What Could Kill the Bitcoin Boom

If you bought a Bitcoin in early 2017, when one cost less than $900, you could have a profit of more than 1,200 percent now. But you almost certainly didn’t do that. Perhaps you dipped in a toe in November or December, as the price hit headline-grabbing records—$10,000, then $15,000, then higher. If you were very unlucky and bought at the peak of about $20,000 on Dec. 17, you’d have lost more than 40 percent of your money as of Jan. 16, when the price was $11,200. More than $2,000 of that decline came in about 24 hours, after South Korean Finance Minister Kim Dong-yeon indicated the country may crack down on cryptocurrency trading to discourage speculation. It’s not every asset that can feel like it’s in a bubble and a crash at the same time.

But based on no other valuation metric than what it cost a year ago, the price of Bitcoin is still dizzyingly high. For the many doubters who can’t believe things have come this far—and for Bitcoin owners who can see how much they might lose—the big question is what it would take to knock the price back further.

In past episodes, “Bitcoin and digital currencies have been incredibly resilient to bad news,” says Meltem Demirors, director of development at Digital Currency Group, which invests in Bitcoin and related technologies. Cryptocurrency exchanges such as Mt. Gox, Bitfinex, and BTC-e have been hacked over the years, with hundreds of millions of dollars’ worth of Bitcoin stolen. China in September moved to shut down exchange trading of the cryptocurrency. None of these permanently stopped Bitcoin’s rise up the price charts, especially after it drew the attention of hedge fund traders and futures markets.

One doomsday scenario would be a successful hack of the blockchain. That’s the underlying technology that records and verifies every transaction, using exact copies of a database spread on computers all over the world. Those host computers, called miners, are rewarded with new Bitcoin for doing the work of verifying transactions. An attacker might be able to alter the blockchain’s history by marshaling more than half the computing power on the network. But that would be monumentally difficult; someone with the technology to do it could instead “opt into the game” and get paid to mine Bitcoin, says Tyler Winklevoss, co-founder of the Gemini digital asset exchange and one of the largest Bitcoin holders.

The likelier risks are far more pedestrian. The first is that while plenty of investors and speculators have piled into Bitcoin, it’s a difficult currency to use in the real world. The network is slow and expensive for small transactions. And who wants to spend $4 in Bitcoin for a coffee if next week that could be worth $8? “My big concern as a company is that digital currency doesn’t find its quote-unquote killer use cases, where people are saying, ‘Wow, we now have tens of millions of daily active users that are using it for payments,’ ” says Adam White, who runs GDAX, the exchange for institutional investors run by Coinbase. “That’s one of the largest existential threats to the company.”

BitPay's Singh Calls Bitcoin Selloff an Overreaction

There’s been a very public civil war among Bitcoin developers: One group favors changes to the network, the other doesn’t. “It’s got to have the developer community come together and figure out how to scale it properly and continuously,” says Sheri Kaiserman, a managing director at Wedbush Securities and an early Wall Street believer in Bitcoin’s potential. Meanwhile, Bitcoin faces competition from other digital currencies, from Bitcoin Cash to Litecoin to Ether, which have also seen big gains and wild swings.

You could spend weeks learning about the nuances of the various cryptocurrencies. But the main risk to Bitcoin is actually the easiest to understand. “The biggest factor in what’s driving the price up is potentially what will drive it down—a reversal of animal spirits,” says Adam Ludwin, chief executive officer of blockchain startup Chain. “There is essentially a belief this will continue to go up. If people believe it will continue to go down, that’s self-reinforcing.”

To explain that psychology, Ludwin invokes John Maynard Keynes. The economist likened investing to a newspaper contest where readers were asked to pick the picture of the person the majority of other people would find most attractive. To win, a reader would have to discard his own judgment and bet purely on a guess of what the average person would find beautiful. Or, maddeningly, even on what the other players would think the average player would like. Cryptocurrency in general is “really one of the most beautiful distillations of the Keynesian beauty contest that’s ever existed,” says Ludwin. All investments have some of this speculative element, but unlike, say, a stock, Bitcoin isn’t a claim on future earnings to which investors can hitch a valuation. To bet on Bitcoin is to believe simply that others will want it.

One read on the psychology of the Bitcoin boom is that it’s part of a broad bull market in all kinds of assets. Despite anxieties about politics, North Korea, and rising equity valuations, investors seem to be in a mood to embrace risk and are fearful of missing out on big gains. Or perhaps Bitcoin is the shadow side of that optimism: Many are drawn to cryptocurrency because they see it as a palliative to the system that came crashing down in 2008, and their belief in Bitcoin has been hard to shake. Market psychology is difficult to pin down—the one thing that’s reliable about it is its volatility.

    BOTTOM LINE – Despite its meteoric rise in the past few years, Bitcoin remains a wildly volatile investment, dropping more than $2,000 in a day when bad news hits.

    Read more: www.bloomberg.com

    How Craig Wright Privately ‘Proved’ He Created Bitcoin

    When rumors surfaced early last month that Australian cryptographer Craig Wright would attempt to prove that he created Bitcoin, Gavin Andresen remained skeptical. As the chief scientist of the Bitcoin Foundation, his opinion counts: Andresen is among the earliest programmers for the cryptocurrency, and likely the one who has corresponded more than anyone with Satoshi Nakamoto, Bitcoin’s pseudonymous, long-lost inventor.

    Today,Andresen fully believes that Wright is Nakamoto. Now he’ll have to convince the rest of the world, because he’s among the only people to have seen what he claims isthe best evidence in Wright’s favor.

    In an interview with WIRED on Monday following flurryof media reportsstating that Wright now publicly claims he created Bitcoin, Andresen described in detail a private meeting he had with Wright in London. And he explains why he left that meeting convinced that Wright is the same Nakamoto who unveiled Bitcoin in 2009 and emailed extensively with himin 2010 and 2011. Andresen says his belief is unwavering, despite a bizarre and highly unconvincing blog post Wright published Monday offering the flimsiest evidence that he invented the cryptocurrency—evidence of a very different sortfrom what Andresen says Wright revealed to him.

    “Im still convinced hes Satoshi despite the really weird proof hes put in his blog post,” says Andresen. He stands by a statement he published on his website this morning: “I believe Craig Steven Wright is the person who invented Bitcoin.”

    The Private ‘Proof’

    As Andresen tells it, a firm representing Wright contacted him in March and invited him to London for a private, in-person demonstration designed to prove Wright created Bitcoin. Andresen understandably expressed reluctance. WIRED and Gizmodo had named Wright in December as a Satoshi Nakamoto candidate based on leaked emails, accounting documents and transcripts. But thengaps in Wright’s story appeared following those reports—including signs he had backdated evidence and misrepresented academic credentials—it seemed Wright was likely pulling an elaborate hoax or con.

    But Wright followed up with a series of emails that piqued Andresen’s interest. “This is a person who knows an awful lot about Bitcoin and an awful lot about early Bitcoin stuff,” Andresen says. “The email conversations I had [with him] sounded like Satoshi to me. It sounded like I was talking to the same person Id worked with way back when. That convinced me to get on an airplane.”

    On the morning of April 7, Andresen took a red-eye to London and proceededdirectly to a hotel in the Covent Gardendistrict. He met Wright and two associates in a conferenceroom there that afternoon and, Andresen says, Wright performed the cryptographic featthat erased his remaining doubts.

    Cryptographers have suggestedat least two waysthe creator of Bitcoin could prove himself: Nakamoto could move some of the earliest Bitcoins, which are known to belong to him and have never been spent in their seven-year existence; or he could use the same cryptographic “private keys” that would allow those coins’ owner to spend them to instead “sign” a message—transforming the message’s data in a way that proves he or she possesses keys that only Nakamoto would have.

    Wright, Andresen says, offered to perform the second test, signing a message of Andresen’s choosing with a key from the first “block” of 50 coins ever claimed by aBitcoin miner, in this case Nakamoto himself. (He also performed a similar test for Jon Matonis, a former board member of the Bitcoin Foundation, and a reporter for the Economist, the magazine says, using both the first and ninth Bitcoin blocks.) Andresen says he demanded that the signature be checked on a completely new, clean computer. “I didnt trust them not to monkey with the hardware,” says Andresen.

    Andresen says anadministrative assistant working with Wright left to buy a computer from a nearby store, and returned with what Andresen describes as a Windows laptop in a “factory-sealed” box. They installed the Bitcoin software Electrum on that machine. For their test, Andresen chose the message “Gavin’s favorite number is eleven.” Wright added his initials, “CSW,” and signed the message on his own computer. Then he put the signed message on a USB stick belonging to Andresen and they transferred it to the new laptop, where Andresen checked the signature.

    At first, the Electrum software’s verification of the signature mysteriously failed. But then Andresen noticed that they’d accidentally left off Wright’s initials from the message they were testing, and checked again: The signature was valid.

    “Its certainly possible I was bamboozled,” Andresen says. “I could spin stories of how they hacked the hotel Wi-fi so that the insecure connection gave us a bad version of the software. But that just seems incredibly unlikely. It seems the simpler explanation is that this person is Satoshi.”

    The Problem With the Public Proof

    Underother circumstances, the Bitcoin community could almost be convinced by Andresen’s account, too. But in contrast to Andresen’s private demonstration, the evidence that Wright publicly offered to support his claim almost immediately collapsed. “The procedure thats supposed to prove Dr. Wright is Satoshi is aggressively, almost-but-not-quite maliciously resistant to actual validation,” wrote security researcher Dan Kaminsky early Monday. After more analysis, Kaminsky updated that assessment: “OK, yes, this is intentional scammery.”

    On a newly-created website, Wright published a blog post featuringwhat appeared to be a cryptographically signed statement from the writer Jean-Paul Sartre. It seemed intended to show, as in Andresen’s demonstration, that Wright possessed one of Nakamoto’s private keys. But in fact, Kaminsky and other coders discovered within hours that the signed message wasn’t even the Sartre text, but instead transaction data signed by Nakamoto in 2009 and easily accessedon the public Bitcoin blockchain. “Wright’s post is flimflam and hokum which stands up to a few minutes of cursory scrutiny,” wrote programmer Patrick McKenzie, who published an analysis of Wright’s message on Github. “[It] demonstrates a competent sysadmin’s level of familiarity with cryptographic tools, but ultimately demonstrates no non-public information about Satoshi.”

    Even Kaminsky and McKenzie say they can’t explain the discrepancy between their analysis and Andresen’s story. “But for the endorsement of core developer Gavin Andresen, I would assume that Wright used amateur magician tactics to distract non-technical or non-expert staff of the BBC and the Economist during a stage-managed demonstration,” McKenzie writes. “I’m mystified as to how this got past Andresen.”

    The Disconnect

    Andresen, for his part, remains equally mystified by Wright’s highly dubious public evidence. The contradiction between the two accounts is so stark that at first some in the Bitcoin community believed that Andresen’s blog, where he’s vouched for Wright, must have been hacked. He says Wright and his staff wouldn’t let him leave the hotel meeting room with his own much stronger evidence, for fear that Andresen would leak it before Wright was ready to come forward. But Andresensays he can’t understand why Wright didn’t release that information publicly now. He hopes Wright still might.

    Andresen’s only attempt at an explanation for Wright’s bizarre behavior, he says, is an ambivalence about definitively revealing himself after so many years in hiding. “I think the most likely explanation is that he really doesnt want to take on the mantle of being the inventor of Bitcoin,” says Andresen, who notes that his own credibility is at stake, too. “Maybe he wants things to be really weird and unclear, which would be bad for me.”

    That uncertainty, Andresen says, seemed to be evident in Wright’s manner at the time of their demonstration. Andresen describes Wright as seeming “sad” and “overwhelmed” by the decision to come forward. “His voice was breaking. He was visibly emotional,” Andresen says. “Hes either a fantastic actor who knows an awful lot about cryptography, or it actually was emotionally hard for him to go through with this.”

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    How to Make Money Off Bitcoin Without Actually Owning It

    It’s the equity investor’s conundrum: how to get access to the skyrocketing returns of bitcoin and blockchain without actually owning the tokens.

    To Thomas Lee, a major bitcoin bull who heads research for Fundstrat Global Advisors, a dozen stocks should do the trick.

    “We believe investors should have exposure to blockchain, particularly given bitcoin has essentially zero correlation to equities, bonds and commodities —- hence, as a portfolio strategy, bitcoin is a good diversification tool,” Lee wrote in a note to clients Friday. “But this is impractical for many equity managers, given the parameters of their mandate or because of practical issues (custody of tokens, etc.).”

    Investors recently have sought ways to participate in the eye-popping bitcoin rally without having to purchase the cryptocurrency on the unregulated exchanges that have proven susceptible to hacks. Absent from Lee’s list are bitcoin futures, regulated derivative products that will debut on Cboe Global Markets Sunday and CME Group Dec. 18.

    Lee has long been one of Wall Street’s biggest advocates of the cryptocurrency. Two weeks ago he doubled his price target on bitcoin to $11,500 by the middle of 2018. It went for $15,552 as of 10:31 a.m. in New York on Friday, according to Bloomberg composite pricing.

    He suggests equity managers look to these ideas to leverage blockchain in their portfolios:

    • Bitcoin Investment Trust (GBTC)
    • MGT Capital Investments Inc. (MGTI)
    • HIVE Blockchain Technologies Ltd. (HIVE)
    • U.S. Global Investors Inc. (GROW)
    • DigitalX Ltd. (DCC)
    • NVIDIA Corp. (NVDA)
    • Advanced Micro Devices Inc. (AMD)
    • CME Group Inc. (CME)
    • Cboe Global Markets Inc. (CBOE)
    • Overstock.com Inc. (OSTK)
    • Goldman Sachs Group Inc. (GS)
    • Square Inc. (SQ)

    The looming availability of futures weighed on these equity proxies this week, as speculators may be shifting away from stocks of companies that have benefited as bitcoin’s price rose more than 15-fold this year. Both HIVE Blockchain Technologies and U.S. Global Investors are down near 10 percent this week. Nvidia and Advanced Micro Devices have also suffered losses in the five days ending Dec. 8.

    As for the totality of Lee’s picks, an equal weighted basket of these stocks is up 136 percent this year, according to the note. But as impressive as that may seem, he points out that it still lags bitcoin’s 1,685 rise in 2017.

      Read more: www.bloomberg.com

      The Future of Bitcoin Is Not as a Digital Currency

      Circle unveiled itself at a bitcoin conference in 2014, vowing to take the digital currency mainstream. But like so many other startups that embraced this big idea at around the same time, its mission has changed.

      In January, I met Circle CEO Jeremy Allaire for coffee in San Francisco. Even then, he was careful to paint his company not as a bitcoin operation but as an outfit that would help people easily trade good old-fashioned dollars with friends and family via a new smartphone app. And now, as it announced yesterday, Circle will no longer allow customers to buy and sell bitcoin.

      Allaire says that Circle, a marquee startup backed by Goldman Sachs, never really saw bitcoin as a consumer technology. “When we founded this company three years ago, the vision was never to build a bitcoin company,” he says, comparing bitcoin to internet protocols like http or smtp. In other words, the company saw bitcoin as a behind-the-scenes technology, not as a mainstream digital currency that the average person would use to pay for goods online or in a physical store.

      Well, all these years later, bitcoin is certainly not a mainstream digital currency. And Circle’s decision to stop operating as a bitcoin exchange is just the latest sign that it won’t become one anytime soon.

      Despite big promises from early adopters, bitcoin is still plagued by tax and regulatory issues. And the bitcoin community is still fighting over its core technologya fracas that could significantly hamper bitcoin’s ability to expand in the near future.

      As it backs out of services that let people buy and sell bitcoin, Circle is pointing these customers to another exchange, San Francisco-based Coinbase. But Coinbase is also moving away from services for consumers. It’s now focusing on running a new exchange where large institutions, not individuals, can move bitcoin. And as far back as February, Coinbase said it didn’t really want to operate as a bitcoin wallet, meaning it didn’t really want to provide a way for individuals to hold the digital currency and actually buy stuff with it.

      In other words, like Circle, Coinbase is moving away from bitcoin as a digital currency and towards a world where it serves as the underpinning for other financial services. (The company is also facing its own legal headaches: Last week, a federal court ruled that the IRS could serve Coinbase with a summons that seeks information about its user accounts.)

      Bitcoin has not become a mainstream currencyand it won’t anytime soon.

      Still, as bitcoin’s prospects as a mainstream digital currency fade, Circle and many other companies believe that the blockchain, the distributed online ledger that underpins bitcoin, can serve as the basis for other applications and services. The bitcoin blockchain helps drive Circle Pay, the app that lets you trade dollars with friends and family. And the company just unveiled a new open source project called Spark that seeks to use the blockchain and similar distributed ledgers as a means of moving all sorts of currencies, something so many others are working on. Meanwhile, outfits like the R3 consortium are building new blockchain technology for big banks and other financial operations that can oversee the movement of stocks and potentially anything else that carries value.

      That said, many of these efforts are also a long way from really happening. Goldman Sachs and three other institutions just pulled out of R3, and though R3 managing director Charley Cooper plays this down, the truth is that many big players are still unsure how these technologies will play out. The future of bitcoin and the blockchain remains unclear. What is clear is that 2016 is not the year they went mainstream.

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      The promise of managing identity on the blockchain

      Blockchain, the secure distributed ledger technology first created to track bitcoin ownership, has taken on a number of new roles in recent years tracking anything of value from diamonds to real estate deeds to contracts. The blockchain offers the promise of a trusted record that can reduce fraud. Some industry experts say that over the coming years, it could be used to control identity information in a more secure fashion.

      As we have seen, just last week with the massive Equifax hack, our personal information is highly vulnerable in online databases in their current form. The fact is that whenever we have to identify ourselves, we are forced to present a variety of information to prove we are who we say we are, whether that’s to register for an online service, to cross a border or even prove you are old enough to drink at a bar.

      The argument goes that if our identity were on the blockchain, it would give us more control over this information, and with proper applications allow us to present just the minimum amount of information a given party needs to identify us. That could be your date of birth at a bar, your credit score at a bank or a unique identifier to access an online service.

      It’s unclear if the blockchain can be that identity panacea that some have suggested, but there are a range of opinions on the matter.

      Yes, it’s happening

      Of the experts we contacted, only one was fully enthusiastic about blockchain as an identity tool. Jerry Cuomo, IBM Fellow and VP of blockchain technologies, sees blockchain already having a big impact as people demand more control of their identities. He says that we are constantly being asked to share personal information to access places or information or to do business with companies — and that each of these actions puts us at risk for identity theft. He believes the solution to this problem could lie on the blockchain.

      “Imagine a world where you are in direct control of your personal information; a world where you can limit and control how much information you share while retaining the ability to transact in the world. This is self-sovereign identity, and it is already here. Blockchain is the underlying technology paving the path to self-sovereign identity through decentralized networks. It ensures privacy and trust, where transactions are secure, authenticated and verifiable and endorsed by relevant, permissioned participants,” Cuomo explained. In fact , he says that he’s already seeing businesses and governments beginning to establish and use these networks to meet citizen demand and deliver the promise of self-sovereign identity.

      No, probably not

      It sounds pretty good to hear Cuomo describe it, yet not everyone is enthusiastic as he is, seeing many obstacles to using the blockchain for identity purposes. Steve Wilson, an analyst at Constellation Research, who has studied the blockchain extensively has serious reservations about it as an identity management system.

      “Identity is not going to move to the blockchain in any big way (not as we know it). Blockchains were designed to solve problems quite different from identity management (IDM). We need to remember that the classic blockchain is an elaborate system that allows total strangers to nevertheless exchange real value reliably. It works without identity and without trust. So it’s simply illogical to think such a mechanism could have anything to offer identity,” Wilson explained.

      He adds, “The public blockchains deliberately and proudly shirk third parties, but in most cases, your identity is nothing without a third party who vouches for you in some way. Blockchain is great for some things, but it’s not magic, and it just wasn’t designed for the IDM problem space.”

      Eve Maler, who works at identity management firm ForgeRock, which landed an $88 million investment last week, also finds the possibility highly unlikely for a variety of practical reasons. “Identity will not move to the blockchain if this means personal data will be put on a public permissionless blockchain (distributed ledger technology in its purest form), as this is now widely considered bad practice,” she said.

      She added, “The “distributed nodes” element of the technology is valuable for architectures where trust in a central authority is difficult or undesirable to establish, but can be challenging where it is desirable to record sensitive information because of the increased attack surface (every node has a copy of everything) and resulting increased privacy considerations.”

      It depends

      Then there are those who fall somewhere in the middle. They aren’t ready to write it off, but they see a lot of obstacles along the way to implementing it, or see it as a part of a broader ecosystem of identity tools, rather than a full replacement to what we have now.

      Charles Race, president of worldwide field operations at cloud identity firm Okta, which went public this year, thinks it’s possible blockchain will emerge. He envisions a similar set of use cases as Cuomo, but sees a lot of obstacles that stand in the way of using the blockchain to implement identity management broadly moving forward.

      “A trusted entity will need to establish some legal and enforceable rules and policies for how it all works, they’ll need to make it easy for the average person to use securely, and they’ll need to convince a critical mass of people and service providers to adopt and trust the ID — all while finding an economically viable business model. Some institutions are uniquely positioned to solve all of these chicken-and-egg issues at once and bring this big idea to life — first among them are our citizen-facing government agencies,” Race explained. But he adds, “The trouble with this idea is that a universal ID poses risks to privacy and hence [could] encounter significant political opposition.”

      Andre Durand, CEO at Ping Identity, an identity management firm that was sold for a reported $600 million to Vista Equity Partners last year, says it’s not likely to happen as a full replacement over the next five years, but it could begin to play a role in identity. “What is much more likely is that the things Distributed Ledger Technology is uniquely designed for, keeping accurate records in a distributed system, will become part of the identity management ecosystem and help improve aspects of it,” he says.

      Ian Glazer, an identity industry expert says it really about choosing the right tool for the job, but he doesn’t necessarily see there ever being one answer that fits every identity scenario including blockchain.

      “To ask if identity will move to blockchain is not the right question. Better to ask will use cases emerge that blockchain-related technologies are uniquely qualified to solve. Likely there will be some. But just like relational databases, LDAP and object databases, no one storage/retrieval mechanism has proven to be the single “right” tool for the job,” Glazer told TechCrunch.

      Like any emerging technology, there are going to be a range of opinions on its viability. Using the blockchain as an identity management system is no different. It will probably begin to take on some role over the next five years because the promise is just so great, but how extensive that will be depends on how the industry solves some of the outstanding issues.

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      With Ethereum wallets under constant attack, Jibrel Network decided to build their own

      Since blockchain technologies appeared people have been trying to figure out how to put traditional assets like currencies, bonds and other financial instruments onto it in a way which has regulatory compliance and is secure. If you could do that you could sell securities in a legitimate way, thus disrupting large swathes of the asset management industry. In case you didn’t happen to know, the asset management industry is worth around $69 trillion or more, globally. But you have to hold these assets in wallets. And it’s not easy getting it right.

      There are already a number of players in this space. Tether is a cryptocurrency issued on the Bitcoin blockchain via the Omni Layer Protocol. This allows users to trade and use digital tokens backed by the US Dollar. Each of their ‘USDT’ cryptocurrency tokens is allegedly backed by this real currency held in Tether’s reserves and can be redeemed through the Tether Platform. LAToken is a blockchain protocol and platform for creating and trading listed equity asset tokens. And Blackmoon Crypto is designed to enable traditional asset managers create and manage tokenized funds in a legally compliant manner (i.e. not go to jail!).

      But this world is not easy and is fraught with problems. Tether recently claimed it was robbed of $31 million in tokens after a malicious attack.

      And just recently the leading Ethereum developer, Parity, accidentally permanently froze over $160 million worth of user funds because of a fault in its wallet. Oops!

      Now a new company claims it will be able to fix some of these problems, especially as it concerns wallets.

      Jibrel Network, a company registered in the so-called “crypto-valley” of the Swiss canton of Zug, specializes in blockchain implementations for banks and so-called ‘Non-Bank Financial Institutions’. It recently raised $3 million from crypto investors including TaaS Fund, Tech Squared, Aurora Partners, Arabian Chain, among others.

      With few robust Ethereum wallets available, and hacks continuing, the team decided to build its own.

      It’s now launched the jWallet, a product aimed at consumers which, the company says, can store financial assets such as currencies, commodities, bonds and equities, on the Ethereum blockchain. The Alpha version of the wallet, which provides a simple way to store, transfer and convert ERC20 tokens, comes out today. jWallet holds no user data and all keys are stored locally.

      Most wallets have to make the decision to either sacrifice security or usability. But the jWallet can be run locally, is open source and a mobile version is also available.

      “There is a growing need for reliable, enterprise-grade wallet solutions, that deliver the highest levels of user-friendliness, without sacrificing security,” says Victor Mezrin, CTO.
      Unlike Tether, which provides only USD in the form of ERC-20 tokens, Jibrel has created tokens for six fiat currencies (USD, GBP, EUR, RUB, AED, CNY).

      Yazanz’s Barghuthi (project lead at Jibrel Networks) criticised Tether’s approach: “As it stands, Tether requires centralization with reliance on traditional banking… Simply put, in tether, users purchased USDT directly from an exchange, whereas in Jibrel, one purchases JNT and then uses that to purchase asset-backed tokens from the Jibrel DAO.”

      Fighting talk.

      Jibrel’s advisory board includes Don Tapscott (of Thinkers50 and author of ‘Blockchain Revolution’) and Eddy Zuaiter (former COO Soros Fund).

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      Blockchain is empowering the future of insurance

      The embers of innovation are beginning to char the massive $1.2 trillion underbelly of the largest industry in the world. Every segment of insurance is under competition by entrepreneurs touting new ways to underprice risk, creating new types of premiums and servicing consumers in a tightly regulated on-demand economy. While most startups attempting to gain traction in the insurance market fall under incremental innovation, Blockchain for insurance could be characterized as disruptive.

      The underlying technology of the worlds most adopted digital currency, bitcoin, is quickly becoming one of the hottest topics across a number of industries. More than just a distributed database for bitcoin, Blockchains ability to send, receive and store information has the underlying power to disrupt the way businesses process digital transactions.

      The implications of decentralized ledger technology (DLT) are astounding: Digital trust is now an ever reasonable possibility; meaning online and offline assets can now be assigned ownership and the transference between those parties can be proven both linearly and cryptographically. Specific to insurance, Blockchain technology has the power to simplify the claims process, alleviate high premiums, help insurers create niche coverage and, most importantly, benefit those who live in catastrophe regions.

      Peer-to-peer insurance

      Blockchain adoption has the power to transition new and existing models of insurance, including P2P insurance, parametric insurance and microinsurance, into a new digital age. Blockchain is powerful because of its secure platform connecting capabilities.

      New distribution methods like peer-to-peer insurance (P2P) could end up restructuring the entire market. P2P insurance empowers policyholders to a greater portion of the premiums rather than the individual private wealth managers working to produce returns for insurance companies. A number of well-funded startups are already beginning to stake their place in the P2P insurance market. One example, Dynamis, a Wisconsin-based peer-to-peer platform built on Blockchain recently pulled in a $2.6 million investment from Golden Angels. They are looking to build a platform that allows brokers to interactively evaluate plan options for employers.

      Enigma, enables different parties to jointly store and run computations on data while keeping the data completely private. In the foreseeable future, specific P2P insurance platforms may begin to use smart contracts to set claims and match demand between consumers in an online market, solving many of the current issues when transferring digital assets or accessing private data.

      Parametric insurance

      Another use case for Blockchain is parametric insurance. Instead of indemnifying the pure loss, insurers would agree to pay a certain amount upon the occurrence of triggers within preset smart contracts. For example, if an earthquake were to occur in a given region above a magnitude of 5, the smart contract would automatically pay 20 percent of the insurance claim to policy holders. Contracts require mutually trusted third-party administrators (TPAs) to adjust. As parametric insurance becomes popular, its process will likely improve to play a key role in the widespread adoption of smart contracts.

      Product-creating startups like Rainvowcan be used to create cross-border risk pools, allowing individuals from all over the world to access its exchange protocol via digital currencies. Rainvows Ethereum platform facilitates niche coverages to automatically compensate unforeseen transportation costs on rainy days.

      The future of insurance could flourish through an intelligent adoption of Blockchain.

      Platform-creating startups like Factom* facilitate highly specific insurance policies. These systems allow TPAs to create triggers or oracles for smart contracts, promising to make parametric insurance easier and more adoptable by insurance carriers.

      The fast growth of IoT-based technologies and sensors have fueled startups and corporations, giving access to real-time data that may ultimately give way to new methods of settling insurance disputes. Automobiles could be assigned tokens by their manufacturers; rather than having the incident go through an insurance company, vehicles could adopt tech for cars to assess driving accidents automatically. A fender-bender would trigger instant compensation within the smart contract based on sensor and party data.


      Blockchain has several perceived benefits in microinsurance, as well. It can enable trust between peers to increase transparency for populations living in remote regions of the world. Its beauty lies in its simplicity. The virtual nature of the transactions could side-step governmental bureaucracy to make geographic limitations irrelevant within its context. These features make the future of microinsurance very appealing.

      Helperbit, an Italian Blockchain startup, uses the Blockchain protocol to enable philanthropists to donate digital currencies to underfunded, hard to reach nonprofits in remote regions of the world. It even allows people to trace their donation and the manner in which it is used. Their risk assessment platform allows Good Samaritans to pool their money while limiting fraud exposure.


      The future of insurance could flourish through an intelligent adoption of Blockchain, with applications in digital currencies, fraud solutions and smart contracts. Large insurers have the potential to benefit immensely. However, its implementation will mean that insurance companies will have to change their underwriting process, the structure of the policy, as well as risk underwriting.

      Blockchain allows for cheaper, more consumer-oriented products to be developed that could chip away at the premiums collected by large insurance companies. An ideal scenario would be the cooperation between Blockchain startups, carriers, brokers, reinsurers, etc. However, most likely many segments of the insurance industry will be subject to disruption and may follow the way of milk men or lamplighters a precautionary tale for incumbents in the insurance industry.

      *Factom is a portfolio company.

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      The Winklevoss twins are still trying to bring Bitcoin to the mainstream

      Tyler Winklevoss and Cameron Winklevoss attend the 9th annual Veuve Clicquot Polo Classic at Liberty State Park.
      Image: Lev Radin/Pacific Press/LightRocket via Getty Images

      Gemini Trust Co., the U.S.-based digital-currency exchange founded by entrepreneurs Cameron and Tyler Winklevoss, is introducing a daily bitcoin auction to facilitate price discovery and larger trades at lower costs.

      The auctions, to be held at 4 p.m. New York time every day including holidays and weekends, at first will support just bitcoin-to-U.S. dollar trading, and will eventually expand to more currencies. Auction trades will be eligible for as much as a 0.15 percent rebate on trading fees, Gemini said.

      By adding daily auctions starting Wednesday, Gemini is bringing to bitcoin a feature thats long been available on exchanges such as the New York Stock Exchange, Nasdaq and Bats Global Markets for other asset classes.

      Its a step toward making the digital currency more attractive, and easier to use by institutional as well as retail investors, Gemini Chief Executive Officer Tyler Winklevoss said in an interview.

      “We believe this is the first-ever end-of-day bitcoin exchange auction,” Winklevoss said. “Auctions create greater price discovery and liquidity, resulting in a very meaningful final auction price. If you were building a securities exchange today, an auction would be a core feature.”

      Bitcoin trades 24 hours a day, but a buyer wishing to purchase a lot of bitcoins may be out of luck at 2 a.m., when there arent many sellers around. Gemini hopes to overcome that issue by designatingthe time when financial markets traditionally close for buyers and sellers to come together and trade. The feature will also help establish the daily bitcoin trading price.

      The auctions are being introduced just as Winklevoss Bitcoin Trust – a bitcoin exchange-traded fund is awaiting listing on Bats. The funds bitcoin price will be valued daily at 4 p.m. Eastern based on the spot price on Gemini, according to a recent filing. Tyler Winklevoss declined to comment on when the fund may be listed.

      We view the launch of an end-of-day auction as a significant step forward for Gemini and the bitcoin industry, Bats CEO Chris Concannon said in an e-mailed statement.

      Gemini has operated in the U.S. since last October, after being licensed by New Yorks Department of Financial Services. In recent months, the exchange has been expanding into other countries, such as Canada. It does not provide its user or growth numbers.

      Gemini is expanding its suite of services as the technology behind bitcoin finds uses in industries ranging from supply chain to finance, and more people around the world open bitcoin accounts. The price of bitcoin reached $607.31 on Tuesday, almost triple its value a year ago, according to CoinDesk Bitcoin Price Index.

      This article originally published at Bloomberg here

      Read more:

      Bitcoin Crashes and Then Surges in Wild Weekend Action

      Bitcoin is proving that investing in digital currencies isn’t for the faint of heart.

      After plunging as much as 29 percent from a record high following the cancellation of a technology upgrade on Nov. 8, the largest cryptocurrency came roaring back in early trading Monday before fluctuating between gains and losses.

      “Crypto trading is not for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York.

      While multiple reasons are being cited for the price volatility, one of the more viable is that some investors are switching to alternative coins. Bitcoin cash, an offshoot of bitcoin that includes many of the technical upgrades being debated by developers, has more than doubled in the same period.

      “We have seen similar steep falls in bitcoin throughout the year — specifically in June and September — but every time a considerable decline occurs, new investors jump in to experience the new asset class,” Hussein Sayed, chief market strategist at ForexTime Ltd., a currency broker that uses the brand FXTM, wrote in a note Monday.

      While markets had been focusing on bitcoin’s more than 500 percent surge this year, bitcoin cash was gaining popularity because of its larger block size. That’s a characteristic that makes transactions cheaper and faster than the original.

      When a faction of the cryptocurrency community canceled plans to increase bitcoin’s block size on Wednesday — a move that would have created another offshoot — some supporters of bigger blocks rallied around bitcoin cash.

      The resulting volatility has been extreme even by bitcoin’s wild standards and comes amid growing interest in cryptocurrencies among regulators, banks and fund managers. While skeptics have called its rapid advance a bubble, the asset has become too big for many on Wall Street to ignore. Even after shrinking as much as $38 billion since Nov. 8, bitcoin boasts a market value of about $110 billion.

      Supporters of bitcoin’s technology upgrade “are now switching support to bitcoin cash,” said Mike Kayamori, head of Tokyo-based Quoine, the world’s second most-active bitcoin exchange over the past day. “There’s a panic about what’s happening. People shouldn’t panic. Just hold on to both coins until we see how it plays out.”

      Read more: A QuickTake on the bitcoin community’s infighting

      The cancellation of last week’s bitcoin upgrade has left users to choose between the two versions of the cryptocurrency. On one side is the original bitcoin, powered by so-called SegWit technology, which aims to improve its performance by moving unessential data off of its underlying blockchain. On the other side is bitcoin cash, which allows its blockchain to handle eight times as much data as the original.

      Proponents of bitcoin cash believe their approach is simpler and closer to the original goal of bitcoin, which was described primarily as a payment system in its white paper. Supporters of the original bitcoin say that vision is too limited, and that by improving the blockchain with SegWit technology, bitcoin can become a new digital-asset class that not only supports payments but countless other functions.

      Upgrade Called Off

      While bitcoin cash has been around for months, it saw limited support as the community awaited last week’s technology upgrade for the original bitcoin, which promised similar features. Now that the upgrade has been called off, businesses that use the cryptocurrency primarily as a payment method are expected to increase adoption of bitcoin cash.

      While bitcoin cash surged over the weekend, it hasn’t been a straight line up. The cryptocurrency was trading at $1,300 at 4:45 p.m. in New York, down from a high of about $2,478 on Sunday, Coinmarketcap.com prices show.

      Bitcoin has been similarly volatile; it initially rose after news that it would avoid another split, but the gains were short-lived. Its plunge earlier Monday to as low as $5,605 compares with an intraday record $7,882 on Nov. 8.

      Volume across bitcoin exchanges jumped to 436,021 bitcoins on Sunday, the highest since September, Bitcoinity.org data show. BitMEX, an exchange for cryptocurrency derivatives that allows shorting, saw record activity on Sunday, Chief Executive Officer Arthur Hayes said.

        Read more: http://www.bloomberg.com/news/articles/2017-11-13/bitcoin-plunges-29-from-record-high-as-civil-war-intensifies