Bakkt’s Physically-Settled Bitcoin Futures in Focus; Hitting A New Record of 15,955 ($200M)

Whenever bitcoin makes a significant move after a period of slow or no movement, the ICE-backed Bakkt records increased activity.

And this time has been no different.

On Tuesday, the price of bitcoin went as high as $10,940, a level not seen in over ten days, since the digital took a drop from $12,000 right at the beginning of this month.

Bitcoin is still keeping these gains as it trades over $10,920, at the time of writing, while managing $1.7 billion in real trading volume.

Meanwhile, the physically delivered bitcoin futures platform that was launched last September celebrated another record day.

Yesterday, 15,955 physically delivered bitcoin futures were traded on Bakkt, representing a volume of over $200 million, which is an increase of 36% from the previous all-time high when the platform saw 11,706 futures, worth over $125 million.

The last record was made at the end of July, for two consecutive days, and since that spike, Bakkt saw a shift in its trend.

The last ten days of July saw BTC going from $9,100 to about $11,400, which led the price to hit over a year high only to dump right back to $10,500 level.

In the past month, the volume on Bakkt has been keeping up; on Sept. 15, a total of $183 million worth of bitcoin futures (physically settled + cash-settled) were traded per data source Skew.

Just like volume, open interest also recovered, which nearly halved during bitcoin’s move from about $11,940 to $12,480 and back to $11,900. From the low of $9.5 million on August 25th, OI on Bakkt has spiked to $13 million.

Unlike Bakkt, CME had a lackluster past few days. Since hitting $1.1 billion on Sept. 2nd, on Tuesday, it registered only $262 million in volume.

However, OI recovered from $415 million just over a week ago to above $500 million.

Unlike the futures, Bakkt’s bitcoin options, launched in December, remain deserted for months now. No one is interested in trading its bitcoin options, but CME managed to see volume between $4.3 million to $24 million this month.

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Author: AnTy

Shyft’s Veriscope Governance Task Force for AML Adds Bitfinex, Huobi, Tether, & Others

Shyft Network, a blockchain-oriented firm focused on KYC and AML solutions has added significant liquidity players in the crypto space, including Bitfinex, Unocoin, Tokocrypto, Haskey, and Tether to its Veriscope Governance Task Force. They join the likes of Bitfury and Binance, who had already been onboarded to the Veriscope decentralized compliance framework and smart contract ecosystem.

According to the announcement on August 8, this development will further increase Shyft Network’s favorability in providing a self-regulatory solution to the FATF Travel Rule. This regulation, which came into effect early this year, requires Virtual Asset Service Providers (VASPs) to share the underlying KYC details of both originators and fund beneficiaries for amounts above $1,000.

Despite a preference towards privacy and anonymity, the crypto community led by market giants have reacted positively towards the FATF Travel Rule initiative. Shyft Network’s Veriscope is among the solutions that have since been floated to ease the burden of sharing information or reporting the same to oversight bodies.

Notably, the company tapped some of the FATF top leadership to lead Veriscope which launched as recent as July. They include Rick McDonell who served as the FATF’s executive secretary and former head of Canada’s FATF delegation, Josee Nadeau. The two will serve as Veriscope’s chairs in collaboration with VASPs that have been onboarded in the governance task force.

Veriscope’s Value Proposition in Travel Rule Compliance

As the FATF compliance deadline approaches in 2021, viable and cost-efficient solutions to sharing KYC information are in the pipeline. Some players like BitGo have already gone ahead to leverage API integration to assist their clients in seamless data appending, as per the Travel Rule guidelines. Now that Veriscope, a public blockchain built network, has also made a debut; the vision to FATF compliance in crypto just made a significant milestone.

Shyft Network Co-founder, Joseph Weinberg, noted that Veriscope’s governance task force will work collaboratively to develop sustainable and growth accommodating policies,

“In a time where we are seeing global coordination challenges and incoming guidance requirements that make significant alterations to our ecosystem, it is critical that the rest of the world has strong liquidity representation and directives from our largest operators who in turn aggregate network effects for the smaller VASPs in our space.”

It is also quite noteworthy that the Veriscope underlying model will allow the VASPs within its network to choose who they want to share information with, hence maintaining operational sovereignty while complying with the FATF Travel Rule.

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Author: Edwin Munyui

Anheuser-Busch InBev, ING Bank, & Rolls Royce Join Mousebelt’s Blockchain Education Alliance

Blockchain Education Alliance, an initiative by Mousebelt, has gained four new significant members according to an announcement by the blockchain accelerator on August 17. They include margin crypto trading platform Multi.io, Rolls Royce, Belgium brewing firm Anheuser-Busch InBev and Dutch-based ING bank.

The project whose fundamental goal is to accelerate blockchain education and research now has 26 members following this addition. Having launched in October 2019, pioneer members included ETC Labs, Nem, LTO Network, Harmony One, Wanchain, ICON, Tron, and the Stellar Development Foundation. It was not long before the initiative attracted the likes of Binance, Mastercard, KuCoin crypto exchange, and Constellation Labs onboard as well.

With such players already approving the Blockchain Education Alliance strategy, some of its milestones include a 72-hour live blockchain education event that was held in May. This virtual conference was dubbed ‘REIMAGINE 2020’ and featured networking events, panel and debates, and a continuous livestream of the keynotes.

Given the prevailing lockdowns at the height of the COVID-19 pandemic, REIMAGINE 2020 attracted students from various universities, giving them exposure to cutting edge tech like blockchain as well as an opportunity to meet with the industry veterans. Mousebelt’s head of Education, Ashlie Meredith, further pointed out that they are looking to nature skills given the looming uncertainty in the global economy,

“In a time when many students will not be returning to campus, increasing opportunities for educational experiences, jobs and internships is of utmost importance.”

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Author: Edwin Munyui

Bitcoin Mixers See Rapid Growth From the Darknet Markets: BitFury Crystal Blockchain Report

The latest crypto activity report, published by Crystal blockchain, suggests a significant surge in the use of bitcoin mixers on the darknet between the last quarter of 2019 and the first quarter of 2020. The rise is a whopping 294% which suggests the rapid adoption and use of mixing tools by these darknet entities.

The report also saw a similar trend for the US Dollar which increased from $3m in Q1 2019 to $67m in Q1 2020. The report read:

“The amount of bitcoin sent to mixers by darknet entities rose significantly this year — from 790 total bitcoin in Q1 2019 to 7,946 bitcoin in Q1 2020. The same growth was also observed in USD — an increase from $3m in Q1 2019 to $67m in Q1 2020. This indicates a rapid adoption of crypto mixing services by darknet entities.”

Some of the key findings of the report include:

BitFury Crystal Blockchain
Source: BitFury Crystal Blockchain

The amount of bitcoin (measured in BTC) transferred between darknet entities and other entity types declined in Q1 2020 compared to the same period one year ago; however, the value of the amount of bitcoin transferred (measured in USD) grew by 65%.

This is not just due to the increase in the USD value of bitcoin from 2019 to 2020. The amount of money being transferred by darknet entities is still growing, and they are continuing to use bitcoin as a medium of transport. The mass adoption of bitcoin, as well as its ease of use and popularity, is a contributing factor as well.

In Q1 2020, there was a rapid growth in the amount of Bitcoin sent from darknet entities to mixers. During that same period, the amount sent in Bitcoin to exchanges that required verification was reduced — indicating a reduction in the use of cryptocurrency exchanges for criminal and darknet activities in favor of more anonymous services like mixers.

The share of bitcoin sent from one darknet entity to another also grew in Q1 2020. It is possible that darknet users are trying to hide their bitcoin flow inside of the darknet, avoiding the detection of their activities. This also encourages darknet services to cooperate and grow their revenue internally.

The report concluded that even though the amount of bitcoin sent to darknet has decreased since 2017, the value of bitcoin in USD has increased significantly. Also, the amount of bitcoin being sent among darknet members have also seen a rise. While the use of privacy tools by these darknet entities was no secret, now with the help of many analytical tools and service providers, it is easier to track even the masked transactions.

Also Read: Twitter Hacker Managed to Scam Only 12 Bitcoin After Duping Major Accounts

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Author: James W

As Decentralized Finance Continues to Evolve, Big Four Audit Firms Will Play a Major Role in DeFi

Big four audit firms are set to be a significant part of the Decentralized Finance (DeFi) ecosystem according to the latest blockchain industry report by German-based non-profit, dGen.

The DeFi space, which has seen tremendous capital gains in TVL, will grow even more prominent in the coming decade as per dGen insights on its report. Jake Stott, the co-founder of dGen, noted that support from other financial market stakeholders would be inevitable going forward. Tom Howard, Chief Strategy Officer at Mosendo, said;

‘Over time, traditional financial institutions will have no choice but to interact with  decentralized finance tools, slowly disinter-mediating the industry from the inside out.’

Functions like verifying the authenticity of an invoice, tracking payment settlements, and insurance claims could occur faster with the help of a blockchain. Their role will be to act as an intermediary between DeFi and traditional finance.

Dubbed the ‘Decentralised Finance: Usecases & Risks for Mass Adoptionreport, dGen paid particular attention to the DeFi space. Currently, over $2.5 billion in funds is locked within DeFi based products. It is an area that has been hailed as the future of markets given almost all traditional assets are finding their way onto Ethereum based protocols. Though still at its infancy stages, dGen acknowledged this underlying potential in DeFi stating that it,

“could leapfrog the current FinTech industry, providing a new structure of financial services.”

Consequently, this optimistic narrative has gained massive support from across financial services, tech, and the academia elite. DGen’s researchers are bullish that the market could grow past the trillion-dollar mark by 2030. The report highlights that DeFi will: “Provide income for thousands of gamers, streamers, and influencers”

It will also be adopted by European financial institutions who will switch to offering “DeFi-enabled savings and pension accounts.”

A recent Q2 report by industry giant, ConsenSys, concurs on the possibility of a DeFi future given historical growth rates in the past three months. It goes on to detail that Bitcoin tokenization protocols and Yield farming frenzy are the fundamental factors behind this growth as per now.

While the DeFi space has emerged as an avenue to make better interest compared to zero percent in some jurisdictions, it continues to face security threats arising from the core infrastructures.

“Knowledge and security risks will continue to reduce, on top of a growing number of securities in the event of a hack. It appears the solutions the industry needs to scale will come from within the industry itself.”

The team is, however, optimistic the underlying issues might be resolved in as little as one year. Kain Warwick, Founder of Synthetix told dGen,

‘Insurance on DeFi is still extremely limited[…] DeFi still has significant tail risk, so insurance is likely to remain very costly in the short term, but as protocols mature, costs should come down[…] allowing for simpler and more useful insurance to emerge’.

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Author: Edwin Munyui

Privacy-Focused Crypto, Beam, to Jump Into DeFi With ‘Confidential Assets’ In Upcoming Hard Fork

Beam, one of the significant privacy-focused crypto assets, is moving into the DeFi space in a bid to disrupt the $1.5 billion booming market. The project has since confirmed its second hard fork on June 28, an upgrade that will facilitate its debut in the DeFi space. This milestone comes with several modifications in Beam’s ecosystem hence the bold move towards ‘Confidential DeFi.’

To enhance its privacy levels, Beam is built on the mimblewimble blockchain. This network designed to minimize transaction size to handle more activity, creating room for scalability. Also, it prevents one from reusing a blockchain address hence making it difficult for analytics firms to track crypto funds transferred on its chain.

With the DeFi market on a steep growth curve, Beam now wants to bring its underlying privacy features into this space. Currently, it is almost impossible to operate anonymously, given all transactions are recorded on Ethereum’s public blockchain. This also applies to the Ethereum Name Service (ENS) as well. Beam has since highlighted its goal as,

“Beam will enable true private and decentralized DeFi instruments like private stablecoins and private synthetics which will track commodity, stocks, and ETFs.”

Beam Upgrades in Preparation for DeFi

The new hardfork will facilitate the creation of Confidential Assets dubbed ‘Beam CA’ set to run within the network as independent tokens. This feature is part of Eager Electron 5.0, a recent upgrade designed for the creation of Confidential DeFi apps. Notably, the CA’s are linked with various assets ranging from commodities like gold to crypto-assets such as ETH.

Some fundamental privacy features embedded in the CA’s include sending assets via non-interactive transactions and an option to unlink transaction history. The Beam CA’s will be made available to users who can lock up to 3,000 Beam tokens, roughly $1,400 as of press date.

Apart from CA’s, the Beam hardfork lays the ground for scriptless smart contracts. Beam’s CTO, Alex Romanov, told Decrypt that the project would extend mimblewimble’s infrastructure to enable anonymity in the digital contracts,

“As a part of building a confidential DeFi platform on top of the Beam blockchain, we will enable the creation of Mimblewimble-based sidechains and integrate a wide variety of Scriptless Contracts to support escrows, collateralized debt positions, multiparty transactions, and Oracle-based settlements.”

The hardfork will also scale Beam’s DEX, which is currently available on atomic swaps as it completes the beta phase. Consequently, CA’s will be tradeable against frequently favored assets like BTC, LTC, BEAM, and QTUM once they debut.

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Author: Edwin Munyui

Samsung’s New EAL 6+ SE Chip For Mobile Devices to Enhance Security for Crypto Transactions

Samsung, the South Korean tech giant who boasts of a significant global market share in the smartphone business has announced a new turnkey security solution chip meant to secure crypto transactions on mobile phones.

The new chip comprises of Secure Element (SE) chip (S3FV9RR) and security software to facilitate secure storage and transactions of crypto payments.

The security chip comes with Common Criteria (CC) EAL 6+ certification which is considered among the most robust security standards primarily used for devices and applications with the highest requirement of security standards like hardware crypto wallets.

The security chip’s biggest advantage is that it can work independent of the mobile device, so even in case the device has been hacked, the chip would keep the assets secure and out of the reach of the scammers. Dongho Shin, senior vice president of System LSI marketing at Samsung Electronics commented on this:

“In this era of mobility and contact-less interactions, we expect our connected devices, such as smartphones or tablets, to be highly secure so as to protect personal data and enable fintech activities such as mobile banking, stock trading and cryptocurrency transactions. With the new standalone security element solution (S3FV9RR), Samsung is mounting a powerful deadbolt on smart devices to safeguard private information.”

As the popularity and use of crypto assets are growing with each passing year, mobile manufacturers have found a keen interest in this nascent market. Samsung started offering crypto wallet support in its flagship Galaxy devices from the past two years and now have decided to introduce a stand-alone SE security chip which meets the highest security standards.

Similarly, HTC is another mobile manufacturer that has gone one step ahead and introduced blockchain centric mobile devices with the capability to run a full node and even mine cryptocurrencies.

Samsung’s Growing Interest in Blockchain and Cryptocurrencies

The SE security chip is expected to hit the market by the third quarter of 2020, and the announcement made specific mention of crypto transactions security for a key use case for the highly secure S3FV9RR chip.

Samsung’s interest in decentralized tech and cryptocurrencies is not just limited to offering crypto wallet support and secure crypto transactions, in fact, the tech giants have made several investments in DLT-based startups.

The latest being the partnership between Samsung Pay and Crypto Visa Card platform Swipe which would enable cryptocurrency payments to be made using mobile devices by Samsung Pay users.

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Author: James W

BitMEX Users are Paying High Bitcoin Fees But Do They Really Care?

Crypto derivatives platform BitMEX “has a significant impact on the Bitcoin network and user fees,” wrote 0xB10C, a German Bitcoin freelance developer.

The developer explained that the platform broadcasts multiple megabytes of large transactions into the Bitcoin network which in turn affects the transaction fees paid during the US business hours and European afternoons.

These transactions are primarily withdrawals by BitMEX users which the exchange process by hand and do not spend Segwit outputs.

BitMEX users paying 6.8% of the total daily transaction fee

Between September 2019 and March 2020, BitMEX broadcasted around 415,000 transactions into the bitcoin network which took up 593 MB and a miner fee of 181 BTC, representing about 2.8% of the total bytes and 3.8% of the total fees broadcast in this period.

These fees, however, are not paid by BitMEX but deducted from the withdrawing users.

Miner fees are chosen by users when withdrawing and 10,000 satoshi is the smallest and most commonly (44%) used withdrawal fee while 50,000 satoshi the least by just 3%.

Meanwhile, feerate, the result of the combination of a user-picked fee and an algorithmically chosen number of inputs, estimators adjust their recommendation, and the wallets using them set a higher feerate.

They also recommend a high feerate to outbid BitMEX transactions “which take up a significant part of the available space in the next blocks.”

Although hard to calculate the fees paid by BitMX users, it is estimated they “cause an average fee rate increase by 4 sat/vbyte between 13:00 UTC and 21:00 UTC.”

As such, about a total of 1.7 BTC of additional fees are paid by Bitcoin users per day due to the BitMEX broadcast, 6.8% of total daily transaction fees.

And the spike in fees remains at an elevated level before to pre-broadcast levels at around 22:00 UTC and those with low fee rate might take a few hours until they are included in a block during this period.

No one really feels the pain

Even if these fees are passed on to their users as such still an incentive to lower the fees, do users really care about fees when it is already small enough? Nic carter, co-founder of Coin Metrics said,

“It’s a bit strange to realize that fees would be close to 0 if exchanges used better practices. Their profligacy helps maintain the fee pressure.”

He further pointed out that “the exchange has no real incentive to pursue the cheapest fees for their users.” Developer 0xB10C said,

“On one hand, the additional fees paid by network users (due to the BitMEX broadcast) increase the network security. On the other hand, nobody likes to pay these fees.”

As independent crypto researcher Hasu says,

“the real problem is the fees are so low on an absolute basis that neither users nor exchanges (in second-order) really feel the pain.”

What can be done?

The developer further noted that the exchange can greatly reduce its transaction size by implementing the current industry standards. The developer recommends,

“Once activated, utilizing Schnoor and Taproot combined with output batching seems to be the most promising for improving the transaction count and size.”

He further suggested using compressed public keys instead of four uncompressed public keys in every BitMEX input. Transaction batching and spending SegWit, whose adoption has declined from its all-time high at 60% peak in January 2020 to below 50%, are other options.

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Author: AnTy

Grayscale Now Holds 1.7% of All Bitcoin; Reports Record Growth in Q1 2020

In Q1 2020, which was characterized by significant volatility, Grayscale Investments saw continued demand and that too at a “record pace.” This is because “investors are tactically using drawdowns to increase their exposure to the asset class, even in a “risk-off” environment.”

Strong and sustained interest in Crypto

The new decade had a turbulent start with coronavirus pandemic induced sell-off triggering a huge drawdown in nearly all risk assets and currencies. But despite the drawdown this quarter, Grayscale continues to hit all-time highs.

For the first time, the inflows into Grayscale products over a 12-month period surpassed $1 billion, “showing strong and sustained evidence that investors are increasing their digital asset exposure at current levels.”

The digital currency manager which has over $2.2 billion in assets under management as of March 31, 2020, had its largest quarterly rise of $503.7 million in 1Q20 in its history.

Both its Bitcoin Trust and Ethereum Trust saw record quarterly inflows of $388.9 million and $110.0 million, respectively. The demand for Grayscale Products ex Bitcoin Trust also grew a whopping over 260% from last quarter.

Not just the assets under management but Grayscale’s market share also spiked to a new high.

“Grayscale’s ten funds now hold 1.2% of ALL crypto in circulation and 1.7% of bitcoin in the world,” said Barry Silber, founder, and CEO of Digital Currency Group, the parent company of Grayscale.

Source: Grayscale Q1 2020 Investment Highlights

Grayscale investors are seeing digital assets as a medium to long-term investment opportunity and using the drop in price as the way to do so at the fastest pace in its history.

Most of the company’s investors allocate into Bitcoin via Grayscale Bitcoin trust or Grayscale Digital Large Cap Fund that accounts for 80% of Bitcoin. However, now 38% of investors, up from 29% in 1Q19, have invested in multiple Grayscale products.

Other cryptos covered are Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), XRP, Stellar Lumens (XLM), Litecoin (LTC), Zcash (ZEC), and Horizen.

This demand for Grayscale Products is primarily from institutional investors at 88%. These investors are dominated by hedge funds, registering a jump of 9% from the past 12 months. New investors meanwhile accounted for $160.1 million in inflows.

Source: Grayscale Q1 2020 Investment Highlights

The new investment capital this time was more heavily weighted to offshore investors than the rough split between the U.S. and offshore investors.

Now, large capital inflows can be taken as a sign of perceived value and “potential future price momentum.” Grayscale also found that “large increases in dollar-denominated inflows relative to Grayscale AUM have historically preceded market rallies.”

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Author: AnTy

QE and Quantitative Hardening to Push Bitcoin Prices by “Hundreds of Percent”

  • The halving “will cause significant stress” – BitMEX Research
  • “My personal view is that we’ll see bitcoin hit $100,000 before December 2021” – Pomp

Just over a month is left in bitcoin reward halving which according to Anthony Pompliano, host of The Pomp Podcast will be like “rocket fuel” for the world’s leading cryptocurrency.

The bitcoin reward halving occurs every 210,000 blocks or 4 years that will see miner flow to be cut down in half from 1800 BTC per day to 900 BTC per day. This halving will also see the scarcity-based stock-to-flow to double from 27 years to 54 years.

The Morgan Creek Capital Management co-founder likened this to gold miners cutting their supply by half.

According to Pompliano, while quantitative easing would push gold’s price to the $2,000 to $2,500 range, it won’t be a material increase compared to bitcoin’s.

“Over the next two years, I think that it will have hundreds of percent of appreciation, given the quantitative easing and the volatility it brings,” said Pompliano.

“My personal view is that we’ll see bitcoin hit $100,000 before December 2021.”

Quantitative Hardening

Blockstream founder and CEO Adam Back came up with another term for this event, “quantitative hardening.”

He explained how central banks have restarted QE programs to tackle the impact of coronavirus on the economy. QE is a tool used by central banks to inject money into the economy and allows them to create money which they then use to buy government debt.

The aim of QE is to boost spending and investment in an economy by firing up the money printer.

Unlike this, bitcoin with a limited supply of 21 million BTC ever, will have a supply shock.

“Bitcoin halving is “quantitative-hardening,” fiat undergoing lots of politically driven quantitative easing. Bitcoin supply algorithm starts quantitative hardening next month,” said Back.

Impact of Halving

According to BitMEX’s latest research on Mining Incentives, when the halving occurs, the network hash rate may decline by 30% to 35%.

However, BitMEX’s estimate is based on the assumption that the BTC price won’t change, all miners are rational, and a significant proportion of miners aren’t operating at a loss. But with the ongoing heightened volatility, it’s to be seen how miners and the market will react.

In March, after reaching its all-time high this month the hash rate already dropped 45%, after the price of bitcoin crashed. However, BitMEX feels, the halving

“will cause significant stress. On the other hand, given the actions governments have taken all around the world in order to mitigate the impact of COVID-19, many other industries will also be going through a challenging period at the same time.”

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Author: AnTy