A Discussion With the Prolific Bitcoin Developer Unwriter

A Discussion With the Prolific Bitcoin Developer Unwriter

This week news.Bitcoin.com spoke with one of the most prolific developers working with the Bitcoin Cash (BCH) network. Over the past few months, the developer Unwriter has created a large swathe of censorship-resistant applications that are tethered to the BCH blockchain. We decided to get an inside glimpse of all the interesting platforms Unwriter has been launching, and the programmer tells us why they were conceived and how they operate.    

Also read: No Matter How You Slice It — Token Assets Are Coming to Bitcoin Cash

So far the programmer Unwriter has launched platforms such as Chainfeed, a Twitter bot called @_Opreturn, Read.cash, the Bitdb.network, and a few more applications that are compatible with the BCH chain. Moreover, Unwriter has also been collaborating with five other well-known Bitcoin developers and contributed to the working paper called ‘The Simple Ledger Protocol,’ a concept that aims to create representative assets using the Bitcoin Cash network. With so many projects under this developer’s belt, we decided to chat with Unwriter in order to get some perspective on some of these unique applications.

Unwriter Has Launched a Flurry of Censorship Resistant Applications

News.Bitcoin.com (BC): Can you tell us about the first three applications you created?

Unwriter: Chainfeed.org is the first application I created on BCH. Chainfeed is a web app that delivers the full firehose of real-time Bitcoin OP_RETURN transactions. It’s pretty mesmerizing to keep the site open and watch as messages flow in, especially now that there’s more variety in the types of apps being built on OP_RETURNs. Immediately after I released Chainfeed people started asking for an API, and soon I released the Chainfeed Firehose API. Now anyone with programming skills could hook into the real-time Bitcoin OP_RETURN feed with just a single function call.

A Discussion With the Prolific Bitcoin Developer Unwriter
Chainfeed.org

To demonstrate the Chainfeed API I built a Twitter bot called @_Opreturn. The @_opreturn account auto-replicates OP_RETURN transactions to Twitter via the Chainfeed API, effectively creating a portal from the Bitcoin world to the “real world”. Currently, it imports content from Memo.cash, blockpress, and Matter, a long-form blogging tool on the blockchain. But it may incorporate other apps in the future whenever it makes sense, pull requests and suggestions are welcome. It’s open sourced on Github so anyone can just fork it and build their own custom bot too.

A Discussion With the Prolific Bitcoin Developer Unwriter
The Twitter bot @_Opreturn

Read.cash was a project I spontaneously built one afternoon because I needed it myself. A lot of Bitcoin-powered apps nowadays have their own built-in wallets to provide a better user experience. You can see this in apps like Memo.cash and Yours.org. Whenever you receive money through these apps, you end up with separate wallets each tied to its parent application website. As I started playing around with these apps, I felt the need to keep track of all of these wallets in one place so I have a comprehensive view of how much money I’m making in total. And that’s what Read.cash does. It’s a read-only monitor that aggregates balances from all your wallets across the web and lets you keep track of them easily in one place.

A Discussion With the Prolific Bitcoin Developer Unwriter
Read.cash

You can add as many public Bitcoin addresses as you want and it doesn’t even require you to add any private key or anything, it’s 100 percent powered by public bitcoin addresses and the site is completely open source so there’s no security risk. Also, with the Money Button integration, you can even charge all your wallets in one place with one click. Some of the future improvements would be incorporating Tipbots like Tippr or Chaintip. Currently, they don’t provide a public access to user addresses so you can’t add them to Read.cash, but I heard some of them are thinking about it, so I’m looking forward to that day.

BC: Just recently you launched the Bitdb.network can you tell our readers about this project and what it can do?

Unwriter: Bitdb is a global NoSQL database backed by Bitcoin and implemented with MongoDB. Bitcoin’s blockchain is the perfect data structure to function as the single source of truth, but it’s not at all designed to facilitate flexible queries. And obviously, this is essential if you want to build any sophisticated app. Bitdb complements Bitcoin by taking all the OP_RETURN transactions on Bitcoin and creating a public MongoDB index that makes it hyper-queryable. This way you can build all kinds of apps easily which used to take months to build because all you need to focus on now are the protocol design and the frontend implementation. You no longer need to build out your entire custom backend infrastructure from scratch. For example, I recently released a new app called https://chaintrend.org – a “Google Trends for Bitcoin op_return”. Something like this would have taken me weeks to build had I started from scratch, but it took me exactly one day to build the whole thing thanks to Bitdb. It was just a matter of a single map-reduce query to the db.

A Discussion With the Prolific Bitcoin Developer Unwriter
The Bitdb network.

In addition to the ease of use, a more important benefit of Bitdb is that it provides a standardized way of querying Bitcoin OP_RETURNs, which is something that never existed before. Before Bitdb if you wanted to build an OP_RETURN based application, you would have had to build an entire backend infrastructure to crawl, process, index, and store OP_RETURNs in your own custom database in a queryable manner. This is exactly what the Memo.cash team did and it’s a lot of work. Furthermore, this is completely redundant for every developer who wants to work on a decentralized app powered by Bitcoin OP_RETURN. They would all end up building their own custom infrastructure that are completely incompatible with one another even though they’re all building on top of exactly the same ledger — Bitcoin.

This is where Bitdb comes in. It takes all the OP_RETURN messages, chunks them into pieces, and stores them under attributes with a standardized naming convention that goes: “b1”, “b2”, “b3”, etc. There are many benefits to this approach:

  • This standardized way of indexing provides a uniform interface to querying the blockchain and makes interoperability across apps a trivial matter. For example when Blockpress first launched, a lot of people complained about the protocol incompatibility between Memo and Blockpress. But with Bitdb this is a non-issue. For example, with a single query, you can even create an app that combines Memo and Blockpress into a unified feed.

Here’s a great example.  

  • Developers no longer need to worry about how to store their data. Without an open standard indexing strategy, every app developer needs to carefully think about how they will structure the protocol and how they will store the data. And since all apps have different purposes, their database will all look different and incompatible with one another therefore difficult to integrate. We don’t want that. We want all apps to seamlessly integrate with one another through the single parent protocol which is Bitcoin. And that’s Bitdb’s main goal — Interoperability.
  • When you build your decentralized app using Bitdb your app is automatically open sourced (which is what users want) even without you doing anything (which is what you want). All you need to maintain are the protocol specification and the frontend implementation. So if the app developer decides to move on, anyone can resurrect the app easily by reconstructing the data from scratch using Bitdb — no need for the original developer to go through trouble to open source their backend, because it’s already 100% open simply by choosing to use the Bitdb scheme instead of rolling a custom backend infrastructure.
  • You could even build an app WITHOUT a public frontend. An app developer may decide to just publish the Bitdb query recipe for their app protocol somewhere either publicly or privately, and the target users can build their own frontend locally using the Bitdb query, which means you can build truly censorship resistant apps this way if you want.

BC: How do you feel about the amount of development taking place with the BCH ecosystem since the May hard fork?

Unwriter: Two things:

  • OP_RETURN increase: When most people see the OP_RETURN size increase from 80 bytes to 220 bytes, they see just a three-fold increase. But when developers look at it I think they see an exponential increase. Developers are very used to creating exponential output from linear input because that’s their job description. We won’t see apps that are 3 times better, we will start seeing apps that never could exist before, which will change everything.
  • The block size limit increase: For most people, I assume the 32 MB size probably sounds cool but not really that tangible. But what’s really important is this increase is a great signaling for all the developers and entrepreneurs who are looking for a platform to build on top of. The block size increase demonstrates the commitment to the “permissionless innovation” philosophy and I think that’s a good philosophy to bet on if you’re building an open source project such as Bitcoin.

BC: If there was something specific you wanted to add to the next hard fork what would it be?

A Discussion With the Prolific Bitcoin Developer Unwriter
@_Unwriter

Unwriter: To succeed, I think Bitcoin at this stage needs to focus on the application ecosystem growth instead of its own growth. This is because I believe exponential growth will come NOT from individual merchant adoptions but from entrepreneurs and developers building useful things on top of Bitcoin. These people are good at creating exponential output from linear input, therefore are the ones Bitcoin needs to win trust from if it wants to grow most efficiently. So in my humble opinion, the top priority for protocol changes should be the features that improve on these fronts — getting trust and attention from entrepreneurs and developers (instead of individual users and merchants). Individual users and merchants will follow when there are more useful things they can do with Bitcoin. Until then, individuals will only see Bitcoin as a speculative asset no matter how many buzzwordy features it adds. 

And to win trust from these people Bitcoin needs to show that it’s scalable, stable, and permissionless. Without scalability, it’s not so attractive to these people because they would rather spend their energy building things on other platforms that they can benefit exponentially from. And without the perception of permissionless innovation and stability, wise developers will not want to waste their energy building stuff on top of Bitcoin because they don’t want to wake up one day to find that the rules of the game have changed overnight and all their effort has gone to waste.

So for example, I think the recent hype and conflicts around tokens on BCH is very healthy and desirable. ICOs have acquired a bad reputation because most of them are scams, but I do believe it is a necessary evil because it will attract the type of people who are seeking exponential growth/returns on their projects and businesses. It will have been a success even if 0.01% of them end up becoming a success and the rest of them are scams or failures. Especially on BCH, since it’s all about scalable usage.

BC: As far as the BCH and BTC rivalry is concerned how do you feel about this subject as far as the future is concerned?

Unwriter: We can learn a lot from history. I think the French revolution provides a lot of insight into the future.

BC: How can other developers help you with your projects if they wanted to collaborate with you or the new applications you’ve built?

Unwriter: I think the best way to get started is actually build your own apps using all the open sourced tools such as Chainfeed API and BitDB. There are so many cool things you can build TODAY, even without running your own node but simply using BitDB/Chainfeed combination. Eventually, as you start using them you will come across pain points and maybe even improvement ideas. Feel free to make suggestions, ask questions, and send pull requests. I’ve done my best to be available as much as possible through the telegram chatroom and Twitter, so reach out anytime.

In fact, all this is already happening organically and it’s amazing. There are some really cool projects already using the Chainfeed and Bitdb infrastructure. One such example is the Chainbet protocol. It uses the Chainfeed API to deal with real-time messaging. Also, the upcoming Simple Ledger Protocol will use a unique security model that takes advantage of both SPVs and BitDB to complement each other. Also, the popular Memo++ extension by Modulus makes use of Chainfeed/Bitdb API. Lastly, I also know of a few people working on a Google-like search engine on top of Bitdb. But these are just some of the projects I’m aware of, and I’m sure there are many other people working on their cool projects, would love to hear from them.

Some people are even forking Bitdb for their own altcoin blockchains and I totally encourage them. If you’re thinking of doing this, please do so and reach out. The codebase is modular for a reason so any Bitcoin-like chains can integrate easily. I take this radical open approach because I believe strongly enough in Bitcoin that I know it can do no harm but only bring good. I also believe the most effective way for Bitcoin to grow at this stage is to gain as much external developer/entrepreneur mindshare as possible, and interface with as many external technologies as possible.

What do you think about all the applications Unwriter has launched? Let us know what you think in the comment section below.


Images via Chainfeed, Read.cash, Bitdb.network, and Twitter. 


Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH, and other coins, on our market charts at Satoshi Pulse, another original and free service from Bitcoin.com. 

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2018 Fortune 40 Under 40: Vitalik Buterin, Brian Armstrong, and More Listed!

Vitalik Buterin makes Fortune 40 under 40

We know their names, but that’s not always enough. To appreciate the young in the world of business, Fortune, a multinational magazine, publishes its ’40 under 40′ list every year. Yesterday, the 2018 Fortune 40 under 40 list was released—and four crypto players made it. Vitalik Buterin makes Fortune 40 under 40, plus more!

Crypto Makes it on the 2018 Fortune 40 Under 40

When Fortune’s under 40 rankings first started, it was to show off the giants of the dot-com boom. But things are different now, with changes being sparked by the 2008 financial crisis. ...

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Study Shows Many ICO Protocols Fail to Match White Paper Promises

Study Shows Many ICO Protocols Fail to Match White Paper Promises

On July 19, a group of interdisciplinary researchers from the University of Pennsylvania, with guidance from the esteemed Penn Law professor David Hoffman, published an in-depth study of initial coin offerings (ICOs) that promise innovative concepts like autonomous governance and operate by the belief that ‘code is law’. However, most of the ICOs the group researched failed to match the original contractual promises and the so-called ‘trustless trust’ offered by these projects had very little merit.

Also read: Japan Tax Agency Says Individuals Earning $1,800+ in Crypto a Year Will Declare Tax

University of Pennsylvania Study Looks Into Whether ICO White Paper Promises Match the Project’s Codebase  

Study Shows Many ICO Protocols Fail to Match White Paper PromisesThis week, researchers from the University of Pennsylvania and Penn Law professor David Hoffman have published an interesting working paper on ICOs called “Coin Operated Capitalism.” The paper was authored by university members Shaanan Cohney (computer science PHd),  David Wishnick (a fellow at Penn Law’s interdisciplinary Center for Technology), and Jeremy Sklaroff (Penn’s JD/MBA program).    

The study’s authors surveyed and audited the top 50 ICOs that raised the most funds in 2017 and researchers looked at whether or not the ICO promises made by the promoters and white papers actually matched the technology’s codebase. The study finds that there are glaring differences between what the ICOs’ code delivers and what the creators promised to their investors.

“The automated mechanisms found in code—known as ‘smart contracts’—are not the only way entrepreneurs can deliver on their promises,” Wishnick explained.

But, according to proponents, they are what make ICOs innovative.

Study Shows Many ICO Protocols Fail to Match White Paper Promises
Researchers from Penn Law looked at ICOs such as Tezos, Filecoin, EOS, Bancor, Tron, Tenx, Civic, Chainlink, Storj, Power Ledger, and many more.

Only 20% of 50 ICO Codebases Matched the Promoter’s Promises

Out of the 50 ICOs surveyed, using both the white papers (contracts) and the codebases (delivered or non-delivered promises), a great deal of the ICO code and their associated ICO contracts did not match. In fact, only 20 percent of the 50 contracts surveyed matched their promises to code 100 percent of the time. “Nearly 60 percent made a least one governance promise that was missing from the code, and 20 percent had two or more mismatches,” the study’s authors emphasize.

“Surprisingly, in a community known for espousing a techno-libertarian belief in the power of ‘trustless trust’ built with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures,” the working paper explains.

In Contrast to Traditional Law, the Smart Contract Community Is Full of Energy But So-Called Autonomous Protocols Need Vetting and Code Auditing

The paper concludes that the informality of smart-contract production does lead to “risks” but also “creativity”. Smart contract developers are far more creative than a “community of lawyers who tend to recycle language from agreement to agreement without much thought,” the study states. In contrast, the smart contract community has a lot of passion and energy, the researchers explain. But the study shows the manufacturing of smart contracts and blockchain promises must be evaluated and scrutinized closely.   

“Beyond the production of smart contracts and blockchain code, our study also highlights the importance of the ecosystem through which crypto code is vetted, audited, and made legible to the outside world,” the paper concludes.

What do you think about the Penn Law working paper that details most ICO code does not match the promises tied to the project? Let us know what you think in the comment section below. 


Images via Shutterstock, and the University of Pennsylvania


Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even look up the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

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Malta Stock Exchange to Develop Two New Platforms for Security Tokens

Malta Stock Exchange to Develop Two New Platforms for Security Tokens

The Malta Stock Exchange has separately announced today that MSX, the innovation, digital and fintech arm of the group, will be developing two new platforms for listing and trading security tokens. Neufund is developed in partnership with Binance, and OKMSX in collaboration with Okex.

Also Read: No Insider Trading, Market Manipulation and Misleading Ads – Malta’s New Crypto Law

Neufund

Malta Stock Exchange to Develop Two New Platforms for Security TokensA subsidiary of the Malta Stock Exchange and Binance, Neufund aims to become an end-to-end primary issuance platform for security tokens, equity tokens in particular. It will allow for secondary trading of equity tokens and enable companies from around the world to raise funds in a legal way while offering liquidity. Seven companies are already slated to conduct an Equity Token Offering (ETO) on the platform: Founders Bank, Brille24, Uniti, Myswooop, Next Big Thing, Blockstate and Emflux Motors. A pilot project is promised later in 2018 which is said to include the public offering of tokenized equity on Neufund’s primary market which may later be tradable on Binance and other crypto exchanges pending regulatory and listing approvals.

“We are thrilled to announce the partnerships with Malta Stock Exchange and Binance, that will ensure high liquidity to equity tokens issued on Neufund. It is the first time in history, that security tokens can be offered and traded in a legally binding way. The upcoming pilot project will allow us to test the market’s reaction and realize the overall project idea in an environment with minimized risk,” commented Zoe Adamovicz, CEO and Co-founder at Neufund.

OKMSX

Malta Stock Exchange to Develop Two New Platforms for Security TokensOKMSX is meant to leverage Okex’s digital asset operations and security expertise, along with the Malta Stock Exchange’s 26-year experience in regulatory compliance and client due diligence. It aims to develop an institutional grade security-tokens trading platform. The two parties say they strive to finalize the joint venture by Q3 2018 and that this new platform will launch by Q1 2019 to service clients globally from Malta.

“Malta is taking the helm of regulating the blockchain technology and cultivating a regulated cryptocurrency and ICO epicentre. This joint venture marks our confidence in the Maltese government as well as our commitment to providing an efficient, secure, and transparent blockchain trading environment to clients worldwide. We believe OKMSX will be a milestone in the economic development of Malta,” said Tim Byun, Chief Risk Officer and Head of Government Relations of Okex.

“Today Malta opened up a way for legally binding listing and trading of tokenized securities. We are proud of Malta Stock Exchange to enter a partnership with a worldwide leader in primary offerings on blockchain such as OKEx. I look forward to the fruitful collaboration in the future,” commented Silvio Schembri, the Maltese minister for Financial Services, Digital Economy and Innovation.

Are security tokens listed on stock exchange-backed platforms really more safe to invest in? Share your thoughts in the comments section below.


Images courtesy of Shutterstock.


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US Ranked Top Destination for Coin Offerings, Majority of ICOs Identified as Scams

US Ranked Top Destination for Coin Offerings, Majority of ICOs Identified as Scams

The US remains a leading destination for ICO projects according to a new study that also ranks Switzerland and Singapore in the top three. The report notes that authorities in other jurisdictions, like Russia and Estonia, are working to adopt favorable regulations in order to attract more crypto startups. The findings coincide with another study identifying 78% of all ICOs as scams.

Also read: Less Than Half of ICOs Survive Four Months After Sale, Study Finds

A Third of the Largest ICOs Held in the US

Despite regulatory uncertainty, the United States has established itself as the leading destination for companies conducting Initial Coin Offerings (ICOs), a new study confirms. According to the recently published report, 30 of the 100 largest token sales were held by companies based in the US. The data compiled by the team of the Crypto Finance Conference places Switzerland second with 15 ICOs, and Singapore third with 11 of the biggest coin offerings.

“ICOs continue to gain momentum. They raised $6.3 billion in the first quarter of 2018 — more than was raised in all of 2017,” said the chief executive of CFC, Andrea-Franco Stöhr, quoted by Venture Beat. In a released statement, he also commented that the research provides an opportunity to understand which countries are embracing blockchain and crypto projects and how they do it.

US Ranked Top Destination for Coin Offerings, Majority of ICOs Identified as Scams

The authors of the study also note that a number of countries are making efforts to adopt and implement regulations that would attract and encourage more initial coin offerings. The Russian Federation, which hosted six of the top 100 projects, is one of them. Another report published earlier this year claimed that startups with Russian participation raised $310 million. That study covered a total of 370 token sales.

The other nation that has been mentioned in the study as a crypto-friendly jurisdiction is Estonia, with four of the largest ICOs. According to some reports, the tiny Baltic country accounts for up to 10% of all funds raised through initial coin offerings last year.

78% of ICO Projects Identified as Scams

Despite two recent studies suggesting investors are still bullish on ICOs, a research conducted by the Boston College revealed that less than half of ICOs survive four months after sale. Now, another study, authored by the research company Satis Group, tells us that a staggering 78% of all coin offerings conducted last year have turned out to be scams. These ICOs promised big profits but shared very little information about the project and the team behind it or didn’t even publish a white paper. Most of them disappeared right after the token sale.

The updated data in the “Cryptoasset Market Coverage Initiation: Network Creation” report, released last week, also shows that 4% of the ICO projects have failed to meet their fundraising targets and have returned the capital to the investors. Another 3% were never listed on a trading platform. Only 15% of the coins sold through ICOs continued to be listed and traded on exchanges. Of those currently trading, 7% are deemed ‘successful’, 3% are said to be ‘promising’, and 4% are tagged ‘dwindling’.

US Ranked Top Destination for Coin Offerings, Majority of ICOs Identified as Scams

It’s been estimated that of the $12 billion raised by ICOs, $1.3 billion (11%) was lost to scams, $1.7 billion (14%) disappeared in failed projects, and $624 million (5%) went to those that had gone dead. However, more than 70%, or $8 billion USD, went to ICOs that eventually reached exchanges. According to the study, most of the funds appropriated by scams were invested in three projects. These are Pincoin ($660 million), Arisebank ($600 million) and Savedroid ($50 million).

Do you think the regulatory efforts in many jurisdictions will decrease the number of fraudulent ICOs? Share your expectations in the comments section below.


Images courtesy of Shutterstock, Satis Group.


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Less Than Half of ICOs Survive Four Months After Sale, Study Finds

Less Than Half of ICOs Survive Four Months After Sale, Study Finds

New academic research has concluded that more than 50 percent of crypto projects raising capital through ICOs do not make it through to the fifth month after the token sale. The study also suggests that investors get the best return on their money if they sell the coins within the first month of trading, while the safest strategy would be to part with the tokens on the very first day.

Also read: Decentralized Exchanges – New and Hacked, and Some Lost Coins

Majority of ICOs Live Less Than 120 Days

Less Than Half of ICOs Survive Four Months After Sale, Study FindsDespite data from two recent studies suggesting that investors are still bullish on ICOs (Initial Coin Offerings), a research conducted by Boston College academics reveals that most crypto startups relying on crowdfunding have a pretty short lifespan. According to the authors – Hugo Benedetti, assistant professor at the Carroll School of Management and finance PhD student Leonard Kostovetsky – less than half of all new ICOs survive more than four months after launch.

The two researchers based their study on analysis of the Twitter accounts maintained by the projects, taking into account the intensity of tweets after the coin offering. They estimated that the survival rate of the startups, 120 days after the end of the sale, was only 44.2%. The assumption is that companies that are inactive on social media in the fifth month most probably did not survive. The report covers almost 2,400 ICOs completed before May this year, and examines over 1,000 Twitter accounts.

The survival rate has been calculated as an average figure for three categories of ICOs, Business Insider reports. The first group consists of projects that have not reported raising any money and are not listed on exchanges. Startups that reported raising capital but didn’t list fell in the second category. And the third includes the ICOs that list their coins on trading platforms. The statistics show the following survival rates – 17%, 48%, and 83% for these groups, respectively. The share of the projects that become inactive right after their token sales, or the potential scams, is about 11%.

Listing Increases Chances of Survival

Based on these findings, the study concludes that the sustainability of an ICO depends on whether the company behind it is able to list its coin on a crypto exchange. Investors who have supported a project during the coin offering enjoy greatest returns when the coin is listed. The researchers gathered data for over 4,000 ICOs, which raised $12 billion since January, 2017, and found that the projects generated an average return of 179%, accrued over an average holding period of 16 days from the last day of the ICO.

Less Than Half of ICOs Survive Four Months After Sale, Study FindsAccording to Kostovetsky, selling the acquired coins on the first day of trading is the safest investment strategy, when it comes to ICOs. In any case, investors should sell their holdings within six months, he added. “What we find is that once you go beyond three months, at most six months, they don’t outperform other cryptocurrencies,” Kostovetsky told Bloomberg. “The strongest return is actually in the first month,” he emphasized.

Benedetti and Kostovetsky explain the spike in the prices of many tokens after their listing with the underpricing during the ICO, as often they are sold to investors at significantly discounted prices compared to the open market rates. Despite that, the researchers also found that the returns are declining over time as companies have started analyzing prior sales by similar platforms to better determine the expected demand and the price of their coins.

What do you think about the short life of ICO projects? Let us know in the comments section below.


Images courtesy of Shutterstock.


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US Financial Authority Asks Brokerage Firms to Disclose Crypto Activities

US Financial Authority Asks Brokerage Firms to Disclose Crypto Activities

The Financial Industry Regulatory Authority has issued a notice encouraging every firm that sells securities to the public in the U.S. to disclose any activities “related to digital assets, such as cryptocurrencies and other virtual coins and tokens.”

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Firms Encouraged to Disclose Crypto Involvement

US Financial Authority Asks Brokerage Firms to Disclose Crypto ActivitiesThe Financial Industry Regulatory Authority (FINRA) issued a Regulatory Notice last week on digital assets.

A not-for-profit organization authorized by Congress, FINRA is not part of the U.S. government but is tasked with protecting America’s investors by making sure the broker-dealer industry operates fairly and honestly, its website describes.

With few exceptions, the Authority explains that in addition to registering with the U.S. Securities and Exchange Commission (SEC):

Every firm and broker that sells securities to the public in the United States must be licensed and registered by FINRA.

Individual registered representatives must also register with FINRA. According to its website, FINRA had 629,112 registered representatives and 3,712 member firms in April.

In the 4-page notice, the Authority emphasized that it “is monitoring developments in the digital asset marketplace and is undertaking efforts to ascertain the extent of FINRA member involvement related to digital assets,” adding:

FINRA is issuing this notice to encourage each firm to promptly notify FINRA if it, or its associated persons or affiliates, currently engages, or intends to engage, in any activities related to digital assets, such as cryptocurrencies and other virtual coins and tokens.

Furthermore, until July 31 next year, the Authority “encourages each firm to keep its Regulatory Coordinator abreast of changes in the event the firm, or its associated persons or affiliates, determines to engage in activities relating to digital assets not previously disclosed.”

Monitoring Crypto Development

In FINRA’s Annual Regulatory and Examination Priorities Letter, published earlier this year, CEO Robert Cook pointed out that cryptocurrencies and initial coin offerings (ICOs) “have received significant media, public and regulatory attention in the past year.” The Letter highlights issues of importance to the organization’s regulatory programs.

US Financial Authority Asks Brokerage Firms to Disclose Crypto Activities

Cook detailed:

FINRA will closely monitor developments in this area, including the role firms and registered representatives may play in effecting transactions in such assets and ICOs. Where such assets are securities or where an ICO involves the offer and sale of securities, FINRA may review the mechanisms…firms have put in place to ensure compliance with relevant federal securities laws and regulations and FINRA rules.

Previously, the Authority issued a notice warning investors of pump-and-dump schemes. It advised them to “be cautious when considering the purchase of shares of companies that tout the potential of high returns associated with cryptocurrency-related activities without the business fundamentals and transparent financial reporting to back up such claims.”

What do you think of FINRA asking brokerage firms to declare crypto activities? Let us know in the comments section below.


Images courtesy of Shutterstock and FINRA.


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Bitcoin Trading in Chinese Currency Drops Below 1% of World Total

Bitcoin Trading in Chinese Currency Drops Below 1% of World Total

Bitcoin trading in renminbi (RMB) has dropped to less than 1 percent of the global total, the central bank of China announced. The People’s Republic banned yuan-crypto trade last year, prompting the exodus of hundreds of Chinese crypto businesses, including some of the world’s leading trading platforms.    

Also read: Crypto Exchange Binance Expects up to $1 Billion Profit in 2018

‘Zero-Risk’ Exit for 88 Exchanges, the People’s Bank Says

The trading of Bitcoin with the Chinese national currency, the renminbi (RMB), has fallen to less than 1 percent of the world’s total, the People’s Bank of China (PBC) announced this Friday, quoted by Xinhua. At its peak, the RMB/BTC trade reached more than 90 percent of the volume, the state-controlled news agency noted in its report without detailing the data.

In September, 2017, Beijing authorities imposed a ban on the trading of cryptocurrencies like bitcoin with the Chinese yuan, referring to the presumed financial risk associated with the rapidly expanding crypto market. The measure also prohibited Chinese businesses from conducting crowdfunding campaigns through Initial Coin Offerings (ICOs).

Bitcoin Trading in Chinese Currency Drops Below 1% of World Total

In its announcement, The People’s Bank of China said the country had ensured a “zero-risk exit for 88 virtual currency exchanges and 85 ICO trading platforms,” since last year. Xinhua also quoted a “blockchain analyst” saying that “The timely moves by regulators effectively fended off the impact of sharp ups and downs in virtual currency prices and led the global regulatory trend.” The opinion belongs to Zhang Yifeng from the Zhongchao Credit Card Industry Development Company.

In February this year, reports came out in Hong Kong that advertisements of products and services offered by companies from the crypto industry no longer appear in China’s major search engines and social networks. The absence of sponsored crypto content prompted local media to allege that the ban also censors all crypto-related ads.

Chinese Platforms Expanding Across the Globe

PRC regulators imposed a comprehensive ban on bitcoin trading in September, 2017, when they ordered local exchanges to suspend their operations. The authorities in the People’s Republic also tried to block access to foreign cryptocurrency trading platforms offering services to Chinese residents. The restrictions encompassed the crypto-yuan trade hitting some of the world’s largest trading platforms.

The ban forced exchanges with Chinese roots, like Huobi, OK Coin, and Binance, to halt all trading in the country and seek to relocate to more favorable jurisdictions. The trading platforms founded new entities and opened offices in Hong Kong, Singapore, South Korea, Japan and the United States, which allowed them to continue their activities and even grow significantly.

Bitcoin Trading in Chinese Currency Drops Below 1% of World Total

Huobi, once one of the largest Chinese cryptocurrency exchanges, is now headquartered in Singapore and maintains presence in Hong Kong, the US and Japan, although it recently decided to close the accounts of Japanese residents as a result of compliance issues. The exchange also announced the launch of a trading platform in Australia supporting 10 pairs against the AUD, including bitcoin cash (BCH), with plans to add new cryptos in the future. Huobi confirmed it will open an office in London, too.

In April, the Hong Kong based Okex, the digital asset exchange founded by OK Coin CEO Star Xu, revealed plans to expand its operations to Malta. Its announcement came after in March, Binance, currently the largest crypto exchange by trade volume, shared its intention to move to the island nation. Binance wants to offer EUR and GBP pairs from Malta, which is a member of the European Union. The company is also launching a fiat-crypto trading platform in Uganda.

Do you think Chinese regulators will eventually reverse the ban on crypto trading? Share your expectations in the comments section below. 


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Draft Regulating ‘Electronic Money’ Prepared in Romania

Draft Regulating ‘Electronic Money’ Prepared in Romania

A draft ordinance aiming to regulate the issuance of “electronic money” has been presented in Romania. The document authored by the Finance Ministry specifies the entities that can act as issuers and clarifies the conditions under which e-money can be emitted. While it does not specifically mention cryptocurrencies, some of its definitions and provisions can affect digital coins and tokens.

Also read: Presidential Decree Sets the Stage for Legalizing Cryptocurrencies in Uzbekistan

Emergency Ordinance Aims to Regulate E-Money

The draft regulation released in Romania introduces definitions and rules regarding the issuing of what it refers to as “electronic money.” The “emergency ordinance”, published by the Ministry of Finance, proposes certain requirements for the issuers and tasks the Romanian National Bank (RNB) with the oversight of the process. The central bank will also be responsible for authorizing the issuing entities.

The document describes electronic money as “monetary value stored electronically, including magnetic, representing a claim on the issuer issued on receipt of funds for the purpose of performing payment transactions and which is accepted by a person other than the issuer of electronic money,” Business Review reported. The description covers some aspects of cryptocurrencies and can potentially influence the status of digital tokens minted through initial coin offerings, although these have not been mentioned explicitly.

Draft Regulating ‘Electronic Money’ Prepared in Romania

According to the draft text, any legal entity considering the issuance of electronic money must have a share capital of at least €350,000 EUR. Each member of a given organization should also be verified and approved by the central bank in Bucharest which will check the tax and legal records. The financial institution will issue authorizations valid for a period of 12 months. The companies will have to perform annual audits and file reports with the RNB.

The Finance Ministry has also listed several types of organizations that can emit electronic money. These include credit institutions, other entities authorized as issuers and providers of postal services issuing electronic money under the applicable national and European law, when they do not act as monetary authorities or exercise public authority.

Romanian Central Bank to Authorize Issuers

Draft Regulating ‘Electronic Money’ Prepared in RomaniaThe National Bank of Romania will grant authorizations after reviewing each application within three months of its filing. It will authorize only entities that are able to prove they have established prudent and sound management, carefully designed electronic money issuance process, clear organizational structure with well-defined responsibilities and effective procedures to monitor and manage risks.

The central bank will have the power to cancel any authorization if the respective entity is not issuing electronic money on the territory of Romania or does not start doing so within 12 months after receiving permission. Authorizations would be withdrawn if they were obtained on the basis of false information or through illegal means. The same will happen if an e-money issuer no longer meets the requirements of the regulation or if its activity endangers the stability of the country’s payment system.

Last but not least, the ministry warns that the unauthorized issuing of electronic money is punishable by Romanian law, either by imprisonment of up to 3 years or by fine. Only three entities are currently emitting digital currencies in the country – Capital Financial Services SA, Vodafone Romania M-Payments Ltd. and Orange Money Ltd.

Cryptocurrencies Deemed a Security Problem

Draft Regulating ‘Electronic Money’ Prepared in RomaniaThe e-money regulations have been proposed just weeks after the governor of the National Bank of Romania, Mugur Isarescu, made a statement against cryptocurrencies. Last month, he said it was hard to believe they could become actual money as they were unable to fulfil the basic functions of fiat currencies. In his opinion, the biggest problem with cryptocurrencies is the lack of a trusted issuer: “It’s not clear who the issuer is. From this perspective, it’s even a security problem.”

Isarescu added that cryptocurrencies could hardly be a means of exchange, noting the limited number of transactions and the insignificant number of retailers accepting bitcoin. The banker explained that the payments with virtual currencies take more time and cost more than the existing payment options. However, like many of his colleagues around the world, the governor suggested that the technology behind cryptos, blockchain, should be explored.

In February, BNR said it classifies digital currencies like bitcoin as volatile and risky speculative assets, stating that it discourages any involvement with them. The warning was also addressed to the country’s legacy financial institutions which were advised against providing services to entities investing or transacting in cryptocurrencies. In May, the oldest Romanian crypto trading platform, Btcxchange, shut down after Idea Bank closed its bank account in January.

Bitcoin, however, has been gaining popularity in Romania over the past years. A poll conducted in March found that more than half of Romanians living in the cities know about cryptocurrencies and half of the respondents under the age of 40 want to use them to pay for goods and services. According to local media, at least six crypto ATMs are currently operational in the country, most of them are located in the capital Bucharest.

Do you expect Romania to legalize cryptocurrencies and regulate coin offerings? Tell us in the comments section below.


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Determining the Tradable Value Of an ICO Token

Tradable Value Of an ICO Token

To seamlessly determine the tradable value of any ICO token is no doubt a big part of what makes you a smart crypto investor. In the last little while, it’s no longer news that Initial Coin Offerings (ICOs) have made some impressive progress on crowdfunding, and have been used to successfully raise over a billion dollars for early-stage startups.

ICOs are an astounding innovation that has positively affected established businesses, startups, and investors as well. In fact, most startups use ICOs to bypass the regulated capital-raising process required by venture capitalists.

Although most of ...

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