Říj 19

Bitcoin (BTC) Mining is Actually Green

Bitcoin (BTC) mining uses up as much electricity as Austria in a year, at 73.12 TW/h, shows data collected by Digicomist.com. This exorbitant energy use is viewed as one of the strongest arguments that mining is an activity extremely damaging to the environment. But is that entirely true? 

Bitcoin Mining Achieves Synergy with Hydroelectric Stations

But another analysis shows that currently, BTC mining is actually quite eco-friendly. The chief reason is that the main source of power is hydroelectric energy. Based on the recent research of the CoinDCA Bitcoin Blog, mining facilities are actually a good match for hydroelectric power stations.

Bitcoin mining farms, built downriver from the Three Gorges Dam in China, or using hydroelectric power in Washington, are actually a boon to the industry. Mining is a 24/7 activity, always ready to absorb excess power. The blog states:

The variable output means renewable suppliers have pay or a lot of wasted capacity. Nobody wants to buy your extra gigawatts at two in the morning. Nobody, that is, except bitcoin miners. Bitcoin mining fixes this problem for renewables by always being willing to buy cheap power, regardless of the time of day. No other industry has this property.

Bitcoin mining is also a seasonal activity, with a clear boost following the wet season in China. Farms go online and offline and offer a just-in-time adjustment to power production.

Miners are also aware of the need to cool down the rigs and choose high-altitude, or cooler locations, which are naturally rich in renewable water-generation power.

Mining Keeps Setting Peak Values

Mining is back above 102 EH/s, a few days after posting a peak at above 110 quintillion transactions per second. This level of activity is unprecedented, and according to experts, is still produced using older Antminer models of the S9 series. With new shipments of the S17 series, mining maybe even more efficient per unit of electricity.

“The future looks like clean energy all over the world, much of it renewable, hooked up to local bitcoin mining operations that utilize slack power generation,” CoinDCA commented.

Bitcoin mining still requires much more hardware in comparison to proof-of-stake coins. Electronic waste is, however, highly recyclable.

Allegedly, one BTC transaction has a carbon footprint of 741,703 VISA transactions. This, however, only takes into account the direct energy usage, and not the VISA teams, offices, buildings and all other activities in keeping a business alive. Bitcoin’s network, on the other hand, is automatic, not requiring a large workforce.

What do you think about Bitcoin’s energy usage? Share your thoughts in the comments section below!

Image via Shutterstock

The Rundown

Říj 18

Binance 125X Leverage Sparks Criticism From Community

Crypto exchange Binance announced that its recently launched futures trading platform would offer BTC/USDT contracts with up to 125:1 leverage.

Use With Caution

Starting from today, Binance Futures allows investors to trade with up to 125x margin and pick any leverage from 125:1 to 1:1 for BTC/USDT contracts. When using the highest possible leverage, a 100 USDT deposit would enable users to hold 12,500 USDT in BTC.

Binance CEO Changpeng Zhao (CZ), explained:

The performance of the Binance Futures systems far outstrips many other platforms in the market, giving users a smooth trading experience. The market has been demanding a product with superior stability and performance; now we are providing one.

CZ said via his Twitter profile that the high-risk trading option is not recommended for beginners.

Binance claims that it is using a sophisticated risk engine and liquidation model for the high-leverage trades.

Despite this, most of the commentators criticized the addition, hinting that Binance has become a platform for gamblers. Indeed, given the insane volatility of cryptocurrencies, including Bitcoin, a 125x leverage could wipe any position within seconds. For most commentators, “125x and caution are not synonymous.”

Is Binance Trying to Deprive Traders of Crypto Funds in a Nice Way?

The crypto community suspects Binance of introducing the high-risk service for its own profit at the expense of ignorant traders. Indeed, the crypto exchange has been mostly about profits. In the last three years, CZ’s platform has generated more than $1 billion in cumulative profit or more than $1.2 million in profits every single day.

Here are the profit figures by different periods:

While Binance has been playing nice so far, the astronomic leverage seems to be an excessive effort to monetize traders’ vulnerabilities.

Ironically, the maximum leverage is aimed at advanced traders, but they would be the last ones to go for such a crazy deal.

On the other side, CZ reacted by saying Binance was offering multiple features and it was the responsibility of traders to choose what they like:

Not every feature is for everyone.  Some features, while not liked by everyone, are in high demand only for small selected groups.  Please don’t use features you don’t like or need.  As a platform, we have to provide choices to stay competitive.

5 Funniest Reactions on CZ’s Tweet

To end this story on a positive note, here are the most hilarious comments on CZ’s announcement:






Let us know which reaction do you like the most!

Images via Shutterstock, Twitter: @cz_binance, @APlompliano, @CryptosBatman, @cCryptula, @money_alotta, @CryptoVirgo, @CharlesSWE, @CryptoRomulus

The Rundown

Říj 17

Debunking Dr. Doom’s Latest Comments About Crypto

In a recent debate with Roger Ver hosted at the CC Forum event in London, Dr. Nouriel Roubini shook his fist at crypto assets once again, making a series of accusations on any and all coins.

Former Bitcoin.com CEO, Roger Ver, faced off as a defender of Bitcoin Cash (BCH) and the wider crypto ecosystem this week, against the renowned Professor of Economics. While the clash was exciting to say the least, it was by no means a close battle.

Roubini’s comments on crypto were particularly close-minded and showed a clear lack of understanding about the emerging industry. His beliefs about the traditional financial world were also a bit off too.

Here’s 5 things Nouriel Roubini got wrong.

(1) Crypto Coins are ‘Not a Means of Payment’

Dr. Roubini insisted that crypto coins are “not a means of payment”. He insisted that the networks are too slow, handling only five transactions per second whereas “with Visa system you can do 25,000 transaction per second”. His chief concern was the volatile price, and the fact that merchants could not rely on a stable exchange rate. However, using crypto as a payment option opens up markets that would not be otherwise open.

In-game payments happen faster, countries where citizens have access to the internet but are unbanked now have a fully array of financial services and P2P platforms available to them. Roger Ver also added that BCH and other coins could lead to even more active internet trading, as more sites take crypto on board.

It’s really hard to claim that cryptocurrencies aren’t money when you can spend them at over 100,000 websites on the internet

(2) Coins Crashed and Never Recovered

Dr. Roubini’s argument points out that many coins lost significant portions of their value since 2017.

Typical cryptocurrency has lost most of its value. Even Bitcoin is 60% below the peak, the other top 10 are 75% below their peak, and the other thousands of shitcoins are 95% below their peak.

It’s true, Bitcoin (BTC) is down around 60% from its peak. However, some coins have also manage to bounce and regain a fair valuation. The peak trading values in 2017 were a one-off anomaly that erased value for some of the risk-takers. But the crypto sector is agile, the market is still immature and it continues to exist and transfer value even at lower market prices. New use cases for coins and tokens are discovered, and crypto-based finance is taking root.

It’s worth noting that this week, the stock price of Belgian bank, Dexia, has crashed 99.99% since May 2007 and is about to be delisted. Not just crypto projects had hit zero hey Nouriel?

(3) “Nobody is Using Crypto, It’s a Joke”

This one is easy.

Bitcoin right now has close to half a million active addresses, with constant growth since the launch of the coin. There is a marked growth in BTC addresses containing upward of 1,000 BTC, showing a certain interest in investment. Miners are also showing their vote of confidence, harnessing immense resources to produce blocks. And there is a market for newly mined BTC with no transaction history, showing that crypto networks do indeed have value for instant, censorship-resistant transactions.

(4) Criminals Only Use Crypto

Actually, being a criminal and using BTC turned to be a very bad move of late. Law enforcement plus Chainalysis ended up unraveling one of the biggest darknet sites serving gigabytes of child pornography. And how did they do it? They followed the blockchain trail, and ended up finding the users in the real world. Any other transfer of funds would not be available and made public for analysis, taking many more months to get court orders.

Dr. Roubini is behind the curve once again, as crypto has found its own tools to perform KYC on the blockchains themselves. Startups like CypherTrace go even deeper too, tracking as many as 700 different projects.

(5) Fintech is Apparently Much Better

Fintech is growing with paces as fast as crypto coins. And some tools and platforms are indeed highly innovative. But even fintech is not for everyone. Firstly, there are mystifying regional restrictions. Then, there are rather high fees that work much like a bank. Then, a fintech tool will hold onto your funds – and even have a section of its small script to freeze the account.

With crypto, on the other hand, the funds are always under your control, with no silly restrictions on only sending a few thousand dollars. Nodes are all over the globe to verify the transaction, and there is no human factor. Fintech may also require a bank relationship, which somewhat defeats its purpose.

Dr. Roubini has mentioned similar sentiments in the past years. But the crypto space has evolved, constantly adding new features and use cases. And while there are face-blanching days of volatility, it seems like Bitcoin is here to stay.

What do you think about Dr. Roubini’s stance on crypto assets? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter @TuurDemeester, video via Youtube @bitcoin.com

The Rundown

Říj 16

Bitcoin Studies- Coming to a University Near You?

Is Bitcoin (BTC) teachable? As Satoshi Nakamoto once commented on Bitcointalk, “If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry.”

Universities Already Hold Courses on Blockchain

In 2019, multiple blockchain or BTC courses already exist – so why not an entire undergraduate program dedicated to various issues of crypto coins.

Leading US institutions are already offering introductory courses, with the lead taken by IT or economics departments. However, Crypto Twitter comments expanded the issue, suggesting that the study program should be much wider, encompassing both psychology and maybe even the legal issues of digital coins.

The proposal for a Bitcoin major raised issues of governance, and of the new types of blockchains created through delegation. But commenters also pointed to the fact that undergraduates rarely receive an explanation on the workings of central banks.

Bitcoin and crypto proponents have a problem with the possibility to raise unlimited funds, simply by tweaking the balance of central banks. Thus, the money supply remains agile, reportedly to encourage the economy. In the past decade, however, unprecedented quantitative easing led to negative interest rates, and fears that fiat money has overplayed its hand.

The interest in Bitcoin and the idea of sound money has followed the interventions of central banks. In the past days alone, the crypto space watched as the Fed poured in tens of billions in overnight repo facilities, to stave off an interbank liquidity crisis. The pouring of trillions of newly printed money into the economy is seen as a confusing tool that erases the meaningfulness of money. Without scarcity, Bitcoin proponents believe, money is prone to inflating illogical asset bubbles.

Bitcoin Projects Target Students

University students have been targeted by crypto projects in the past. Bitcoin Cash (BCH) popularized itself by sending small amounts of BCH to students. And now, the same technique is applied by the Bitcoin SV community.

BSV, which lost credibility within crypto social media, leading to delistings from major exchanges, keeps attempting to gain popularity and proponents by other means.

While universities are yet to dedicate entire majors to Bitcoin, adoption is growing. Recently, the Oxford English Dictionary officially added the word “satoshi” to the official dictionary.

What do you think about a Bitcoin university major? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter @zhusu @Centbee

The Rundown

Říj 15

Nick Szabo: Ethereum (ETH) is Becoming a “Centralized Cult”

The Ethereum (ETH) leadership is showing signs of becoming a force to be reckoned with, commented bitcoin pioneer Nick Szabo. While Ethereum was inherently democratic, the need to perform a series of hard forks and upgrades has put the developer team in charge.

Ethereum Developers Steer Transfer to ETH 2.0

Now, Ethereum has unrolled once again the drive to move on to ETH 2.0, the proof-of-stake version of the network. But while early hard forks happened with the support of miners, now there is the disparity between the interest of miners, node operators, and developers.

The conflict became apparent in a simulated environment, as the Ropsten testnet split into two, with an entity still mining the old blocks. The question was raised whether miners could dispute the decision of the developers, and “vote with their feet”, by continuing to produce blocks.

Now, Ethereum developers have put up insurance against such an event, namely the “mining ice age”, which would make mining impossible at the protocol level. However, miners may still have significant influence. The developer team, on its side, has the power to sway multiple decisions. This has led to the accusations of Szabo, who sees the network becoming cultish.

Proposed Upgrade Goes Against Miners

The Ethereum protocol is trying to reinvent itself while the network is still alive and running. Smaller projects have managed to relaunch on new blockchains, but in the case of ETH, there is too much at “stake”.

Ethereum coins are increasingly important in the crypto ecosystem. The most recent trend, Defi, or crypto-collateralized lending, concentrates significant ETH funds in smart contracts, with expectations of returns. Any tremors on the Ethereum network would have wider repercussions for the crypto ecosystem.

Currently, Vitalik Buterin has expressed beliefs that users would not feel the switch between ETH1 and ETH2. However, the series of upgrades and decisions raise the specter of centralization, every time the developers decide on steering the network.

By all expectations, Ethereum was expected to enter the proof-of-stake stage much earlier. But so far, the phasing out of mining has been slower, limited to rolling back the crypto ice age, while decreasing the block reward.

ETH currently trades at $184.62 as the most liquid altcoin, with registered volumes above $7.24 billion in 24 hours.

What do you think about the platform governance model of Ethereum? Share your thoughts in the comments below!

Images via Shutterstock, Twitter: @NickSzabo4, @VitalikButerin

The Rundown

Říj 14

Bayern Munich Partners with Stryking for Blockchain-Based Collectibles

Bayern Munich, Germany’s most successful football club, has partnered with the blockchain-oriented venture of fan engagement firm, Stryking Entertainment.

Blockchain-Based Collectibles on Bayern Players

According to the agreement, Stryking, which is itself a subsidiary of Hong Kong-based Animoca Brands – a mobile games developer, will issue and distribute digital collectibles based on Bayern players. Thus, the German football club will become part of a global platform for blockchain collectibles.

Stryking has created a fantasy sports challenge aimed at its “Football-Stars” game. The latter provides gameplay for the blockchain-based collectibles. It allows fans to use the virtual cards to compete against each other in special challenges.

For example, users will be able to create virtual teams with their player cards and compete against the teams of other users. Consequently, the results will influence the value of the non-fungible collectibles, which the users can then sell at a better price.

Stryking will start with cards related to Bayern stars like goalkeeper Manuel Neuer, forward Robert Lewandowski, and former Barcelona player Philippe Coutinho.

Dirk Weyel, founder and CEO of Stryking Entertainment, commented:

FC Bayern is one of the biggest football clubs in the world and their fans all around the globe should watch out for the first pre-sale with rare cards of their favourite stars coming soon.

In the upcoming weeks and months we will add more football licenses and other sports to the platform. Our vision is to build a truly global hub where sports fans meet to collect and trade, as well as play with their digital collectibles

Bayern is not the only football club connected with blockchain. There are more European teams that are embracing digital tokens. Giant clubs like Juventus, Paris Saint-Germain (PSG), AS Roma, and Benfica are all using cryptocurrency in one way or another already.

Most of the clubs that adopt blockchain-based tokens are using them to better engage with the fans. Socios.com, a startup offering customized Fan Tokens aimed specifically at football clubs, partnered last year with Juventus and PSG, which host two of the most popular players in the world, Cristiano Ronaldo and Neymar Jr., respectively.

Individual players are also becoming aware of the new technology. For instance, former Bayern player James Rodriguez launched his own cryptocurrency called JR10 Token.

What is your favorite football club? Would you buy customized tokens offered by it? Share your thoughts in the comments section!

Images via Shutterstock

The Rundown

Říj 13

Sunday Digest: Bitcoin Price Consolidation, And The SEC Spoils The Party

Japan was hit by Typhoon Hagibis this weekend, causing devastation and affecting both the Japanese Grand Prix and Rugby World Cup. So what has been causing devastation and affecting bitcoin and cryptocurrency markets for the past week?

Bitcoin Price: Consolidation Station

So it seems we are back in a consolidation phase, albeit around the lower underlying price point of $8k.

Monday saw a dip down to $7,800, prompting some to herald the long-awaited return of an alt season that some think will never come.

Bitcoin price bounced back up to $8200 on Tuesday, but a whale move of 13,180 BTC on Wednesday sparked fears of another dump.

That dump never materialized, with the price actually pushing higher towards $8600. Although, perhaps a “terminal shakeout”, is what the market really needed to spur another bull-run, suggested one analyst.

Fundstrat’s Tom Lee felt that the next breakout was more reliant on a positive move from the S&P500, however.

Whatever will spur the next breakout, didn’t come this week, as price slipped gradually back to the $8300 level.

Bitcoin Network: Evolution Vs Revolution

The Bitcoin network isn’t perfect (there, I said it). If it was then there would have been no need for the flood of ‘improved’ altcoin clones which we see today. However, there are some interesting updates in the pipeline, including the Schnorr and Taproot soft-fork.

This aims to improve scalability and fungibility, amongst several other updates. So is this going to deal with all of the legacy ‘issues’ with bitcoin scalability and spur a new wave of fans getting on board?

Not according to BitMEX, which doesn’t see network improvements or second-layer solutions like Lightning Network as a magic button with immediate effects. Instead, it says, Bitcoin may slowly improve over the years, rather than gain the sudden technological jump that users want.

Meanwhile, Ethereum’s upcoming upgrade to ETH2.0 has been labeled a “scam” by critics over claims of scalability. But then, by now we all realize that in the crypto-world, haters gonna hate harder.

One DEX Opens, Another One Closes

On Monday, John McAfee launched his Twitter-teased KYC-free decentralized exchange (DEX), McAfeedex. Initially only allowing listings of Ethereum-based coins, it did have the benefit of those listings being completely fee-free.

Then on Tuesday, Aphelion closed down its DEX platform making the native APH token worthless. It is not believed that this was due to the launch of McAfeedex, rather the relative lack of interest in DEX solutions currently.

News In Brief

Binance quietly added WeChat and Alipay onramps to its P2P trading solution for the Chinese market. This move was so quiet however, the WeChat and Alipay weren’t aware of it, and nixed the whole thing as soon as they found out.

Bakkt futures products have been gaining momentum after a slow start, while Grayscale is trying to tempt high-flyers with zero premium on GBTC.

Ripple announced an updated release schedule regarding the 55 billion XRP it holds in escrow. According to the new list, Ripple will be flooding the market with its personal stash for the next 18 years.

Meanwhile, Ripple CEO, Brad Garlinghouse threw shade at Facebook’s Libra, claiming it would not launch in the next three years. At the same time, he made a flawed analogy between XRP and oil, in an attempt to defend against accusations that Ripple sold XRP as an unregistered security.

In more bad news for Libra, Visa, Mastercard, and Stripe followed PayPal out of the Libra Association, following strong warnings from US Senators.

The ‘widow’ of QuadrigaCX CEO, Gerald Cotten, will allegedly handover assets of the exchange still in her possession, along with her husband’s entire estate, and a vast majority of her personal assets, to liquidators for the compensation of the exchange’s customers.

UNICEF is accepting funds in Ether and BTC, and in a surprising move, will not convert these funds into fiat, but distribute and use them in original form.

Ether was ruled to be a commodity by the CFTC, paving the way for ETH derivatives markets.

And Finally…

The SEC was due to give Bitwise Investments a decision on its application for approval for a Bitcoin-ETF by today. On Tuesday, Managing Director, Matt Hougan, said the company was optimistic about approval being given.

Hougan didn’t have to wait until today to find out, as the SEC gave its final decision before the final deadline. Unfortunately, it was bad news for anyone hoping to finally see a regulated Bitcoin-ETF.

The SEC also managed to put the kibosh on Telegram’s planned $1.7 billion planned ICO, at least for the time-being.

What do you make of this week’s bitcoin and crypto news? Let us know your thoughts in the comment section below!

Image via Shutterstock

The Rundown

Říj 12

Fed’s Hidden QE Becomes Norm; Bitcoin to the Rescue

Yesterday, the Federal Reserve (Fed) said it would restart buying bonds in the open market. Also, it will continue its overnight funding operations until January of next year.

Fed’s Cash Injection Is Already Routine

For the Fed, pouring cash into the markets is already routine. It seems that policymakers are trying to convince the public that there is nothing wrong with their easing measures. However, what we get is cheaper money that devalues at an even faster paste.

Last month, the M2 monetary supply exceeded the $15 trillion mark.

Elsewhere, the M1 money supply – a narrower definition of money that includes its most liquid form – is about to touch the $4 trillion mark soon.

For former congressman Ron Paul, the Fed’s intervention in the market is a form of monetary socialism, as the central bank is trying to plan the value of money through manipulations rather than letting the markets decide it.

On Friday, the Fed announced it would start purchasing about $60 billion in Treasury bonds every month until at least the second quarter of 2020. Also, it will extend the repo operations from the end of November to at least the end of next January. The Fed explained:

“These actions are purely technical measures to support the effective implementation of the FOMC’s monetary policy, and do not represent a change in the stance of monetary policy.”

Bitcoin Is Among Ideal Assets to Preserve Value

The Fed is trying to convince the public that we shouldn’t call its measures quantitative easing and that its last steps are not even part of monetary policy. For the central bank, buying bonds and injecting cash into the repo market are necessary measures to protect the economy and mitigate potential risks, especially amid the Sino-US trade war.

Dallas Fed President Robert Kaplan told the media:

“It is not intended to create more accommodation or create more stimulus. This is not intended to have any impact on monetary policy. It’s not designed that way.”

However, economists argue that this is the purest form of QE and should be treated as such. Usually, QE is the result of a crisis but it seems the Fed doesn’t want the public to realize there is a problem with the economy.

Nevertheless, the figures are insane. On Thursday, the New York Fed added $88.1 billion through the repo market, and another $82.7 billion on Friday.

While the Fed is experimenting, Bitcoin remains an ideal asset to preserve value and stay away from a devaluing currency.

Do you think the Fed is doing too much? Share your thoughts in the comments section!

Images via Bitcoinist Media Library, Fed, CNBC TV

The Rundown

Říj 11

Bitcoin Miners Drove Price Volatility In 2018 Bear Market, Says New Data

Bitcoin miners are behind spikes in price volatility which saw the largest cryptocurrency hit $3100 in 2018, new data suggests.

Miner Sell-Offs Preceded BTC Price Floor

In fresh analysis uploaded to social media on October 11, on-chain intelligence resource Token Analyst revealed miners selling coins directly influenced the Bitcoin price.

Specifically, large sell-offs coincided with BTC/USD dropping to $3100 late last year. Large chunks of coins moved to exchanges in June and August, which “drove the price down even further.”

“We see miners taking advantage of volatility by sitting on their mined stash and then selling aroung (sic) large price swings,” Token Analyst summarized.

Bitcoin mining chart

Bitcoin mining chart

The data followed up on previous findings by Decentral Park senior research analyst Elias Simos, who in August tracked to which Bitcoin mining rewards went over time. Before the 2016 block reward halving, more independent miners shared the coins.

“70% of the reward went to non-mining pool affiliated entities, in the beginning. This figure is now at ~25%,” Simos found. He described the current mining period as the “professional era.”

Miners And Price Control

Token Analyst’s data adds fuel to mounting theories about the overall role miners play in dictating the Bitcoin price. 

As Bitcoinist reported, well-known commentators are also increasingly aware of the phenomenon. Chief among them is PlanB, whose stock-to-flow Bitcoin price model has demonstrated the importance of miner participation. 

Another well-known hypothesis, championed by Bitcoinist contributor Filb Filb, Cole Garner and others, revolves around miners sustaining minimum BTC prices.

This week, Garner referenced Bitcoin creator Satoshi Nakamoto in endorsing the concept. In 2010, Nakamoto had claimed the price of a commodity “tends to gravitate toward the production cost.” 

“If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more,” he added.

As such, it is unlikely that miners will sell at levels below around $6400 under current conditions, leading to the conclusion the figure represents a new price floor for Bitcoin. 

For everyone, the next block size halving in May 2020 represents a key moment. As with 2016, overall momentum should start to build for new price highs after the block reward drops to 6.25 BTC per block.

What do you think about Token Analyst’s data? Let us know in the comments below!

Images via Shutterstock, chart by thetokenanalyst

The Rundown

Říj 10

Skew and CryptoGarage Settle S&P 500 Derivatives on Bitcoin Blockchain

Wall Street is trying to tame Bitcoin (BTC), but two crypto startups are using the Bitcoin blockchain to take on Wall Street.

Settlement Takes Days and Relies on Traditional Intermediaries

Startups skew. and CryptoGarage announced a successful test for settling an S&P 500 derivative over the Bitcoin blockchain, in a transaction completed between September 6 and September 20. The two startups believe blockchain holds the answer for faster, secure settlement, which is otherwise an expensive process run by intermediaries.

The two parties entered a derivative spread contract, then settled it as it expired, using oracle data from ICE Data Services.

Emmanuel Goh, CEO of skew, said,

With its hashrate making regularly new all-time highs this year, the Bitcoin blockchain is arguably the most secure distributed ledger globally — it is the ideal candidate for becoming the settlement ledger of global financial transactions,

Goh joined the crypto space after working as a derivatives trader for J.P. Morgan, hence the idea to handle a known area with novel technology.

Bitcoin Network Safer than Ethereum with Sky-High Hashrate

CryptoGarage, a Japanese startup, took the challenge of turning the investment product into a smart contract running on Bitcoin. The greater security of the network with the highest hashrate made the two companies choose Bitcoin over the Ethereum (ETH) network.

What is even more curious, the S&P 500 derivative was originally denominated in USD. But the contract was settled in BTC, turning the transaction into a so-called quanto option. The two startups believe the use case for the Bitcoin network can open the network to settle contracts that total $400 billion per year, and currently use traditional settlement tools.

The companies warn that the transaction was done solely as a proof of concept, and for now do not intend to offer a settlement or other financial services.

The Bitcoin network poses a challenge for building smart contracts, as it does not offer the Turing-complete solution of Ethereum. However, Ethereum faces significant setbacks to smart contracts, including unpredictable gas fees. The other problem is the ubiquity of smart contracts, which often suffer from logic flaws and facilitate hacks and exploits.

Blockchain has always been offered as a solution to settle transactions in traditional securities. But so far, there is no test on how the system would behave under a greater load. The Bitcoin network is extremely secure when it comes to attempts to change the record. Over the past few days, mining reached peaks above 102 quintillion hashes per second, thus making any transaction very expensive to reverse.

What do you think about using the Bitcoin network for derivative settlement? Share your thoughts in the comments section below!

Images via Shutterstock

The Rundown