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7 Reasons Why That Hot New ‘Bitcoin Stablecoin’ Sounds Like Junk

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A brand new Ethereum token referred to as “Wrapped Bitcoin” simply introduced Thursday.

How Wrapped Bitcoin Works

[youtube https://www.youtube.com/watch?v=er0ZIHKTo5Y?feature=oembed&w=680&h=383]

The function of the brand new cryptocurrency is to enable Bitcoin customers to “participate in Ethereum smart contracts natively on the Ethereum blockchain.”

Last October Bitcoin custody corporate BitGo introduced a partnership with Kyber Network and Republic Protocol to release Wrapped Bitcoin (WBTC), a token at the Ethereum blockchain that acts as a 1-to-1 token sponsored through Bitcoin reserves.

In a weblog submit pronouncing the brand new token BitGo stated:

“WBTC users will be able to utilize Bitcoin in a wide variety of new decentralized use cases, including on decentralized exchanges (DEXs), as collateral for stable coins or lending, for payments and flexible smart contracts within the Ethereum ecosystem.”

Then your Wrapped Bitcoin can fly across the Ethereum ecosystem whilst the Bitcoin that backs it, and for which you’ll be able to ostensibly redeem your WBTC at anytime (once more through going throughout the service provider account), sits parked within the custody of BitGo or Kyber.

The way to acquire WBTC, an ERC-20 token at the Ethereum digital gadget, is to shop for one from this consortium of cryptocurrency startups through buying and selling in Bitcoin for a “Wrapped Bitcoin,” a transaction that may most effective be made thru an licensed service provider account at the Ethereum community (of which there are lately 8):

“To receive WBTC, a user requests tokens from a merchant. The merchant then performs the required KYC / AML procedures and verifies the user’s identity.”

“Once this is completed, the user and merchant execute their swap, with Bitcoin from the user transferring to the merchant, and WBTC from the merchant transferring to the user.”

Why I Think Wrapped Bitcoin is Junk

1. Hodl

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 1

I’m now not a Bitcoin maximalist, however I feel it’s an excellent concept to hodl Bitcoin.

Selling your Bitcoin for anything else, whether or not it’s Federal Reserve notes, or a speculative funding in a brand new Ethereum token, but some other shiny concept within the relentless treasure hunt for TNBT, isn’t hodling.

2. Ethereum Decentralization Is Overrated

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 2

As David Hundeyin reported for CCN on the same day as BitGo’s announcement closing October:

“New data from cryptocurrency prime dealer SFOX has painted a somewhat bleak picture of the current state of dApp development on the Ethereum network.”

“Using a Jupyter Notebook to query Google’s public Ethereum dataset hosted on BigQuery, SFOX has revealed that of the top 10 Ethereum smart contract addresses by transaction volume, only one is held by a dApp.”

WBTC proponents would possibly counter that there’s a rooster and egg downside right here, and extra liquidity will pressure extra dApp construction, however the dream of your Bitcoin fueling decentralized process at the Ethereum community is some distance from the present truth.

3. WBTC Isn’t Really Decentralized

wrapped bitcoin

Its creators are touting Wrapped Bitcoin as a step ahead for decentralization. But in a single crucial appreciate, it’s in fact the complete opposite of that.

They are asking other folks to take their Bitcoin, which is on a decentralized, peer-to-peer community, and hand it over the custody of a centralized, depended on 3rd birthday celebration.

Users need to get permission from a centralized 3rd birthday celebration platform to “mint” a WBTC through promoting them Bitcoin, after which need to get permission once more to “burn” their WBTC and redeem it for his or her Bitcoin.

4. It’s A Stablecoin

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 3

A columnist at Forbes as soon as breathlessly referred to as stablecoins the Holy Grail of cryptocurrency, however those tokens are half-baked schemes to create a non-volatile cryptocurrency the usage of a community structure that pegs them to the price of some other forex (just like the USD or in Wrapped Bitcoin’s case– Bitcoin).

But how are they in fact price the actual factor for which they’re an overt counterfeit? Answer: If you’ll be able to promote them to a better idiot than you. I’d quite hodl the item itself.

5. Who Needs A Digital Paper Banknote?

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 4Wrapped Bitcoin’s proponents are in fact likening WBTC to the paper banknotes of outdated that was redeemable for gold.

They’re calling it the virtual similar of a paper banknote sponsored through gold reserves (and BTC is the gold), however BTC is already moveable. It is going with me anyplace I am going, and it doesn’t crush my wallet or my horse-drawn carriage.

6. WBTC Requires Trusted Third Parties

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 5

BitGo says:

“For the first time, this digital asset will be tokenized with full proof of reserve, backed 1:1 with Bitcoin. Every Bitcoin will be accounted for on a dashboard displaying addresses and balances, and users will be able to verify on the blockchain each Bitcoin that is held in custody. This can be done by comparing the exact number of Bitcoin stored with the total supply of WBTC in circulation via a blockchain explorer like Etherscan.”

It’s just right that the Bitcoin reserves backing your WBTC token will likely be verifiable in a clear platform, however “verifiable and transparent” nonetheless falls in need of the Bitcoin gold usual of totally trustless banking.

Wrapped Bitcoin is independently verifiable and clear, however it’s not trustless.

People holding a portion in their investments, financial savings, or money as WBTC will nonetheless need to agree with quite a few 3rd events to stay solvent and to stay their very own Bitcoin reserves safe from hackers.

This falls in need of and dilutes the price proposition in the back of Bitcoin–– that those that cling think everyone seems to be incompetent or unscrupulous from the outset, and that it doesn’t subject. They don’t need to agree with any 3rd birthday celebration.

7. We Don’t Need No Stinking Tokens

7 Reasons Why That Hot New 'Bitcoin Stablecoin' Sounds Like Junk 6

WBTC is a token, now not a coin. A coin is one thing helpful as forex, which may also be traded for principally anything else any individual would possibly wish to pay for, however a token is aptly named as it’s just like the tokens you purchase at arcades: it has extra restricted use instances.

When you purchase a token on the arcade, you’ve traded your cash that that you must have purchased the rest with for a token that you’ll be able to purchase just one factor with: online game performs at that one arcade.

I by no means confer with Bitcoin as tokens, as a result of Bitcoin is cash, and its use as an international forex is intrinsic to its design. But use as a token for powering Ethereum apps is intrinsic to WBTC’s design. That’s the one factor you’ll be able to do with it. That’s the one factor it’s designed so that you can do with it. Bitcoin is designed to be the Internet of cash.

Disclaimer: The perspectives expressed within the article are only the ones of the writer and don’t constitute the ones of, nor will have to they be attributed to, CCN.

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Crypto exchange BTCNEXT seeking Japan license

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BTCNEXT, an Asian based cryptocurrency exchange, earlier this month announced it received notification from the Japan Financial Services Agency (FSA) that it must suspend services for Japanese residents.

As part of Noah Ark Technologies Ltd., BTCNEXT operates with a Virtual Currency Exchange license issued by the Cagayan special economic zone and Freeport Philippines.

The BTCNEXT team says that its legal department is currently working with the FSA in regards to getting a Japanese license and will take necessary steps to ensure full compliance with all FSA requests.

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NEO Price Prediction: Long-term (NEO) Value Forecast – June 2

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  • The long-term outlook is in a bullish trend.
  • The 1.618 in the fibs at $19.17 is the bulls target in the long-term.

NEO/USD Long-term Trend: Bullish

Supply zone: $20.00, $30.00, $40.00
Demand zone: $2.00, $1.00, $0.50

NEO continues in the uptrend in its long-term outlook. The strong pressure on the cryptocurrency by the bulls’ comeback at the 61.8 on 18th May has kept price up with new high each week. $12.59 and $15.04 in the supply area were the highs on 20th and 30th May respectively.

The new week is started on a bullish note with today’s opening candle at $13.72 higher than last week opening price at $11.45, an indication that the bulls are more in the market.

Price is above the two EMAs that are fanned apart which suggest strength in the trend and in this case the uptrend.

The journey to 1.618 of the fib extension with price at $19.17 in the supply area is the bulls target in the long-term as the bullish momentum increase and more bullish candle open and closed above the two EMAS.

The views and opinion as expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.

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Why Bitcoin’s ‘Culture War’ Matters

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Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.


Let’s talk about bitcoin, toxicity and inclusiveness.

(Boy, my Twitter feed is going to have fun over the next few days.)

To start with, let me take a position: I stand with those people, especially women, who’ve lately been calling out maltreatment from members of the bitcoin community and citing rude and abusive behavior as proof of that community’s lack of inclusiveness. These are people who believe in cryptocurrency technology’s potential but feel discouraged to believe that they belong to the community’s dominant white-male subculture. If this technology is to fulfill its global potential, the community associated with it must confront this problem.

But the real point of this column is not to just defend these critics. It’s to debunk one of the more common positions adopted by those who take issue with their complaints, particularly on Twitter. In doing so, I hope to emphasize just how important the concepts of “community” and “culture” are to the healthy development of crypto technology and the ecosystem growing around it.

Hammer culture?

The line that’s most often thrown back at those calling out incivility is that bitcoin is nothing more than a technology, a tool, and that it’s meaningless to attach to it value judgments relating to human behavior. Bitcoin is amoral, apolitical and a-cultural, the argument goes, and like any technology it is used by good and bad people alike.

These pundits, warning of a political correctness-based threat to free speech, will then advise the injured party to take issue directly with the bad actors but refrain from agitating for community-wide change.

A perfect example of the genre came from outspoken lawyer Preston Byrne.

Clever, yes. But it’s extremely unhelpful, because the examples given do not share equivalent terms of reference.

Byrne’s “hammer” refers solely to the steel implement that tradesmen use. By contrast, people complaining about “bitcoin” are clearly using the word in a much wider context than in merely a reference to the code, to the ones and zeros that comprise the bitcoin protocol. They are inherently talking about the wider ecosystem and community gathered around the idea of bitcoin.

So, let’s equalize the terms, shall we? We can turn each of these nouns into a modifier of the word “community.”

While it might sound silly to talk about a “hammer community,” there may well be groups of hammer-obsessed souls who debate questions of design and ease of use at meetups and in chat rooms. If so, I’m going to guess that that community would probably also be predominantly male.

But the real issue is that such a hammer community is going to be far less important to the future design and evolution of hammer technology than bitcoin’s community is to its. I’m no expert, but I don’t see a great deal of change in hammer technology having occurred over the centuries and I’m not sure people expect much in the future. As such, we don’t see much jockeying among users to ensure that proposals for hammer upgrades are implemented and standardized to their preferred design.

By contrast, the open-source technology behind bitcoin is in a constant state of evolution. It is, by definition, under development, which is why we talk about the engineers who work on it as “developers,” not “custodians.” As such, there is a constant battle of interests over who gets to modify the code. Exhibit A: the block-size debate.

Counter-arguing that those who don’t like the process can just fork the code, as the large-blockers did, and set up their own new community, doesn’t cut it for me. Bitcoin is the brand that matters. Any newcomer will struggle to achieve the same network effects. Secession just isn’t viable for anyone who likes its current design but doesn’t like how its future is being defined.

Also, is there a “hammer ecosystem?” Maybe. But beyond producers of nails, and perhaps steel and rubber or wood suppliers, you can hardly call it a complex ecosystem.

Bitcoin, by contrast, which purports to reinvent the global system of money, has attracted an inherently vast array of different technology providers, all of whom have competing interests in how it is designed, managed and marketed to the world. I’m not just talking about businesses applications built on top of it, but also the developers of related encryption, payment channel, smart contract and other vitally important technologies, all of which are themselves in a constant state of flux.

(I’m guessing that the exhibition halls at hammer conventions don’t have quite the same spread of offerings as cryptocurrency events such as Consensus.)

Saying that bitcoin is nothing but a tool, is like saying that music is nothing but a system for ordering different audible tones.

Money = community

When Paul Vigna and I wrote The Age of Cryptocurrency, we spent a lot of time chronicling the emergence of the community that had formed around bitcoin, which we saw as fundamental to its success. It struck us that the notion of a bitcoin community was so prominent — the “c” word was always being bandied about — because bitcoin embodied a profound and sweeping social idea. It offered nothing less than a reinvention of money, a revolution in the entire system for coordinating human value exchange.

Money only works to the extent that there is widespread belief in it, that people buy into its core myth. Money, Felix Martin says, is a social technology, by which he means that its functionality and usability depend far less on the physical qualities of the token that represents it than on the collective agreement among large communities of people that their token captures, represents and communicates transferable value. This is true whether we’re talking about gold, dollar bills, entries in a bank account, or cryptocurrency.

By extension, then, for any form of money to succeed, it must sustain a vibrant, growing community.

Communities = culture

The thing about communities is that they inevitably develop cultures. In self-defining their boundaries of belonging, they develop shared ways of seeing and language — akin to a kind of social protocol – that regulate (in a very unofficial, and quite subconscious way) their members’ behavior.

As they evolve, cultures can become more or less open, more or less inclusive, more or less abrasive in their treatment of outsiders. And inevitably, these cultural features will either encourage or impede the growth of the community.

All this should hardly be a revelation. Anthropology, the study of culture, is a globally widespread and influential field (one that is now appropriately turning its attention to cryptocurrency communities.)

Studies of U.S. culture, from Alexis de Tocqueville down, have rightly pointed to the inclusiveness of the founding fathers’ ideas as a key driver of its economic expansion. In fact, American culture is arguably its most important ingredient for success, a social manifestation of Joseph Nye’s notion of the United States’ “soft power.”

So, yes, bitcoin culture really, really matters. If the compelling ideas behind permissionless, peer-to-peer exchange and censorship-resistant money that attract people of all stripes to it are to retain those people’s interest and grow in influence, the bitcoin community needs to evolve a more inclusive culture.

The only way to do that is to spur the kind of open debates that have always driven the progress of human culture — those which shifted norms and mores to the point that it became unacceptable to own slaves, to spit in public, or to jump a queue.

So, listen up, bitcoin. It’s time to confront your toxicity.

Hazard drums image via Shutterstock

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Holiday Spending up 14.6% as E-Commerce Beats Brick-and-Mortar

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E-commerce sales hit record highs this year as Americans continue to move their holiday shopping online.

According to Mastercard’s SpendingPulse report, online retail grew 18.8% over last year’s holiday season. That’s enough to make online sales a record 14.6% of holiday shoppers total spend, the report says.

Online consumers this year spent 17% more on apparel, 8.8% more on jewelry, 10.7% more on electronics, and 6.9% more at department stores. 

Overall, holiday spending jumped 3.4% compared to 2018.

The strong numbers came in spite of 2019’s unusually short holiday season, commonly defined as the period between Thanksgiving and Christmas. Shoppers had six days fewer than they had in 2018.

Steve Sadove, an advisor for MasterCard, said in a press release that retailers adapted to the shortened season. 

“Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices.”

Interestingly – or ominously – retailers who accepted crypto or managed crypto payments were slow to respond when we asked them how their holiday shopping season went. eGifter, a gift card trading service, noted that it had not yet “crunched the numbers” on holiday sales but that “We saw growth in overall crypto sales,” said Bill Egan, the site’s VP of Marketing.

“We saw more gifting with crypto in 2019, compared to buy-for-self use cases in prior years,” he said.

Payment processor BitPay found the holidays quite inspiring as well.

“We saw twice our daily averages of processed volume leading up to the holiday,” said BitPay’s CMO, Bill Zielke.

It will be interesting to see what kind of statistics surface over the next few seasons as e-commerce becomes king and crypto payments come to the fore.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto Custodians Grapple With Germany’s New Rules

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Crypto firms in Germany are getting ready to exist under a new regime. 

Under a law going into effect Jan. 1 requiring digital asset custodians to be licensed, each company that currently custodies crypto and targets German clients must announce to Germany’s Financial Supervisory Authority (BaFin) its intention to get a license before April 1 and submit an application before Nov. 1.  

A clause allows current crypto custodians to keep serving German customers without being penalized if they declare their intent to apply, but those same companies are waiting on BaFin to release final regulations around the law.

“As long as the legislation is not in place, BaFin is not going to think about how to cope or how to deal with the legislation,” said BaFin press officer Norbert Pieper. The regulator declined further comment and Germany’s Federal Ministry of Finance did not respond to request for comment by press time.

Pieper added: “There is no date foreseeable [yet] by which we’ll be able to communicate the results of our assessment. We will certainly communicate that on our website.” 

While the final regulations haven’t been set yet, the new license requirement may not produce the same kind of exodus of crypto firms that New York saw after the BitLicense requirement, said Miha Grčar, head of business development at Bitstamp.

London-based Bitstamp, one of Europe’s largest crypto exchanges, plans to continue operating in Germany but declined to say whether it would apply for a license, said Grčar. Crypto firms could also use a white-labeled custody service to operate in Germany. 

Because the law is an “updated version of the existing banking regulation,” banks will likely have the most to gain from it, Grčar added. Companies that get the license will be German financial institutions, but not classified as banks.

The law also means that German regulators now see crypto as a “legitimate” industry, he said. 

Ulli Spankowski, chief digital officer and managing director of the crypto custody subsidiary of German stock exchange Boerse Stuttgart, called Blocknox, sees the license as a step forward for “the professionalism of the industry.” The subsidiary has already advised BaFin that it plans to apply.  

“There are other countries that won’t go for a full-fledged license,” he said. “If you want to get traditional, established players from the banking side, you need to give them this environment to feel safe.” 

DLC group is taking advantage of the new regulatory framework by offering consulting services for firms interested in applying, and its own white-labeled crypto custody service. 

Sven Hildebrandt, head of Distributed Ledger Consulting Group, is concerned some exchanges won’t understand the nuances of the new law.

“The law is only in German and no English translation of the law is out there,” he said. “What’s going to happen to exchanges? [Operating without a licence] is actually a felony and not a misdemeanor so that’s jail time.”

Hildebrandt predicts the costs of licensing will be similar to other German financial services licenses where firms will need two managing directors, an established German entity and 125,000 euros of starting capital. He also estimates installation will cost 250,000 to 350,000 euros and recurring yearly costs will be 350,000 euros. 

Switzerland-based Crypto Storage AG, a subsidiary of Crypto Finance AG, is opening a branch in Germany to offer crypto custody to banks and then financial technology startups. 

“Large banking houses will do custody business in the future,” Stijn Vander Straeten, CEO of Crypto Storage AG, said. “They are moving slowly, though. We’ll build it up now for a premium.” 

Berlin-based solarisBank this month opened a subsidiary called solaris Digital Assets to offer crypto custody as a service. So far, the bank has a handful of customers testing the service with more than 40 companies in the pipeline, said Alexis Hamel, managing director of solaris Digital Assets.

In addition to waiting for details from BaFin, crypto firms are also waiting to see if the law can be passported to other European Union states. 

“Germany is definitely at the forefront with the clearer regulation,” Hamel said. “We still need to see how other European countries level up.”

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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