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Category Archives: Bitcoin

Bitcoin price, charts, market cap, and other metrics …

Posted: July 13, 2020 at 5:05 pm

What Is Bitcoin?

Bitcoin is a completely decentralized digital cryptocurrency. Unlike US dollars that you can hold in your hand (or in your bank account), there is no central authority or centralized payment system controlling Bitcoin. Instead, Bitcoin operates in a peer-to-peer network that allows anyone in the world to send and receive Bitcoin without any middleman (like a bank, central bank or payment processor).

Although there are thousands of cryptocurrencies ranked on CMC today, Bitcoin was the very first cryptocurrency ever created. On Oct. 31, 2008 a person (or group of people) under the pseudonym Satoshi Nakamoto published the now-world famous Bitcoin white paper.

The first line reads: A purely peer-to-peer version of electronic cash, which would allow online payments to be sent directly from one party to another without going through a financial institution.

The Bitcoin network then launched on Jan. 3, 2009, marking the start of the cryptocurrency revolution.

Bitcoin is a purely decentralized digital currency, which makes it unlike any other asset that came before it.

Before the digital age, everyone transacted in physical forms of currencies, from livestock and salt, to silver and gold, and finally to banknotes. Only in recent times was money digitized allowing bank accounts to exist online, as well as creating the many online payment processing platforms, such as PayPal and Square, that you often use today without thinking about it.

However, all of these digital transactions require a centralized system to operate. Your bank, or financial services like PayPal, needs to ensure that all of their users accounts are constantly updated and tallied correctly. These systems represent the centralized form of digital money.

Bitcoin revolutionized digital money by decentralizing this accounting process. Instead of a central figure that is responsible for making sure that their users transactions were always adding up, Bitcoin works by sharing the account balances and transactions of every user across the globe in a pseudonymous form. In simplest terms, this means that anyone can download and run the free and open-source software required to participate in the Bitcoin protocol.

As a Bitcoin user, all you need to know to send Bitcoin to someone else is their Bitcoin address (a series of letters and numbers, not their name or any personal information!). By sending your Bitcoin to an address, what you are doing is broadcasting your transaction (Hi, Im Alice sending 1 BTC to Bob!) across the Bitcoin network using blockchain technology (more about that below). Since the Bitcoin network has the most up-to-date ledger tracking Alices wallet balance, the system checks her wallet balance (i.e., Alice has 2 BTC in her wallet, so a transaction of 1 BTC to Bob is valid), and then completes the transaction.

In summary, Bitcoin works by ensuring that this shared ledger always tallies up, and that new Bitcoin transactions (Bob sends 2 BTC back to Alice. Go Alice!) are validated, recorded and then added to the ledger in order. That is the heart of blockchain technology, where new blocks of information are added to the chain of blocks that already exist.

Mining refers to the act of adding new blocks to the blockchain. In simple terms, Bitcoin miners dedicate significant amounts of computing power to solve a cryptographic problem, which is basically a very complex puzzle. The successful miner that solves the puzzle before all the other miners gets rewarded with a block reward, which is an allocation of a predetermined number of Bitcoin. In some cases, the block rewards are awarded to mining pools, when miners group together to share resources.

Once the puzzle is solved, the block is confirmed, and it is added to the blockchain. This new information is sent to all nodes, aka participants in the Bitcoin protocol, and the shared ledger is updated once again.

As Bitcoin's price rises, the block reward becomes increasingly more attractive. This incentivizes more miners to join in the competition to mine for blocks. In return, the more miners there are in the system, the more secure the network is. In addition, the increased competition also means miners are continually investing in newer hardware to ensure their computing power remains relevant for the fight for block rewards.

To ensure that the value of Bitcoin is not compromised by an infinite supply, Satoshi Nakamoto wrote in a halving event that happens every 210,000 blocks. When Bitcoins network first began, Bitcoins block reward was 50 BTC per block mined. This was halved in 2012, at block #210,000, where the block reward became 25 BTC. The second halving was in 2016, at block #420,000, and the block reward became 12.5 BTC.

This process will continue every 210,000 blocks, until the total supply of BTC (21 million BTC) has been reached. It is estimated that the final block reward will be paid in 2140! For more information on the Bitcoin halving, check out our Bitcoin Halving page and blog post!

There are many different ways of storing your Bitcoin heres just a few:

There are many Bitcoin different exchanges all over the world. All of these exchanges allow you to sell Bitcoin for other cryptocurrencies (altcoins) or government currencies (USD, EUR, GBP etc.) At the same time, these Bitcoin exchanges allow you to store your BTC with them, which means that the burden of keeping it safe is on them. Do note that incidents have occurred when exchanges have been hacked or lost their customers BTC, so do your own research when youre looking for an exchange thats safe to hold your cryptoassets. For the latest list of exchanges and trading pairs for this cryptocurrency, click on our market pairs tab.

Instead of keeping it on a Bitcoin exchange, you could keep your Bitcoin in a Bitcoin wallet instead. Wallets come in two forms hot and cold. Hot wallets are software that stays connected to the internet, aka storing your Bitcoin online. It is more convenient to transact via a hot wallet, but they logically are more susceptible to being attacked, as they stay connected to the internet.

Cold wallets are wallets that are not online. They are less prone to attack, as hackers cannot access this type of cold storage via the internet, but they are also a lot less convenient for the user as they may be cost-prohibitive and require more technical understanding to operate. Examples of cold wallets are hardware wallets and paper wallets.

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‘Ferocious Rally’: Weiss Ratings Bullish on Bitcoin, Price to Hit $70K Next Year | Markets and Prices – Bitcoin News

Posted: at 5:05 pm

Weiss Ratings has outlined key reasons why investors should be bullish about bitcoin, seeing a ferocious rally with the price of the cryptocurrency expected to hit $70,000 next year. In addition, the Federal Reserves massive money-printing and institutional investments into cryptocurrencies add to the bullishness.

Weiss Ratings analysts Bruce Ng and Juan Villaverde explained last week why investors should be bullish about bitcoin despite some sideways consolidations. Weiss Ratings currently ranks bitcoin first among all cryptocurrencies overall.

One of the three key reasons why the analysts are bullish about bitcoin stems from a price prediction based on the stock-to-flow analysis (S2F). The popular forecasting model now points to a ferocious rally over the next 12 months or so, they wrote.

Ng and Villaverde described that S2F is based on the common-sense notion that the scarcer a commodity is, the more valuable it becomes, adding that scarcity is measured by circulating supply. For example, Gold has an S2F of 62, which is the number of years of current production required to match global above-ground holdings, they clarified.

After the May Bitcoin halving, 6.25 new bitcoins are being created every 10 minutes, meaning it would take an estimated 56 years for new mintage to match Bitcoins circulating supply, they continued. Notice how close that is to the S2F number for gold, which makes sense because bitcoin is fast becoming a major rival to gold as a safe-haven investment.

The analysts added that previous S2F predictions line up quite well with bitcoins actual price performance, as seen in the chart above, elaborating:

Now, based on the history of the halving, current S2F analysis says bitcoin should reach $70,000 by sometime around mid-2021 Even if it turns out to be only half right, you could still triple your money.

The other two reasons Weiss Ratings analysts highlighted were QE infinity and institutional money flowing into cryptocurrencies. The covid-19 pandemic environment has pushed the Federal Reserve to print $2.9 trillion in new paper money in just 13 weeks, or about $22 million a minute, the analysts detailed. By any measure, this is corruption of money on an industrial scale, they exclaimed, predicting that investors will pour money into bitcoin and gold as a safe haven when they lose confidence in paper money.

Billionaire investor Mike Novogratz has also been saying that central banks printing record amount of money is the best environment for bitcoin.

The last major factor Ng and Villaverde focused on was the increasing interest in cryptocurrency among institutional investors, such as by Paul Tudor Jones who invested about $210 million of his own money into bitcoin. Grayscale Investments has been adding bitcoin to its Grayscale Bitcoin Trust faster than the rate of new coins being mined and recently, venture capitalist Andreessen Horowitz raised half a billion dollars to invest in crypto startups. The analysts opined:

The sheer weight of institutional-sized money flows into a small market like bitcoin can have truly explosive effects.

Are you bullish on bitcoin? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Weiss Ratings

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Crypto Winter Could Really Be Over as New Bitcoin Starts to Bloom – Cointelegraph

Posted: at 5:05 pm

There is no doubt that cryptocurrency specifically Bitcoin (BTC), which is frequently used as a barometer for the health of the entire sector has made a comeback. As of the writing of this article, Bitcoin stands at a little over $9,000, very close to the $10,000 rebound that investors hoped for sometime this year and we are barely in the third quarter.

Although there are signs that crypto winter is over, many experts are still understandably cautious.

Related: What's Next for the Industry as 'Crypto Winter' Thaws?

Cryptocurrency has been a notoriously unstable investment, first selling at less than a penny and then varying from $400 to $1,242 between all of 2013 and 2016. In 2017, crypto investors were gleeful (and some, probably, quite smug) to see the currency reach the insane height of $4,400 and then end the year breaking an astonishing $20,000 all this after plummeting to $2,000 that same September.

Of course, what followed that bright season in the cryptocurrency industry was what we refer to as crypto winter the drastic drop in value following several high-profile Ponzi schemes, successful hacks, crypto-jacking attempts and overall negative media coverage.

In this article, we will discuss the question of whether crypto winter is over, whether those who have already invested have a reason to be hopeful, and whether those who havent should jump on the bandwagon soon before prices skyrocket. We will also place a focus on blockchain technology as it exists both inside and outside the cryptocurrency industry, and why widespread adoption of this new technology is an indicator of cryptocurrencys future success.

For many of the experts, the answer seems to be yes. From crypto enthusiasts to Forbes, the current viewpoint of many is that Bitcoin is poised to make huge gains for the next 10 years. Although the vagaries of the cryptocurrency industry are as mysterious as Satoshi Nakamoto himself, it seems that we have headed into a period of stability during which the fundamentals of cryptocurrency are better understood and trusted.

Only 4% of Americans polled cite cryptocurrency as their preferred long-term investment, but this is very likely going to change in the near future, as Bitcoin has nothing but room to grow.

Many compare the future of Bitcoin to that of the internet, and claim that the commodity is going through the same growing pains of scalability, availability and ease of use that the internet first went through from 1995.

Similarly, market experts note that although only 11% of Americans own Bitcoin, those numbers are on par with other huge technological developments in their early stages, such as smartphones.

Many point out that the disruption caused by the coronavirus outbreak to traditional banking and investing institutions may be a motivator to invest in the digital currency to protect against inflation and the questionable resilience of fiat currencies.

Many experts also suggest that cryptocurrency transactions arent completely secure and anonymous without the use of a virtual private network, or VPN. They are also irreversible. Once a coin is gone from your account, it can easily vanish without a trace. Hackers have taken advantage of this by breaking into exchanges and stealing small amounts from each user.

So, it will likely take time until Bitcoin gains trust from the wider public, but for those willing to take a risk, it might be the most profitable investment of 2020, specifically for those who are willing to wait 10 years to witness the true extent of its growth.

Although much is left to be seen about the future of cryptocurrency, no one can deny that the idea of creating a digital-only currency is as old as science fiction. From transportation to food to medicine to video games, a wide variety of industries continue to look to blockchain technology for logistical and transactional solutions. In seven years, it is estimated that $300 billion worth of food products will be tracked using blockchain technology, saving over $100 billion annually.

In 2018, JPMorgan surprised the traditional financial world by publicly stating that blockchain technology is the way of the future for cross-border payments. A year after that, IBM, Citibank and Barclays announced the development of their own blockchain-based platforms, and Dubai made a statement that it has a new goal to become blockchain-powered by 2020.

Although this is still a relatively new technology, there is little doubt that blockchain and the cryptographic technology it uses will rapidly dominate the landscape in coming years. Countless top-tier engineers, product developers and designers are building real solutions on top of blockchain, working to perfect this technology for widespread use across various industries.

It is possible that we may have to wait until blockchain technology is fully understood, utilized and appreciated by the masses in order to provide cryptocurrency a much-needed publicity boost.

After all, although currencies and monetary investments like cryptocurrencies can go through wild ups and downs, there is nothing more stable than an already proven and reliable technological solution like blockchain.

Many unanswered questions and problems that still exist are unsettling to cautious investors, but these obstacles bear resemblance to other successful, ground-breaking technologies such the internet and Apple smartphones. Furthermore, much of the negative press about the problems associated with Bitcoin is due to scams that could have been easily avoided with adequate financial knowledge and cybersecurity.

Also, lets not forget that traditional banking institutions have a vested interest in making cryptocurrency seem like a questionable investment. Of course, big banks and traditional investing platforms have significant power to fund research and news stories that influence opinions on a daily basis. This might be more of a reflection of their fear of competition rather than a legitimate portrayal of the value of the cryptocurrency industry.

Certainly, if you prefer safe and reliable investments with moderate-to-low gains in the short term, Bitcoin is probably not the right investment for you.

However, if you are looking to potentially gain big by investing in a growing new industry, and are not afraid of the spring cleaning that is currently needed to make improvements to the future security and useability of cryptocurrency, it might be just the right time to buy Bitcoin.

After all, where there is no risk, there is no reward and it may be wise not to wait until everyone is singing the praises of Bitcoin in the coming years to make the decision to invest.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sam Bocetta is a freelance journalist specializing in United States diplomacy and national security with an emphasis on technology trends in cyber warfare, cyber defense and cryptography. Previously, Sam was a contractor for the U.S. Department of Defense, working in partnership with architects and developers to mitigate controls for vulnerabilities identified across applications.

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Bitcoin Thieves Hit Cashaa – Infosecurity Magazine

Posted: at 5:05 pm

Cyber-criminals have compromised a British cryptocurrency exchange, making off with over $3min Bitcoin.

Cashaa has halted all its crypto-related transactions after cyber-criminals stole more than 336 Bitcoin from their exchange. The company has said that prima facia users have not been impacted by the theft.

In a media brief shared with Cointelegraph, Cashaas CEO Kumar Gaurav said: We are still investigating the damage caused by the incident and suspend all the withdrawals for 24 hours.

Kumar said that the theft occurred after malicious hackers compromised one of the exchanges digital wallets. Once access had been gained, the hackers sent the cryptocurrency contained within the wallet to themselves.

Guarav said that he had reason to believe that the cyber-criminals who hit Cashaa are based in East Delhi, India. Acting on this suspicion, the exchange has filed a cyber-crime incident report with the Delhi crime bureau under the cryptocurrency crime category.

A meeting of Cashaas board has been called to determine whether the company will bear all the losses associated with the crime.

Cashaa said it believes that to carry out the theft, cyber-criminals installed malware onto a computer used to make exchange transfers like user withdrawals. This malware sent a notification to the cyber-criminals at 1:23pm on July 10 when an employee logged into the account and made two transfers from a wallet. It was this wallet that was then compromised and illegally relieved of over 336 Bitcoin.

The company is now taking steps to prevent the cyber-criminals who hit Cashaa from selling the stolen cryptocurrency on exchanges. On Twitter, Cashaa posted the Bitcoin address of the hacker in hopes of tracking any movement of the illegally acquired funds.

Guarav said Bitcoin thefts were on the rise because some cryptocurrency exchanges made it easy for cyber-criminals to launder stolen funds.

As of today, hackers are very confident to hack crypto addresses and move it through exchanges that are facilitating such laundering through their systems, said Guarav.

Exchanges like these must be shut down and owners of these exchanges should be charged with money laundering facilitation crime.

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Bitcoin Trading Volume Slumps; Will TikTok Revive Dogecoin? – Forbes

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Get Forbes' top crypto and blockchain storiesdelivered to your inboxevery week for the latest news on bitcoin, other major cryptocurrencies and enterprise blockchain adoption.

Mustafa Murat Kaynak / Anadolu Agency

Bitcoin enjoyed a modest breakout Monday, gaining close to 5%, though it soon retreated back near where it began the week. After rising more than 150% in a two-month period from mid-March to May, bitcoin has sputtered since its halving and its volatility by the end of June was its lowest since February. A report this week showed that bitcoin trading volumes sank by 36% in June, a decline reminiscent of the lead-up to the crypto winter in early 2019.

One small cryptocurrency did double in value this week with a push from young TikTok users. Dogecoin, which trades for less than half a penny, soared after a viral video with a million views encouraged users to invest.

Brock Pierce, a controversial cryptocurrency investor who cofounded the stablecoin tether, is running for president. While his vanity third-party run isnt getting as much hype as that of rapper Kanye West, Pierce promises that he would have used 21st century technology to get stimulus checks and unemployment to Americans much faster. In a wide-ranging interview, Pierce revealed more details on his policy positions and denied disturbing allegations that he provided drugs to minors and pressured them to have sex in 2000.

The first week of his campaign didnt go so well. A New York appeals court approved an investigation into a number of businesses behind tether, which is pegged to the U.S. dollar and has a market value of $10 billion. Questions about whether or not tether is actually backed dollar-for-dollar have circulated since 2018. The Bitfinex exchange is also a separate respondent in the New York attorney generals investigation.

Sigal Mandelker, a Donald Trump appointee for under secretary of the Treasury for terrorism and financial intelligence who stepped down last year to work in the private sector, has reemerged as an investor and board member for Chainalysis. Her venture firm, Ribbit Capital, joined the crypto investigation startups expanded $49 million Series B funding round, and she expects to put her government experience tracing illicit activities to good use.

Bitcoins lightning network was built to speed up low-value bitcoin transactions by moving them off the bitcoin blockchain, but researchers at the Hebrew University of Jerusalem warned that the network is vulnerable against cyberattacks if users arent careful. Computer scientists Jona Harris and Aviv Zohar wrote in a Medium post that since the network is susceptible to blockchain congestion, around $9 million worth of bitcoin could be looted by attackers.

The PlusToken Ponzi scheme masterminds disappeared in 2019 with a $3 billion profit after six people allegedly involved in the scheme were arrested, but after a long quiet period, the XRP holdings of PlusToken wallets are moving again, signaling that some Ponzi schemers may still be at large.

About 285 million XRP tokens were transferred to a pool of accounts on June 19 shuffling the money and making it difficult to trace, though the scammers dont necessarily control this shuffle-pool and it may be law enforcement simply selling seized assets.

Digital asset investment manager Arca launched the Arca U.S. Treasury Fund on Wednesday, making it the first SEC-registered product regulated under the Investment Company Act of 1940 to offer digital securities. The fund will use the Ethereum blockchain to offer shares of ArCoins, which will pay out quarterly interest to investors, and ArCoins value is expected to remain stable since the fund will invest primarily in low-risk Treasury securities.

The Federal Reserves Declining Balance Sheet Is Bearish for Bitcoin. Or Is It? [CoinDesk]

Crypto Stablecoins Face Increasing Regulatory Scrutiny [Bloomberg]

Could We Fight Misinformation With Blockchain Technology? [New York Times]

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Listen: What a Bitcoin Researcher Says About Lightning – CoinDesk – CoinDesk

Posted: at 5:05 pm

Chaincode Labs researcher Clara Shikhelman has been studying mathematics in university since she was 14 years old. Now, as the bitcoin companys newest post-doctoral fellow, she is exploring ways to optimize the Lightning Network.

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In this audio interview, CoinDesks Leigh Cuen and Chaincode Labs researcherClara Shikhelmantalk aboutbitcoinand what attracted them to it.

As a co-founder of the IsraeliWomen in Mathematics Association, Shikhelman has been researching complex math problems for nearly a decade. But she said bitcoin offers especially interesting puzzles to solve because this technology may have the potential to change the world. Shes one of many young researchers who identify with the cypherpunk movement.

There are a lot of people like me, their main thing is academic, Shikhelman said. They are not the classic cypherpunk people, but [t]hey believe in privacy, in political change.

Until recently, most people associated with thecypherpunk movementwere technologists in the 1980s and 1990s who circulated mailing lists about encryption and other privacy tech topics. The term was created byfeminist hackitvist Judith Milhon, although it is widely associated with software engineers such as bitcoin veteran Adam Back. Many of the original cypherpunks are still active in thecryptocurrency spacetoday. However, theyve also inspired a new generation of self-identified cypherpunks with different skills now also exploring the subcultures proverb that cypherpunks build things.

In Shikhelmans case, shes focused on mathematical research to make bitcoinsLightning Networkreliable. Like her predecessors, she shares a love of cypherpunk literature, such as novels by science fiction writer Neal Stephenson. These fantasy worlds help her think outside the box and apply math to ideas with cypherpunk potential, meaning the potential to use privacy tech to promote social change. Such solutions-oriented research is a fundamental part of building technology, just as valuable as adding open source code to a Github repo.

Lets talk big. Lets think huge. Lets talk about thousands of years in the future, changing humanity, Shikhelman said.

In order to build privacy into the bitcoin ecosystem, technologists first must understand the mathematical aspects of the system. Just as safety equipment works best when it fits the person (an oversized helmet can be more dangerous than none at all), software works best when designed with both the details and holistic value flow in mind.

Lightning will need more than justonion routingfor good privacy guarantees going forward, said cypherpunk journalistJanine Roemer, who writes anewsletterabout bitcoin privacy tech. Lightning is one of many adaptations that will expand Bitcoins ability to carry larger and larger portions of the global economy.

Similar to Shikhelman, Roemer is a researcher who views herself as part of the broader cypherpunk movement.

A lowercase c cypherpunk, she joked, acknowledging she was never involved with the movements founding fathers.

This social movement is not preoccupied with overthrowing or altering governments, in stark contrast with Bitcoin Twitters anarchist undertones. Instead, Roemer said, rather than seizing power the movement is focused on working to make things un-take-over-able. In short, unseizable assets, self-sovereign data and other types of independence in a digital world.

I prefer the term informational self-determination, which is used in the German constitution, Roemer said.

As for bitcoin, Shikhelman described Bitcoin Core as pretty much stable and running, meaning her focus has now turned to privacy-centric usability for the Lightning Network. With regards to bitcoins reliability so far, Roemer agreed.

I hope bitcoin will become/keep being something that survives under adversity, and gives the people who use it at least enough privacy that they can escape from whatever preys on them. Whether thats the state, banks, corporations, abusive family or partners, Roemer concluded.

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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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Nearly $60M in Bitcoin Moved to Ethereum in June – CoinDesk – CoinDesk

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Nearly $60 million worth of bitcoins moved to Ethereum during June, according to data estimates from Dune Analytics. Wrapped Bitcoin, the oldest tokenized bitcoin protocol on Ethereum, is responsible for roughly 75% of that growth after moving more than 4,800 BTC to Ethereum last month.

Demand has increased for using bitcoin in a variety of decentralized financial services as Ethereum continues to be the most popular off-chain destination for bitcoins. More specifically, yield farming and MakerDAO adding tokenized bitcoin as collateral are likely strong catalysts, said Medio Demarco, former associate at Deutsche Bank and co-founder of cryptocurrency research firm Delphi Digital.

The recent trend shouldnt come as a surprise and will probably continue, Demarco told CoinDesk.

The increasing popularity of tokenized bitcoin is also no surprise to Ben Chan, CTO at BitGo, the cryptocurrency payments processor that spearheaded Wrapped Bitcoin. The purpose of WBTC is to bring bitcoin to the world of decentralized finance, Chan said. Yield opportunities for lending and supplying WBTC in Ethereum-based applications are driving recent growth, he added.

Currently $132 million worth of bitcoin is on Ethereum, at the time of publication, or roughly 0.08% of the leading cryptocurrencys market capitalization, according to OnChainFX.

Is the growing demand to use bitcoin on Ethereum a positive signal for the leading cryptocurrency? According to Demarco, the trend has a synergistic effect for both blockchains.

Chan agreed, telling CoinDesk that, for Ethereum, growth in the value of assets on decentralized finance applications is a step towards the maturation of trustless and transparent financial services. For Bitcoin, the benefit comes from being able to earn yield and collateralize bitcoin, which adds incentive for users to invest in the cryptocurrency, according to Chan.

Using bitcoin on Ethereum is potentially bullish for both networks, Chan said.

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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CoinSwap and the Ongoing Effort to Make Bitcoin Privacy ‘Invisible’ – CoinDesk – CoinDesk

Posted: at 5:05 pm

A developer known for working on enhancing Bitcoin privacy has set his sights on a new project he hopes will massively improve how we keep our transactions private.

Chris Belcher, who also created the technical privacy market JoinMarket, is currently working on putting to the test CoinSwap, an idea first proposed by legendary Bitcoin developer Greg Maxwell in 2013. Belcher has been focusing on CoinSwap rather than JoinMarket because he thinks it will give users better privacy, he told CoinDesk.

Belcher recently received not just one, but two grants for his efforts, showing just how excited Bitcoiners are about the potential of the project.

Though the Bitcoin network arose from a privacy-minded movement, its privacy is actually pretty thin. Just take a look at any block explorer for a glimpse of how easy it is to pull up any transaction thats ever happened in Bitcoins history as well as the transactions associated history.

Right now, Bitcoin privacy is not very good at all. Anyone in the world can analyze the blockchain and then can find all sorts of information about users their balance, their history, who they transact with and in what amounts, when everything they spend, Belcher told CoinDesk in an interview.

Belcher argues that this is, in some ways, worse than the financial privacy we have in legacy systems today. The banking system, they know your transactions, but the general public doesnt. With Bitcoin it is the general public it is everyone that can see exactly what the user does, Belcher added.

He added its important to most people that this type of information isnt exposed to the whole world.

Financial privacy is good for human dignity, [for example], if you dont want your neighbors to see what charities you donate to or that type of thing, or if youre paid in bitcoin you dont want your employers to know what charities you donate to or what other activities youre involved in, Belcher added.

CoinJoins: today's Bitcoin privacy

CoinJoins (distinctive from CoinSwaps, which Belcher is putting to the test) are the privacy transactions that are most popular on Bitcoin today. CoinJoins give users good privacy and are becoming more popular. Thus far, they have been adopted in the Wasabi wallet, Samourai Wallet and JoinMarket.

A CoinJoin takes all inputs from several transactions by different users and mixes them into one big, collaborative transaction. This one big transaction then sends the bitcoins mixed from different addresses out to different addresses. Because no one can tell where the spent bitcoins originally came from, the scent of the trail is obfuscated and the participants in the CoinJoin gain better privacy.

But its not perfect. There are still ways for people analyzing the Bitcoin blockchain (namely blockchain analysis companies) to detect when and where bitcoins are being mixed.

For one thing, the transaction sizes of mixed coins are much bigger than normal transactions because they contain so many different inputs.

Also telling is the fact they have outputs that are all the same size. Equal output CoinJoins are very obvious. If someone sees them on the blockchain they can see that this kind of privacy protocol is happening, Belcher said.

Why are outputs the same size? If Bob sends 0.8 BTC into the CoinJoin transaction and Alice sends 0.187 BTC and Mary sends 1.2222 BTC, and the resulting outputs are exactly 0.8 BTC, 0.187 BTC and 1.2222 BTC respectively, that coincidence is pretty obvious to anyone who is looking.

In order to preserve privacy, a CoinJoin transaction usually splits the amount of bitcoin dispensed into even pieces, say 0.1 bitcoin. So, if Alice put in 0.3 bitcoin, she will receive three 0.1 pieces sent to three separate addresses that she controls.

Most transactions dont have a bunch of equal outputs like this. Thats why CoinJoins are easy to detect.

Indeed, there have been a few instances of cryptocurrency exchanges banning users who have evidently sent their bitcoin through such privacy services.

Theyll be suspicious. If theres someone analyzing the blockchain, theyll see this is a CoinJoin, so they know this person did that. And if they see another transaction, [by comparison] they can see that its not a CoinJoin, Belcher said.

CoinSwap: an invisibility cloak for transactions

CoinJoin and CoinSwap have similar names and they both help to preserve privacy, so its easy to confuse them. But theyre different, and Belcher argues CoinSwaps fixes many of the problems of some kinds of CoinJoins and is the next step for on-chain bitcoin privacy.

CoinSwaps can be made to look invisible, Belcher said. If done correctly, a CoinSwap transaction can look just like a vanilla bitcoin transaction.

In a CoinSwap, it looks like two separate people are sending completely separate transactions. But under the hood, something else completely is happening.

Two parties, say Alice and Bob, execute such a swap. In short, Alice sends some bitcoin to a CoinSwap address. Bob sends the same amount of bitcoin to a separate CoinSwap address.

If both send the right amount of money over, the coins are swapped. The coins Alice sent to the CoinSwap address are sent to a new address owned by Bob, and the coins Bob sent to his own CoinSwap address are sent to a new address owned by Alice.

'Teleporting' Coins

Under the hood, the CoinSwap address, which is responsible for this swapping, is much fancier than a normal bitcoin transaction. Its a multi-signature transaction, meaning it requires more than one person to sign off on it in order to send the transaction. Usually, these types of transactions stand out on the blockchain since they look different from normal bitcoin transactions. But by including ECDSA-2P cryptography, these multi-signature transactions can be made to look just like normal bitcoin transactions. This is very much Belchers plan.

With ECDSA-2P in place, Alice sends a CoinSwap to Bob and it just looks like just a normal transaction. But actually the coins have ended up somewhere else completely, Belcher said.

This component is important. If all of these transactions look the same, people who arent even using CoinSwaps are getting more privacy too. Theres no way to tell if any transaction is a CoinSwap transaction or a normal one, turning bitcoin chain analysis on its head.

Similar technology will expand to the Lightning Network as well, so blockchain watchers cant tell if any single transaction is a CoinSwap, a Lightning Network transaction or just a normal bitcoin transaction.

CoinSwap could be said to allow bitcoins to teleport undetectably to anywhere else on the blockchain, as a description of the technology on the Bitcoin Wiki puts it. For a deeper explanation, check out this post from JoinMarket developer Adam Gibson.

Thats not to say that CoinSwap is perfect, though. The problem with CoinSwap is that it is a much more complicated process to implement than CoinJoin.

'As decentralized as possible'

In his mountain of a post, Belcher describes how to turn the idea of CoinSwap into reality.

A key reason CoinSwaps havent taken off since Maxwell described them seven years ago is that theyre not as straightforward as CoinJoins. So, Belcher has his work cut out for him in implementing the complexity for the first time.

His first step was just thinking about the best way to do it, outlining a number of different design considerations in the article making up his plan of attack. For one, he plans to use the Rust programming language, since its potentially more secure than other languages.

I want to make it as decentralized as possible, so theres no central point of failure that can be switched off or censored, Belcher said. To meet this goal, he wants the whole thing to run over the privacy network Tor, which helps to shield IP addresses, which are kind of like a mailing address for a computer exposing where it is located.

I think thats quite necessary for privacy, he said.

Belcher outlines this and various other considerations in his proposal, such as routing and using PayJoin, yet another bitcoin privacy technology, alongside it. Now that his ideas are out in the public, people can comment and make suggestions.

The next step is actually implementing it. Belcher told CoinDesk he hopes to release a minimum viable product in the next six months.

Image: BallesStrob-4 by MathGoulet is licensed under CC BY-ND 2.0.

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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Grayscale large cap fund shifts focus to Bitcoin and Ethereum – Decrypt

Posted: at 5:05 pm

In brief

Digital assets management firm Grayscale has increased the weighting of Bitcoin and Ethereum in its Digital Large-Cap (DLC) investment fundat the expense of other major altcoins.

Grayscale announced in a Twitter thread on July 12 that the composition of its DLC fund had shifted moving into Q2 of 2020. Between March and June, the percentage of Bitcoin in the fund increased from 81% to 81.5%, while Ethereums weighting in the fund increased from 9.6% to 11.7%.

The presence of three other major altcoins in the fund was reduced in the same time period. XRPs (XRP) weighting dropped from 5% to 3.6%; Bitcoin Cash fell from 2.8% to 2%; and Litecoins presence decreased from 1.6% to 1.2%.

Grayscales single-asset investment funds for Bitcoin and Ethereum are the largest under the firms management, totalling $3.5 billion and $410 million respectively. Comparatively, the single-asset funds for Bitcoin Cash, Litecoin and XRP total less than $12 million between them.

The worlds largest crypto-investment firm signaled a renewed thirst for Bitcoin throughout most of 2020. Prior to the Bitcoin halving event, Grayscale was estimated to be purchasing the equivalent of around half of all Bitcoin mined. In the two weeks after Bitcoins halving, Grayscales rate of Bitcoin acquisition increased to 153% of all BTC mined in that period.

By early April, the digital asset investment firm was also shown to be purchasing the equivalent of half of all ETH mined in 2020, eventually coming to own 1.1% of Ethereums circulating supply.

Its conceivable that Grayscales re-evaluation of its DLC fund is a reaction to market conditions. Since March 31, the global market dominance of Ethereum increased from 8.17%, to over 9.8% at time of writing. In the same time period, XRPs market dominance fell from 4.21% to 3.28%. Bitcoin Cashs dominance decreased from 2.27% to 1.6%. Likewise, Litecoins dominance dropped from 1.4% to 1.07%, according to CoinMarketCap.

The only exception to this trend is Bitcoin, the market dominance of which fell from 65.78% from March 31, to 62.46% at time of writing. This could be a result of the recent block reward halving, which resulted in half as many BTC being produced by Bitcoin miners.

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Comparing Apple to Bitcoin? Crypto Occupies a Class of Its Own – Cointelegraph

Posted: at 5:05 pm

A recent article by a Cointelegraph Markets contributor proclaimed that Bitcoin is the new Apple, explaining just how Bitcoins (BTC) price could reach $60,000 by 2023: Bitcoin hangs near the chasm of the adoption curve, and its price looks similar to Apples stock in 2008 before it broke out with a 520% rally.

The technology adoption curve referenced was Everett Rogers famous diffusion of innovations model, published in 1962, which described the five stages through which technology becomes diffused i.e., goes mainstream: innovators, early adopters, early majority, late majority and laggards.

In 2008, manufacturer Apples United States smartphone penetration was stalled at about 11% and still waiting to cross the chasm, the gap between the early adopter stage and the early majority stages in the Rogers lexicon. Any technical innovation worth its salt needs to cross that threshold. Apples smartphone surmounted that chasm, of course: Usage exploded, and Apples share price soared into the ionosphere. Bitcoin may well be in a similar place today.

But this comparison, satisfying as it may be, raises some questions. Is BTC even a technology like radios, PCs, and smartphones or is it something different: unique, sui generis i.e., in a class by itself? Is BTCs global penetration really anywhere close to 11% its putative U.S. penetration rate? Also, while smartphone usage indubitably crossed the chasm more than a decade ago, how does one extrapolate BTCs future price from AAPLs share price? Shouldnt it be compared with smartphones price?

The resemblance between Bitcoin and Apple in terms of growth and adoption is indeed there, but in short, is it fair to compare Bitcoin to younger versions of tech giants like Apple?

Arvind Singhal, a professor of communication at the University of Texas at El Paso, whose academic research has focused on the diffusion of innovation, told Cointelegraph that Bitcoin did indeed seem singular: It has tremendous barriers to adoption for most individuals and operates in a space of multiple familiar currencies and that peculiarity would greatly influence its adoption.

Michel Rauchs, the head of Paradigma a consulting firm focusing on the digital assets sector and a former research affiliate for the cryptocurrency and blockchain research program at the Cambridge Centre for Alternative Finance at the University of Cambridge, told Cointelegraph: Bitcoin is not a technology in itself, and any comparison [with traditional technologies] is misguided. He added: It is a social/economic system, a new monetary order that uses technology to represent its unit of accounts. Technology is just a secondary component, a means to an end.

Additionally, it may be important here to separate Bitcoin from the more generalized blockchain technology in which it partakes or risk misapplying Rogerss diffusion of innovation theory suggested Theophanis Stratopoulos, PwC Chair Associate Professor at the University of Waterloos School of Accounting and Finance, who further explained to Cointelegraph:

When decision-makers consider whether to implement blockchain in, lets say, their supply chain they develop expectations in terms of the cost of making the investment e.g., paying for the implementation of the software versus the benefits, such as increased revenues or cost savings. It is the difference in expectations among decision-makers that explains the adoption cycle that was observed by Rogers.

But Bitcoin does not behave the same way as other technologies typically adopted by firms like CRM systems, for instance. When it comes to Bitcoin, its the expected price that drives people to invest in Bitcoin. It is a matter of speculation, Stratopoulos continued, closer to a pyramid scheme than a capital expenditure. If I believe that more people will want to hold Bitcoin in the future, the price of the Bitcoin will rise. In a case like this, it makes sense for me to invest today rather than tomorrow.

Oliver von Landsberg-Sadie, the CEO and founder of the BCB Group a digital assets financial services group agreed that BTCs adoption cycle was anomalous, telling Cointelegraph: The reason Bitcoins adoption path has broken formation with established adoption curves is quite technical: In the short term, the more users there are, the less useful it is as a currency.

With more users, the Bitcoin network self-regulates by raising the network fees as the mem pool bulges up in busy periods and breathes out in quieter ones. But this makes Bitcoin less effective as a payments processing system. As von Landsberg-Sadie explained: When fees are high, no one is going to pay a $5 transaction fee on a $5 coffee.

Many technical solutions have been proposed to solve this dilemma, some in the form of forks, others like the Lightning Network project that makes use of a second layer, but none have truly stuck in the core Bitcoin protocol, which has been the slowest to evolve. The good news is that it is evolving, and the increase in off-chain transactions is reducing barriers, but all of this means one cant expect Bitcoin to follow a classic Rogers technical adoption curve, according to von Landsberg-Sadie.

When U.S. smartphone penetration stalled at around the 11% mark in December 2008, Apples share price became volatile three-month volatility stood at 92%, according to the July 6 Cointelegraph article. In June 2020, with BTC penetration at 11%, three-month volatility was at 64%, indeed also a very high figure.

But Stratopoulos was unimpressed. I would not compare Bitcoin to the performance of Apple or Amazon or any other high-tech company. Rogerss adoption cycle applies to innovations emerging technologies not to the price of stock. Kevin Dowd, a professor of finance and economics at Durham University in the United Kingdom, agreed, telling Cointelegraph:

Since BTC is a form of product, then the natural comparison is with Apples smartphone product. Apples share price might have risen strongly, but the better comparison is with the price of smartphones, which have not.

It is relatively easy to find correlations like between AAPL in 2008 and BTC in 2020, commented Stratopoulos. It does not mean that there is causation, or it could be just a spurious correlation.

What, then, can be said about Bitcoin adoption? If measured by awareness e.g., recognition of the term Bitcoin then it has already entered the mainstream, said Rauchs. A Blockchain Capital survey reported 89% awareness of Bitcoin in the U.S. as of Spring 2019. A U.K. Financial Conduct Authority survey conducted in December 2019, which was recently published, found that 73% have heard about crypto, compared to 58% in 2019.

As for BTC ownership, the Blockchain Capital survey reported: In total, 9% of the [U.S] population owns Bitcoin including 18% of those aged 1834 and 12% of those aged 3544. The firm originally reported 11% but that was later corrected. In the U.K. survey, by comparison, an estimated 3.86% of the general population currently own cryptocurrencies. This projects to approximately 1.9 million adults within the U.K. population (over 18) of roughly 50 million.

Rauchs finds the lower U.K. adoption estimate more realistic if generalizing; that is, he would peg crypto ownership at 3%5% of the global population, which also includes indirect ownership e.g., individuals participating in a pension fund that invests in Bitcoin. But this clearly means that all crypto is in the first half of the early adopter stage nowhere near the so-called chasm.

Its not much different for blockchain technology. Stratopoulos co-authored a paper on blockchain technology adoption exclusive of cryptocurrencies that concluded: Despite the recent hype, the current adoption rate is relatively low, and blockchain has not become mainstream yet.

Bitcoin clearly means different things to different people. Its most popular use today is as a store of value, while back in 2011, its principal use was as a payment method for gaming and other purposes, said Rauchs. Depending on its applications, different adoption curve scenarios are possible. For his part, Rauchs believes that BTCs most likely future usage will be as an alternative, non-sovereign store of value.

According to von Landsberg-Sadie, Bitcoins true adoption pattern will be more like a wave, oscillating higher at each cycle. In this view, the biggest bets are on the most extreme outcomes: Bitcoin will either ripple slowly out of relevance, or it will amplify meaningfully into the mainstream. My money is on the latter.

In sum, BTC following the same growth pattern as Apple sounds like a fun version of what may happen, but ultimately, one shouldnt quibble that it is not based on a statistically valid experiment, as Dowd reminded Cointelegraph. Still, according to several experts, it doesnt make sense to compare Bitcoin to traditional technologies because Bitcoin does not have the ability to create value either in the form of increasing revenues or reducing costs, as Stratopoulous noted. Moreover, global BTC penetration is arguably closer to 4% than to the 11% mark where smartphones stood in 2008, immediately before they went mainstream.

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