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World’s Largest Asset Manager BlackRock Is Exploring Bitcoin

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The floodgates could be about to open in the cryptocurrency market. BlackRock, the world’s largest asset management firm, with $6.3 trillion in assets under management, is exploring bitcoin. The firm reportedly has established a working group to determine opportunities surrounding cryptocurrencies and blockchain technology, according to Financial News London.

The reaction is twofold. If BlackRock can do for bitcoin what it did for exchange-traded funds (ETFs), as the firm is largely responsible for opening up nearly every American’s 401(k) plan to ETFs, this would be a complete game-changer for cryptocurrencies. On the other hand, BlackRock chief Larry Fink in 2017 characterized bitcoin as an “index of money laundering.” What a difference a year can make.

Bitcoin Futures

Based on the report in Financial News, BlackRock has tapped various individuals from the company to comprise the blockchain exploratory group. This group is being spearheaded by Terry Simpson, a multi-asset strategist for the firm. Simpson and the team are expected to research ways in which BlackRock could benefit from bitcoin — specifically bitcoin futures — and share those findings with the senior management team, which would include Mr. Fink.

Incidentally, now that Ethereum is clear of being designated as a security, reports suggest that  ETH futures could be on the horizon.

BlackRock is also interested in gauging the temperature of its rivals that are participating in the space. JPMorgan has an asset management arm and the firm has a blockchain business. Jamie Dimon, JPMorgan CEO, also previously dissed bitcoin, similar to BlackRock’s Fink. For BlackRock to jump into bitcoin futures could bolster liquidity in the market and invite other asset-management firms to enter the space.

We don’t want to get ahead of ourselves, as it’s early days for BlackRock’s crypto committee. But clearly, there is enough potential opportunity on the institutional investment side for the firm to take these next steps. With the rise of custody solutions from the likes of leading cryptocurrency exchange Coinbase, it’s only a matter of time before hedge funds and other big investors jump in.

The development comes in the midst of a mini-rally in the broader cryptocurrency market, one that has been led by the No. 5 cryptocurrency by market cap, EOS, which is currently advancing nearly 9%. The rally has also bolstered the Ethereum price to within reach of $500.

It’s unclear if the BlackRock development is what turned the markets around, but given the influential nature of the world’s largest asset manager, it’s certainly contributing to the positive sentiment among crypto market participants after last week’s disappointing showing.

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 35 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 35 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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Crypto Mining Giant Bitmain Is About to Become One of the Biggest IPOs Ever

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Bitmain Technologies, Ltd., the world’s largest blockchain conglomerate, is going public this year in a deal that could go down as one of the biggest in history.

Bitmain Files for IPO

The China-based crypto mining company is planning to file an initial public offering (IPO) in September worth as much as $18 billion at a market capitalization of up to $50 billion, sources reveal. Once approved, Bitmain’s stock will be listed on the Hong Kong Stock Exchange.

The IPO is higher than the number floated around by Bitmain last month when it revealed plans to raise up to $15 billion via public sale. The higher valuation came after Bitmain closed a $1 billion funding round led by Tencent Music and SoftBank Group – a pair of Chinese companies that are also planning to go public this year.

At $18 billion, Bitmain would be the ninth largest IPO in history, just ahead of Facebook Inc. ($16.01 billion) and Enel ($16.59 billion), an Italian energy distributor.

Competition Intensifies

As Hacked reported last month, Bitmain isn’t the only Chinese blockchain powerhouse looking go public. Ebang Communication and Canaan Creative – Bitmain’s largest competitors – have also announced plans to launch IPOs this year. Each company is looking to raise at least $1 billion.

Bitmain remains ahead of the curve thanks to a series of successful funding rounds and a diversified business strategy focused on mining equipment manufacturing, equipment rentals and mining pools. This strategy has allowed Bitmain to profit despite the sharp downturn in cryptocurrency prices.

The company is on track for its most profitable year ever, with 2018 set to nearly double the last two annual hauls. Revenues have also experienced a four-fold increase over the past 12 months, outpacing Silicon Valley powerhouse Nvidia.

Bitmain is already expanding its global footprint with plans to build a $500 million data center in Texas. The investment would bring up to 400 jobs to a region that has been hit hard by de-industrialization.

However, Bitmain’s expansion has not come without controversy. The company has been accused of operating “secret mining pools” using its own ASIC hardware. Although CEO Jihan Wu has outright denied those allegations, a blockchain developer by the name of Hakkane has provided evidence to the contrary.

Controversy notwithstanding, Bitmain’s push to become one of the biggest IPOs ever is a significant milestone for the blockchain industry, which has struggled to gain mainstream acceptance. The massive economy that is borne out of the bitcoin revolution is showing signs of expansion despite underlying volatility in crypto assets themselves.

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 538 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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