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Is Sergey Brin’s Ethereum Mining Operation Running on the Cloud?

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One person you might not expect to see at a blockchain event is Sergey Brin. The Google co-founder was seemingly a last-minute add to the event, which took place in Marrakesh and was hosted by Richard Branson. Incidentally, the FANG stocks have been surprisingly accepting of their decentralized peers.

It’s well known that Apple Co-Founder Steve Wozniak is a bitcoin bull, and now Brin disclosed that he operates a mini Ethereum mining operation with his 10-year old son, according to Forbes.

Cloud Mining?

One Twitter follower wants to know if Brin is using the Google Compute Engine to create more ETH, or cloud-mining. Reddit members have suggested that using Google Compute Engine for mining is not a profitable endeavor.

Meanwhile, the price dynamics for mining Ethereum have been a roller coaster, with the ETH price having surpassed the $500 threshold over the weekend for the first time since June 21, according to Coin Market Cap. The ETH price has since retreated back below $500.

It’s unclear when Brin and his son launched their ETH mining operation, but what is clear is that falling crypto values have eaten into profits. As PC Gamer described, last year at about this time, a miner of ETH using a “GeForce GTX 1070 graphics card” for mining ETH would have earned a daily profit of $6, which amounts to a little less than $200 per month after electricity costs.

Today, a similar operation would only deliver a little more than 50 cents per day based on the same hashrate, which is a reflection of the capacity to mine new coins. So clearly the economics of mining Ethereum aren’t as attractive as they once were, but things can change on a dime in this industry.

Miners Flock to Japan

Cryptocurrency miners are increasingly flocking to more rural areas of  Japan to set up shop. Cities like Fukui, which boasts approximately 250,000 residents and borders the Sea of Japan. The cool sea breeze coupled with cheaper electricity costs in the region is an ideal spot for bitcoin miners to operate, and that’s exactly what Tokyo-based Alt Design has done, according to Nikkei Asian Review.

Alt Design mines both bitcoin and Ethereum at an abandoned factory in Fukui. The operation is comprised of 500 servers that run constantly and give off an extreme amount of heat that require around-the-clock cooling. Nikkei Asian Review suggests the operation’s monthly production is approximately 200 ETH, which at current rates amounts to about $86,000.

Alt Design’s Chief Analyst told the publication: “Industrial-use electricity is cheaper [in Fukui] than in Tokyo, and we can cheaply rent a large space that fits all our equipment.”

Fundstrat Co-Founder Tom Lee recently pointed out, the difficulty for mining bitcoin is increasing. “The reason bitcoin looks really good here is the cost of mining around $7,000 fully loaded. And the difficulty is rising. So by the end of the year, it’s going to be $9,000,” Lee said to CNBC.

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 36 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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Winklevoss Twins Shift Crypto Focus to Retail Investors, not Resentment

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If anyone in the world has good reason to feel resentment toward Wall Street regulators for rejecting their bitcoin ETF application, it’s Cameron and Tyler Winklevoss of the Gemini cryptocurrency exchange. Their bitcoin ETF product was rejected by the U.S. SEC not once, but twice, the most recent decision of which was responsible for igniting the crypto market meltdown that was exacerbated by the VanEck bitcoin ETF delay.

Instead of harboring feelings of resentment, however, the brothers only seem to be empowered by the development, as evidenced by their decision to focus on the one client group in which they can depend — retail investors, according to a Bloomberg report. If investors could adopt a similar big-picture perspective, perhaps we wouldn’t be in the current situation in which more than $20 billion has been shaved off the total value of the cryptocurrency market over 24 hours.

In fact, for Cameron and Tyler Winklevoss, it’s not only business as usual but it’s more business than usual by the retail segment.

“Wall Street is taking cryptocurrencies seriously, however, the vast majority of Wall Street firms are still not participating in the cryptocurrency market, which remains primarily a retail-driven market. This will change over time, but it will take time,” Tyler Winklevoss told Bloomberg.

Winklevoss isn’t the only one to feel this way. Adam White, vice president and general manager at Coinbase, a rival exchange to Gemini, recently told CNBC: “What’s so unique about cryptocurrencies, and in many ways this asset class, [is that it] was driven by retail investors — not institutions,” characterizing the interest among institutional investors as “profound.”

OTC Market

Meanwhile, a report by Tabb Group earlier this summer revealed that trading volume in bitcoin’s over-the-counter (OTC) market exceeded that of exchanges as much as threefold, which would attach a value of $12 billion in OTC bitcoin trades every day. Here’s the tweet by crypto industry engineer Eric Wall –

A report on Yahoo Finance concluded that the dramatic selling in the cryptocurrency markets on the heels of the Winklevoss bitcoin ETF rejection could have been the result of bitcoin whales selling not on exchanges like Gemini, where the adjusted trading volume over the last 24 hours hovers at $69 million, but instead the OTC market. This inserts a bit more uncertainty into the drivers of cryptocurrency prices.

Nonetheless, it appears clear that the market is placing a great deal of emphasis on a bitcoin ETF, or lack thereof currently. Such a product could open up the asset allocation of large pension funds, for instance, to crypto.

And as for the Winklevoss twins, they already have a “first” in this market. They were behind the maiden Bitcoin Futures Contract (XBT) on the CBOE last December. And if the CBOE has its way, it will be part of the inaugural bitcoin ETF, as well.

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 36 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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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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Turkish Lira’s Volatility Rivals that of the Bitcoin Price: Report

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If you think the bitcoin price has taken you on a wild ride of late, it could be worse. The Turkish lira remains in freefall, rocking not only the local economy but spilling over into vulnerable emerging markets as well. In fact, the short-term volatility in the lira versus the U.S. dollar has surpassed that of leading cryptocurrency bitcoin, a report in Bloomberg pointed out.

Source: Bloomberg

Indeed, based on 10-day performance in the lira versus the U.S. dollar, volatility has exceeded that of bitcoin, Bloomberg reported. A Turkish constitutional referendum last year inspired similarly wild swings. Meanwhile, the lira and bitcoin are neck-and-neck for year-to-date declines at 45% and 55%, respectively.

Beating out bitcoin on volatility is not a coveted title, especially when you consider bitcoin’s ride since it’s December 2017 peak, since which time it’s shed more than half of its value. This summer alone, the bitcoin price has gone from approximately $5,800 in June to more than $8,000 in July only to fall back below the $7,000 shortly thereafter to almost $6,700 today. It has fallen through support levels like a hot knife through butter, but the plight of the Turkish lira is arguably worse. Turkey is facing a crisis of confidence in its currency, which is making other forms of payment, most notably bitcoin, more attractive.

Cryptocurrency a Refuge

So what’s a Turkish investor to do? Increasingly they are seeking refuge in cryptocurrencies, where the environment remains relatively friendly compared to other jurisdictions for crypto trading, say India. Bitcoin trading volumes that are up by double-digit percentages across local exchanges Koinim, BTCTurk and Paribu, as reported by Forbes. BTC trading volume on Turkey’s largest crypto exchange Koinim is up more than 60%. Over on BTCTurk, volumes are up by more than one-third and on Paribu it’s reportedly up 100%.

Meanwhile, the trade tensions between the Trump administration and Turkey surrounding steel and aluminum sanctions and tariffs only seems to be escalating, which could push investors and consumers alike further into crypto.

Taken the South American country of Venezuela, for instance. Dash Core has been thrust into the spotlight there as the poverty-fueled Venezuelan economy has been reeling from hyperinflation, as evidenced by hundreds of merchants now accepting the No. 14 cryptocurrency by market cap as a payment method. The same could happen in Turkey, though it’s unclear which cryptocurrency would be the top choice. Dash put boots on the ground in Venezuela to make integration and adoption more seamless and their efforts appear to be working.

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 36 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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