The Mastering Bitcoin author says places like Korea “probably” don’t need smart contracts, crypto, or blockchain
He predicted crypto adoption for people outside “broken [financial] systems” will come when more use cases are developed in phase 2 and it attains parity with the likes of Visa
He also shared his scepticism with STOs and centralised stablecoins
Andreas Antonopoulos was among a wave of bitcoin maximalists descending on the South Korean capital this week.
Speaking shortly after the crypto market’s bump, Antonopoulos told the Deconomy conference audience that mass adoption of bitcoin was a matter of “when,” not “if.” But, he noted, it may come later rather than sooner in places like the U.S., highlighting the long road of secondary development ahead.
These are the soundbites of his speech:
When mass adoption?
Ultimately, he said, people need to “need” crypto. For so-called developed countries like Korea, that need frankly does not yet exist. Largely because the space has so far only tried to “simulate” the current financial system.
“Why do Koreans need cryptocurrency?” he asked. “The answer is really simple: Korea doesn’t need cryptocurrency…Really what is the purpose of cryptocurrency in a country where the banking system, the financial services system, is so well developed?”
He went on:
“Do you [Korea] need smart contracts? …People use smart contracts to record title of land and ownership. You think they’re talking about Korea when they talk about that? Probably not, because you likely have a land registry that works.”
Therefore, he said, mainstream adoption won’t happen all at once. It will be incremental, region by region, each with a different catalyst and format. He also predicted the next series of developments will provide a use-case for consumers outside Venezuela and for the likes of Korea.
For those countries, he said the appeal will come in decentralised financial systems and micropayments. He predicts adoption will come when crypto not only “remove[s] unnecessary layers of intermediaries” but goes far beyond that. Just like the internet, which began by providing an electronic post-office through email before eventually growing far beyond that.
“Stage one: Replace all of the fax machines. And then stage two: Do applications that a fax machine could never do.”
That also means don’t expect anything too soon.
Not beating about the bush
Make no mistake, Antonopoulos said – we’re just at the beginning. Crypto is still dominated by a small community who are either drawn in by the prospect of capital-gains, victims of corrupt governments, or anarchists.
“It is difficult to understand, difficult to secure, with very poorly designed applications and with very difficult wording,” he said.
He also highlighted the accounting burden that has hindered retailers conducting crypto transactions.
“At least in the United States, the way that the capital gains taxing is implemented on retail is you have to record every purchase or every company profit based on the cost basis…And that creates an enormous burden on accounting which has killed retail adoption…It’s almost impossible to do retail transactions. It costs me more in accounting than I make from selling things if I do that.”
Poopooing STOS and stablecoins
He also commented on the STO wave. To put it mildly – he’s not convinced.
“I think STOs are likely to bring a small improvement of the issuance of securities compared to traditional soft markets. But that to me is not revolutionary,” he said. “STOs are the simulation of the existing system only now we’re watching and that’s not very exciting to me.”
As for centralised stablecoins? He’s even less sure. He commented sarcastically:
“You like the dollar? How about the dollar on a blockchain, huh? Yeah? Nice. Stablecoins. Very, very exciting stuff. Cutting edge technology.”
He also compared stablecoins to the era of introducing colour fax machines to replace black and white ones; in short, not fundamentally changing the system.
When financial sector?
Antonopoulos says he believes banks and the likes will wake up to customer demand when it is truly usable and desirable. It needs to be wanted, and it needs to be needed. Eventually, he added, banks are going to realise the inefficiencies of the traditional fiat system. He did not touch on their security and custody concerns however.
Perhaps sensing he had deflated a bubble of excitement, he finished by repeating his catch-phrase: Bitcoin will overtake Visa and MasterCard in less than a decade.
“The day after we achieve parity for payments with Visa or PayPal or Venmo or any of these platforms, we are six months away from doing 100 times more,” he said.
He also noted crypto’s ability to disrupt different sectors is already visible, including in the VC world.
“We had this explosion of ICOs. Nobody expected the first application of disruption to be venture capital itself. Who were most surprised were the venture capitalists. They were like ‘hang on, did you just replace us? This isn’t fair.'”
The rate at which new transaction blocks are being added to the ethereum blockchain is back on the rise after the network’s successful upgrades, Constantinople and St. Petersburg, last week.
According to blockchain analytics site Etherscan, the daily block count increased more than 1,500 blocks within a 24-hour period after the upgrades, implemented as hard forks, were accepted onto the main network.
The spike in block numbers is a direct result of Ethereum Improvement Proposal (EIP) 1234 activated last Thursday, which was designed to effectively disable a piece of code in the software known as the “difficulty bomb,” for a period of 12 months. Meant to encourage the platform to transition to a new proof-of-stake (PoS) consensus algorithm, the code has incrementally been increasing the mining difficulty of the ethereum network and slowing block creation since December of last year.
Now delayed, the effects of the bomb look to have rapidly reversed. Etherscan reports within just a day of hard fork activation, block creation times on ethereum have decreased from roughly 19 seconds to 14.
Core developers are now looking ahead to a new set of EIPs for inclusion in the next ethereum hard fork, Istanbul.
The timeline for Istanbul has yet to be solidified by ethereum developers, though former core developer Afri Schoedon suggested back in January possible mainnet activation for sometime in October of this year.
Still, as highlighted by Taylor Monahan, CEO of crypto wallet tool MyCrypto, in a recent interview with CoinDesk, preparations for a hard fork a are getting increasingly difficult as the ethereum ecosystem scales to include more companies, developers and users.
“I’m always worried whenever there’s a fork because there’s so many moving pieces,” said Monahan. “You have the miners. You have the hardware or the nodes. You have Geth, Parity, Harmony and all the different client softwares. You have the exchanges, wallets and everything in between. There’s a lot of places where things can go wrong.”
Such concerns have also been voiced by major enterprise companies considering how to extend their services to incorporate the buying and selling of ethereum’s native cryptocurrency, ether.
The latest hard fork activation on ethereum, however, was comparably smooth.
Likely due to the multiple attempts for its release as Monahon points out, the large majority of stakeholders on ethereum don’t look to have had any difficulty upgrading to the new software.
Ethereum blockchain analytics platform Alethio reports that no large fluctuations in either transaction volume or number of smart contract message calls were identified from when the hard fork activated to present day.
Number of transactions and smart contract messages on ethereum around the time of the Constantinople and St. Petersburg hard fork. Courtesy of Alethio.
As seen on Etherscan, the ethereum network hashrate – a measure of the total computational power being contributed by miners to create new blocks and validate transactions – also barely saw a notable change after activation of Constantinople and St. Petersburg
This indicates that most miners on the ethereum network upgraded their computer servers (also called nodes) to mine on the newly upgraded chain, as opposed to a chain running older ethereum software.
At present, the hash rate of the ethereum network according to hard fork monitoring site ForkMon is 132,986 GH/s. Comparatively, those miners who are still contributing hash power to the non-Constantinople and St. Petersburg activated chain have a combined hash rate of 1,777 GH/s.
As a result of the remaining hash power on the old version of the ethereum blockchain, a total of 19 wasteful blocks have been mined since hard fork activation on Thursday according to Ethereum Foundation security lead Martin Holst Swende.
“These blocks have been mined on the old mainnet chain, presumably having failed to update the miner software for the Constantinople fork – a waste of money,” wrote Swende in a public GitHub note.
As such, while the majority of the nodes on ethereum did upgrade successfully, an important caveat to note is that a small but persistent number of miners have yet to migrate to the current upgraded blockchain.
40 percent of institutional investors believe blockchain may be the most important innovation since the internet, according to a survey by trade association the Global Blockchain Business Council (GBBC), shared with Cointelegraph Jan. 24.
The opinions of 71 investors, which the GBBC quizzed about blockchain this month and last, were revealed at the ongoing World Economic Forum (WEF) in Davos, Switzerland.
The GBBC’s findings revealed that 40 percent of institutional investors that responded to its survey think blockchain “could be the most transformative technology since the internet.”
In addition, just under a third of investors interviewed believed businesses would need to find a head of blockchain on their boards within the next five years. 38 percent also considered firms would need to reveal their approach to the technology to investors within that time frame.
“There is little doubt about the potential impact blockchain can have on most sectors, and key areas of everyday life,” GBBC’s CEO Sandra Ro commented at the WEF, quoted in the press release:
“Increasingly, the winning organisations of the future will be those that have a clear and comprehensive strategy for blockchain and those that are committed to implementing and using it to transform their organisations.”
A similar survey earlier this week revealed that institutional investors consider 63 percent of senior business executives to have a limited understanding of the technology.
Blockchain has had mixed reviews as its reputation grew over the course of 2018. Despite its reportedly healthy uptake by businesses, others warned the technology was overhyped in some sectors.
Over the last eight weeks, the world has watched the yellow vest protests in France as the grassroots political movement has fought for economic justice. On Sunday, the well known street artist Pascal Boyart (Pboy) revealed a mural that contains a solvable puzzle with 0.28 BTC inside. The artist explained that the puzzle cannot be solved remotely and that sleuths must visit the location to decipher the painting’s clues.
In the midst of the yellow vest protests in Paris, a popular street artist called Pascal Boyart, otherwise known as Pboy, has created a mural depiction of the drama unfolding in the region. The painting is also a puzzle, which contains 0.28 BTC for whoever can solve the mystery. Pboy explained to his Twitter followers that the conundrum within the mural was funded by the well-known bitcoin enthusiast Alistair Milne.
“A street art treasure hunt in Paris with a bitcoin puzzle,” Pboy announced to his Twitter followers on Jan. 7. “For the 10th birthday of the genesis block, I painted this fresco in Paris with a 0.26 BTC ($1000) puzzle in it.”
In order to solve the puzzle, you must be physically in front of the mural — The bitcoin puzzle now has 0.2845 BTC inside as someone gave more to the bounty.
A Visual Representation of New Age Revolutionaries
So far, no one has solved the puzzle yet as the address still holds the 0.28 BTC inside. According to a marketing executive at Coinhouse, Brian O’Hagan, it was cold outside in Paris when Pboy worked on the painting. “Congrats to Pascal for this great piece and resilience — Painting on a wall for a few days in the middle of winter is not that easy,” O’Hagan emphasized. Another fan of the street art wrote: “I feel like there is not enough celebration for Bitcoin’s 10 years and I am glad Pascal Boyart did this.”
Recent research by the Wall Street Journal published Dec. 27 revealed that hundreds of cryptocurrency offerings showed signs of fraudulent activity, improbable returns and plagiarism.
In the course of its research, the WSJ downloaded “white papers” of 3,291 cryptocurrency projects that announced an initial coin offering (ICO) from three websites — ICOBench.com, Tokendata.io and ICORating.com.
A white paper is an informational document issued by a company that describes the company’s position, team biography, and technical specifics of a project, and is designed to be used as a marketing tool for potential investors.
The reporters further conducted an analysis of the documents, excluding duplicate and non-English papers:
“To identify duplicate language, the Journal compared sentences with at least 10 unique words to every other sentence in other white papers. Reporters then read and reviewed nearly 10,000 sentences appearing more than once among the 3,291 papers analyzed and removed technical and legal sounding language. Then, the Journal compared reported offering dates to determine which document first published any given sentence and excluded those projects from this database.”
The analysis reportedly indicated that 16 percent — or 513 — of the aforementioned white papers showed signs of plagiarism, identity theft and promises of implausible returns. White papers of more than 2,000 of the 3,291 projects contained sentences with luring terms such as “nothing to lose, guaranteed profit, return on investment, highest return, high return, funds profit, no risk and little risk.”
State and federal regulators in the United States have previously cracked down on various offerings with similar language, issuing cease and desist orders and at times filing charges against alleged offenders.
Additionally, the WSJ tried to identify fake team members by reverse image search of photos of people associated with 343 crypto projects, which did not cite key data about team members. Some documents did not list team members at all, so the Journal searched for names appearing in a list of over one million managed by the U.S. Census Bureau.
In August, the WSJ claimed in a study that cryptocurrency price manipulation was largely conducted by organized “trading groups” using services such as Telegram. The WSJ suggested that coordinated “pump and dump” schemes had seen traders inflate and crash the prices of various cryptocurrencies this year.
Although it has been a sketchy year for crypto in terms of price fluctuations, the number of cryptocurrency ATM machines in the world has doubled in 2018 to over 4,000. Crypto prices might be up and down quicker than a manic depressive, but wider adoption gets closer and closer.
The figures come from data published by the crypto analytics firm Data Light and show a massive upward trend in the installation of cryptocurrency ATM machines this year.
The Rise of Crypto ATMs
One of the most startling figures to come from the Data Light statistics is that six cryptocurrency ATM machines were installed per day on average in 2018. One of the main ingredients of wider crypto integration and adoption is the availability of crypto for the masses, and that is exactly what the increase in ATMs shows.
Some of the most interesting data in the stats are that out of the 4,051 cryptocurrency ATM machines now in the world, nearly all of them offer Bitcoin, while Litecoin is available at 2,421 and Ethereum is available at almost half the machines. Dash is also available across 729 machines, which is very impressive.
Other Interesting ATM Machine Stats in 2018
Another great source to check out crypto ATM stats is on the Coin ATM Radar site. On their crypto ATM map, they have listed a total of 4,085 cryptocurrency ATM machines in the world across 76 countries.
The map shows there are 1,258 Bitcoin ATM machines in the US and over 1,000 that support Bitcoin Cash. The combined total in North America adds up to 3,157 machines according to the website.
The United Kingdom has over 200 machines while Central Europe comes in at 750. South America is also no slouch in the crypto ATM stakes, coming in with 65 machines. Australia is slightly lagging behind South America with a total of 54 machines.
The vast increase in cryptocurrency ATM machines in 2018 proves that more people than ever before are starting to see crypto in similar terms to fiat currency, which is a great look for the industry.
Zebpay announced on Tuesday that its European exchange is now live. “We have recently expanded our global footprints in Europe with our exchange and wallet enabling crypto-to-crypto trading,” the company wrote, adding:
We are live with euro deposits/withdrawals and trading in 21 countries (Malta, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Netherlands, Poland, Portugal, Slovenia, Sweden, Austria) in Europe for users and corporate investors.
Zebpay Exchange Now Live in 21 European CountriesCustomers need to sign up for an account and go through Zebpay’s know-your-customer (KYC) procedures. “After successful KYC and bank verification,” customers can then deposit euros into their Zebpay euro wallets via bank deposits, the exchange detailed. They can also trade BTC against the euro on the Zebpay exchange and withdraw fiat from the wallets. “We will soon add more digital assets that can be traded with euro,” the company wrote.
For its European grand opening, Zebpay is offering zero-fee euro deposits as well as zero maker fees. Customers will also receive a reward of 0.25 percent per transaction. The offer is valid until Dec. 31 for supported euro and crypto-to-crypto trading pairs, currently BTC/EUR, ETH/BTC, LTC/BTC, XRP/BTC, BCH/BTC, EOS/BTC, and TRX/BTC.
Indians Cannot Register
Zebpay Exchange Now Live in 21 European CountriesIn September, Zebpay closed down its exchange service in India due to the banking ban by the Reserve Bank of India (RBI). At the time, the exchange claimed to have over 3 million users. Zebpay subsequently set up subsidiaries overseas. The company is registered in Malta under the name Awlencan Innovations Malta Ltd.
Another related entity is Zeb Ventures Pte. Ltd. Zebpay explained that this Singapore-registered company “is engaged in the service of providing a platform for the buying and selling of bitcoins and other cryptocurrencies through its mobile application known as Zebpay App, being listed on Android and iOS platforms.” The exchange’s website states:
We are not accepting new registrations from India.
The crypto banking ban in India is still in effect but the country’s supreme court is scheduled to hear all of the petitions against the ban in January 2019. Meanwhile, the crypto community is eagerly awaiting the recommendations submitted by the government panel headed by Subhash Chandra Garg, the country’s Economic Affairs Secretary.
The U.S. Commodity Futures Trading Commission (CFTC) wants to learn more about ethereum, its technology, and the markets that have built up around it.
In a “Request for Input” (RFI) published Tuesday, the regulator explains that it is looking for public feedback on different questions about ethereum, ranging from its technology to how it’s used. Respondents have 60 days from the RFI’s publication in the Federal Register to submit answers, either via email, mail or hand delivery.
“The CFTC expects the comments and information received will benefit LabCFTC, the CFTC’s FinTech initiative, and help to inform the Commission’s understanding of these emerging technologies,” a press release explains.
The RFI itself goes into further detail, explaining that its RFI will inform the agency’s oversight of the ethereum market, as well as any derivatives markets related to the cryptocurrency.
It goes on to say:
“The input from this request will advance the CFTC’s mission of ensuring the integrity of the derivatives markets as well as monitoring and reducing systemic risk by enhancing legal certainty in the markets. The RFI seeks to understand similarities and distinctions between certain virtual currencies, including here ether and bitcoin, as well as ether-specific opportunities, challenges, and risks.”
The document lists 25 different questions about ether and the network, divided into the network’s purpose, the technology behind it, its governance, markets and oversight and cybersecurity and custody.
The questions themselves touch on various issues and concerns discussed in the space, including ethereum’s upcoming move to proof-of-stake, scalability issues, how the network is being used specifically at present and how ether deposits may be audited, among others.
Notably, one question asks: “How would the introduction of derivative contracts on ether potentially change or modify the incentive structures that underlie a proof-of-stake model?”
A number of questions following this go further into detail about how the ether market might impact a derivatives market built on top of it – or vice versa.
The RFI was published through the regulator’s LabCFTC fintech initiative, which focuses on both educating the public about crypto assets, as well as acts as a way for participants in the space to interact with the regulator.
CFTC image via Mark Van Scyoc / Shutterstock
The U.S. Securities and Exchange Commission has ordered fund manager CoinAlpha Advisors LLC to pay a $50,000 fine following what it deemed to be an unregistered securities sale.
According to the order published Friday, CoinAlpha formed a fund in October 2017 with the goal of investing in digital assets. It reached out to possible investors, raising a bit more than $600,000 during the process.
While CoinAlpha did file a “Notice of Exempt Offering of Securities,” the company was not eligible for an exemption and did not otherwise register with the SEC. As such, it effectively solicited securities investors in breach of the law, the order says.
Further, the agency said that the company did not run adequate know-your-customer procedures to ensure that all of its investors were accredited, though it did hire a third-party to check accreditation status after the SEC first contacted it.
The order notes that CoinAlpha reimbursed all fees to its investors after being contacted by the SEC, saying:
“A total of 22 investors invested a total of $608,491 in the Fund. In October 2018, after being contacted by the Commission staff concerning the issues herein, CoinAlpha unwound the Fund, pursuant to the authority granted in the Fund’s Limited Partnership Agreement.”
Notably, the order highlights that CoinAlpha cooperated with the SEC, and the regulator in turn is only imposing sanctions that it negotiated with the company.
These sanctions include barring CoinAlpha from violating the Securities Act in the future and a $50,000 penalty paid to the SEC, on top of the reimbursements. According to the filing, CoinAlpha didn’t admit to or deny the allegations put forward by the agency.
The SEC’s response echoes similarly light repercussions for other entities in the space, including startups Airfox and Paragon and EtherDelta founder Zachary Coburn.
While each of those firms or individuals was found to have violated securities laws, the SEC in each case explained that they had cooperated with its investigation, and imposed relatively low penalties for each.
CoinAlpha did not respond to a request for comment by press time.
The Bitfury Group has recently announced a partnership with crypto payment processing system Paytomat, working to bring the Lightning Network to Paytomat’s participating merchants.
According to a recent Medium post made by LightningPeach, “Bitfury’s in-house specialized Lightning Network engineering team,” the Bitfury Group is pouring its resources into Paytomat’s wallet and vendor system, enabling “users and merchants on the Paytomat system to send and receive bitcoin payments over the Lightning Network almost instantly.”
“Both Bitfury and Paytomat participated in the Blockchain Expo in Amsterdam in June, and, after meeting, we began discussing our potential partnership opportunities,” Pavel Prikhodko, the head of LightningPeach, told Bitcoin Magazine.
The partnership between the two companies seems like a natural fit. Bitfury specializes in building blockchain hardware and tools (such as mining chips), and Paytomat has a large base of customers and merchants already lined up.
Per the partnership, Bitfury will be incorporating Lightning directly into Paytomat’s platform. As Prikhodko described it, “Bitfury’s LightningPeach team integrated Lightning Network in Paytomat. Bitcoin Lightning payments are now built in to Paytomat’s merchant dashboard, allowing users to make instant and low-fee payments in Bitcoin.”
The Lightning Network has generated a great deal of fame in the cryptocurrency space for its promise of instant and feeless microtransactions, but, as with many promising technologies, adoption can become a major hurdle. Prikhodko seems fully confident, though, in Paytomat’s ability to give Lightning and bitcoin sufficient exposure to its network of merchants.
“You can find a list of merchants that are already working with Paytomat in their partnership section. Bitcoin Lightning payments on Paytomat will be made available to more than 300 merchants around the world.”
On the aforementioned partnership section of Paytomat’s website, the company lists a wide range of vendors across Europe from the Iberian Peninsula to the Lower Countries and even as far as Ukraine. In addition to the wide geographic range of vendors, Prikhodko also said there is a diversity of these vendors themselves, stating that “Paytomat works with many kinds of merchants, including restaurants/cafes and clinics.”
With this partnership introducing the Lightning Network to a hitherto unexposed audience, it could open up the payment solution to an entirely new user base and provide a use-case with real worldwide leverage. To date, Lightning’s main implementations and use cases have been limited to web activity and online merchants, though the network has grown significantly in the latter half of 2018.