New Bitrefill Service Aims to Make Lightning Payments Easy

Stockholm-based startup Bitrefill now offers a way to mitigate bitcoin’s expensive learning curve for new users.

Revealed exclusively to CoinDesk, Bitrefill’s new Thor service allows people to give lightning channels to someone else with no setup on the recipient’s side. Lightning was created to allow cheaper, off-chain bitcoin payments.

Bitrefill’s John Carvalho told CoinDesk:

“Thor allows people to connect to the lightning network whether they have bitcoin or not. All you have to do is download one of the supported wallet apps, install it, and then either you or a friend can come to Bitrefill and purchase a channel opening.”

Typically, this is how lightning works: Someone has to set up a channel between two parties and deposit enough bitcoin to hold it open. Users can only send as much money as the channel’s capacity supports.

What Thor allows users to do is outsource the technical work for opening a channel, which can be paid for with bitcoin, litecoin, ethereum, dash or dogecoin. Bitrefill will then maintain active channels for 30 days.

“The idea here is to be able to allow everyone to get on the lightning network and running a hot wallet,” Carvalho said. “There’s still a lot of lightning development left to go and a lot of convenience that is needed so it’s not so intimidating to get onto lightning.”

After more than a year of experimenting with lightning payments, this 12-person startup has allowed people to pay phone and cable bills and use the network for a variety of other transactions, totaling 3,760 completed orders. The first week of 2019 alone saw 105 new orders, the company says. According to 1ML.com, Bitrefill is one of the top five organizations increasing global lightning channel capacity, which now hovers above $2 million across the network.

Carvalho said overall lightning usage is growing steadily, adding:

“As far as giving bitcoin enthusiasts a way to onboard other people and teach them about lightning, I think [Thor] will be a good tool.”

Thor works with several free wallet apps such as the LND wallet. Users scan the QR code on the Thor page provided while paying for the service, then copy and paste script – all without needing to deal with the raw command line themselves.

Anton Kumaigorodskiy, a developer for the Bitcoin Lightning Wallet that also integrated directly with Thor, told CoinDesk this service could help boost lightning usage. He said at least 3,204 users have installed the Bitcoin Lightning Wallet app on their phones so far.

New possibilities

“Opening an incoming payment channel is something which was not possible for mobile [lightning network] users before,” Kumaigorodskiy said. “But now anyone can install a fresh wallet, order an incoming channel and start receiving lightning payments right away.”

All things considered, lightning usage is poised to continue growing in 2019.

This bitcoin scaling solution burst onto the scene with user-ready beta software less than one year ago. And yet already a comparison of 1ML.com statistics to Ethernodes.org, which tallies nodes for the second largest cryptocurrency network, reveals there are roughly half as many lightning nodes as there are unique ethereum nodes, more than 5,215.

However, when it comes to lightning-enabled payments competing with traditional fiat methods, Kumaigorodskiy said he is “a bit skeptical.” For now, Kumaigorodskiy said he still thinks professional traders have the most to benefit from using this nascent technology.

It will take quite a bit of experimentation before lightning services are ready for a high volume of low-value payments from mainstream users. Speaking of his own hopes for lightning growth in 2019, Carvalho added:

“The more these services are working, live and tested, the more this will become a majorly used network that people can transact on.”

Team meeting image via Bitrefill

European Finance Regulators Call for Bloc-Wide Crypto Rules

Two major European regulators have separately called for cryptocurrency and ICO rules at the EU level.

Firstly, the European Banking Authority (EBA), a regulatory agency of the EU, has urged the European Commission to examine whether unified crypto rules are needed across the region.

In a report published Tuesday, the EBA said that crypto asset-related activities do not currently fall under existing EU financial laws and, as these activities are “highly risky,” appropriate rules need to be put in place to protect investors.

The EBA has, therefore, asked the commission to carry out a “comprehensive” analysis to determine what action may be required at the EU level.

Adam Farkas, the EBA’s executive director, said in a statement:

“The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.”

The EBA also advised the commission to take into account recommendations to be issued by the Financial Action Task Force (FATF), the global money-laundering watchdog, in June of this year.

The FATF is expected to issue guidance for international cryptocurrency regulation covering crypto exchanges, digital wallet providers and initial coin offerings (ICOs).

Meanwhile, throughout 2019, the EBA said it will take a number of steps to monitor the crypto sector, such as developing a common monitoring template for crypto activities, assessing business practices regarding advertisements in the industry, determining the treatment of banks’ holdings or exposures to crypto assets, and more.

A second regulatory agency in the economic bloc, the European Securities and Markets Authority (ESMA), also published a report on crypto assets and ICOs today. It advises the EU’s Commission, Council and Parliament on the existing rules that could be applied to crypto assets and further sets out any regulatory gaps to consider for policymakers.

Notably, it says that some crypto assets could fall under the EU’s MiFID financial framework and be classed as financial instruments, although some adjustments may be required.

Steven Maijoor, ESMA chair, said:

“Our survey of NCAs highlighted that some crypto-assets may qualify as MiFID financial instruments, in which case the full set of EU financial rules would apply. However, because the existing rules were not designed with these instruments in mind, NCAs face challenges in interpreting the existing requirements and certain requirements are not adapted to the specific characteristics of crypto-assets.

Another category of cryptos would not fall under MiFID, but should still have to comply with anti-money laundering rules. Additionally, risk disclosure should also be enforced, to alert consumers to potential risks when investing in crypto assets, it said.

“In order to have a level playing field and to ensure adequate investor protection across the EU, we consider that the gaps and issues identified would best be addressed at the European level,” Maijoor concluded.

EU flags image via Shutterstock 

Bitcoin Price Faces Minor Pullback as Indecision Creeps into Market

Bitcoin (BTC) could be in for a minor pullback, as the market seems to have turned indecisive near a key price resistance.

The world’s biggest cryptocurrency by market capitalization witnessed a two-way business yesterday before ending largely unchanged on the day (as per UTC) at $3,995 on Bitstamp.

Essentially, it created a doji candle, which is considered a sign of indecision in the market, even though the bull flag had set the stage for a move above $4,300.

Notably, that candlestick pattern has appeared at the top of the recent recovery rally and at the crucial resistance above $4,100, representing bullish exhaustion.

The bears, therefore, could make a comeback, especially if the hesitant buyers fail to keep prices above the previous day’s low of $3,934.

As of writing, bitcoin is changing hands at $4,010 on Bitstamp, representing a 0.80 percent gain on a 24-hour basis.

Daily chart

As seen above, BTC has carved out a doji candle at the confluence of the 50-day exponential moving average (EMA) and the inverse head-and-shoulders neckline resistance.

The prospects of a bull breakout above $4,130 (neckline + 50-day EMA) would drop sharply if BTC confirms a bearish doji reversal with a UTC close below $3,934. That will likely put the focus back on the long-term bearish technical setup and allow a drop to $3,566 (Dec. 27 low).

It is worth noting that a drop towards $3,566 would imply inverse head-and-shoulders failure, which is widely considered a strong bearish signal.

Put simply, the bulls need progress soon. A UTC close above $4,130 would confirm an inverse head-and-shoulders breakout and open the doors for a stronger rally.

4-hour chart

BTC witnessed a bull flag breakout on the 4-hour chart yesterday, signaling a resumption of the rally from the Jan. 6 low of $3,753.

So far, however, a break above the inverse head-and-shoulders neckline resistance of $4,130 has remained elusive. That said, the pattern is still valid and would lose credibility only below the previous day’s low of $3,934.

View

  • Bullish exhaustion seen at the key hurdle above $4,100 could embolden the bears.
  • A UTC close below $3,934 could yield a drop to $3,566 (Dec. 27 low). A break below that level would violate the bullish-higher low pattern and expose the December low of $3,122.
  • On the higher side, $4,130 is the level to beat for the bulls. An inverse head-and-shoulders breakout, if confirmed, would invalidate yesterday’s doji and open up upside towards the psychological hurdle of $5,000.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin chart image via Shutterstock; Charts by Trading View

Pakistani Bank Teams With Alipay for Blockchain Remittances

Pakistan-based Telenor Microfinance Bank, a subsidiary of Norwegian telecoms multinational Telenor Group, has launched cross-border payments using blockchain technology from payments firm Alipay.

Claiming it as Pakistan’s first blockchain-based international remittance service, the bank announced Tuesday that the effort is a joint effort between Telenor Group’s Malaysian fintech subsidiary Valyou and its Pakistani mobile banking arm Easypaisa, offering real-time money transfers between the two nations.

Blockchain will “significantly boost the speed and efficiency” of payments, the bank said in a statement, adding that the money transfers will be “highly secure and transparent.”

“Currently, Pakistan receives about $1 billion in home remittances from Malaysia and this Easypaisa-Valyou collaboration is going to change it for the better,” said Roar Bjærum, senior vice president at Telenor Financial Services.

“Home remittances contributed to over 6 percent in GDP, equivalent to over 50 percent of our trade deficit, 85 percent of exports and over one-third of imports during FY 2017-18,” added State Bank of Pakistan governor Tariq Bajwa.

Alipay, operated by Alibaba Group’s Ant Financial, is said to have waived transaction fees for use of its technology during an initial one-year trial period.

“By eliminating intermediary costs, the new remittance service reduces transactional cost for end-users,” the bank said in a statement.

While Pakistan appears to be keen on the potential of blockchain technology, it has taken a negative stance of cryptocurrencies to date. Back in April, the country’s central bank, the State Bank of Pakistan, issued a statement barring financial companies in the country from working with cryptocurrency firms.

“Any transaction in this regard shall immediately be reported to Financial Monitoring Unit (FMU) as a suspicious transaction,” the central bank said at the time.

Pakistani rupee image via Shutterstock

Decentralized Exchanges: 2019’s Key to a Dapp Comeback

David Lu is a partner at 256 Ventures where he focuses on partnering with early stage blockchain companies and a venture partner at Virgil Capital, a quantitative cryptocurrency hedge fund. Find David on Twitter.

The following is an exclusive contribution to CoinDesk’s 2018 Year in Review.

2018 year in review

Ethereum and EOS, the two major platforms on which decentralized applications (dapps) are built, have market capitalizations of $15 billion and $2 billion, respectively. But, unfortunately, the number of dapp users simply fails to correlate with the market capitalization or valuations of these projects, with figures ranging in the thousands at best.

Whilst it is impressive observing dapps execute functions in a decentralized manner that once required centralized authorities, we’re still many years from seeing their mainstream adoption, setting aside that gambling dapps have seen the highest levels of usage to date.

Yet, a class of dapp that we should all be extremely excited about in the short term is the decentralized exchanges.

A decentralized exchange is built on the blockchain and allows for the peer-to-peer trading of tokens native to that blockchain. How this works is that the users simply connect their cryptocurrency wallets to the decentralized exchange to begin interacting with the smart contract on it. This process automatically matches, verifies and executes trades without the need of a third-party. Traditionally, DEXs have been built on the ethereum blockchain (Kyber0x ProtocolAirswap), however, this has recently extended to other blockchains such as EOS or NEO.

As a standalone, the decentralised exchange is a dapp that facilitates liquidity but arguably, their function extends beyond that. Here’s why.

Dapps will often require multiple tokens to operate them. You might require the native dapp token, ethereum to send and confirm transactions on the blockchain, a storage token (Sia & Storj) to store the data for the dapp and perhaps a few other tokens depending on the specific needs of the project.

The project might have these tokens to power the service on the backend, but it is unlikely that the users of these dapps will have such a portfolio of tokens (on top of having the correct ratios) to operate the application. The dapp can integrate with the DEX, which abstracts all of the tokens to the back end — providing a “just-in-time” mechanism that creates a seamless user experience.

Throughout this process, there is no third-party API or account setup is required. Below are two examples that highlight the use cases of this.

Liquidity and payments

Melonport’s integration with decentralised exchanges such as 0x, OasisDEX and Kyber Network is a great example of leveraging the liquidity pools that DEXs provide. Melonport is trying to develop a decentralised asset management tool with the front-end operating on top of IPFS, while the back-end leverages off a set of ethereum smart contracts.

In this scenario, the DEX functions as a liquidity provider for fund managers to directly tap into these pools when managing their portfolios. The ability to swap assets with one click is an incredibly convenient function for fund managers to instantly trade or hedge their investments.

Etheremon’s integration with Kyber Network, one of the first dapps to integrate with Kyber’s onchain liquidity, illustrates another use case of DEXs. As more dapps get created, so do the number of different cryptocurrencies — resulting in a more fragmented token ecosystem. Holders of cryptocurrenies are less likely to just hold traditional pairs such as BTC or ETH, but numerous other altcoins in their wallets.

Meanwhile, most dapps usually only accept ETH and perhaps the games’ native token. The implication is that players need to exchange tokens they hold to ether or games’ tokens every time they want to play, which may adversely affect the user’s experience when playing such a game.

In this scenario, the DEX functions as a swap service that allows its players to pay with any supported ERC-20 token, such as Basic Attention (BAT), OmiseGo (OMG) or Zilliqa (ZIL). Simplifying the payment process into one step will allow users to seamlessly enjoy the game and more broadly, driving adoption for the entire dapps ecosystem.

What’s next for DEX?

DEXs will no doubt play a key role in the adoption of cryptocurrencies. But at the moment, they are very much in their infancy — DEXs are used by a niche audience and the technology behind them is still relatively nascent.

However, the interest and merits of DEXs cannot be ignored. Radar Relay completed a $10 million Series A funding round in AugustAirswap recently executed the world’s first security token transfer on a public blockchain with partners SPiCE VC and Securitize. The P2P compliant transfer of a security offers a significant innovation to the way in which traditional securities market operate, cluttered by intermediaries.

And finally, centralized exchanges like Binance are considering their own DEXs despite their position as one of the leading exchange on the market. All that being said, it is important for the DEXs to consider the relevant compliance measures as platforms such as EtherDelta, which brand themselves as a “DEX,” have recently come under fire from the SEC for operating an unlicensed exchange.

There’s no question that blockchain will play a significant role in our technological DNA moving forward. But rather than seeing the blockchain as a thing on the internet and as a tool to decentralize it, the question that should really be focused on is “What can we do with this technology that we couldn’t do before?”

The decentralized exchanges capture this sentiment very well – for the first time in history, users are able to have full control over their funds by utilizing non-custodial wallets that allows them to spend and trade their currency in a peer-to-peer manner.

Ethereum image via Shutterstock

Security Token Offerings: A Way Past the SEC’s Incomplete Crypto Guidance?

Chi-Ru Jou is a partner in the Blockchain Technology & Digital Currency Group of CKR Law LLP, a global law firm with approximately fifty offices worldwide and more than forty attorneys contributing to the blockchain group. The views offered in this article are her own only.

The following is an exclusive contribution to CoinDesk’s 2018 Year in Review.

2018 year in review

2018 has been a tumultuous year on the regulatory front for the blockchain industry.

The year began with news that the SEC had issued dozens of subpoenas for blockchain startups that had issued unregistered token offerings, spreading alarm throughout the crypto world. These investigations have recently resulted in penalties, mandatory securities offering registrations and in some cases reimbursement to investors, for a few blockchain companies.

SEC Director William Hinman issued informal guidelines that bitcoin and ether were not securities because those networks had become “sufficiently decentralized.” Now, as the year winds to a close, we hear that the SEC will issue “plain English” guidance on the security token analysis as soon as early 2019.

In this uncertain regulatory environment, most blockchain startups contemplating token offerings are steering away from the public crypto markets and venturing into the brave new world of security token offerings. The buzz on the street is that “STOs” may be the next big wave for blockchain fundraising.

However, many blockchain startups initially planned their business model around what they perceived to be a utility token – a software license to use the token on a platform, often as the currency to pay for services or earn rewards in a digital marketplace powered by a blockchain.

As these start-ups shift their plans from doing ICOs toward the regulatory landscape of STOs instead, the biggest question is whether the STO is going to be the panacea everyone is looking for: what unresolved legal issues for STOs do we confront in 2019? What cutting edge issues are currently boggling the minds of securities attorneys as they begin to execute these STOs?

Using Security Tokens on a Blockchain

Most STOs that are currently being initiated are private placement securities offerings to accredited investors.

However, the private placement poses a number of unresolved problems for blockchain companies wishing to use the tokens on their platforms. These issues will have to be analyzed carefully under the facts and circumstances of each blockchain platform, but some general considerations include:

  • Accreditation: Will the accredited status of investors have to be checked every time that the platform issues tokens, even where the tokens are being issued as rewards earned on the platform?
  • One-Year Lockup: Will initial token users have to hold the tokens for a year each time they earn tokens on the platform before using them for functional purposes on the platform such as paying for services?
  • State Issuer Dealer Registration: Will blockchain companies have to register as issuer dealers with several states that have such requirements before they can transact in their own securities on their platform? The American Bar Association published a useful article on state issuer dealer registration laws. Although these issuer dealer laws usually affect primarily public offerings of securities rather than private placements, a different novel question is presented by blockchain platforms that deal in their own securities on an ongoing basis after initial issuance.
  • Registration as an Alternative Trading System (“ATS”): If the blockchain platform is acting as a marketplace to bring together sellers and purchasers of security tokens, at what point does it need to register as an ATS? The SEC has yet to issue clear guidance regarding the circumstances under which a blockchain platform dealing in security tokens would be regarded as a securities “exchange,” particularly in difficult cases where the platform does not call itself an exchange of any kind.

Brave New Frontier of Reg A+ STOs

For blockchain companies that intended their tokens to be sold to the general public rather than accredited investors, without resale restrictions, all eyes are on the backlog of exempt public security offerings, or Regulation A+ STOs, currently sitting with the SEC awaiting approval.

Although blockchain companies that have filed Form 1-As under Regulation A+ generally regard their discussions with the SEC as confidential, the grapevine has relayed that there are currently unresolved obstacles to SEC compliance for these offerings. Hopefully in 2019, we’ll see the first qualifications of Reg A+ STOs and the exempt public securities offering will no longer be considered an “experimental” area.

Problems for Secondary Trading

Once hurdles with regard to federal securities laws on resales are cleared, blockchain companies will have to figure out some way to comply with state Blue Sky laws regarding secondary trading.

Each state offers a set of exemptions under which secondary trading may take place, with many states offering an “unsolicited brokerage transactions” exemption. 2019 will be the year when issues regarding state securities laws on secondary trading must be resolved.

Conclusion: Looking Ahead

2019 promises to be an exciting and eventful year for security token offerings.

For the first time, the blockchain industry will figure out if there is a way forward from the SEC’s informal guidance that most token offerings will have to be registered or issued under an exemption from registration. Furthermore, a wild card has been thrown into the regulatory mix with the recent introduction of a new bill amending the Securities Act to define cryptocurrencies as not being securities so long as they are utilized on a functioning network.

It is far from clear that STOs will provide an easy solution for blockchain start-ups that planned a utility token model and are now steering clear of the public crypto markets, but undoubtedly securities attorneys will throw in their best efforts to resolve these issues.

Door in the sky image via Shutterstock

The Case for a 2020 Bitcoin Bull Run

Christopher Brookins is the founder of Pugilist Ventures, a quantitative crypto fund founded out of Carnegie Mellon.

————————————————————————————————

Since the end of 2018, price action has been demonstrably negative, which surprised many expecting the end of Q4 historical “pump” in prices.

The price plummet appears largely driven by negative sentiment and swathes of selling pressure after the 2018 support level of $6,000 finally broke (dashed black line). This selling pressure kept prices well into the oversold range (using RSI and SWTO) for several weeks.

Only recently, has price begun to rebound. Even so, RSI and SWTO are still trending downward (black arrows), which may point to further price weakness at the beginning of Q1 2019 while bitcoin searches for a sustainable bottom.

Charts via Tradingview.com

Volatility ≠ Price Growth

As mentioned prior, many market commentators and participants assumed, incorrectly, that Q4 was always a strong period for market price growth, specifically from mid-November to the end of December. However, what many viewed as historically consistent price growth during this period, was in fact historically consistent volatility growth.

The graphic below shows historical daily volatility trends of bitcoin on a yearly basis since 2013. Thus, the supposition that many bulls were wrongly betting on was that higher volatility always equates to higher prices.

*Gdax/Coinbase Pro

As the volatility chart illustrates, the volatility trends of BTC, since 2013, do follow predictable patterns, culminating in higher volatility during Q4. This dynamic unfolded again in 2018 as price volatility compressed from October to mid-November (black lines), which typically precedes a breakout in price action. However, this time, volatility broke out to the downside for bitcoin.

After analyzing the overall trend in 2018 (demonstrably bearish), price volatility compression, historical volatility patterns, and fundamental indicators, it should have been more clear to market participants that the probability of a negative price breakout was far higher than to the upside.

Fundamental Indicators

Fundamental indicators can be quite useful for ascertaining a “narrative” of price movements and patterns, as long as the narrative is rooted in non-subjective data exploration. However, given the small sample size of bitcoin market cycles (n=10), each indicators output and predictive ability should be taken with a “grain of salt”.

Nic Carter from Castle Island Ventures / CoinMetrics and Antoine Le Calvez from Blockchain.info recently pioneered a new concept called realized cap (capitalization). The differentiation between realized cap and market cap being “instead of counting all of the mined coins at equal, current price, the UTXOs are aggregated and assigned a price based on the BTC/USD market price at the time when said UTXOs last moved.”

David Puell and Murad Mahmudov do an excellent job explaining these terms and significance further in their article.

Using data from CoinMetrics, the significance of realized cap compared to market cap can be visualized quite dramatically, albeit via a small sample size. The crossover points between market cap and realized cap can be viewed almost similar to golden crosses, whereby market cap breaching above realized cap is a re-ignition of a bull cycle, while a cross beneath may indicate the final stretch of a bear cycle. Beyond the aforementioned, this comparison offers lessons which may bear out or “repeat” in 2019.

Looking at the graphic, market cap went beneath realized cap on December 28, 2014, and stayed beneath realized cap until October 28, 2015, which coincides with the data-validated, high volatility period for bitcoin.

In this case, volatility coincided with price growth for bitcoin and kicked off the start of an amazing two-year bull run for bitcoin. This time around, market cap fell beneath realized cap on November 20, 2018. So, if history repeats itself (which is a tepid assertion), an investor might expect further price declines in 2019 followed by sideways trading, until a reignition of a new bull cycle at the end of Q4 2019 (November to December 2019).

Correlation to Δprice of 0.19

Additionally, using realized cap, an additional ratio or oscillator can be created that further explains bitcoin’s market cycles, market cap to realized cap (MVRM). The MVRM provides a useful indicator that visualizes the above dynamic via one ratio.

For example, historically, a value beneath 1.0 is undervalued while a value above 3.0 is overvalued; and above 4.0 is a negative inflection for prices. Currently, MVRM is 0.82 and the all-time low is 0.56. So, despite bitcoin being in undervalued territory, MVRM still possibly has further room to fall, which is consistent with the end of Q4 2019 narrative.

Further support of the significance of MVRM for price movements can be seen by the correlation between price and MVRM of 0.19, and correlation between price and MVRM of 0.98, which is extraordinarily high.

*coinmetrics.io

Network transaction volume to active addresses ratio (TAAR)

This ratio acts as an “equilibrium” gauge of bitcoin’s price to fundamentals valuation, where transaction volume and active addresses both represent “quantity and quality” growth of the bitcoin network; validated by 0.15 and 0.07 correlation between price, respectively.

For example, when TAAR and price are closely distributed, price (valuation) and fundamentals are aligned in equilibrium; and when either TAAR or price deviate substantially from each other, price is out of equilibrium which has historically resulted in price devaluation (albeit small sample size). The market’s recent selloff has helped reduce the gap between price and TAAR, which has persisted since Q4 2017.

Correlation to Δprice of 0.13

The 30 day moving average of TAAR is ~$2500 while TAAR daily is ~$2000, thus an “equilibrium” range for price appears between $2,000 and $3,000. *Note: prices seldom mean revert directly to their equilibrium level, they typically over-correct, which makes further price depreciation beyond the stated levels possible. Additionally, as can be seen on the logarithmic chart, price has bounced off TAAR’s 30-day MA twice in 2018 (black boxes), and has most recently rebounded momentarily.

The final price flush before finding a stable bottom will likely coincide with price falling beneath the TAAR 30 day MA, price recovering that level, and then TAAR beginning to trend upward once more.

*coinmetrics.io

Similar to MVRM, the TAAR to price ratio is an oscillator that visualizes the same dynamic via one ratio. Historically, a ratio of 1.5 and above is undervalued, 1.0 to 2.0 is “safe”, and beneath 1.0 (“equilibrium”) is overvalued. Currently, the oscillator is ~0.70 which still indicates overvaluation, but the overall trend back towards 1.0 is positive.

*coinmetrics.io

Conclusion

While the recent price action for bitcoin has been harshly negative, these market clearing events have begun the normalization process for bitcoin’s price valuation, which can be seen in several indicators. Per the MVRM analysis above, if history repeats itself, price will likely fall further, then trade sideways until the end of Q4, then reignite a new bull market.

An additional verification of this narrative will be if the TAAR to price oscillator enters undervalued territory above 1.50 in 2019, especially, prior to Q4.

*Disclaimer: this article is for educational purposes only and should not be considered investment or trading advice.

Bitcoin image via Shutterstock

ShapeShift Lays Off 37 in Latest Round of Crypto Industry Cutbacks

Crypto exchange ShapeShift has announced a round of layoffs, citing a range of difficulties including a tough market climate.

In a blog post published Tuesday, CEO Erik Voorhees wrote that the startup had laid off 37 employees, or a third of its staff. He described the process as “a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”

As Voorhees noted, ShapeShift isn’t the only crypto startup to move to trim its workforce in recent weeks. As CoinDesk previously reported, ethereum production studio ConsenSys announced a 13 percent staff cut in early December. More recently, chat startup Status and bitcoin mining giant Bitmain confirmed that they were cutting staffers.

In one of the most transparent testimonies of its kind to date, Voorhees detailed several problems that worked against Shapeshift heading into this decision. Besides the mounting legal concerns that have impeded the entire industry, Voorhees contended that the company grew too fast and spread out its efforts into too many product areas (such as CoinCap, it’s CoinMarketCap competitor, and KeepKey, an acquisition).

Additionally, the company’s decision to begin doing know-your-customer checks on customers caused a large loss in clients and users. Lastly, transactions, in general, dropped across the board, leading to a general drop in revenue, Voorhees wrote.

Though Voorhees said the firm had hedged for such risks, it wasn’t enough to allow the company to remain at its current staffing level.

“2018 marked a rough year. While this new one starts upon some painful reorganization, we’re encouraged and hopeful for 2019,” he wrote.

ShapeShift did not immediately respond to a request for comment.

Image Credit: Piotr Swat/Shapeshift

Euro Exim Bank Taps Ripple’s xRapid for Cross-Border Settlements

Euro Exim Bank, a London-based bank primarily focused on providing financial services for export and import companies, will become the first bank to publicly announce it is using the XRP cryptocurrency for cross-border payments.

Ripple announced Tuesday that Euro Exim Bank, alongside payment startups JNFX, SendFriend, Transpaygo and FTCS, would be leveraging XRP for cross-border transactions. Further, Ahli Bank of Kuwait, BFC Bahrain, ConnectPay, GMT, WorldCom Finance, Olympia Trust Company, Pontual/USEND and Rendimento have signed on to RippleNet.

As a result, the startup now has more than 200 customers worldwide, according to Tuesday’s reveal.

Ripple CEO Brad Garlinghouse said the company is now signing two-three customers per week, and last year saw a 350 percent increase in customers sending live payments.

“We’re beginning to see more customers flip the switch and leverage XRP for on-demand liquidity,” he added in a statement.

Euro Exim Bank director Kaushik Punjani noted that his bank’s customers have traditionally been restricted from settling transactions quickly and cost efficiently. This issue extends to both major corporations and individual remitters, he said, adding:

“Working collaboratively with Ripple and selected counterparts, we have designed, tested and are implementing both xCurrent and xRapid in record time, and we look forward to the benefits these will bring our customers.”

David Lighton, CEO and co-founder of remittance service SendFriend, similarly touted the focus on cheap cross-border payments as the main benefit of using xRapid.

“A distributed ledger-based solution, leveraging Ripple’s XRP asset allows us to settle transactions in real time, with lower capital requirements and lower costs. We’re proud to partner with Ripple to offer our customers cheaper, faster, payments to the developing world,” he told CoinDesk.

A number of other companies have already begun using xRapid, which uses the XRP cryptocurrency, for international payments, including MercuryFX, Cuallix and Catalyst Corporate Credit Union. However, while the three firms provide financial services, none possess a banking license like Euro Exim does.

In the past, other companies including Western Union, MoneyGram, Viamercias and IDT have trialed xRapid, though none are utilizing the platform in full production at this time.

Ripple image via Shutterstock

Exchange Says $200K in Ethereum Classic Lost As Blockchain Attacks Continue

Cryptocurrency exchange Gate.io said Tuesday that it will absorb the loss of roughly $200,000 worth of ethereum classic – about 40,000 ETC – in light of a series of blockchain history rewrites that continue to occur.

In a blog post, the exchange said it had confirmed the 51 percent attack – whereby an entity controls sufficient computing power to alter the network’s transaction history and double-spend coins – and identified three addresses that it said are tied to the attacker in question.

“Gate.io’s censor successfully blocked attacker’s transactions at the beginning and submitted them to the manual exam. Unfortunately, during the 51% attack, all the transactions looked valid and confirmed well on the blockchain. The examiner passed the transactions. It caused about 40k ETC loss due to this attack. Gate.io will take all the loss for the users,” the exchange said in its statement. The press-time price of ETC is $4.97 per token, according to CoinMarketCap.

The announcement corroborates similar claims made by crypto exchange Coinbase, which said Monday that it had identified double spends have occurred as a result of deep block reorganizations (reorgs) on the ethereum classic blockchain.

Information shared by Bitfly (Etherchain), Coinbase and Blockscout indicates that the attacks continue. “We updated our blog last night with additional attacks. We won’t resume ETC sends/receives until we feel that it’s safe to do so,” a representative for Coinbase said.

Speaking to CoinDesk, Bitfly CEO Peter Pratscher explained that although a number of reorganized blocks could be confirmed on the ethereum classic network, no analysis of the movement of transactions could yet be ascertained on their part to confirm or deny double spends.

On the other hand, Blockscout’s project lead Andrew Cravenho told CoinDesk that evidence of a double spend attack is “100 percent.”

Pointing to a reorg that occurred between block number 7261495 and 7261496 on the ethereum classic blockchain, Cravenho reported that 26,000 ETC were spent once before the reorg occurred on block number 7261492 and again thereafter on block number 7261497.

“This double spend transaction was effectively stolen,” said Cravenho. He also added that while it’s still possible the event could have been caused by accident due to specialized mining hardware testing as suggested yesterday on the official Ethereum Classic Twitter page, the likelihood of this is slim.

“If I was testing new hardware, I wouldn’t be testing $100,000 in a single transaction,” Cravenho quipped.

Developer efforts

Some developers in the ethereum classic community have come publicly to agree with Blockscout’s analysis, including developer Donald McIntyre, who told CoinDesk: “The last information I have is that there was no attack by any ASICs provider but a textbook 51% and double spend attack.” At the same time, not all ethereum classic developers are in agreement.

Ethereum classic developer Cody Burns maintained that a clear picture of what is happening on the ethereum classic network is yet to be uncovered, declining to comment when asked about the cause for these reorg attacks.

And on the matter of proactive steps forward to ensure the security of the network, Burns told CoinDesk that developers are similarly moving forward with caution.

He told CoinDesk:

“We have been discussing options [to] mitigate the current threat, but no one wants to make a hasty decision that would expose greater security threats.”

Adding to this, McIntyre went so far as to suggest tentative steps “to decide whether an urgent PoW algorithm change in ETC” is necessary in the short term and “rule changes to the client or protocol for example a temporary reorg cap per miner” in the longer-term.

Still, given the decentralized form of governance overseeing the relatively nascent blockchain network, McIntyre concludes that coordination between ethereum classic developers remains unformalized.

“As we are truly decentralized, we don’t have formal processes or any top down management of our network, communications or decision making process. However, we do coordinate as we share the same incentives to support the network, so we communicate regularly, albeit not with the method or [system] of a centralized team,” said McIntyre.

Magnifying glass image via Shutterstock

Nik De and Rachel Rose O’Leary contributed reporting.