High-Frequency Trading Is Newest Battleground in Crypto Exchange Race

High-Frequency Trading Is Newest Battleground in Crypto Exchange Race



The Takeaway

  • High-frequency trading (HFT), a longtime and controversial practice in traditional markets, is becoming commonplace in crypto, too.
  • Placing trading servers physically close to exchanges’ matching engines can win an edge on speed. This helps HFT firms make large profits in the legacy markets.
  • Crypto exchanges such as ErisX, Huobi and Gemini are trying to attract large algorithmic traders with colocation offers.
  • Demand for the service is high, but its benefits are a matter of debate, due to the structure of the crypto market.

A handful of cryptocurrency exchanges are rolling out the red carpet for high-frequency traders. Huobi, based in Singapore, and ErisX, in Chicago, have separately begun offering colocation, in which a client’s server is placed in the same facility or cloud as the exchange’s, officials at each exchange told CoinDesk. This allows those investors to execute trades up to a hundred times faster, giving them an edge over the rest of the market. These exchanges join Gemini, which was one of the first crypto firms to offer colocation at a popular data center in the New York area, and is about to expand the option to include a second site in Chicago. Notably, none of these exchanges charges for the service, seeing it as a way to differentiate themselves. “It’s our competitive advantage,” said Andrey Grachev, head of Huobi Russia, the exchange’s Moscow client office.

To be sure, such accommodations remain rare in crypto, which historically was dominated by individual traders and only recently began to draw interest from institutional investors such as hedge funds and family offices. But the exchanges’ moves are a sign that high-frequency trading (HFT), a longtime and controversial practice in traditional financial markets, is slowly entering the crypto sphere. And though “bots” have been present in crypto since the days of Mt. Gox, colocation takes algorithmic trading to a different level. Eric Wall, former crypto and blockchain lead at Cinnober, a financial technology company acquired by Nasdaq,

told CoinDesk:

“It’s big business, everyone I’ve been speaking to that runs an exchange mentioned being approached by Wall Street types with these kinds of requests.”

Most crypto exchanges are not ready to satisfy this demand, Wall said. These are “very new concepts to many retail-focused exchanges with no experience of the traditional world, it seems.”

800K trades a day

In the six months since Huobi opened its Russia office, around 50 clients have taken advantage of its colocation service by locating their servers in the same cloud and using the same domain name service (DNS) as the exchange, according to Grachev. The option allows these clients to make trades 70 to 100 times faster than other users, he said. “One of our clients makes about 800,000 trades a day, and there are more and more such clients.” Unlike many crypto exchanges that use cloud-based servers, ErisX has a hardware matching engine, located in the Equinix data center in Secaucus, New Jersey, said Matthew Trudeau, the exchange’s chief strategy officer.

The same facility houses the matching engines of a range of major traditional exchanges, brokers and trading firms, Trudeau told CoinDesk, so traders that colocated servers in the data center can connect to ErisX’s matching engine there. (The firm launched spot trading in several cryptocurrencies in April and recently obtained regulatory approval for futures.) Gemini, founded in 2014 by Cameron and Tyler Winklevoss, also houses its primary trading platform at Equinix and offers colocation there. The exchange plans to offer another colocation option soon in Equinix’s Chicago data center, where multiple stock exchanges — and their HFT customers — keep their hardware, according to Gemini’s website.

In a statement, Gemini’s managing director of operations Jeanine Hightower-Sellitto said the exchange “offers a variety of connectivity options to suit our customers’ needs. Each option is available to all of our customers free of charge.” Coinbase, the leading U.S. crypto exchange, almost entered the fray, but this year closed down its Chicago division that had been working on services for high-frequency traders, including colocation. At the time, the exchange cited its prioritization of other institutional services. The company declined to comment for this article. (Gemini, which just opened a Chicago office, hired some of Coinbase’s former employees there.)

Controversial practice

All of this invites the question of whether HFT, given its history on Wall Street, could exacerbate problems in the opaque and volatile crypto markets. As depicted in Michael Lewis’s book Flash Boys, algorithmic stock traders placed their servers in the physical vicinity of exchanges’ to execute trades faster than other investors and make profits on arbitrage between markets in fractions of a second. The issue with HFT, as explained by Lewis, is that in a market where some players can perform trades hundreds of times faster than ordinary users, they get an unfair advantage and leave ordinary, non-algorithmic traders with inferior price options.

Another problem with HFT, according to a 2011 report by the International Organization of Securities Commissions (IOSCO), is that it can dramatically increase volatility in markets. In particular, it contributed to the so-called Flash Crash on May 6, 2010, when the prices of many U.S. securities fell and recovered dramatically in minutes, exposing ordinary traders to a higher risk which they couldn’t manage as quickly as HFTs. High-speed trading has led to other technical glitches that cost companies hundreds of millions of dollars, the Federal Reserve Bank of Chicago wrote in 2012, noting that “some high-speed trading firms have equity ownership stakes in certain exchanges.”

Maturing market

However, ErisX’s Trudeau (who, it should be noted, was one of the early employees of stock exchange IEX, the heroes of Flash Boys) argued that high-frequency arbitrage and automated trading, in general, can benefit markets. They are helping to narrow the price spread between different exchanges over time and make markets more efficient – including the crypto market,

Trudeau said, explaining:

“This phenomenon has occurred in other asset classes as trading has become more electronic and more automated. Market makers and arbitrageurs are able to trade more efficiently, which improves price formation, price discovery and liquidity. Arbitrage opportunities may become fewer and more fleeting, which is a sign of a more efficient and maturing market.”

It’s important, however, to check if the exchanges and high-frequency traders strike deals with preferential terms which are not disclosed to the market, he noted. As for ErisX, it “offers transparent, standardized pricing and connectivity options for our customers. All customs are offered the same terms of access and fees,” Trudeau said. For its part, Huobi tries to make sure all users “compete on a level playing field,” said the exchange’s head of global sales and institutional business, Lester Li.

Li told CoinDesk:

“Our users know that we monitor for any abusive trading activity. We also continually remind users that there will always be risks when you trade, that is why we strongly recommend users to trade within their means and be mindful of the risks involved.”

Protecting retail

Still, other exchanges contacted by CoinDesk made a point of saying they don’t do anything special for algo traders. A smaller exchange tailored for institutional clients, LGO Markets, which launched earlier this year, took the opposite approach, deliberately slowing the trading process for everyone, according to CEO Hugo Renaudin.

Before getting matched, the orders are gathered into batches and the hash of every batch gets recorded in the bitcoin blockchain — each batch takes around 500 milliseconds to form, so this serves as a “speed bump” for trades, Renaudin said. As a result, “every trader has the same feedback on the activity of the platform.” Taking a similar stance, Kraken’s vice president of engineering, Steve Hunt, told CoinDesk the exchange doesn’t do anything differently for HFT customers.

“We want all customers regardless of size or scale to have equal access to our marketplace,” Hunt said. Binance, the world’s largest crypto exchange, is not considering offering colocation, account manager Anatoly Kondyakov told attendees of a recent “elite investor” meetup in Moscow. He gave two reasons. First, “we’re trying to protect retail customers,” Kondyakov said, answering a question from the audience. Second, colocation means an official presence in a particular jurisdiction, he said, which Binance is not willing to do at the moment. (Binance is known for its deft regulatory arbitrage.)

Too soon?

Still, others said the crypto market hasn’t caught up with the traditional financial world to the point where offering colocation services to HFT firms would make much sense. “Currently, the crypto market structure is still developing. HFT, in the context of equity and FX markets, does not really exist,” said Wilfred Daye, head of financial markets at San Francisco-based exchange OKCoin. Traders coming into crypto from the traditional markets do ask for colocation, he said, but “the ask is one-off, not a popular ask in crypto,” so OKCoin doesn’t offer this service.

David Weisberger, ?o-founder and CEO of market data platform Coinroutes, has another reason to be skeptical about HFT in crypto: this market is so much more dispersed and volatile that what works with stocks just won’t with bitcoin. The concept of HFT front-running is irrelevant in crypto, Weisberger said, where the prices vary between different exchanges much more than in

traditional markets:

“In futures or equities, with relatively large minimum quote variations, the bid offer spread is often stable with a lot of bids and offers at the same price. In that circumstance the fastest gets to be at the front of the queue whenever the price changes. Those orders at the front of the queue are profitable, while the ones at the back are not. In crypto, the tick size (price variation) is so small, it is easy to be ‘first’ by paying a slightly higher amount, so no need for incredible speed.”

Plus, crypto exchanges are so scattered around the world that there is no point in “being colocated to one exchange and still having to wait seconds for Binance to update,” Weisberger added. The reason there is demand for colocation at crypto exchanges, he concluded, is simply

human nature:

“People always fight the last war. People do what they are used to.”

Article Produced By
Anna Baydakova

Anna writes about blockchain projects and regulation with a special focus on Eastern Europe and Russia. She joined CoinDesk after years of writing for various Russian media, including the leading political outlet Novaya Gazeta. Anna owns a fraction of ETH.


Thomas ClaimCo.in

Top Crypto Markets Report Losses Bitcoin Hovers Around 11000

Top Crypto Markets Report Losses, Bitcoin Hovers Around $11,000


The top-20 digital currencies by market capitalization are trading in the red zone

Friday, July 5 — the top-20 digital currencies by market capitalization are trading in the red zone, with only Chainlink (LINK) seeing daily gains, according to data from Coin360. Bitcoin (BTC) has been trading in a narrow corridor from $11,701 to $10,751 as its highest point during the day. The leading crypto has lost 6.25% over the past 24 hours, and is currently trading at $10,969. In terms of its weekly performance, bitcoin has seen a price drop by 2.73%.

Bitcoin has become less correlated with other cryptos in Q2 2019 due to a potential “flight-to-quality” in the recent bull run, according to a Binance report on crypto correlations released today. Average correlation between bitcoin and all other major crypto assets declined to 0.61 from 0.73 in Q1 2019.

Ethereum (ETH) has registered smaller losses on the day, with a 1.89% drop, and is trading at around $287.31 at press time. Its weekly chart shows that ETH fell to as low as $274.62 on July 2, while its highest point was $321.68 on June 30, subsequently correcting downwards and then sideways in the last few days. Earlier today, Justin Drake, an Ethereum 2.0 researcher at the Ethereum Foundation, said that ethereum might decrease issuance ten-fold by 2021.

Coin360 data indicates that Ripple (XRP) is down by 3.15% on the day to trade at around $0.381 at press time. The altcoin’s weekly performance shows that it has lost nearly 9%, while over the past month it is down by 4.84%. On the top-20 crypto list, only LINK is reporting gains, with over 6% up on the day. The coin is trading at around $3.62 at press time. Total market capitalization of all digital currencies is over $320 billion at press time, up from its intraweek low of around $290.5 billion on July 2. The daily trading volume of all coins is currently around $74.8 billion.

Article Produced By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.


Thomas ClaimCo.in

Iran Accuses US of Looking to Thwart Its Bitcoin Mining Operations

Iran Accuses US of Looking to Thwart Its Bitcoin Mining Operations

The U.S. believes Iran is relying on BTC mining as a "tool" to circumvent sanctions, according to Iran's Assistant Minister of Industry, Trade and Supply.

Iran’s Assistant Minister of Industry, Trade and Supply, Saeed Zarandi,

said that Trump’s administration is working to block bitcoin mining in the country, according to local news outlet Fars. After lobbying to get the country out of the SWIFT system, the U.S. now seems to have its eyes set on the recent interest of Iranian citizens in crypto-mining as a productive activity capable of evading the financial sanctions imposed against their country. The U.S. is making it difficult for Iran to get its economy off the ground.

Iran is a Paradise for Crypto Miners, but Miners Are a Nightmare For Iran

Iran is one of the countries with the cheapest electricity in the world. Statistics from Global Petrol Prices reveal that while 1kWh costs on average $0.14 in the U.S., Iranians pay about $0.03 thanks to a government subsidy. Low energy costs make mining extremely profitable. In the latest months, the activity has grown so much that the country’s infrastructure is suffering the consequences of a growth in consumption higher than the power generation capacity. Speaking to Mehr, Ali Akbar Karimi, a member of Iranian Parliament’s Economic Committee, shared his concerns while urging the government to redouble its efforts

to regulate this activity:

“Mining cryptocurrencies has become a common and widespread activity in Iran, and it consumes considerable power which has caused problems for the country, especially in the hot season.”

This problem has led Iranian officials to combat mining with measures such as power cut-offs and direct confiscation of mining equipment

Is All of This Part of a Major Agenda?

If Mr. Zarandi’s suspicions are correct, Iran may be just a piece in the geopolitical and commercial chess game the United States and China are playing right now. China’s government has not shown official interest in promoting BTC mining. The Chinese private sector, however, migrated to Iran to take advantage of its low energy costs and enjoy better benefits from crypto mining, according to Iran’s Minister for Communications and Information Technology, Mohammad Javad Azari Jahromi,

on PressTV.

“A major part of cryptocurrency mining used to be done in China before Iran became attractive for miners …The Chinese government has no plan to be present in the field of cryptocurrency mining in Iran; however, China’s private sector and people may have been involved in this area.”

To this possible boycott, we must add other actions that have strongly harmed the cryptocurrency community in Iran. A little over a month ago, Localbitcoins announced that it would not allow Iranians to use its platform; likewise, at year-end 2018, Binance and other exchanges also withdrew support for the Iranian citizens, complying with the unilateral sanctions imposed by the U.S. government.

Iranians Want to Move Forward

Despite the setbacks, the Iranian government is optimistic and confident that cryptocurrencies can help provide a better future for its citizens. Earlier this year, the government announced the launch of a gold-backed stablecoin and it seems that its citizens also share this interest. Several enthusiasts have shared a variety of projects to promote the ecosystem, with proposals as impressive as that of a skyscraper in the middle of the desert hiding a mining farm cooled by a waterpark. Concept image of a mining farm/waterpark/skyscraper | Source: Designboom Currently, several ministries are working together with the Central Bank of Iran to regulate the local crypto ecosystem, attacking different angles such as mining, transactions, and economic obligations.

Article Produced By
Jose Antonio Lanz

Lawyer, specialist on strategic planning, professor and Bitcoin enthusiast.


Thomas ClaimCo.in

Litecoin Outperforms Top-10 Cryptos Ahead of August Reward Halving

Litecoin Outperforms Top-10 Cryptos Ahead of August Reward Halving


With the supply of new coins to be halved in less than five weeks,

litecoin is outpacing its peers. The fourth-largest cryptocurrency by market capitalization is currently trading at $123, representing 5 percent gains on a seven-day basis, according to data source CoinMarketCap. Meanwhile, bitcoin, the top cryptocurrency by market value, is currently reporting a meager 1 percent gain on a weekly basis. Other top-10 cryptocurrencies are trading mixed as seen in the table below.

  • Cardano, down 10 percent, is the worst performing top-10 cryptocurrency over the last seven days.
  • ETH, XRP, BCH, and EOS are flashing red.
  • Binance coin is up a staggering 481 percent on a year-to-date basis, followed by litecoin, up 305 percent.

Litecoin’s recent relatively shining performance could be associated with the mining reward halving due on Aug. 6 this year. The process is aimed at curbing inflation by reducing the coins paid out for mining on litecoin’s blockchain by half. So, after Aug. 6, miners will get 12.5 coins for every block mined – down 50 percent from the current reward of 25 coins. Essentially, miners will be adding fewer coins to the ecosystem, likely leading to less in circulation. The impending supply cut might have helped LTC outperform its peers in the last seven days. While it is logical to expect the cryptocurrency to rise further in the run-up to the event, the upside looks limited. After all, LTC has already witnessed phenomenal growth in both price and non-price metrics so far this year, and is currently up more than 300 percent on a year-to-date basis.

Meanwhile, litecoin’s hash rate, or computing power dedicated to mining, rose to a record high of 468.1019 TH/s this week. Notably, the metric is currently up 220 percent from the low of 146.2118 TH/s seen in December. All-in-all, the market may have largely priced in the reward halving already. In fact, if history is a guide, the probability of LTC witnessing a sharp pullback in the run-up to the Aug. 6 event is high. It is worth noting that LTC had nosedived from $8.72 to $2.55 in 6.5-weeks leading up to the previous reward halving, which took place on Aug. 25, 2015. Technical charts are also signaling scope for a near-term price drop.

While the bullish higher lows, higher highs pattern is intact, the relative strength index (RSI) is reporting a bearish divergence and the 5- and 10-candle moving averages have produced a bearish crossover. As a result, the price risks falling to the 200-candle MA, currently at $221. A violation there would expose the 50-candle MA, currently at $83.00. On the higher side, a high-volume break above $140 is needed to expose the next major resistance lined up at $182 (May 2018 high).

Article Produced By
Michael Williamson


Thomas ClaimCo.in

LIQUIDATED Cryptopia Exchange Review 2019 Mini Guide

[LIQUIDATED] Cryptopia Exchange Review | 2019 Mini Guide


What is Cryptopia?

Designed to fill a gap the market needs, Cryptopia is a somewhat different cryptocurrency exchange. It allows users to buy and sell their assets, but, unlike various other exchanges where transactions are taken care of by the exchange itself, Crypto proposes a new model where users can trade among them directly.

How it works?

Not only that, but this all-in-one exchange/trading site also allows anyone to buy, sell, and trade almost any object, product, or service using cryptocurrency, including gift cards. Traders are provided with the option of buying altcoins at whatever prices are being offered by other traders on the platforms, and also sell them at any price just as easily. An important aspect that must be noted is the fact that currencies can be transferred between users free of charge. This transfer passes through Cryptopia and not along the blockchain. Users are also provided with the option of setting up auctions, where cryptocurrencies can be transferred for real items and services.

Exchange Features

Cryptopia is the successful platform it is today mostly thanks to its unique proposition it brings to the market, but also thanks to its large range of features designed to cater to all users’ needs and wants. One of the most interesting (and potentially innovative) features of Cryptopia is the platform’s
Marketplace. It’s the place where users can buy, sell, and trade anything for cryptocurrencies. The Arbitrage is a unique information section where you can see the prices of coins listed on other exchanges. This feature is very useful for newbie users who want to make sure that their
decisions are as informed as possible.

Coininfo is yet another useful feature that provides instant, up-to-date information regarding more than 500 coins supported by the platform. Users can view information such as ratings, connection numbers, wallet status, listing status, and block height.

Paytopia is a service (or product) offered directly by Cryptopia, and it includes a wide array of promotional tools to help users create compelling listings. A surprising feature of the platform is the Lottery. With it, you can participate and win daily and monthly prizes. Lastly, we have
Mineshaft which is Cryptopia’s mining platform. It’s designed to work with multiple cryptocurrencies, and it supports the very best and most popular miners on the market. Best of all, it supports GPU and CPU mining as well.

Exchange Fees

Generally, there are two kinds of fees associated with Cryptopia: exchange fees, and withdrawal fees. The first type of fees depends on which particular currency is being transferred, while the second only applies when withdrawing NZD from an account. When withdrawing cryptos from a
Cryptopia to your wallet, users will have to play a transaction fee as well. Still, overall, the fees are relatively low.

Is Cryptopia Safe & Secure?

Cryptopia is regarded as being a generally secure platform by most within the cryptosphere. Cryptopia does not distribute any personal information it collects from its users. The platform makes use of an HTTPS security certificate, as well as two-factor authentication. At the end of the day, the best proof that Cryptopia is a legit, safe, and secure platform is represented by a large number of users it has.


In a market over-saturated of cryptocurrency exchanges, it’s impressive that Cryptopia manages to set itself apart by coming up with a different proposition. This peer-to-peer, all-in-one exchange supports over 500 cryptocurrencies and allows users to send and receive cryptos from other users without any transfer fees. It also offers a wide range of products and services. On the flipside, without proper research, not all users can get good value out of its offers. Furthermore, more seasoned traders and investors will find the platform to be lacking advanced trading features.

Article Produced By
Stingaciu Erick
Stingaciu Erick


Thomas ClaimCo.in

BitDeer Founder amp CEO Celine Lu Attended Bitcoin 2019 to Discuss the Driving Force Behind Bitcoin

BitDeer Founder & CEO Celine Lu Attended Bitcoin 2019 to Discuss the Driving Force Behind Bitcoin


San Francisco, CA – On June 25, Celine Lu, Founder & CEO

of the world’s leading computing power sharing platform BitDeer.com, was invited to share her insights of the Bitcoin community and cloud mining industry at Bitcoin 2019.

In her speech entitled “BitDeer: The New Driving Force Behind Bitcoin”, Celine Lu gave a thorough introduction of BitDeer.com, the pioneer computing power sharing platform aiming to solve the problem of low efficiency in the Bitcoin mining industry and lower the barrier to entry for individual miners to gain Bitcoin. Celine also shared her vision of restoring the fundamental principle of decentralization to the blockchain community.

To provide a reliable and transparent way for global crypto community members to mine Bitcoin and other PoW cryptocurrencies, Celine launched BitDeer where users could start mining within merely 10 minutes of placing an order on December 2018. With its proprietary real-time computing power allocation technology, BitDeer is the first shared mining platform to truly implement the segmentation and allocation of computing power. Users can now purchase his share of computing power segmented by terahash. In order to save its customers from the hassle of purchasing and installation of heavy and noisy mining equipment, BitDeer has also partnered with eight out of the top ten largest Bitcoin mining pools in the world including BTC.com, AntPool, F2Pool, and ViaBTC. Users are enabled to choose and switch between the world’s top mining pools, monitor the mining process and receive daily payouts directly from the designated mining pool to his chosen wallet address

Celine Lu also shared some interesting statistics about BitDeer.com with hundreds of audience:

  • 1 million monthly active users
  • More than 5 million visits
  • 300% sales growth within the last three months
  • Ranks at top 3 in cloud mining market share
  • Customers from 223 countries and regions all over the world
  • Repeat purchase rate is over 80%
  • 4 orders placed by each user every month
  • The biggest spender has purchased a total amount of over USD $7.68 million, with at least USD $7.27 million in return
  • Stable daily platform output of over 100 BTC even during the bear market

Through an exclusive strategic partnership with Bitmain, the largest manufacturer of cryptocurrency mining equipment by market share, BitDeer.com is now working with professional and top-notch mining facilities all over the globe including the U.S., Canada, Russia, Northern Europe, and China. With sufficient miner supplies, miner slots, and a cutting-edge automated computing power monitor system, the platform is proud to provide its global users support from a team of world-class operations and management experts.

Celine Lu concluded her speech by restating BitDeer’s vision and dedication to a healthier cryptocurrency mining ecosystem and a more transparent cloud mining industry, echoing her appeal during the 2019 China Mining Industry Summit in Beijing two weeks ago. Hosted by BitDeer.com and joined by hundreds of mining industry leaders in China, the summit introduced the Cloud Mining Industrial Standard Draft to highlight the following key points:

  • Computing power in the cloud mining industry should be transparent and traceable.
  • The industry is advised to develop an open and fair product model, in which users will receive direct payouts from mining pools, hence no cloud mining platform should be an intermediary for users’ earnings.
  • All platforms are expected to keep the computing power fluctuations within certain limits. For example, the fluctuation rate for 98% of the total computing power should be kept within 3%; and the number for 85% of the total computing power should be 1%.
  • Mining facilities connected with platforms must ensure that at least 98% of the miner hardware is powered on and online for at least 98% of the time.
  • Miner hardware deployed by platforms must limit the computing power fluctuation rate within 5%.

As one of the most enthusiastic members of the Bitcoin community and a pioneer in the mining industry, BitDeer.com will spare no effort to bring higher value to its global users and build a well-developed ecosystem to fuel the whole industry.

Article Produced By
Adrian Mathiau



Thomas ClaimCo.in

Top 4 Reasons to not get Involved With Facebook’s Libra

Top 4 Reasons to not get Involved With Facebook’s Libra


A lot of people are keeping close tabs on Facebook’s new digital currency project.

Known as Libra, it will either change the world as people know it, or fail to make any meaningful impact. There are several reasons to not get too involved in this project right away, primarily because a lot of unanswered questions remain in place. 

The Trust Problem Can’t be Ignored

There is a very big difference between using Facebook for social media purposes and trusting the company’s digital currency project. Libra, while maybe appealing to some people, has a lot of things to prove. The main question is whether or not this will cause even more trust issues between Facebook and its users. The company does not have a good reputation in terms of keeping private information private, after all. According to some people close to the matter, there will not be any trust issues. In fact, David Marcus claims how users will not have to trust the company in order to make full use of Libra. This sounds appealing on paper, but in the real world, it raises a lot of questions. It seems this business model will ensure Facebook acts as a custodian of user funds. However, if the company doesn’t need to be trusted, it will be interesting to see how much control the end users have when everything is said and done. 

Political Concerns and Vulnerabilities

Perhaps the biggest drawback of Libra in its current form is how the development of this project has not received regulatory approval. In fact, the US Congress would like to potentially investigate this entire ordeal before it is even released to the public. There is also some concern this venture will pose a threat to the financial system, similar to how Bitcoin is treated in the United States. For the time being, the demand to delay the Libra launch is nothing more than an official request. That doesn’t mean an investigation will be launched, although things should become a lot more clear in the coming weeks and months. Some oversight regarding this digital currency would certainly bring more legitimacy to Facebook’s new venture. Leaving this new form of money unregulated could create very dangerous precedents for the future. 

Thumbs Down From Experts

The public perception of Libra, as well as parent company Facebook, is not helping matters much.  While some will claim everything has been blown out of proportion, it is often better to tread with caution rather than going in head-first. This is especially true when it comes to financial ventures in this day and age. As Joseph Stiglitz pointed out in a rather interesting post, this entire project gets the “thumbs down”. Since Facebook’s business model seems unclear, there is more than enough reason to be concerned. It is very difficult to create a digital currency with a fixed value, especially when multiple fiat currencies are involved. Stiglitz welcomes government scrutiny where this project is concerned, for rather obvious reasons.

Too Many Unanswered Questions

It is rather apparent Facebook has issues with transparency in every way one can imagine. Even when it comes to explaining Libra to the masses, there is still a lot of valuable information which has yet to be unveiled. Especially when it comes to the reserve holdings, potential interest returns, and the uncertain incentive system, a lot of crucial aspects need to be addressed fairly soon. As far as the governance model is concerned, things are not as cut-and-dried either. It is unclear how the battle lines will be drawn among council members, as those with more skin in the game will undoubtedly attempt to get their decisions put through by whichever means necessary. This can spell trouble for this project from day one, unless proper countermeasures are put in place to prevent shenanigans from happening.

Article Produced By
JP Buntinx


Thomas ClaimCo.in

How blockchain impact the healthcare industry in upcoming years?

How blockchain impact the healthcare industry in upcoming years?


Thomas ClaimCo.in

Recognizing Blockchain’s Potential Some Politicians Now Calling For Crypto Bans

Recognizing Blockchain’s Potential, Some Politicians Now Calling For Crypto Bans


For many years leaders around the world dismissed cryptocurrency as lacking

any true value or legitimate use. This attitude was due largely to a failure to understand, or respect, its revolutionary nature. Now that mass adoption is underway, crypto cannot be ignored, and voices are now emerging calling for it to be banned. Although misguided, this hostility clearly reflects the realization that blockchain technology will inevitably lead to a radical restructure of the global economic framework. In May, U.S. Congressman Brad Sherman (D-CA) called for an outright ban of cryptocurrencies in the United States. This is the second time Sherman has made such a proposition. Last July he called for a law making mining and trading illegal.

What is notable about Sherman’s anti-crypto stance is his premise that blockchain assets threaten to undermine the global hegemony of the U.S. Dollar by creating borderless, supranational money that cannot be tracked or regulated. In other words, Sherman dislikes crypto because he has come to recognize its true potential. Gone are the arguments that cryptocurrency is a scam, or a ponzi scheme. Now it is being taken seriously as a legitimate alternative to the fiats issued by central banks. It is worth noting that Sherman’s primary campaign donors include UBS and Royal Business Bank as well as credit card processor Allied Wallet.

Russian parliamentarian Nikolai Arafiev is another politician seeking to ban cryptocurrency largely due to its disruptive potential. A senior member of the Duma, Arafiev has stated that crypto has the potential to destroy Russia, largely because it enables assets to be moved outside of the country, and without any state oversight. Specifically, Arafiev has stated:

If cryptocurrency worked, we would be completely ruined today because all financial flows would be taken out of Russia. And Russia would end. Because cryptocurrencies were created to ensure that the state does not control the flow of capital.” These comments compliment those of Elina Sidorenko, a Duma official investigating crypto regulations, who earlier this year stated that Russia would not implement the digital currency for at least thirty years.

The harsh sentiments expressed by Sherman and Arafiev can also be found by leaders in other economically influential nations. Indian lawmakers, for example, are presently considering criminalizing crypto adoption with ten years in prison. At issue is, of course, the power held by states over how capital is created and used. The centralization of state-backed fiats in the 19th century, and the abandonment of the gold standard in the 1970s gave governments unprecedented authority to create wealth that has no backing by tangible assets.

The fact that global leaders are loathe to yield such significant power is not surprising. It is now clear that, for many, opposition to blockchain assets is rooted in the fact that they now understand just how powerful the technology is. Nevertheless, each passing day yields more evidence that fiat currencies will one day be replaced with this new form of wealth. Thus, rather than seek to criminalize it, these individuals would be better served respecting what it has to offer.

Article Produced By
Trevor Smith


Thomas ClaimCo.in

Keychain and Chubu Electric Power conduct verification testing on peer-to-peer trading that uses blockchain technology

Keychain and Chubu Electric Power conduct verification testing on peer-to-peer trading that uses blockchain technology


On July 1, Keychain, a limited liability company which develops and provides Keychain Data Provenance Infrastructure (DPI)

blockchain-based data security technology, announced that it had conducted verification testing on personal authentication that uses blockchain technology, issuance of digital assets, and peer-to-peer trading using distributed ledger technology at the Technical Development Department (Midori-ku, Nagoya City) of Chubu Electric Power < securities code: 9502>.

The verification testing was designed for three-way trading among a digital asset issuer, users (about 30 users this time), and merchants. According to the announcement, Keychain performed the implementation process between late November 2018 and mid-April 2019, while about 30 employees of the Technical Development Department, Chubu Electric Power carried out verification testing between late April and early May 2019.

The three targets of verification testing were: (1) Verifying the effectiveness of Keychain blockchain as a personal authentication infrastructure; (2) Issuing of digital assets by Chubu Electric Power and verifying double transfer and falsification risks; and, (3) Verifying application of an Android app that can use distributed ledger technology for payments at a cafeteria, peer-to-peer payments, and other transactions. The company reported that verification testing verified blockchain technology functions as a personal authentication infrastructure; digital assets can be issued using distributed ledger technology; and, peer-to-peer trading can be conducted without causing double transfers or falsification.

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