to go live soon is powered by an Australian company. It will help residents of Bangkok’s Sukhumvit neighborhood trade power with each other, and the state power utility. Power Ledger‘s platform will make the exchange possible. The program will begin with 635 KW that will be traded among a mall, school, dental hospital and apartment complex. The Bangkok electricity grid will be used to carry the power.

David Martin, the managing director of Power Ledger, told Reuters why this platform will aid power consumers,

“By enabling trade in renewable energy, the community meets its own energy demands, leading to lower bills for buyers, better prices for sellers, and a smaller carbon footprint for all,” he commented, and expanded on the advantages, “It will encourage more consumers to make the switch to renewable energy, as the cost can be offset by selling excess energy to neighbours.”

Power Ledger isn’t the only company that is working on a blockchain platform that would help small-scale electrical producers market their power via an existing grid. Walmart has patented a similar idea, though there is no information on how they plan to implement their system. Power Ledger clearly has a first-mover advantage, and their upcoming debut in Thailand will hopefully provide them with a real-world use case to drive further implementation.

Regulations are in Place for Thailand

In addition to pioneering uses for blockchain that fall outside of consumer-level FinTech, Thailand has also approved the licensing of crypto exchanges, and authorized Pundi X to deploy their payment platform in their nation. While there are rich areas of Thailand, there are also many areas that suffer poverty. Pundi X could help to attract the unbanked population, and help to them to use the same kind of financial services that banks offer.

The advantages that crypto can offer the impoverished are only beginning to be understood. There could be huge advantages to enabling the economically disadvantaged to get out of the cash economy. The poor would be able to save their wealth without incurring relatively huge costs when they need to send or receive money. Thailand appears to be open to cryptocurrency and blockchain to a greater degree then many countries, and this will likely help them as the industry evolves globally.

This content was originally published here.

North Korea hackers create malware to mine monero

Researchers have discovered a piece of software that installs on a victim’s computer, mines a cryptocurrency called monero, and sends it to North Korea.

File photo of students at the Mangyongdae Revolutionary School, in Pyongyang, North Korea, work on computers.

This content was originally published here.

Announcing instant bitcoin, ethereum and litecoin purchases on Coinbase

We are excited to announce the ability for customers to instantly purchase digital currency using a US bank account. Previously, customers who purchased using a bank account had to wait several days before receiving their digital currency. Customers can now buy up to $25,000* and receive access to their digital currency immediately.
Our mission is to make Coinbase the most trusted, safe, and easy-to-use digital currency exchange. Instant purchases make it significantly easier and faster for customers to invest in the digital currency ecosystem. Reducing the time to receive digital currency has been a highly requested feature and we are pleased to provide this improved experience for our customers.
Instant bank purchases are now live for many of our customers in the US, and we will expand availability over the coming months. You will receive an email when instant purchases become available for your account.
If you don’t have a Coinbase account, sign up for one here .
*Note: maximum instant purchase limit is $25,000. Individual limits may vary.

This content was originally published here.

Litecoin Foundation and Tokenpay Acquire Stake in German Bank

Tokenpay Swiss AG has officially confirmed that it has acquired a 9.9 percent stake in WEG Bank AG in partnership with the Litecoin Foundation. The terms of the agreement will also include options to purchase approximately 90% overall of the bank, pending the customary regulatory approval.

Litecoin Foundation and Tokenpay Acquire 10% of German Bank

Tokenpay has revealed that a strategic partnership between it and the Litecoin Foundation has seen the entities acquire an approximately 10% stake in the German financial institution WEG Bank.

According to a press release published by Tokenpay, the deal will see WEG Bank “Provide its world-class technology and marketing expertise to Tokenpay and its several blockchain initiatives,” specifically citing Tpay Cryptocurrency, Efin Decentralized Exchange, Tokensuisse Asset Management, WEG Bank Fintech Platform, and Multisignature Transaction Engine.

The managing director of the Litecoin Foundation, Charlie Lee, praised the partnership, stating: “This partnership is a huge win-win for both Litecoin and Tokenpay. I’m looking forward to integrating Litecoin with the WEG Bank AG and all the various services it has to offer, to make it simple for anyone to buy and use Litecoin. I’m also excited about Litecoin’s support in Tokenpay’s Efin decentralized exchange.”

Mr. Jorg E. Wilhelm, the head of the supervisory board of Tokenpay Swiss AG., stated: “We are elated to be in the process of acquiring a large stake in a successful business bank based in Germany such as WEG. Our ecosystem consisting of the Tpay blockchain, WEG Bank, Tokensuisse and Litecoin Foundation provides us with a tremendous opportunity regarding merchant solutions, along with a strong and diverse customer base for our crypto debit card business. The tangible reality of bridging the gap between the old and new world is electrifying.”

Deal May See Acquisition of 90% of WEG

The terms of the agreement will also include “options to purchase approximately 90% overall of the bank pending the customary regulatory approval.” The release adds that “under German banking law no entity can own more than 9.9% of a bank without regulatory approval.” Tokenpay “plans to exercise its options to acquire the remaining shares of WEG Bank it is entitled to purchase” should approval for such be granted.

Matthias von Hauff, founder, and CEO of WEG Bank AG stated: “The partnership with innovative institutions such as Tokenpay and Litecoin might at first come unexpectedly for a very conservative institution like us. But we have thoroughly and diligently examined the prospects of a common future, and we became convinced that the future of banking will make adoption of such modern payment methods inevitable. We are therefore proud to have teamed up with the best in the field.”

What is your reaction to the acquisition of 9.9% of WEG Bank by the Litecoin Foundation and Tokenpay? Join the discussion in the comments section below!


Images courtesy of Shutterstock, Tokenpay, www.weg-bank.de


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

The post Litecoin Foundation and Tokenpay Acquire Stake in German Bank appeared first on Bitcoin News.

This content was originally published here.

Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Stellar, Litecoin, Cardano, Monero, ETC: Price Analysis, August 17

The views and opinions expressed here are solely those of the author 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 market data is provided by the HitBTC exchange.

The cryptocurrency market capitalization has risen above the $215 billion mark once again. A resilient Bitcoin was the main reason for the pullback. If the leader holds ground, the investors gain confidence and start entering the markets.

Crypto hedge fund Pantera Capital is looking to raise $175 million for its third venture fund. They had previously raised $13 million in 2013 for the first fund and $25 million for the second. This shows that the demand for cryptocurrencies and related investments is still alive.

While the decline was purportedly caused by the rejection of the ETF proposal by the SEC, some experts still hope to see a Bitcoin ETF in the near future. Others, however, are not keen on Wall Street money entering the crypto world. They believe that Wall-Street managed money will cause more problems.

Cryptocurrencies are currently pulling back from their lows. So, should the traders start buying at these levels or wait? Let’s find out.

BTC/USD

Bitcoin continues to trade within the range of $5,900.06—$6,617.5. Currently, the bulls are making another attempt to break out of this range. Above the range, the virtual currency can again face resistance at the 20-day EMA, at the downtrend line of the descending triangle and at the 50-day SMA.

For the past seven days, the bears have repeatedly pushed prices down from the $6,617.5 mark. We believe that if the bulls finally scale it, the momentum will carry it above the 20-day EMA and the downtrend line of the descending triangle.

Therefore, we retain the buy recommendation provided in the previous analysis.

Our assumption of a bull move will be invalidated if the BTC/USD pair breaks down of $5,900. Another possibility is that the price remains inside the range for a few more days, forming a bottom.

As prices are in a range, false breakouts are possible. Hence, we have suggested buying only if we find the price holding for four hours. If prices retreat following a breakout and show weakness, the long positions should not be taken.

As always, traders should trail the stops higher if the position moves in their favor.  

ETH/USD

Ethereum is struggling to stay above the $300 mark. For the past two days, it has retreated from this level.

Both moving averages are sloping down and the RSI is still in the oversold zone. This shows that the bears still have an upper hand. The pullback will face selling pressure at the 20-day EMA, which is close to the previous support of $358 that will now act as a resistance.

If the ETH/USD pair sustains above $358 for three days, it will signal a probable change in trend. We shall wait for a new buy setup to form before suggesting any long positions on it.

XRP/USD

Ripple was deeply oversold. It is currently in a pullback that can carry it to the downtrend line 2 where we expect a strong resistance.

The XRP/USD pair is one the worst performers among the top cryptocurrencies. Hence, we don’t advise buying the first pullback from the lows. The trend remains bearish with both moving averages still sloping down.

It has a slew of overhead resistances that will act as a hurdle, attracting selling. Hence, it is suitable only for the very short-term traders who can enter and exit positions quickly.

The swing traders or long-term investors should wait for the pair to complete a bottoming pattern and then buy it. Until then, it is best to stay with the outperformers.

BCH/USD

After failing to climb above the $537.8221 level for the past three days, Bitcoin Cash is again attempting to scale the overhead resistance and the RSI is trying to exit the oversold zone.

On the upside, the bulls will face strong resistance at the 20-day EMA. After this is crossed, the 50-day SMA and the downtrend line will act as the next roadblock.

On the downside, if the BCH/USD pair plunges below $473.9060, it can slide to $400. We will wait for the price to break out and sustain above both moving averages before turning positive.

Currently, we don’t find any buy setup, hence, we are not proposing any trade on it.

EOS/USD

EOS has finally made a move today, after struggling to move up for the past two days. However, both moving averages are sloping down and the RSI is still in the negative territory, which shows that the sellers have an upper hand.

Any recovery will face resistance at the 20-day EMA and above that at the 50-day SMA. The bulls have not broken out of the 50-day SMA since June 9. Hence, a break out of it will indicate strength.

In April of this year, the EOS/USD pair picked up momentum only after breaking out of the 50-day SMA. Hence, we might suggest long positions after the price sustains above the 50-day SMA. If a new setup develops before that, we shall consider it.

XLM/USD

Stellar has extended its stay inside the range of $0.184—$0.25. The pullback on August 13 and August 15, both faced selling at the 20-day EMA.

Previously, in mid-April and mid-July of this year, the XLM/USD pair picked up momentum after it closed (UTC time frame) above the 20-day EMA.

Currently, the 50-day SMA is flat and the 20-day EMA is sloping down. If the bulls break out of $0.25, the probability of a rally to the downtrend line at $0.32 increases. Therefore, we retain our buy recommendation provided in the previous analysis.

LTC/USD

The attempt to pullback on August 18 met with selling at higher levels but Litecoin has maintained above the $54 level for the past two days.

The 20-day EMA will be the first hurdle, above which, the pullback can extend to $80. The 50-day SMA and the downtrend line are both close to $80, hence, we anticipate the bears to strongly defend this level.

The RSI is trying to exit the oversold territory, which is a positive sign. All these indications point to a corrective rally, but we don’t find any reliable buy setups, hence, we are not recommending a trade on the LTC/USD pair.

ADA/USD

Cardano is struggling to bounce off the lows. This shows that the bulls are in no hurry to buy even at these low levels.

On the upside, the zone between $0.111843 and $0.13 will act as a stiff resistance. The 20-day EMA is sloping down but the 50-day SMA is flattening out. This shows that the ADA/USD pair might enter into a consolidation for the next few days.

If prices sustain above $0.111843, it shows that the selling pressure has reduced. We shall wait for a new buy setup to form before recommending a trade on it.

XMR/USD

Monero has pulled back for the past three days and is close to the 20-day EMA where it might face resistance.

If the bulls scale above the 20-day EMA, the recovery can continue till the $120 mark. The long-term downtrend line is also close to $120; hence, we anticipate selling at this level.

The next decline to the $76.074 mark will confirm whether a bottom has been made or is the current pullback only a bear market rally.

Currently, we don’t have any bullish pattern on the XMR/USD pair, hence, we suggest traders wait for a few days.

ETC/USD

Ethereum Classic has found a place in our analysis by taking the tenth spot. While its price has not risen, it has declined less, compared to some other cryptocurrencies.

The ETC/USD pair has been holding above the $13 level since April of this year. While the bears broke below this support on August 13, prices have quickly bounced back, after taking support close to the $9.5 mark.

This shows that the buyers are scooping up the digital currency on sharp dips. The 20-day EMA is sloping down, but the 50-day SMA has been flat since July. This shows that the virtual currency might remain range bound between $13 and the downtrend line.

We don’t find a strong buy setup, hence, we are not recommending a trade on it.

The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.

This content was originally published here.

Coinbase And Visa Are Making Bitcoin, Ethereum, Ripple’s XRP, And Litecoin Payments A Reality

Bitcoin and other major cryptocurrencies, including ethereum, Ripple’s XRP, and litecoin, have long struggled against accusations they are harder to spend and use in the real world than their traditional fiat counterparts.
The bitcoin price, which leaped higher last week to trade around $5,000 per bitcoin , has been called too unstable and volatile to be used as a means of payment, resulting in bitcoin and other cryptocurrencies being used more of a store of value, like gold, than traditional means-of-exchange currency .
Now, major bitcoin and cryptocurrency exchange Coinbase has teamed up with global payments processor Visa to try to change that, launching the Coinbase Card which allows users to “spend crypto as effortlessly as the money in their bank.”
Coinbase is hoping its Visa debit card gets people using bitcoin and other cryptocurrencies for real world spending. Coinbase
The Visa debit card, which has a £4.95 ($6.50) card issuance fee, can be used to spend Coinbase bitcoin, ethereum, Ripple’s XRP, and litecoin balances “in millions of locations around the world,” by converting the cryptocurrency to fiat when the card is used—the merchant or store gets paid in traditional fiat currency.
Coinbase users can choose which cryptocurrency is used on the card through a new app which supports all crypto assets available to buy and sell on the Coinbase platform. The app also offers instant receipts, transaction summaries, and spending categories, to help people keep track of their spending.
“This is the first debit card to link directly with a major cryptocurrency exchange, allowing people to spend their crypto balances direct from their Coinbase account,” Coinbase said in a statement, announcing the launch of the card. “Previously available crypto cards required users to pre-load a specified amount of crypto onto their card, adding a point of friction to the process.”
The Coinbase Card is currently only available in the U.K. but the San Francisco-based exchange, which was valued at $8 billion in October, plans to roll out support in other European countries in the “oncoming months.” There are no plans yet for support outside of Europe.
Apto Payments, previously known as Shift Payments, is providing the technology for Coinbase after discontinuing its own Shift Card, allowing U.S. Coinbase users to spend crypto from their accounts, in February.
PaySafe, a U.K. payment processor, is issuing the cards.
The bitcoin price has been called too volatile to be used as a means of payment—Coinbase is hoping to change that. Coindesk
Meanwhile, in a win for institutional support for bitcoin and cryptocurrency, Fidelity Digital Assets, an institutional provider of custody and trade services for digital assets, has poached Christine Sandler from Coinbase as its new head of sales and marketing.
“We’re excited for Christine to join our growing team,” said Tom Jessop, president of Fidelity Digital Assets. “We look forward to her leadership in support of the strong interest we’re seeing from investors who are looking for a trusted provider to take an increasing role in this market.”
Fidelity is one of the world’s largest providers of retirement savings and mutual funds and wants to win over institutional customers keen on digital currency trading.
The company hired Jessop from Chain, which offers blockchain technology to financial companies, a year ago.

This content was originally published here.