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Cobinhood Founders Raises $20 Million for New Blockchain That Can Process 1 Million Transactions/s

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The founders of Cobinhood, (the zero-fee cryptocurrency exchange that riffed on popular stock trading app Robinhood for its name and branding), have successfully raised $20,000,000 from venture capitalist firm IDG and angel investors to launch the Dexon Blockchain.

Dexon is offered as an ultimate solution to the scalability issues plaguing many larger and more recognized blockchains, such as Bitcoin & Ethereum.
The founders claim that this is achieved through the use of a Blocklattice, as opposed to a blockchain.

According to the Dexon whitepaper, “On the Dexon network, blocks are grown by all nodes individually in parallel to each other and in a non-blocking fashion, creating a blocklattice structure.

No node has to wait for any other node as it extends its own blockchain, enabling unprecedented scalability. In order to achieve consensus in a blocklattice, there must be a mechanism to identify the validity and order in which all of these blocks are being produced.

This is accomplished by having each node broadcast the existence of the new blocks to all other nodes on the network once they have been produced. As other blocks receive the broadcast, they can perform an “​ack” or “acknowledgment​” that serves as a validation and timestamping for the creation of the new block.”

In Dexon, the consensus of the network is achieved by taking the median time that all nodes recognized a given block solved by a single node. By fragmenting this validation, the founders of Dexon posit that it is basically impossible to game the system.

After all, you would basically have to fool each node in the network into thinking they recognized a block from another node at a different time than they actually did.

But is this really the silver bullet to every blockchain’s woes?

Unlikely.

Vitalik Buterin originally coined the phrase, “The Scalability Trilemma.”

In this Trilemma, Buterin posited that blockchains can only have two of the following three properties:

1. Decentralization (defined as a system where each user accesses network resources more or less equally)

2. Scalability (defined as being able to process X number of transactions in a given amount of time for insignificant fees)

3. Security (defined as ensuring security against network attackers due to the inherent amount of computing resources needed to attack successfully)

After conducting deep research on the project, this analyst remains unconvinced that Dexon has solved this trilemma. That said, it remains a promising project worthy of attention.

To provide some context on the project, Dexon is laser-focused on blockchain mass adoption within the banking industry and for real-world application requirements. They believe that blocklattices will work together to form an infinitely scalable, low-latency, and decentralized transaction processing engine.

The Dexon team also timed the announcement of securing funding with the release of results from the network’s first transaction speed test, which clocked in at 50 blocks per second. This figure is estimated one million transactions per second.

To put that number into perspective, Bitcoin has a transaction time of 1-6 hours, while Ethereum takes 1-5 minutes.

According to Dexon cofounder and Cobinhood founder Popo Chen, “Clearly, investors believe in Dexons’ ‘blocklattice’ protocol, which is underpinned by consensus algorithms that allow for transaction speeds competitive with major credit card companies.

In fact, we hope to partner with these institutions, as we’re now able to offer the same processing power without a need for centralization. Other than Dexon, current blockchain protocols can only process a few secure transactions per second, leaving them unable to keep pace with traditional solutions.”

Another critical feature of Dexon is its native interoperability protocol so that other blockchains can easily interface with it. In its white paper, the Dexon team is highly critical of other interoperability solutions, such as Polkadot.

They describe the flaws in Polkadot’s model as, “The way Polkadot bridges transactions is by a c​ollator, which is nominated by n​ominators. A nominator’s voting right to elect a collator is bonded to Polkadot’s native token, making the collators among different blockchain systems stake-coupled. We argue that the stake-coupled model will not work in the practical world.

Taking one case as an example, if Polkadot’s market cap is 1B USD and the bridged total amount of Bitcoin amounts to 10B, then theoretically, any malicious party’s best strategy is to purchase enough Polkadot tokens to break the Bitcoin collator system and steal all funds stored in the collator-managed multi-signature Bitcoin wallet.

In reality, the value of bridged assets tends to exceed the bridging network’s total assets value, thus we conclude that for a practically feasible blockchain bridging protocol to work, the bridging protocol collator must be stake-decoupled from the bridging network’s token value.”

Dexon’s interoperability approach meanwhile uses a so-called PoA (or proof-of-authority) model.

According to the Dexon whitepaper, “the goal of the PoA model is to achieve stake-decoupled and fully decentralized bridging operations. To this end, there is a special type of contract called inter-chain bridging contract,​ which can be used to bridge transactions between different blockchain systems.

The inter-chain bridging contract is operated by an inter-chain ​bridging committee ​which acts as an ​authority​ to ​two-way peg the transactions in other blockchain systems. We call the members of the bridging committee bridging operators​.”

It’s important to note that the whitepaper gave no explanation of how these bridging operators are elected. This could be an important point of contention to watch if their blockchain truly will be the interoperability tool of choice. This is also the focus of this analyst’s contention that Dexon has not solved the “scalability trilemma.”

That said, the project is intriguing, and the focus on mainstream adoption is sorely needed in an ecosystem in which scalability is treated as a long-term problem to solve instead of a necessary roadblock to everyday use.

According to another Dexon co-founder Wei-Ning Huang, “With its fundamentally new architecture, the DEXON network is poised to become the world’s first mainstream blockchain.

Investors are recognizing that there is a problem with current blockchain technology and that the protocol most focused on throughput and scalability will form the basis of Blockchain 4.0. These tests prove that the blocklattice works and this funding are proof that investors trust Dexon’s strategy over the long term.”

Whether this network can truly scale efficiently remains to be seen. Although these early speed tests are promising, only the existence of large numbers of nodes will definitively prove if the network efficiency is sustainable.

The fact that the founders of Cobinhood are behind the project could also be a positive thing or a liability depending on your perspective. Cobinhood after all pretty shamelessly ripped off Robinhood’s name and branding in launching their crypto exchange.

This resulted in Robinhood sending them a cease and desist letter and releasing a public statement stating, “Robinhood has no affiliation with Cobinhood, which is confusingly similar in name and branding. In order to protect our brand, Robinhood sent a cease and desist letter requesting that Cobinhood cease its use of the Cobinhood name and branding.”

Cobinhood responded publically by issuing a statement saying “Cobinhood is not associated with Robinhood in any way, but are as legitimate as them.” Now, this claim is essentially laughable.

Although it is not necessarily fair to judge the technology of the project by the co-founders, it is important if only to remember that it will be a project strongly influenced by founders who have no issue ripping off other projects and lying to gain user adoption.

Although Cobinhood has since become a fairly useful exchange to use for the limited number of coins they support, it’s still not necessarily the cryptocurrency equivalent of a gold star to have their endorsement on a given project.

In conclusion, Dexos appears promising. If the networks’ speed test figures can maintain themselves as more nodes are added, they could be a real contender for a mass adopted blockchain. If.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 17 rated posts




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ICO Funding Has Slowed to a Crawl; Bithumb Reportedly Eyes Security Token Offerings

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The amount of money flowing into initial coin offerings (ICOs) plunged in October to levels not seen since before the crypto boom took off in early 2017, as regulatory uncertainty and bear-market conditions continued to take their toll.

ICO Funding Plunges

Crypto startups managed to raise a mere $54.5 million in token sales last month, the lowest haul since March 2017, according to ICOData.io. That’s a far cry from the $1.66 billion raised in December 2016 and the $1.52 billion-dollar haul from this past January.

ICO funding has declined in each of the last four months following a decisive shift in market dynamics earlier in the summer. Tokens sales attracted nearly $913 million in investments in June; one month later, that figure had fallen to less than half.

For all of 2018, 1,150 ICO projects have raised in excess of $7.16 billion, easily outpacing last year’s haul. Although that still comes out to a respectable $6.2 million average raise per project, the amount of money flowing into the ecosystem has fallen sharply from peak levels.

Bithumb Pursuing STO Platform: Report

The fallout from the ICO boom has given rise to a new paradigm that seeks to address many of the longstanding issues plaguing token sales. The security token offering (STO) is a financial security that mirrors traditional shares in a publicly-traded company. STOs are governed by federal laws set forth by the U.S. Securities and Exchange Commission (SEC), putting them in the same bracket as traditional securities. This includes specific consumer protection guidelines and rules for soliciting investment from the general public.

According to a new report from South Korea’s Yonhap news agency, cryptocurrency exchange Bithumb is planning to launch its own STO platform. Citing industry sources, Yonhap reports that the exchange has already entered into an agreement with SeriesOne, a U.S. fintech firm, to begin developing the STO exchange, which would allow it to list security offerings in the world’s largest economy.

Yonhap reports that SeriesOne is looking to launch the security token platform during the first half of 2019, with Bithumb providing necessary resources to operate the exchange.

“SeriesOne actively sought to strike a deal with Bithumb after assessing it as the most suitable partner,” a Bithumb official said, as quoted by Yonhap. “Bithumb will ramp up efforts to develop into a global financial firm as the blockchain-based asset tokenization is expected to spread globally down the road.”

A platform backed by one of the world’s largest cryptocurrency exchanges could entice more startups to register as a security and actively seek contributions from U.S. investors. Until now, blockchain companies have been hesitant about entering the U.S. market due to more stringent regulations.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 660 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Is Goldman Sachs Finally Launching a Bitcoin Trading Product?

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After a full year of speculation, Goldman Sachs Group Inc. may finally be following through with plans to launch a bitcoin trading product. According to The Block, Goldman has already begun a limited roll-out of its new trading platform.

About to Make a Splash?

Citing sources familiar with the matter, The Block reported Tuesday that Goldman Sachs is already signing up new customers for a forthcoming bitcoin derivatives product. Although details remain scant, the New York mega firm appears to be pushing for a non-deliverable forward – a cash-settled product that is comparable to futures but isn’t traded on an exchange.

Last year, Bloomberg reported that Goldman Sachs was planning to launch a full-fledged bitcoin trading desk by mid-2018 in its quest to bring crypto trading to mainstream investors. The bank has since scaled back that timeline and has apparently done away with the concept for now. The trading desk was initially conceived to support physical cryptoassets, including bitcoin. Although the bank has been involved in clearing bitcoin futures contracts that trade on CBOE and CME, Goldman announced back in August that it had “not reached a conclusion on the scope of our digital asset offering.”

Rumors linking Goldman Sachs to crypto offerings continue to swirl. Earlier this month, Abacus Journal reported that the bank was actively seeking the creation of an Ethereum derivatives product that would serve many of the same functions described above with respect to bitcoin. According to The Block, those rumors are not accurate.

Institutional Adoption

Putting digital assets in the hands of institutional markets is considered by many to be the greatest hurdle standing in the way of mass adoption. This line of reasoning also believes that institutional access to the market, whether physical or derivatives-based, could spearhead the next wave of growth. While significant efforts have already been made to democratize cryptocurrencies and temper fears over custody and consumer protection, adoption at the institutional level remains limited.

Intercontinental Exchange (ICE) is launching its new cryptocurrency trading platform, Bakkt, in mid-December. The platform will initially offer physically settled bitcoin futures contracts as opposed to the derivatives contracts currently offered by the Chicago-based clearing houses. This means traders who purchase a futures contract will receive physical bitcoin on settlement.

ICE’s foray into cryptocurrencies could be a significant step in the market’s gradual pivot toward institutional investment. In the absence of a bitcoin exchange-traded fund (ETF), physical futures could serve as a promising alternative for investors looking to diversify into crypto without the risk of trading on a virtual exchange.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 660 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Crypto M&A: Bitstamp Acquired by Belgian Investment Firm

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UK-based Bitstamp, which is the largest crypto exchange in the European Union, is being acquired by Brussels-based investment firm NXMH. Bitstamp, whose trading volume hovers at approximately $45 million over the last 24 hours and which only supports leading cryptocurrencies, will keep its management team and vision intact. The deal is a sign of shifting sands in the blockchain industry during a year in which market prices and trading volumes have plummeted.

Bitstamp’s reasons for being acquired are three-pronged:

  • “quality of the buyer”
  • “quality of the offer”
  • “the industry is at a point where consolidation makes sense”

According to Reuters, it’s an “all-cash deal”, the size of which is being held close to the vest. Bitstamp reportedly boasted a valuation of $60 million as of 2016. Bitstamp will gain access to the deep pockets of NXMH, which reportedly has AUM of EUR 2 billion and which should only strengthen the exchange’s competitive position. NXMH, whose investment approach focuses on China, Korea and Japan, is no stranger to crypto, with its parent company NXC having acquired South Korea’s Korbit exchange last year.  NXMH is acquiring a majority stake of 80% while Bitstamp CEO Nejc Kodrič will hold into 10%, according to Reuters.

Further industry consolidation could unfold with exchanges buying exchanges or there could be a trend emerging in which investment companies acquire minority and majority stakes. Bitstamp reportedly has been being courted by potential buyers since mid-2017, which suggests that other exchanges are similarly being pursued. Meanwhile, leading U.S. crypto exchange Coinbase is reportedly pursuing an IPO, though no signs of a public listing could be found.

With the BTC price having shaved off more than 50% of its value this year, exchanges are experiencing lower trading volumes versus a year ago, which no doubt has eaten into profits. Reuters reports Bitstamp’s daily turnover at $100 million, but CoinMarketCap suggests it’s less than half that amount. Bitstamp, whose humble beginning sounds a lot like that of Microsoft, having been “founded in a garage with two laptops and EUR 1,000 seven years ago,” maintains that the integrity of the exchange will remain the same.

One Step Forward, Two Steps Back

For all the progress that the industry has made, there are signs of an apparent “exit scam” unfolding on a small Canadian crypto exchange dubbed MapleChange over the weekend. If that proves to be the case, it’s two steps forward one step back for a crypto community that has worked to remove the stigma attached to the nascent industry.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 70 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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