Stably’s Stablecoin, USDS, to Let Platform Users View Company’s ‘Fiat Reserve Balance in Real-Time’

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Stably’s Stablecoin, USDS, to Let Platform Users View Company’s ‘Fiat Reserve Balance in Real-Time’

stably-s-new-stablecoin-usds-to-let-platform-users-view-company-s-fiat-reserve-balance-in-real-time

On Thursday (November 2nd), a venture capital-funded blockchain startup, Stably, announced the launch of its stablecoin called StableUSD (USDS). The company noted that USDS can now be purchased and redeemed.

Stably’s new stablecoin is reportedly backed 1-to-1 with the USD (as all stablecoins are), and the company’s escrow account is managed by Prime Trust, a Nevada-based regulated trust company.

In its official blog post, Stably wrote: “Stably recognizes that a fiat-backed stablecoin requires a high standard of public transparency for consumers and businesses to build trust … Users of Stably’s future platform will be able to view our fiat reserve’s balance in real-time via a live feed from Prime Trust’s API.”

“Weekly Attestations For Fiat Reserves”

Stably’s post also mentioned that Cohen & Co., an accounting and auditing company and also one of the largest CPA firms in the US, will be performing “weekly attestations for [Stably’s] fiat reserve.”

At present, Stably is offering its customers an early-access option, however, the company requires that all new users submit the required know-your-customer process (KYC) paperwork before being able to purchase the new stablecoin.

USDS tokens are reportedly generated by issuing smart contracts. Users who’ve successfully completed KYC checks may transfer their funds to a trustee. Once the funds have been received, Stably’s platform initiates a smart contract for the transaction – which involves issuing new USDC coins and transferring them to the user’s account.

$500,000 Raised In Seed Funding Round

According to Stably’s announcement: 

StableUSD will utilize a proven centralized model to fully back every token issued. … The creation process will also work with bitcoin (BTC), ether (ETH), or tether (USDT). The sent cryptocurrency will be converted to U.S. dollars on the open market by our regulated third-party trustee. The corresponding amount of StableUSD will then be minted and sent back to the client through our smart contract.

In April, Stably raised $500,000 in a seed funding round – which was led by venture capital firm, Beenext, and Silicon Valley-based investment firm, 500 Startups. Kory Hong, the co-founder of Stably, has said: 

The blockchain economy desperately needs a reliable and price-stable medium of exchange as well as a store of value in order to evolve and scale beyond its current speculative state … Tether’s first-mover advantage has paid off handsomely, but their dominance probably won’t last forever as more stablecoins start coming onto the scene.

Tether Ltd. Confirms New Banking Relationship

As CryptoGlobe reported on November 1st, Tether Ltd. confirmed that it had established a banking relationship with Bahamas-based Deltec Bank & Trust. It also noted that its management spent time working with Deltec as it performed “an analysis of [its] compliance processes, policies, and procedures.”

According to Tether’s announcement, Deltec only opened an account for Tether after performing thorough due diligence – which was “conducted over a period of several months and garnered positive results.” 

In an attempt to prove that it had not become insolvent, Tether shared a letter that confirms it has a balance of over $1.8 billion its bank account. However, the letter (dated November 1st, 2018) may not serve as proof of an audit because there is no name provided of the bank official that prepared the document.

Moreover, there is no visible official stamp and the USD balance shown does not include details such as the account’s history (when it was opened, and other business-specific activities).

Vitalik Buterin is Not Stepping Away from Ethereum

Ethereum

Vitalik Buterin is Not Stepping Away from Ethereum


An article headline in MIT Technology Review heralds Vitalik Buterin saying Ethereum can’t succeed unless he takes a step back. Tone Vays almost wet his pants with glee at Vitalik’s imminent departure, before being put straight by the man himself. 


Tone Deaf

Vays jumped on the headline to rant about bitcoin not competing with nonsense platforms, and suggested Buterin was going to ‘pull a Dan Larimer.’ (He has previously criticized Larimer, the Block.one Founder and CTO, over the EOS platform.)

Buterin was quick to point out that he is not leaving the platform, and that critics will criticise, whatever he does. He suggested that the headline was misleading, and that the sub-headline gave the more correct emphasis: that Ethereum must stop depending on him if it is to be truly decentralised.

Spontaneously Combusting

Buterin has spoken about detaching himself from the Ethereum project before. As recently as last month, he suggested that it was “already in progress.”

Though the language is a bit ambiguous, he clarifies that his intention is for Ethereum to survive if he spontaneously combusts. (Why he pictures such a gruesome demise for himself is unclear.)

Vitalik is still actively involved in Ethereum development, although he is deliberately attempting to reduce his prominence. Clearly, it is not healthy for the fate of an entire platform to rest in the hands of one man.

“Burn in Hell” – Vitalik Buterin on Centralized Exchanges

Ethereum 2.0

Buterin was talking to MIT Technology Review at Devcon in Prague, the annual get-together organised by the Ethereum Foundation. The hot topic of discussion was Ethereum 2.0, a future update dealing with issues of scaling, amongst other things.

A key part of this is transitioning from a ‘proof-of-work’ protocol to a more energy-efficient ‘proof-of-stake’ algorithm. Other improvements include methods known as sharding and plasma to improve current transaction limits. By allowing users to perform certain transactions without writing each one to the blockchain, the network will be able to handle more volume.

Unsurprisingly, Buterin has been instrumental in designing and implementing these changes. Whilst he may aim to be detachable from the project, he is very far from being detached.


Images courtesy of Twitter, Flickr.

[Disclaimer: Any opinions expressed in this article are purely those of the author and do not necessarily reflect those of Bitcoinist.]

ETF ‘Godfather’ Bearish on Bitcoin ETF – For Now

 

Reggie Browne, a living legend on Wall Street and one of its most prominent exchange-traded fund (ETF) developers, has said a bitcoin ETF will come “no time soon,” citing lack of market activity.

 

Speaking yesterday at an industry conference, Browne explained that :

it’s very difficult for the commission to wrap their heads around a positive approval because there’s no data yet […] the markets just aren’t here.

Liquidity, ETFs, and Browne

 

Market liquidity was a sticking point for the U.S. Securities and Exchange Commission (SEC) during their recent review of the proposed VanEck SolidX bitcoin ETF, wherein the Commission repeatedly emphasized that markets must be “of significant size.” This is the case partially so that there is enough market data to detect market manipulation, and partially because liquidity is generally very important in ETF trading.

 

Browne has a reputation and historical role as an ETF market maker – a critical role for providing market liquidity. “After the investor, the [lead market maker] is probably the most critical piece for a new ETF,” the Washington Post quoted an ETF specialist as saying.

 

He thus played a critical role in fostering the ETF industry when it was in its infancy, and is a central figure in the astronomical growth of ETFs during the past two decades, being referred to as “a missionary, especially in the institutional space. He’s the person on the ­­edge showing people the power of the ­exchange-traded fund.”

 

Between 2000 and 2014, ETF assets grew from $79 billion to $2.4 trillion, and ETFs were “the biggest innovation in the distribution of investment products since the invention of the mutual fund in the 1920s,” according to another ETF expert quoted by the Post.

 

‘That’s why Reggie’s the godfather’

 

In light of Browne’s great stature and experience on the subject of ETFs, the prospect of a bitcoin ETF approval no longer looks very auspicious. This notion, however, clashes with recently reported rumors that would suggest the opposite.

 

Only time will tell, as the SEC has a maximum limit of February to reach a conclusion on the VanEck/SolidX bitcoin product.

 

Aragon Project Releases Aragon 0.6, Goes Live on Mainnet

Aragon, the open source project led by the Aragon Foundation, has just gone live on its mainnet with its 0.6 updates, and is currently running on aragonOS version 4, the company announced in a blog post on October 30, 2018.

Aragon 0.6 Is Live on Mainnet

Just seven months after releasing Aragon 0.5, the company behind one of the most popular decentralized organizations in the world has released another update to both their platform and software.

Aragon, the open source project led by the Aragon Foundation is a fully decentralized autonomous organization (DAO) offering neutral jurisdiction for anyone to create an organization on the blockchain.

More than 2,500 organizations have been created since the launch of Aragon 0.5 back in March 2017. When counting all Aragon versions, the total number of Aragon organizations now includes more than 15,000.

0.6 Alba Aragon(Source: Medium)

However, despite the incredible number of businesses created on the platform, all of those organizations were running on Ethereum Testnets, without any real-world implications.

Aragon 0.6, named Alba, will now enable users to create Aragon organizations directly on the Ethereum Mainnet. The company has called this new update “a new era for human collaboration,” saying that Alba will enable new kinds of organizations to be created.

What Does the Update Bring?

According to the company’s official blog post, the framework powering all Aragon organizations, aragonOS, is now on its fourth version. The company said that all Aragon smart contracts have undergone several audits to be ready for the launch.

For the past six months, all Aragon organizations have been running on Mainnet, and the DAppNode has been using aragonPM, a decentralized organization itself, on a daily basis. And while tests have shown that there are no significant bugs within the system, the company is also running a bug bounty on Mainnet.

When it comes to the practical implications the update brings to its users, the company said that they have upgraded all building blocks, such as token manager, voting, and finance, to provide a better user experience.

The most important feature of the update, however, is the addition of permissions. According to Aragon, permissions are a “dynamic and powerful way” to customize organizations, as they manage who can access resources within the organization, and how. The addition of permissions allows users to implement any governance process they want into their organization.

The company has also rebuilt the voting system, updating it to a card-based interface that allows users to see all the votes happening with a single click. The ease of access is meant to promote community engagement, the company explained in the blog post.

However, despite the company claiming its aragonOS 4 is the most secure and stable framework for smart contract development yet, they have advised users not to place large amounts of funds in Aragon 0.6 until the bug bounties, and audits are finalized.

Dutch Criminals Demand BTC from Businesses

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Tether Opens Bank Account with Caribbean Deltec Bank

Tether Limited, the issuer of stablecoin Tether (USDT) wholly-owned by Bitfinex, has opened a bank account with Bahamas-based Deltec Bank. The move follows a long process of due diligence review of the company, including the ability to maintain the USD peg at any moment in time, the announcement says.

Deltec Accepts Tether as Client After Long Due Diligence Process, Company Says

The 72-year-old financial institution with headquarters in the Commonwealth of The Bahamas has accepted Tether as a client. The news comes as a milestone for Tether following months of tribulation as many questioned whether the firm had enough USD to match the number of Tether tokens distributed on the Bitfinex platform.

Tether said in a statement:

“The acceptance of Tether Limited as a client of Deltec came after their due diligence review of our company. This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”

Tether Limited, which is registered with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, claims all USDT in the market is fully backed by U.S. dollars “that are safely deposited in our bank accounts.”

While many questioned the veracity of the claim, the controversy surrounding the stablecoin only intensified when consulting services firm Friedman LLP decided to end the relationship with Tether because the firm denied access to their accounts.

In late October 2018, the company announced it had burned 500 million tokens, supposedly worth $500 million. Tether wasn’t clear about the reasons why it did proceed to burn units. Some believe Bitfinex funded the redemption by selling 100,000 BTC to remove the amount of circulating supply from the market, partly because of new strong competition coming from the U.S., with Coinbase announcing support for Circle’s new stablecoin, USDC.

Tether is only confirming previous reports that the firm opened a bank account with Deltec Bank. People familiar with the situation told The Block that the arrangement was made weeks ago and some over-the-counter trading desks have already shown interest in doing the same in order to redeem USDT directly.

Tether, which was on the top five cryptocurrencies by market cap for a long time, saw its position falling apart in October. Its market cap crashed to $1.7 billion from $2.8 billion in a matter of weeks and it hasn’t stopped bleeding yet. The announced new banking relationship might ease the pressure, but the USDT is still trading at $0.98, which indicates a lack of trust in the market.

One side-effect of the panic regarding the true value of Tether was the run towards Bitcoin, which pushed the number one cryptocurrency to the $7,500 area as USDT holders dumped the token. Investors were willing to pay a $300 premium on Bitcoin in order to get rid of the stablecoin.

Featured image from Shutterstock.

A Week of Satoshi Pt. 5: What Is on the Horizon for Bitcoin?

Bitcoin is set to witness a range of upgrades that will address its network’s challenges and potentially cement its leadership position as the world’s largest digital currency for decades to come.

The fifth part in our A Week of Satoshi series will provide insight into the planned improvements for the pioneer crypto network and how these upgrades may affect the digital currency going forward.

The Introduction of the Lightning Network

The Lightning Network mainnet beta was launched on March 15, 2018, as a response to the significant scalability challenges that the Bitcoin network had been facing. Created by Joseph Poon and Thaddeus Dryja, the Lightning Network protocol was published in a white paper in 2015.

The Lightning Network is an off-chain scaling solution for bitcoin. The protocol is based on a second layer built atop the original Bitcoin blockchain. The layers can communicate and facilitate the transfer of payments between each other.

The fact that transactions can be sent between the two layers is the reason why the Lightning Network is being implemented. The protocol works by allowing nodes on the network to temporarily create channels through which transfers from the other chain can be facilitated. These channels are under the control of both parties involved and are closed, and created, at the behest of the actors involved in the transaction.

As transfers on the two layers are interoperable, this results in faster transaction speeds as well as much lower costs. The nodes are also able to send units of bitcoin back and forth between each other. However, there are ways in which the scalability solution is contrary to the workings prescribed in the original Bitcoin network protocol.

The most important of these is the fact that Lightning Network transactions are recorded differently. On the Bitcoin network, every single operation, as well as its associated data, is currently registered on its public blockchain. With the relatively small block size of the Bitcoin network, it is easy to understand why the network fell victim to sluggish speeds as its adoption grew.

The Lightning Network aims to remedy this by greatly reducing the amount of data that is recorded. The LN only records the initial and final balances of a channel. Once both parties deposit their bitcoin in the address associated with the channel, the protocol records this amount. The parties privy to the channel can transfer bitcoin an unlimited amount of times to each other. The final amount is recorded once the channel is closed.

The Lightning Network allows the Bitcoin network to increase capacity while still maintaining security and the integrity of the world’s leading digital currency. Additionally, the main chain can be called in to ascertain any values in the case of conflict between channel members. The Lightning Network is considered an excellent option for bitcoin adoption especially for businesses who handle a high volume of small payments daily.

The number of nodes on the mainnet had already surpassed that of the testnet. Following the full release of its Beta platform, the Lightning Network saw a significant increase in nodes on the protocol. Needing less than two weeks to surpass the number of nodes on its previously released testnet, the speed at which the community responded signals a certain level of necessity and belief in the protocol.

Increasing Popularity and its Side Effects

The protocol continues to attract all kinds of attention as the number of nodes and its capacity increases. However, not all of it has been positive.

Earlier in the year, Diar conducted research and published its opinion that the LN was unable to handle large transaction volumes. It further added that the protocol unnecessarily introduced more levels of complexity to the bitcoin network.

Additionally, Emin Gün Sirer, a Cornell University computer science professor, reiterated this negative opinion about the LN, stating “amounts of Lightning Network routes has grown ten times in the past five months, but the probability of successful routing has not increased at all.”

As the discourse on the matter intensified online, Olaoluwa Osuntokun, Lightning Labs co-founder and chief technology officer, called out Diar’s research methods. He took aim at the publication, explaining that they focused on irrelevant data points to prove a point. Osuntokun stated:

“On what I can find with respect to the methodology used to generate these metrics, [the] model itself is flawed and produces flawed metrics. When one takes into account how Lightning Network works, this is akin to saying ’the probability of room that fits ten people may fit 50 people is 0 percent.’”

The LN protocol also has its supporters, especially from those who believe the entirety of the digital currency sector needs to focus on sound infrastructure before embarking on further projects. Speaking to Forbes, Jack Mallers, a Zap Wallet developer, explained:

“This release is a step forward for the network itself. What I mean by that is: Before all the apps, we need to build a healthy network that has liquidity, reliability, high-uptime nodes, healthy channels, etc. We need to onboard an entire industry onto a new layer and build a healthy topology. This release kinda marks the ‘start’ so to speak.”

Lightning Network collaborated with payment processing startup CoinGate to increase merchant adoption for the scalability solution. The partnership with CoinGate came with 4,000 merchants from high-end brands such as Chronoswiss and Louis Chevrolet to online services like Mmoga.com and Bitlaunch. Moreover, in July 2018, CoinGate and the Lightning Network initiated a beta test in which they boarded 100 stores worldwide. The test produced desirable results with no reported errors as yet.

As more developers begin to work on creating Lightning Network-compatible products and services, there is continuing speculation about whether the adoption of the Lightning Network will lead to an increase in bitcoin adoption as well as the cryptocurrency’s value.

There is a universally accepted consensus that an increase in consumer and merchant adoption of a digital currency is directly proportional to a rise in its value. If the Lightning Network succeeds in bringing larger businesses to the bitcoin network, then there are good times ahead for all bitcoin holders and investors.

Additionally, for bitcoin to make a move from a popular disruptor and cement its position as a universally respected currency, an increase in merchant and consumer adoption is paramount.

The Liquid Network

Attempting to remedy Bitcoin’s scalability challenges, Blockstream has announced the launch of the Liquid Network. The Liquid Network went live on September 27, 2018, according to Samson Mow, Blockstreams’ Chief Strategy Officer.

Similarly to the Lightning Network, the Liquid Network is a second layer on top of the Bitcoin blockchain. However, the Liquid Network functions in a completely different manner. The Liquid Network is a federated sidechain which is pegged one-to-one to BTC. It has the distinction of being the world’s first production Bitcoin sidechain.

The protocol was initially devised by Blockstream developers in 2014 and was published in a white paper under the name “Enabling Blockchain Innovations with Pegged Sidechains.” In the following years, the blockchain company focused on the ideas put forth and developed the first viable sidechain for the Bitcoin network.

The Liquid Network has its native digital currency called L-BTC. The digital currency is verifiably pegged to BTC with an equal amount of BTC frozen in the main chain at all times. The two-way peg allows for transactions sent over the Liquid Network to be settled immediately without the need to wait for confirmations to be sent by the Bitcoin Network.

In this way, the Liquid Network aims to reduce the inter-settlement lag times. Blockstream developed the sidechain to function in the context of exchanges.

“The Liquid Network was built specifically to address the particular needs of exchanges and enables the rapid, confidential and secure transfer of funds between participants, providing a solution to the inherent problem of delayed transaction finality on the Bitcoin network.”

Because a group provides consensus on the Liquid Network, it calls a “Strong Federation of trusted functionaries,” settlements are much faster, and final states are reached in a more timely manner. Additionally, all transactions on the Liquid Network are feeless due to the consensus architecture of the protocol. The platform also supports tokenized assets due to its one-to-one peg. Moreover, it is possible to obscure the amounts transferred in a payment providing a greater level of privacy and confidentiality.

The Liquid Network generated its first block on September 27, 2018, with support from 23 stakeholders who will also serve as the federation keeping the network secure. If the Liquid Network delivers on its potential, it will be interesting to see how fast, feeless payments will affect the value and adoption of the digital currency.

RSK

Rootstock (RSK) is the first open-source smart contract platform created for the Bitcoin network. RSK labs, the startup behind the innovation, mined the network’s genesis block on January 2018. The platform is a two-way smart contract platform pegged to the Bitcoin network.

With its genesis block, RSK launched its mainnet beta release on January 5, 2018. The iteration is called Bamboo and aims to facilitate the addition of smart contracts to the Bitcoin network. Moreover, the protocol also promises fast settlement times as well as increased scalability.

While RSK has come under fire for lack of foresight concerning scalability challenges in future, the protocol has received support from the mining community due to the fact that it is designed to support merge mining. RSK Labs co-founder, Gabriel Kurman, recently announced that one in ten bitcoin miners also support the RSK sidechain.

While working on addressing the scalability challenges should more users join the RSK network, the startup is also working on other solutions designed to increase the Bitcoin network’s speed. Kurman explained:

“Before the end of the year, we hope to launch the Lumino network, which will allow for 20,000 transactions per second.”

If RSK succeeds and can bring smart contract functionality to the Bitcoin network stably and securely, it is very likely that the value of the digital currency will skyrocket. It will also be interesting to see how Ethereum performs on the market if smart contracts become available on the Bitcoin network as more developers are likely to relocate to Bitcoin as it has the more trusted and robust codebase.

An Emerging, Bonefide Investment Asset Class

Bitcoin as an asset class has witnessed an increase in interest from institutional investors in the past 12 to 18 months. Speaking to Bloomberg, Bobby Cho stated that the company had seen a significant uptake in high net worth individuals and funds purchasing bitcoin over-the-counter (OTC).

Cho, who works as the global head of trading at Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holding, believes this heralds a new age for the cryptocurrency sector. Cho said:

“What that’s showing you is the professionalization that’s happening across the board in this space. The Wild West days of crypto are really turning the corner.”

Additionally, a report from Grayscale, a provider of digital currency investment trusts, published in July 2018 points to continued investment in the cryptocurrency market from institutional investors. This has been confirmed by recent statements made by Morgan Stanley and Fidelity Investments.

The future for Bitcoin is set to be interesting as various groups are working to better the underlying software of the network. Moreover, as more merchants and investors interact with the digital currency, it is likely that the value of the digital currency will continue to rise as adoption grows.

Despite its challenges, bitcoin is well-positioned to withstand the wave of altcoins attempting to dethrone it as the number one digital currency in the world thanks to its large community of developers who want to see Bitcoin succeed.