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South Africa has taken a conservatively optimistic stance toward cryptocurrencies — balancing development with investor protection.

Blockchain and cryptocurrencies have proliferated the minds of millions across the world, as trading and crypto asset ownership continues to rise.

In the same breathe, many countries across the world have taken a tough stance against cryptocurrencies in particular. Some, like China, have outlawed their use, while others like Malta are at the forefront of cryptocurrency and blockchain development.

In an African context, this sector is slowly growing. At the southern end of the continent, South Africa sits in an interesting position. As one of the bigger economic hubs of Africa, it has the potential to lead the way in terms of blockchain development and cryptocurrency adoption.

With that being said, it's worth considering what the current climate is like in the country and what efforts are being made to drive innovation and acceptance of this burgeoning new industry.

The tax man

Cryptocurrency trading has become immensely popular over the past two years — as was demonstrated in the latter half of 2017, when Bitcoin and a number of altcoins cruised to all-time highs.

During this period, plucky investors flocked to the market in the hopes of cashing in on a spiralling bull run that made many early investors substantial sums of money.

Across the world, cryptocurrency exchanges were inundated with new users looking to open up accounts and get their hands on the increasingly valuable Bitcoin and the like.

Some people made massive profits while others were left watching their investments decline in value during the resulting correction. That didn’t change the fact that the tax man wanted his pound of flesh from those that had cashed in their profits.

This was the case in South Africa, where the South African Revenue Services (SARS) made it clear to registered taxpayers that they would be liable to pay tax on cryptocurrency gains.

How crypto is classified in South Africa

As the SARS pointed out, the word ‘currency’ is not defined in the Income Tax Act. It’s important for people to understand this because it means that cryptocurrencies themselves are not taxable.

“Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.”

However, the value of a given amount of cryptocurrency can be valued in South African rands, and any income received or accrued from cryptocurrency trading can be taxed under the laws of gross income.

Simply put, South Africans that are actively trading cryptocurrency will be liable to pay tax on any income made.

Don’t stress, it's legal

In a South African context, the use of cryptocurrencies is legal. There are no laws governing the sector although the South African Reserve Bank (SARB) is monitoring the situation.

The Reserve Bank issued a white paper outlining its views on cryptocurrencies in 2014. The institution does not recognize any cryptocurrency as legal tender.

In South Africa, the Reserve Bank has the sole right to issue and manage money, in the form of bank notes and coins. As such, cryptocurrencies fall outside the jurisdiction of the Reserve Bank.

In layman’s terms, the Reserve Bank doesn’t view cryptocurrencies as an alternative to fiat currency, in fact it doesn’t view them as legitimate currencies at all. In that very document, the SARB went as far to say that cryptocurrencies won’t pose any threat to the South African Rand, or financial institutions:

“Given the current landscape and information currently available, the Bank contends that VCs pose no significant risk to financial stability, price stability or the National Payment System.”

Task force looking at crypto

Given that the SARB’s first report on cryptocurrencies is nearly 5 years old, the institution has since launched a Fintech task group that will handle cryptocurrency and fintech developments in the country.

As it was the case around the world, investor protection has been a big concern amid the inherent risk of investing in cryptocurrencies and initial coin offerings (ICOs).

This self-regulatory body will be allowed to set up its own rules and directives, while looking to balance crypto and blockchain development in the country with risk prevention.

In the initial announcement in April 2018, SARB director of banking practice Bridget King said a major hurdle has to do with timelines and the dangers of imposing regulations that could stifle the growth of the sector:

“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology."

In May 2018, the SARB made it clear that it still doesn’t classify cryptocurrencies as money. Deputy Governor of the bank, Francois Groepe, explained the reasoning behind their classification and choice of terminology:

“We don’t use the term “cryptocurrency” because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value. We prefer to use the word ‘cyber-token’.

This is part and parcel of why the SARB created its Fintech task group. Groepe said the bank wants to make sure that cryptocurrencies, and their trade, are still adhering to South African laws:

“We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations.”

Reserve Bank tests pilot blockchain payment system - Project Khokha

In addition to establishing this regulatory body for the South African crypto industry, the SARB has also forged ahead with a proof of concept for a blockchain-based payment system.

Project Khokha has been tested and in June 2018 a report was released. The system was built using JPMorgan’s Quorum platform, and providing participating parties actual experience using blockchain technology in a safe, test environment.

According to the report, the daily volume of the South African payment system could be processed in less than two hours. Along with this, transactions would remain completely confidential and would be completely settled.

Transactions were processed within two seconds by a network of nodes in different locations using distributed consensus. Furthermore, the SARB was able to view the details of transactions, ensuring regulatory oversight for their own purposes.

The project was mainly aimed at giving the SARB and various participants a first hand look at how blockchain technology could help streamline payments systems.

While no official, blockchain-based payment system has been launched from the proof-of-concept, the exercise has provided first-hand experience of the capabilities of  distributed ledger technology and how it could possibly improve the current South African payment system:

“One objective of Project Khokha is to provide a better understanding of how South African Multiple Option Settlement (SAMOS) system would integrate with a DLT system. The intention is not to consider changing the approach with the SAMOS replacement, but to provide input to that project.”

A waiting game

Regulation is somewhat of a double-edged sword. It has the power to both promote and nurture, as well as stifle and strangle. When it comes to cryptocurrencies, the second scenario is a real concern.

This is why, in a South African context, a slow and methodical approach to cryptocurrency regulation is a definite positive. As King suggested above, rushing to regulate prematurely could hamper the development of the industry in the country.

If anything, South Africans should be encouraged by the SARB’s Fintech working group and the outcome of Project Khokha’s report on the uses of blockchain-based payment systems.

While we may not see any clear cut legislation or regulation on the sector soon, the fact that the SARB is making a concerted effort to research the possibilities of blockchain technology is positive.

Cointelegraph has reached out to the South African Reserve Bank for comment - and is awaiting an official reply.

Cybersecurity firm Banbreach reports that nearly 30,000 routers in India are infected with cryptojacking software.

A recent report by security company Banbreach has found that in the past month, the number of routers compromised by cryptojacking software in India has doubled. The report indicates that hackers have cracked over 30,000 routers within the country, Hard Fork reported Oct. 5.

Banbreach managed to track Internet traffic and detect all devices on the Internet with public IP addresses, which made it possible to examine traffic passing through routers.

In the course of its research, Banbreach grouped populated areas of India into three categories from most to least dense. According to the report, 45 percent of the infected routers in India are in the least densely populated areas.

Tier 3 cities are the most affected, followed by tier 1. pic.twitter.com/2fCyR7fQqj

— Banbreach (@Banbreach) October 5, 2018

“For the top three cities with the most infected routers, the growth has been [500 percent],” Banbreach reported.

The number of compromised routers have doubled in the past month. For the top three cities with the most infected routers, the growth has been ~5x. pic.twitter.com/TuCxt0evnb

— Banbreach (@Banbreach) October 5, 2018

While CoinHive is not an inherently malicious code — charities have employed it and analogues like it — it has become popular among hackers for illicitly mining cryptocurrency on web surfers’ computers, or cryptojacking. Its code uses a part or all of the computing power of a browser to mine altcoin Monero (XMR).

Related research reportedly suggests that the total output of all machines “infected” with CoinHive generate over $250,000 in XMR every month.

Vipin Nathaw, a security enthusiast from Mumbai, tweeted that he “found the same thing in the router provided by [his] Internet service provider (ISP) a couple of days ago. Probably all the routers used by them are infected and outdated.”

Last month, Cointelegraph reported that Indian official government websites have become a prime target for cryptojacking, where more than 119 Indian websites run CoinHive code. Per the report, over 13,500 home routers in India were infected by cryptojacking malware — a figure that was only outflanked globally by Brazil.

A study conducted in June found that XMR has an “incredible monopoly” on the cryptocurrencies targeted by malware. $175 million of Monero — around 5 percent of all XMR in circulation at the time of the report — had been mined maliciously.

Expert at Blockchain Capital and former Bitcoin analyst Spencer Bogart has predicted that the Bitcoin price has nearly hit its bottom.

Spencer Bogart, an expert from digital currency and blockchain venture firm Blockchain Capital has said that the Bitcoin (BTC) price has nearly found its bottom, CNBC reported Oct. 5.

Speaking on CNBC’s “Fast Money,” Bogart asserted that “we're down about 70 percent from our highs, so I think that Bitcoin is close to bottoming and so is the rest of the market.” Bogart added that the news flow regarding the cryptocurrency industry “is a piece of kindling that we are going to throw onto a future crypto bonfire when we have the next bull market." Bogart said:

“Towards the end of last year, when we were in the peak of this bull market, bad news seemed to have no effect on the markets [...] Now we are seeing the other side of that, when we have a week of news with TD [Ameritrade], Ric Edelman and Yale, and it has almost no effect on price.”

Bogart’s prediction about the BTC price bottom follows similar sentiment from major market players like the founder of crypto investment firm Galaxy Capital Management, Mike Novogratz. Novogratz said that digital currency prices hit a bottom in a tweet last month. Speaking at the Beyond Blocks conference in South Korea in July, Novogratz also predicted that many institutions will enter the crypto industry “in the next two to three years.”

Earlier this week, Cointelegraph reported that 54 percent of institutional players think that the BTC price has already bottomed, having hit its lowest price point this year. Institutional players are also bullish in regards to the potential future growth of BTC. 57 percent of respondents in the survey said that BTC price is going to reach anywhere from $15,000 to “the moon” by the end of 2019.

In July, Fundstrat’s Tom Lee reiterated his bullish position regarding BTC, claiming that the leading cryptocurrency could trade between $22,000 and $25,000 by the year’s end. Later in August, Lee predicted that BTC “could end the year explosively higher,” citing a correlation between it and emerging markets.

Recently, BTC has seen insignificant price change, which is reflected with only two subsequent price corrections since trading above $6,600 at the beginning of its weekly chart. At press time, BTC is trading at around $6,606, up less than one percent in the last 24 hours.

A recent poll by Clovr has revealed that millennial men earning more than $75,000 per year are most interested in crypto investing.

Recent research by blockchain-focused company Clovr has revealed that cryptocurrency investing is most popular among millennials earning from $75,000 to $99,999 annually. The survey collected responses from over 1,000 Americans between ages 18 and 80.

Per the survey, men are almost twice as likely as any other generation to invest in digital currencies, with 43 percent of men and 23 percent of women investing in crypto. 47 percent of individuals with an annual income not less than $75,000 annually have invested in digital assets, while less than a quarter of those earning under $25,000 said they can afford to significantly invest in crypto.

According to data from the U.S. Bureau of Labor Statistics, the median weekly earnings in the second quarter of 2018 for a man between the ages of 25–34 was $857, or over $44,000 annually.

Almost 40 percent of respondents cited peer influence as a main reason for investing in crypto, and over 35 percent have reportedly been lured into the crypto market by the “Fear of Missing Out” (FOMO).

The survey found a solid level of awareness of digital currencies, with more than 75 percent of respondents claiming that they “feel” they know what cryptocurrency is, while the remaining 20 percent suppose they “sort of” know what is happening in the crypto field.

In regards to explaining to others what crypto is, 62 percent of the survey participants said they are able to keep up a discussion about cryptocurrencies.

When asked their opinion on investment in crypto, almost 80 percent of respondents answered that they consider investing in crypto as a positive form of risk-taking. The study further states that 1 in 3 think that crypto investment is an innovative option compared with stocks and bonds.

Recent research has found that of all the generations, millennials show the most interest in crypto investing. A survey published in September by research service YouGov Omnibus revealed that half of American millennials are interested in using cryptocurrency.

Another poll by crypto finance company Circle showed that 25 percent of millennials said they are interested in purchasing digital currencies over the next 12 months, which sets them apart from other generations by more than 10 percent.

Crypto finance company Circle has acquired equity crowdfunding platform and broker-dealer SeedInvest.

Cryptocurrency finance company Circle Internet Financial Ltd. has acquired equity crowdfunding platform and broker-dealer SeedInvest, according to an announcement published October 5. Exact terms of the transaction were not disclosed.

New York-based SeedInvest was founded in 2012 as a startup investing platform. Since then, the company has reportedly raised capital for 220 firms through more than 240,000 investors. The average investment per company through SeedInvest is said to be $500,000, while the largest investment was$2,000,000.

Once the acquisition is approved by the Financial Industry Regulatory Authority (FINRA), it will reportedly enable Circle to expand SeedInvest’s offerings to support cryptocurrencies, including fiat stablecoins and issuing and offering tokenized securities.

Additionally, companies will reportedly be able to raise capital through a regulated platform, get access to retail investor portfolios via Circle Invest, and provide investors with secondary market liquidity on Circle’s cryptocurrency exchange. Circle CEO Jeremy Allaire told Bloomberg in an interview:

“This was a company who had been at the forefront of collaborating with government to figure out how to make it possible to innovate in the way people raise capital. Crypto securities are going to become a major new category of securities that ultimately every business is going to adopt, just like every business has a website.”

Earlier this week, Circle launched a new feature for its crypto investment app Circle Invest dubbed “Collections,” that gives customers the option to invest in one or more collections of crypto assets, each divided according to a particular theme: “Platforms, Payments, and Privacy.”  After choosing a collection category, users can invest in the entire category in one swoop.

In September, Circle launched a USD-backed digital token dubbed the “USD Coin (USDC).” Per Circle, over 20 companies are about to announce support for USDC, while others might add trading through the open ERC-20 standard.

Circle was founded in 2013 by investment banking and management giant Goldman Sachs. The company offers four products including Circle Pay, which is a fiat money sending service with a social messaging component, and Circle Trade, which is a liquidity provider of cryptocurrencies and reportedly moves over $2 billion each month.

At a recent event in Minneapolis, CFTC chairman Christopher Giancarlo noted increased enforcement actions last year, partly due to fraudulent crypto cases

Christopher Giancarlo, the chairman of U.S. Commodity Futures Trading Commission (СFTC), said in an Oct. 2 speech that enforcement actions and fines increased significantly in the last fiscal year.

Giancarlo presented at the Economic Club of Minnesota, stating that the enforcement of the recent fiscal year, which ended September 30, was "among the most vigorous in the history of the CFTC."

The CFTC filed 83 enforcement actions in the last fiscal year, representing a 25 percent increase from the last three years of the previous administration. The CFTC levied as much as $900 million in penalties this fiscal year.

The watchdog has also reached settlements from $30 million to $90 million that are reportedly connected with interest-rate benchmark manipulation with banks such as JPMorgan Chase & Co., Deutsche Bank, and Bank of America, among others. Giancarlo noted cryptocurrencies among the commission’s enforcement actions over the course of the last year:

"We have not been shy to take these cases to trial, winning significant trial victories in this area over the past year—including a precedent setting victory in a trial involving Bitcoin (BTC) fraud."

The chairman also noted inter-agency collaboration in bringing charges against Marshall Islands-based international securities dealer 1 pool Ltd., and its project 1broker.com:

"We brought the action charging the portion of the activity involving derivatives, the SEC charged the portion relating to equities, and DOJ and the FBI secured an order seizing the platform’s website and shutting it down."

Earlier this year, an undercover Federal Bureau of Investigation (FBI) agent purchased security-based swaps on 1broker’s platform from the U.S. without complying with requirements set by federal securities laws. The CFTC and the Securities and Exchange Commission (SEC), subsequently filed complaints against the firm.

In August, the commission permanently barred the operator and promoter of the CabbageTech Corp., who had previously been charged with “fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin (LTC).” Although the operator, Patrick McDonnell, insisted that the CFTC did not have the authority to regulate his commercial operations, the judge took the CFTC’s side.

The volatility in Bitcoin that once was an attractive characteristic for speculators seems to have declined, but has Bitcoin bottomed, or can it fall further?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Market data is provided by the HitBTC exchange.

2017 was about large range days and superlative returns in cryptocurrencies. 2018 is about a crushing bear market and a sharp drop in volatility. Bitcoin’s volatility is at year-to-date lows and most altcoins have followed suit. While flat markets are despised by speculative traders, it is a good time to make an investment for the long term.

A small range trading period with low volatility will be followed by range expansion and increased volatility. However, we believe that the rise from current levels will face a number of hurdles on the way up. A large number of retail investors stuck at higher prices will bail out when the price of Bitcoin starts a new uptrend. Mike Novogratz, CEO of crypto investment firm Galaxy Digital Capital Management, does not see Bitcoin scaling above $9,000 in 2018.

So, has Bitcoin bottomed or can it fall further?

Fundstrat managing partner and head of research Tom Lee asked this question to institutions and Twitter users. The results of the poll were interesting. A majority of 25 Wall Street institutions believed that the Bitcoin price had “already bottomed”, whereas the majority of 9,500 Twitter poll respondents think that it is likely to fall further.

57 percent of institutions have a minimum target of $15,000 on Bitcoin by the end of 2019, which is about 127 percent higher than the current price of the leading digital currency.

BTC/USD

The bears did not take advantage of the breakdown below the trendline and Bitcoin has bounced back above the 20-day EMA. The important level to watch on the upside is the downtrend line of the descending triangle and $6,832. If the bulls scale above these two levels, it will invalidate the bearish pattern, which is a bullish sign.

The first level to watch on the upside is the intraday high of Sept. 4 at $7,413.46. If this level is crossed, the BTC/USD pair could rally to the next level of $8,500. The bears might launch a strong defense of this level.

On the downside, a break below the $6,341–$6,435 support zone can sink the digital currency to the critical zone of $6,075.04–$5,900. A break of this level will trigger a number of stop losses that can result in a sharp fall. Therefore, traders holding long positions should keep a stop loss of $5,900.

ETH/USD

Ethereum is at the center of the $200–$250 range. For the past few days, the intraday range has shrunk, suggesting a lack of buying and selling interest.

The first sign of bullishness will be a breakout and close (UTC time frame) above $250. Such a move will attract buyers and can carry the ETH/USD pair to the next level of $322.57.

On the downside, a break of the $200 level could plunge the virtual currency to the Sept. 12 low of $167.32, below which the downtrend will resume.

We do not find any reliable buy setups at the current level; hence, we are not recommending a trade on it.

XRP/USD

For the past two days, Ripple has been trading between $0.50–$0.55. A breakout from $0.55 could carry it to the overhead resistance of $0.625. A breakout from this level will resume the uptrend.

A break below $0.50 will test the support of the 20-day EMA. Any break of this support will retest the bottom of the range at $0.425. A break from this level is likely to result in a fall to $0.37512.

As the price is still above the moving averages — which are trending up — we suggest holding long positions on the XRP/USD pair with a stop loss of $0.42.

BCH/USD

Bitcoin Cash has been holding above the 20-day EMA for the past two days but the bulls have not been able to push prices higher.

A breakout from $600 might indicate the start of a new uptrend, while a breakdown from $400 could resume the downtrend.

As the BCH/USD pair is holding above the 20-day EMA, we suggest traders hold their long position with the stops at $400.

EOS/USD

EOS has formed a symmetrical triangle at the bottom. It is largely stuck between $5.30 and $6 since Sept. 26. Attempts to break down from the 50-day SMA have seen buying at lower levels, which is a positive sign.

A breakout from the symmetrical triangle has a pattern target of $8. However, we believe the EOS/USD pair will face stiff resistance at $6.80. Traders can hold their long positions with the stop loss at $4.90. A close below the trendline of the triangle could sink prices back to the $4.49 level.

XLM/USD

Stellar has held the 20-day EMA for the past two days but has not been able to close (UTC time frame) above $0.24987525.

A breakdown from the 20-day EMA can result in a dip to the 50-day SMA and below that to the critical support of $0.21489857.

The XLM/USD pair will turn bullish if it breaks out and closes (UTC time frame) above the downtrend line of the descending triangle. As the bulls have managed to defend the 20-day EMA, we suggest traders hold their long positions with stops at $0.21.

LTC/USD

Litecoin is currently trading close to the center of the $49.466–$69.279 range. The moving averages have been flat for the past nine days and the RSI is close to the midpoint.

The LTC/USD pair will turn positive on a breakout and close above $70, and will turn negative on a breakdown and close below $49.

Trading inside a range can be volatile and can hit stops on both sides. Short-term traders can buy a small quantity on a rebound from the bottom of the range, whereas positional traders should wait for a breakout above $70 to buy.

ADA/USD

Cardano broke below the 20-day EMA on Oct. 2, but the bears have not been able to push prices to the lower support at $0.071355. The flat moving averages and the RSI close to the 50 level shows equilibrium between the bulls and the bears.

If the ADA/USD pair breaks out of $0.94256, it will indicate that bulls have the advantage, whereas a drop below $0.071355 will suggest that the bears have an upper hand.

Between these two levels, the digital currency might consolidate for a few days. We will wait for a buy setup to form before proposing any trade on it.

XMR/USD

Monero has been trading close to the $115 level since Sept. 29. This shows a balance between both buyers and sellers.

Both moving averages are flat and the RSI is close to the 50 level, which suggests that lackluster trading action might continue for a few more days.

The XMR/USD pair could move up to $140 if it sustains above $121. On the downside, a break below $107.80 could result in a drop to $103 and $96. Traders can maintain their long positions with a stop loss of $100.

IOTA/USD

IOTA has extended its stay inside the $0.6170–$0.5000 range. Both moving averages are flat and the RSI is close to the midpoint, suggesting continuation of range bound action.

The IOTA/USD pair might attract buyers if it breaks out and sustains above the range. The first target of such a breakout is $0.8152. If the bears break below the range, the digital currency can retest the low at $0.4037.

Traders should wait for the price to close (UTC time frame) above $6.50 before initiating any long positions.   

Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.

Intermediaries profiting from the fiat banking system “face the chop in the not too distant future,” Malta’s finance minister Edward Scicluna has told Cointelegraph.

Financial intermediaries will be “facing the chop” thanks to Bitcoin and cryptocurrency, Malta’s finance minister told Cointelegraph in an interview Friday, October 5.

Speaking in a private interview during the Malta Blockchain Conference: Delta Summit 2018, Edward Scicluna said that the advent of cryptocurrency that is usable by the mass populace was making the middlemen of finance go the way of traditional photo developers.

“This is a disruptive technology,” he said when asked whether he sees crypto as a future payment method, continuing:

“I can see this, just like in photography when you could tell that […] those who process the photos [are] going to lose their jobs, a lot of financial intermediaries will be facing the chop in the not too distant future.”

Scicluna revealed that although he no longer held cryptocurrency himself, he had learnt “a lot” about it early on from his son, who both bought and traded Bitcoin in its “early years.”

“I think [intermediaries] have to listen and be attentive; I think that’s what the banks are doing now,” he continued.

Scicluna stopped short of stating that cryptocurrency and blockchain could help prevent another financial crisis in and of itself. “It’s a big revolution,” he concluded. “The possibilities are endless.”

The comments come as little surprise on the back of Malta’s continued partnerships with the cryptocurrency industry as part of its quest to become the so-called “Blockchain Island.”

Last week, the country’s prime minister Joseph Muscat continued the official line of support in a speech to the United Nations, during which he called cryptocurrency the “inevitable future of money.”

EOS found itself in hot water after allegations against its governance arose.

This week, EOS found itself in hot water after allegations arose that a major part of its blockchain governnance, led by Chinese crypto exchange Huobi may be involved in a corruption scheme. EOS’ parent company and Huobi have issued public statements since these allegations, but refrained from admitting or denying the charges.

What is EOS?

EOS.io is a blockchain-powered smart contracts protocol for the development, hosting, and execution of decentralized applications (dApps). It aims to operate in a way similar to the web-based applications and retains similar structural principles, which makes it comparable to Google’s Play Store or Apple’s App Store.

EOS.io is supported by the native cryptocurrency EOS, currently the fifth largest crypto by total market cap. Those tokens could be staked for using network resources either for personal use or leased out for developers use — as per the project’s whitepaper, dApp developers can build their product on the top of the EOS.io protocol and make use of the servers, bandwidth and computational power of EOS itself, as those resources are distributed equally among EOS cryptocurrency holders. Hence, EOS.io attempts to represent a decentralized alternative to cloud hosting services.

The EOS.io platform was launched in June 2018 as open-source software. Its first test nets and the original whitepaper emerged earlier in 2017. The platform was developed by block.one, a startup registered in the Cayman Islands and lead by Daniel Larimer and Brendan Blumer.

EOS holds the absolute record in terms of funds raised during initial coin offerings (ICOs): it has managed to gather around $4.1 billion worth of investments, or about 7.12 million Ethereum, after fundraising for nearly a year. Its predecessor, messenger Telegram, has raised less than half this much - $1.7 billion.

Who are ‘block producers’?

EOS employs a consensus model called Delegated Proof-of-Stake (DPOS). That means that its investors are rewarded with voting power and decide who gets to mine the EOS blockchain.

Indeed, the EOS network is constantly governed by a total of 21 block producers (BPs). Those are decentralized bodies who, well, produce the blocks of EOS blockchain — just like miners do within the Bitcoin’s (BTC) blockchain. In reward, BPs earn EOS tokens produced by inflation. The total inflation of EOS tokens is reportedly 5 percent, only 1 percent of which goes to BPs.

Whilst BPs have the option to keep the tokens, they are also encouraged to reinvest them “to create better infrastructure growth, better community and financial support, along with better education on the EOS network and EOS dApps”, as blockchain analyst and tool builder Ben Sigman explains in a Medium post.

What does ‘mutual voting’ mean? Nuances of blockchain governance

BPs are elected through the voting system since June 2018, when the mainnet went online. EOS’s total supply is set at 1,000,000,000 (1 billion), and the EOS main platform was fully activated, or handed over to the community, when 15 percent of total circulating supply had voted. That occured on June 14, when 21 EOS block producers primarily from the US, China, and South America came ahead in the voting race. The voting process with EOS is constant — that means that the top 21 is fluid and BP candidates who earn enough votes can replace the BPs in power any minute.

The supposedly democratic voting system soon showed its flaws: for instance, cryptocurrency exchange Bitfinex secured its position as a block producer allegedly due to the votes of just few EOS holders, one of which accounted for 27 percent of all votes for Bitfinex, as community members pointed out on Reddit.

‘Mutual voting’, in turn, would imply a process when block producers are voting for each other in order to remain in power and keep their passive income - according to some estimations, top three EOS BPs earn around 1000 EOS per day. That process violates Article IV of the current EOS Constitution titled “No Vote Buying”, which states the following:

“No Member shall offer nor accept anything of value in exchange for a vote of any type, nor shall any Member unduly influence the vote of another.”

Moreover, the EOS voting system seems to be designed for casual users who vote with their private wallets, whilst investors who have their EOS tokens on exchanges’ wallets appear to be stripped off of their voting rights — instead, they are passed over to the exchanges who hold their tokens. While Bitfinex has attempted to introduce a scheme that would allow its customers holding EOS to participate in the voting, other exchanges have remained inactive on the matter.

This problem was recently discussed by members of Chinese EOS Community, who argued whether exchanges should be allowed to vote with customer funds. As per the meeting notes posted in English, “general consensus was mixed between yes and no, but favored yes with the caveat that all voter participation must be increased [... and] exchanges should be expected to provide greater transparency to their voting selection process”.

The allegations: geopolitical conspiracy

The allegations were originally raised by Eosone, a non-profit supervisor of BPs and builder of EOS ecosystem who regularly reports on BPs’ activities. On September 26, Eosone posted what it claims was an Excel spreadsheet of the large Chinese cryptocurrency exchange Huobi, currently the fifth largest exchange by reported volume globally per Coinmarketcap, that was allegedly leaked by its former employee Shi Feifei.

The supposedly leaked document includes four tables with titles "node mutual voting table" and "node income statement" among them. Eosone implied that chief EOS BPs, including Huobi, which is bthe fourth largest BP in current producer ranking, according to EOS Titan data, were involved in mutual voting along with pay-offs.

According to the explanation of Twitter user and EOS investor Maple Leaf Capital, who summarized the document’s findings in English, Huobi voted for 20 other BPs, and 16 of them voted back for Huobi. Moreover, Huobi allegedly voted for three other BPs in exchange for significant paybacks:

“Huobi votes for eosiosg11111, cochainworld, and eospaceioeos in exchange for 170, 150, and 50 percent of the returns respectively...”

Maple Leaf Capital also argued that such agreements could "increasingly compromise the integrity of the network," noting that at least 12 of 21 major BPs were controlled by Chinese entities:

"This file documents the collusion, mutual voting, and pay-offs that occur amongst the Chinese BP community."

Thus, Maple Leaf Capital essentially accused a number of Chinese companies of forming a cartel to collude together, adding:

“I view such action with utter disgust, and there is a reason why our Mapleleafcap proxy only votes for a very selective [sic] group of Chinese BPs.”

Furthermore, the Twitter user linked the alleged mutual voting with the recent promotion of Huobi Pool Token (HPT,) which shared tokens with users in exchange for locking their EOS on Huobi. The Chinese crypto exchange might then capitalize those votes, Maple Leaf concluded.

EOS response: neither confirmed nor denied

On October 1, Block.one’s CEO Brendan Blumer published a statement addressing EOS public blockchain governance problem. In it, he neither confirmed nor denied the allegations, stating his company is “aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims”.

Without specifying which “denials” of allegations he referred to, Blumer stated that EOS will continue to “ensure a free and democratic election process and [...] vote with other holders to reinforce the integrity of this process”:

“We continue working on our potential involvement with the goal of empowering the intent of the greater community through a transparent process that incorporates community feedback.”

Huobi response: investigation is required

On October 2, Huobi responded to the accusations. In a brief statement, the exchange said an investigation into the allegations was “still ongoing”:

“Based on the initial investigation, there were no financial contracts involved between Huobi and any third party… The investigation is still on-going [sic] and therefore, we seek your patience and co-operation [sic] in this matter.”

Previously, on September 26, Danny Wu, Senior Manager at Huobi Pool, defended against the allegations on Telegram, claiming that the document in question was faked by their former employee.

Community backlash and Vitalik’s “I told you so” 

Expectedly, the alleged Huobi spreadsheet provoked a major backlash in the EOS community and beyond.

EOS Alliance, an non-profit organization formed by EOS community members and block producers with the role to “facilitate the dialogue within community”, has released a statement on the situation:

“Dan Larimer’s Delegated Proof of Stake (DPOS) was designed with the requirement that 15 of 21 independent votes are required to operate the network securely. If, as some alleged recently, some current Block Producers are coordinating together, this might call into question the transactional reliability of the EOS blockchain data for all users and the attractiveness of EOS as a platform for dApps.”

Additionally, EOS Alliance stressed that “there are geopolitical considerations, given that Chinese corporations and investors are potentially being demonized, and the consequences in China might be more dire for the individuals involved than they would be in other countries”.

The community’s reaction on EOS’s official Reddit channel seems mixed. “I don't find that surprising giving the governance model of EOS.”, wrote user bhiitc. “If you optimize your system under the assumption that most players aren't malicious and thus reduce the number of nodes for more transactions per seconds, such an outcome like this was likely”.

Ethereum co-founder Vitalik Buterin commented on the aforementioned thread started by Maple Leaf Capital, arguing the vote-trading was “completely predictable”:

“Interesting! I mean, it was completely predictable and I did predict it,  but I did not expect it to happen so thoroughly and so soon!”

Buterin also criticized the very system of EOS nodes:

“As a followup, *this* is why I do not believe in coinholder-voted on-chain treasuries. Any chain where coinholder-voted on-chain issuance is used to supposedly fund public goods can easily collapse into this kind of ‘I vote for your crappy project, you vote for mine’ equilibrium.”

Interestingly, the Ethereum co-founder has criticized the EOS voting system before. In August 2017, Buterin clashed with EOS’ Daniel Larimer after he responded to an Ethereum Reddit thread post claiming that EOS was superior to Ethereum in terms of number of transactions and flexibility.

In his comment, Buterin mentioned that EOS’s reliance on voting, among other features, is problematic, and the scenarios where “exchanges would vote on users' behalf, with users not really caring how exchanges vote with their money” were “likely to happen”.

Crypto markets are seeing little price movement today, with only Ripple seeing a more substantial loss of close to 3% among top coins.

Friday, Oct. 5: cryptocurrencies are seeing little volatility over the past 24 hours to press time, with the majority of losses and gains of top coins capped within a 1 percent range on the day, as data from Coin360 shows.

Market visualization by Coin360

Ripple (XRP) is the only outlier in the top ten coins, down a little over 3 percent on the day to trade at $0.52. The asset – which in September briefly outflanked Ethereum to seal the second spot ranking on CoinMarketCap listings – has had a shaky start to the month, and is currently trading almost 15 percent lower than its intra-week high at around $0.61 September 30.

On its rolling weekly chart, however, Ripple is a more modest 4.6 percent in the red. On the month, Ripple is up an impressive 57 percent.

Ripple 7-day price chart. Source: Cointelegraph Ripple Price Index

Bitcoin (BTC) is seeing negligible price change on the day, trading around $6,580 as of press time. Since trading above $6,600 at the start of its weekly chart, the top coin has seen two subsequent price corrections (Sept. 29 and Oct. 3).

Having briefly dipped below the $6,500 threshold during the latter of these, Bitcoin has reclaimed some ground and is back pushing a slightly higher price point.

On its weekly chart, Bitcoin is just over one percent in the red. Monthly losses are also mild at 2.5 percent.

Bitcoin 7-day price chart. Source: Cointelegraph Bitcoin Price Index

Taking note of Bitcoin’s relative price stability recently, twitter personality and crypto trader WhalePanda tweeted today: “With everyone launching their own stablecoin Bitcoin decided to be the ultimate stablecoin.”

Ethereum (ETH) is down a marginal 0.15 percent on the day to trade at $222 at press time. After a steep plummet Sept. 29 to trade as low as $215, the leading altcoin briefly recovered to push above $235 Sept. 30. Throughout early October, Ethereum has seen renewed losses, although its lowest Oct. price point has been at around $218.

Ethereum’s market cap is around $22.8 billion, slightly widening its margin ahead of Ripple (XRP), which today has a market cap of $20.5 billion.

On the week, Ethereum is almost breaking even, up 0.6 percent; on the month, the altcoin is down around 2.8 percent.

Ethereum 7-day price chart. Source: Cointelegraph Ethereum Price Index

The remaining top ten coins listed on CoinMarketCap are seeing red, almost all capped within a 1 percent range.

Bitcoin Cash (BCH) is down 1.14 percent at $511.51, whereas EOS (EOS) is down only 0.33 percent at $5.73. Just as fractionally, Dash (DASH) is up only 0.10 percent on the day to trade at 180.94.

In the context of the top twenty coins, 24-hour price fluctuations are similarly slight, though more mixed red and green. Crypto exchange Binance’s native token Binance Coin (BNB) is the only exception, up a strong 3.14 percent to trade at $10.61 at press time.

At the start of October, Binance Labs revealed it had made a multi-million dollar investment in decentralized digital content ecosystem Contentos.

After strong growth and volatile price action earlier this week, NEM (XEM) is up just a fraction of a percent on the day: the asset is trading at $0.105 as of press time.

NEM’s 7-day price chart. Source: CoinMarketCap

Ethereum Classic (ETC) is down an above-average 1.19 percent, trading at $10.97 per coin at press time.

Total market capitalization of all cryptocurrencies is around $218.2 billion as of press time, after seeing an intra-week low Oct. 3 at around $214 billion.

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

Earlier today, reports emerged that the  U.S. Ivy League university Yale is said to have been one of the investors that helped to raise $400 million for a major new cryptocurrency-focused fund. The fund, dubbed ‘Paradigm,’ was reportedly created by Coinbase co-founder Fred Ehrsam, former Sequoia Capital partner Matt Huang, and Charles Noyes, formerly of stalwart crypto fund Pantera Capital.

In other industry news, the U.S. Securities and Exchange Commission (SEC) has outlined a time frame for reviewing proposed rule changes related to a series of applications to list and trade various Bitcoin (BTC) exchange-traded funds (ETFs). The review period affects nine separate ETFs that have been proposed by three different applicants, and the SEC has set a deadline of Oct. 26 for parties to file statements in support or rejection of the proposals.

Time Magazine has put a blockchain startup from Ghana in its “Genius Companies” list for 2018, along with such companies as Apple, Netflix and SpaceX.

American journal Time Magazine has included a blockchain startup in its recent top 50 “Genius Companies 2018" list, published Thursday, October 4.

In putting together the list, the magazine asked their editors and correspondents to name "businesses that are inventing the future." Influence and success were among the criteria for the choice. Bitland, a blockchain startup based in Ghana, joined the list along with giants like Apple, Netflix, SpaceX and Domino’s.

As Cointelegraph reported earlier, Bitland, founded by Ghana native Narigamba Mwinsuubo, uses blockchain to register local land. Bitland cooperates with local authorities to help record property rights in a decentralized, immutable format.

Ghana is not the first African country to take on land property issues using blockchain. In August, the Zambian government announced its partnership with the blockchain-based land registry subsidiary of American retail giant Overstock.

In other examples of blockchain being used globally in the real estate industry, the Swedish government officially started using tech to register land back in summer 2017, while earlier that year, Georgia initiated a project to register its first property on the Bitcoin blockchain.

The U.S. SEC has outlined its review period for considering proposed rule changes related to various Bitcoin ETFs.

The U.S. Securities and Exchange Commission (SEC) has outlined a time frame for reviewing proposed rule changes related to a series of applications to list and trade various Bitcoin (BTC) exchange-traded funds (ETFs).

The review period affects nine separate ETFs that have been proposed by three different applicants, according to documents filed by the SEC yesterday, Oct. 4.

The new amendments affect a pair of BTC ETFs that had been submitted by ProShares in conjunction with the New York Stock Exchange (NYSE) ETF exchange NYSE Arca. The other affected applications are the five further proposed ETFs from Direxion, also for listing on NYSE Arca – and two proposals from GraniteShares, for listing on CBOE.

The SEC has solicited  “any party or other person” to file a statement in support or rejection of the proposed BTC ETFs by Oct. 26.

The regulator has outlined that its prior orders disapproving proposed rule changes for all three applicants’ proposals will remain in effect pending the Commission’s review.

In a separate notice, the SEC has filed amendments to specific changes and clarifications that had been put forward by GraniteShares regarding its proposed models of operation.

As reported in late August, the SEC had chosen to review its decision to reject the nine ETF proposals, just a day after it disapproved them. The regulator had found that the products did not comply with the requirements by the “Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange's rules be designed to prevent fraudulent and manipulative acts and practices."

Chilean MPs urge country’s parliament to adopt blockchain for public needs and conduct studies on its advantages.

Two Chilean deputies have presented a resolution on blockchain adoption to the lower house of the country’s parliament (Camara de Diputados) on Thursday, October 4, local news website Fortin Mapocho reported.

The proposed blockchain resolution project was first registered in late August. In the project proposal, the two presenting members of parliament (MPs) Miguel Angel Calisto and Giorgio Jackson, along with eight other MPs, appeal to the Chilean president Sebastian Pinera, urging him to implement blockchain in all public areas of the country. The document also offers to carry out studies on the advantages of blockchain-based security and energy solutions.

Introducing the resolution to parliament, Jackson cited a recent report from the Chilean Economic Prosecution office, which stated that the maintenance of notaries had become too expensive for the government. Jackson argued that storing said data in a decentralised system would significantly help reduce those costs.

MP Calisto also stressed that blockchain technology could guarantee the accuracy of all information kept.

Earlier in May the president of the Chilean Central Bank stated that he was considering introducing cryptocurrency regulation in the country. He argued increased regulation could help the state to "monitor risks," notably of terrorist financing and money laundering.

Neighbouring South American countries are also testing blockchain for public administration. In July, Argentina announced the creation of a federal blockchain system back, while earlier this year, the Brazilian government stated it was planning move its popular public petitions onto the Ethereum blockchain.

Ivy League American university Yale is said to be one of the investors that has helped to raise $400 million for a major new cryptocurrency-focused fund.

Ivy League U.S. university Yale is said to be one of the investors that helped to raise $400 million for a major new cryptocurrency-focused fund, Bloomberg reports October 5.

The fund, dubbed ‘Paradigm,’ was reportedly created by Coinbase co-founder Fred Ehrsam, former Sequoia Capital partner Matt Huang, and Charles Noyes, formerly of stalwart crypto fund Pantera Capital.

Huang was said to have left Sequoia in June to embark on establishing the fund together with Ehrsam, according to reports from the Wall Street Journal at the time.

Bloomberg has today cited an anonymous source as saying that Yale – whose $30 billion endowment is reported to be the second-largest among U.S. higher education institutions – has made an investment of an undisclosed size in Paradigm.

Bloomberg further reports that 60 percent of Yale’s assets for the fiscal year 2019 are earmarked for “alternative investments” including “venture capital (vc), hedge funds and leveraged buyouts.”

According to Bloomberg, the fund reportedly plans to invest in “early-stage” crypto-focused projects, new blockchains and digital asset exchanges.

This summer, Cointelegraph reported on a group of economists from Yale that created a “comprehensive” analysis of the “risk-return tradeoff” of major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP), based on their historical performance data.

The U.S. Department of Justice has charged seven officers from Russia’s Main Intelligence Directorate with crypto-funded crimes.

The U.S. Department of Justice (DoJ) has charged seven officers from Russia’s Main Intelligence Directorate (GRU) with cryptocurrency-funded global hacking and related disinformation operations. The indictment was filed by the grand jury at the Western District of Pennsylvania October 3.

The defendants, all of whom are alleged to work for the GRU — a military intelligence agency of the General Staff of the Armed Forces of the Russian Federation — have been charged on multiple counts for alleged “computer hacking, wire fraud, identity theft, and money laundering,” according to a DoJ press release published October 4.

The group is said to belong to a hack team known as “Fancy Bear,” and the indictment contains charges dating back as early as 2014.

According to the indictment, in order to “facilitate the purchase of infrastructure used in their hacking activity […] [the defendants] conspired to launder money through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin."

The document alleges that the use of Bitcoin (BTC) “allow[ed] the conspirators to avoid direct relationships with traditional financial institutions,” enabling them to further dissimulate their identities and sources of funds.

The defendants are further alleged to have created “hundreds of different email accounts” in order to “avoid creating a centralized paper trail of all their purchases.” Several of these accounts are said to have been dedicated to tracking Bitcoin transaction information and facilitating Bitcoin payments to vendors.

The indictment also charged the defendants with funding their activities through Bitcoin mining:

"The pool of bitcoin generated from the GRU’s mining activity was used, for example, to pay a United States-based company to register the [phishing] domain wada-arna.org through a payment processing company located in the United States. The conspirators used the same funding structure—and in some cases, the very same pool of funds—to purchase key accounts, servers, and domains used in their anti-doping related hacking activity."

This latter reference to anti-doping related hacking activity refers to the DoJ’s charge that Fancy Bear conspired to steal data from 250 international athletes, as well as anti-doping agencies across the world. These attacks are alleged to have been in retaliation for the banning of Russian athletes from the 2018 Olympics, following suspicions of a state-sponsored doping program.

Although these specific charges are not part of the Robert Mueller investigation into alleged Russian interference in the 2016 U.S. elections, notably three of the seven officials named by the DoJ in this indictment have also been named in the Mueller investigation.

As previously reported, this July the DoJ charged twelve individuals from two units of the GRU with using crypto – allegedly either mined or obtained by “other means” – to fuel efforts to hack into computer networks associated with the Democratic Party, Hillary Clinton’s presidential campaign, and U.S. elections-related state boards and technology firms.

Technologies like blockchain form one of the focuses of a new partnership between major Russian bank Sberbank and energy giant Rosseti.

Russia’s largest majority state-owned bank Sberbank has signed a partnership agreement with state-owned power giant Rosseti to propagate new technologies, a press release confirms Friday, October 5.

The latest step in Sberbank’s ongoing engagement with innovations such as blockchain, the institution and Rosseti will work together on a raft of projects, including accelerators, education, research trials and exchange of expertise.

Sberbank will also dispatch a consultant to Rosseti with the aim of “increasing the efficiency of its current operations and performance.” The energy company will also get access to a bank of “innovative laboratory developments” and products from the Sberbank ecosystem.  

“The strategic partnership between Sberbank and Rosseti in the innovative growth field allows both companies to use the very latest technologies to transform their business and client satisfaction,” Sberbank CEO Herman Gref commented.

While the legal landscape surrounding cryptocurrency – its usage, mining and other activities – remains an uncertain gray area in Russia ahead of formal regulations becoming law, the government has pledged full support for blockchain.

Since its first government-level implementation of the technology in December 2017, various initiatives continue to surface from the country’s most influential entities.

For its part, Sberbank was one of a two-party initiative to launch Russia’s first cryptocurrency investment fund in July, having previously signalled interest in launching cryptocurrency trading for clients at its Swiss branch.

While Bitmain’s IPO launch date is getting closer, recent retractions of large investor participation, increased competition, and possible losses may affect the company’s leading position on the market.

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com

Bitmain, the world market leader for mining equipment, on the eve of an epic IPO — which could become the largest in the entire history of the IT market — is experiencing an equally epic publicity and information attack. Despite the fact that the upcoming IPO is getting closer, as demonstrated by a draft application for registration recently filed by the company on the Hong Kong Stock Exchange, its success may be questionable. 

The fact is that, since Aug. 21, official refutations have started to appear on the internet from companies that were previously listed in the Bitmain investor list. Beginning with SoftBank, the rumor about participation in the company's IPO was also denied by DST Capital.

Without making unequivocal conclusions, let's try to figure out whether there is any smoke when it comes to Bitmain’s IPO claims — to which its founder, Jihan Wu, prefers not to respond.

Reconnaissance

On June 6, media presented information that Bitmain’s IPO on the Hong Kong Stock Exchange was scheduled for September 2018 and, according to investment analysts, was expected to raise anywhere from $3 billion to $18 billion, thereby becoming the largest initial public offering in the IT market’s history, beating Facebook with its $16 billion.

However, on August 6, the company gave a more cautious outlook on the IPO date, taking the gap between the fourth quarter of 2018 and the first quarter of 2019. Nevertheless, a draft application for the listing on the Hong Kong Exchange indicates that the giant’s intention is getting stronger and the date for the launch of the initial offering is getting closer. Additionally, as part of the approval process, Bitmain has submitted a prospectus where it reported new financial data which was closed before.

According to the updated information, Bitmain earned $701 million in net profit in 2017, while various estimates show that the annual income for the same period ranged from $1 billion to $4 billion. A gross income claimed for the first half of 2018 exceeded the one received for the whole previous year and comprised $743 million, despite a significant fall in the crypto market.

However, according to the report published by BitMEX at the end of August, Bitmain could face “visible losses, which might be caused by "allegedly investing the majority of its operating cash in 2017 in acquiring Bitcoin Cash (BCH).” Experts believe the estimated potential losses could reach $328 million.  Additional calculations show that the ratio of the $2.5 billion revenue to the $701 million net profit in 2017 is more positive than that of 2018 ($2,5 billion and $743 million). Further analysis made by the BitMEX team implies “Bitmain are currently loss-making, with a negative profit margin of 11.6% for the main S9 product and a margin of over negative 100% on the L3 product.”

Given the continuing decline in Bitcoin’s price and the challenging situation in the mining hardware market, some experts suggest that the company’s IPO may become a challenging task. Although the corporation still remains the industry leader, with 60-70 percent share of the ASIC production market.

As of the beginning of October, the capitalization of Bitmain has reached $12 billion with its latest funding round in August 2018 reported to be $442.1 million. In total, Bitmain has raised $784.8 million to date and was rumored to have accumulated around 51 percent of the Bitcoin network hash — or that it was at least close.

One of the reasons the research group Sanford C Bernstein & Co. is given as an argument on why Bitmain may strongly need to start its IPO, is increased competition. Wall Street may also be occupied by the company Chinese Canaan Inc., whose value is estimated at about $500 million and Ebang International Holdings Inc., registered in the Cayman Islands. Both companies also announced an IPO with plans to begin before the year ends, which will also take place on the Hong Kong Stock Exchange. According to Reuters, Ebang is planning to raise up to $1 billion, while Canaan is targeting at least $400 million, which in total is 2 times smaller than the sum planned by Bitmain.

The challenges Bitmain is facing

In the middle of the summer, the media reported that Bitmain had held its first round of the pre-IPO and that among the investors there was a co-owner of Uber, Japanese SoftBank and Chinese IT giant Tencent, which developed the WeChat platform. WeChat itself is reported to be ahead of Facebook in terms of capitalization with the market valuation of $534,5 billion against $519,4 billion. Later, the insider information was released about DST Global participating in the pre-IPO.

Neither references to Bitmain’s publications disseminating information, nor the company’s comments on these data were provided. Information was distributed in Twitter with a reference to an investor deck screenshot.

It is highly risky but yet institutional investors like GIC, Sequoia and etc, have invested. Institutions FOMO and invest without sufficient due diligence - or maybe they want to buy BCH bags from Bitmain. Beats me pic.twitter.com/79BzNw3eZt

— Eugene Ng ⚡️ (@Eug_Ng) August 12, 2018

By August, all three companies named originally as investors in Bitmain’s pre-ICO, have issued public denials. But this was only the beginning.

In late August — theoretically on the eve of September’s IPO, the analytical agency Sanford C. Bernstein & Co., which in 2000 merged with Alliance Capital, published a detailed report analyzing the challenges of Bitmain’s IPO.

The study is devoted to Bitmain and contains clear indications of the Chinese giant’s loss of technological advantage, connected with increased competition and the purchase of a large amount of Bitcoin Cash, which could pose a significant risk to the company if the digital token declines. Moreover, Bloomberg, which detailed the report of Sanford C. Bernstein & Co., pointed out that analysts directly called for Bitmain’s technological partner — Taiwan Semiconductor Manufacturing Co. — not to produce chips for ASIC-miners without a full prepayment.

Meanwhile at the Bitmain headquarters

The Chinese giant is consistently expanding its mining empire. In August, Cointelegraph reported that NVIDIA left the mining equipment market, unable to withstand the severe competition of Bitmain. Thus, it appears that 85 percent of the world’s mining equipment production market has come under the control of Bitmain, a figure with which the analysts of Sanford C. Bernstein & Co. agree.

More questions are raised by the above mentioned purchase of BCH, which according to some users, was either a risky investment, given the unstable market situation, or was made with the purpose of not disclosing Q2 income.

To recap the Bitmain disaster recovery IPO:
1) They sold most of their $BTC and have now over 1 million $BCH
2) They purposely didn't include the Q2 numbers for Pre-IPO buyers since they were a disaster
3) They told Pre-IPO buyers they would use some of the money to buy more BCH

— WhalePanda (@WhalePanda) August 13, 2018

BITMAIN holding 1M+ BCH is a very powerful statement that they have skin in the game and put their money where their mouth is. It’s a good and calculated move, and it’s not wise to underestimate them.

— Cøbra (@CobraBitcoin) August 13, 2018

At the presentation for investors, Bitmain reported that, since the end of 2017, it consistently traded Bitcoin Cash for any available Bitcoin, despite the fact that the company lost about $500 million. A slide taken from an investor deck was published in Twitter, and caused a stormy reaction in the crypto community.

According to the Bitmain pre-IPO investor deck, they sold most of their #Bitcoin for #Bcash. At $900/BCH, they've bled half a billion in the last 3 months. If Bitcoin Core devs didn't disclose the Bcash vulnerability, it could've wiped a billion dollars off their balance sheets. pic.twitter.com/9BMywdvvby

— Samson Mow (@Excellion) August 11, 2018

While information about the future IPO and the monopolized market was teeming with passion, Jihan Wu himself shared his opinion regarding the futility of ICOs and the prospects for Bitcoin Cash in an interview with Coingeek.

An imperturbable 32-year-old Chinese billionaire called ICOs "a bubble that will last for two years and then burst," followed by the securities of crypto startups released on the blockchain. The Bitmain owner predicted a rate of $100,000 of Bitcoin’s fork — Bitcoin Cash (BCH) — and a dominant position in the market by 2023, as he believes only BCH corresponds to the real vision of Satoshi Nakamoto. Having intrigued Bitcoin evangelists in this way, Jihan Wu completed the interview without commenting on the prospects of his future IPO.

Possible scenarios

Bitmain has accumulated a lot of BCH, but there is no liquid market and there is no demand outside the market. A lot of ASIC-devices were released, but their profitability decreases as the complexity of BTC mining grows. So far the company has not developed any AI initiatives since the moment Jihan mentioned his plans to take on Nvidia.

The IPO process may be hindered by some of Bitmain’s mistakes, such as “producing too many units and buying too many speculative altcoins in a bull market,” BitMEX analysts say. Still they are not so catastrophic and “typical” of mining producers management teams.

The exchange specialists predict that in order to keep their industry dominance and achieve higher results, “the Bitmain management team may need to improve their management of company resources. Once the company goes public, capital allocation decisions in this volatile and unpredictable market will be difficult enough, letting emotions impact too many investment decisions may not be tolerated.”

Perhaps, the giant will reconsider their target sum for the IPO due to revealed losses, and increased competition.

U.S. crypto exchange Coinbase has announced that veteran employee Adam White, head of its institutional platform group, is leaving the firm.

Leading U.S. crypto exchange Coinbase has announced that veteran employee Adam White, head of its institutional platform group, is leaving the firm, Bloomberg reported October 4.

Adam White was reportedly Coinbase’s fifth-ever employee, joining “in 2013 when the founders were still working out of a one-bedroom apartment and Bitcoin was trading around $200,” as Bloomberg notes. Prior to his work at Coinbase, he reportedly served in the U.S. Air Force and received an MBA from Harvard Business School.

For his most recent post, White served as Coinbase’s vice president and general manager of the institutional business. As of spring 2018, the exchange has been rolling out a series of products targeted at major institutional clients – including custodian services and an Index Fund – which Coinbase considers could “unlock $10 billion of institutional investor money sitting on the sideline.”   

While White reportedly declined to comment on his departure, a company spokesperson told Bloomberg that:

“While we’re extremely sad to see him go, we’re also confident in that group’s ability to keep executing on the vision that he laid out to be the most trusted venue for institutional investors to trade cryptocurrencies.”

CEO Brian Armstrong gave his comment, saying:

“Over the past five years, Adam helped us build our exchange business into the largest U.S.-based crypto-trading venue, and was integral to growing Coinbase’s global presence and scaling our culture to multiple offices.”

Coinbase announced Oct. 3 that Jonathan Kellner, former chief executive officer of Instinet, is joining as a managing director of the exchange’s institutional business.

There has been a wave of new talent joining the San Francisco-based exchange, which recent reports have suggested could soon be valued at $8 billion. This week, Coinbase announced that Chris Dodds, a member of the board at Charles Schwab, would be joining the exchange’s board.

In late September, the company hired former Fannie Mae General Counsel Brian Brooks as its new Chief Legal Officer; former Amazon Web Services (AWS) and Microsoft employee Tim Wagner also joined Coinbase as vice president of engineering this summer.

sponsored

Users can learn how to build real products from more experienced colleagues.

A blockchain project called Education Ecosystem is developing a decentralized online learning platform called LiveEdu, where people can learn how to build complete products in categories like programming, cryptocurrencies, artificial intelligence, and other technology fields. Describing itself as “Netflix for professional development”, the company says it is different to other online learning platforms as they are focused on intermediate to advanced level learners seeking to improve their career skills and not beginners just starting out.

Learning from real projects

According to the Training Industry survey, the money spent on professional development worldwide was $359.3 billion in 2016 and reached $362.2 billion in 2017. Education Ecosystem has announced an ambitious goal — to disrupt the professional training industry.

LiveEdu is a platform where intermediate and expert learners can get current information on future fields of technology from their more experienced colleagues. Besides programming, cryptocurrencies and artificial intelligence ( AI) , there are topics such as game development, cyber security, data science, design, virtual reality (VR), and augmented reality (AR).

Content creators develop projects where they showcase themselves building real products. The users can watch videos with live-classes and also interact with the project creator during a live-stream. All of the videos are also archived.

The company says developers have been recording how they create products for years. The problem was that it was not easy for learners in technical fields to find the instruction for an exact topic or suitable real-life project examples, especially after they pass the beginner level. Those videos were scattered across YouTube, Twitch, and Reddit or personal blogs. Education Ecosystem decided to make a dedicated place where both sides — the developer and other users — could meet. The company’s goal is to provide a project-learning library where learners can easily find practical examples for some of the most in-demand skills of today.

“We believe learning from real projects is a practical and efficient way for professionals and students to improve their skills and make more money in their career,” Education Ecosystem CEO and Founder Dr. Michael J. Garbade says.

The key component of the ecosystem is the Education Token (LEDU). The new version of LiveEdu, that the team is developing now, will be powered by this ERC-20 token. Currently, LEDU coins are available on Exrates, BitForex, Livecoin, Mercatox, and IDEX. “LEDU tokens are used as payment for all financial transactions in the internal ecosystem, as well as rewards for project creators, learners, site moderators, and API ecosystem developers,” the company says.

A million users in 200 countries

The beta version of the program was launched at the end of 2015 with the name 'Livecoding.tv.' It only included video content related to programming. The major change for the project was made two years later in 2017. The platform was renamed to 'LiveEdu,' the education categories were also expanded to the current topics. The team has also adjusted the monetization structure. Education Ecosystem concluded a token sale in February 2018.

Now the company earns by subscriptions. Education Ecosystem offers different prices based on the number of topics and the duration. In the future the company plans to make money mainly through B2B and B2G sales. The B2B and B2G sales channels will be launched in 2019.

Education Ecosystem says that LiveEdu was used by more than one million people in almost 200 countries since the launch of the platform. The number of streamers exceeded 13,000, and they have created over 200 000 videos. Around 50 new projects per week are currently being added. That is expected to ramp up as the company seeks to build the largest project learning library on the internet.

Education Ecosystem plans to expand their external ecosystem in 2019 to include businesses, colleges, and universities as well as other online education platforms. The company sees the likes of Pluralsight, Udemy, and others as potential partners and hopes those companies can become distribution channels for the projects available on LiveEdu via its API.

The team has recently concluded a roadshow through North America, attending major events like BlockShow in Las Vegas, Token Fest in Boston, and Blockchain Seattle. Another roadshow across Asia is scheduled to begin in October.

Overstock’s investment subsidiary Medici Ventures has funded a blockchain project aimed at fighting wine counterfeit.

Overstock.com’s venture capital subsidiary Medici Ventures has invested in Israeli-based technology company VinX to develop a blockchain-powered wine futures platform, according to a press release published October 4. The exact amount of the investment was not disclosed.

Per the announcement, VinX plans to develop a token-based digital wine futures platform based on the Bordeaux futures model, that will enable the trade of wine futures on a blockchain platform. The initiative purports this will create a secure supply chain that assures product provenance and thus reduces fraud in the wine industry.

According to the press release, 20 percent of wine globally has counterfeit labelling. VinX reportedly plans to deploy blockchain to link wine consumers directly with wineries, eliminating allegedly fraudulent intermediaries. Patrick M. Byrne, the CEO and founder of Overstock.com, said:

“Like any economy, the wine industry has difficulty scaling its middlemen-heavy systems in parallel with the growing demands of an increasing global market. VinX’s steps in tokenizing wine futures while allowing wine enthusiasts to know without a doubt that the bottles they purchase are filled with authentic wines will position the entire industry as a model of a new global economy that replaces old boys’ networks with frictionless trust through technology.”

In May, Cointelegraph reported that Chinese blockchain startup VeChain began testing a blockchain application to verify wine supply chain and fight counterfeits. Statistics reportedly showed that “at least half of the Chateau Lafite-Rothschild consumed in China is fake.”

In September, Albert Heijn, Holland’s largest supermarket chain, revealed it is using blockchain to make the production chain of its orange juice transparent. The system will reportedly store data that reveals the quality and sustainability ratings held by various produce growers, as well as information about the fruits themselves.

A recent study by ReportLinker predicted that the blockchain in agriculture and food supply market will be worth over $400 million in the next five years. The report states that “the blockchain market is expected to grow, owing to the increase in the demand for supply chain transparency along the agriculture and food verticals,” explaining that food fraud is estimated to cost the global food industry $49 billion annually.

A new patent filed by Alibaba seeks to develop a blockchain system that enables authorized parties to intervene in a smart contract.

Chinese e-commerce conglomerate Alibaba has filed a patent application with the U.S. Patent and Trademark Office (USPTO) for a blockchain-based system that allows a third-party administrator to intervene in a smart contract in case of illegal activities. The USPTO published the patent application on Oct. 4.

A smart contract is a computer protocol designed to digitally verify or enforce the negotiation or performance of a contract. Smart contracts are self-executing, with the terms of the agreement between the parties being directly written into lines of code.

The patent document, which was initially filed in March, describes a blockchain-powered transaction method that enables authorized parties to freeze or halt user accounts associated with illegal transactions, or intervene in a blockchain network.

The authors of the document emphasize that while blockchain technology has a number of advantageous features like openness, unchangeability, and decentralization, it still does not provide conditions applied to specific cases in a real life environment. The patent explains:

“In real life, however, there is a type of administrative intervention activities in the category of special transactions. For example, when a user performs illegal activities, a court order may be executed to freeze the user's account. However, this operation activity conflicts with smart contracts in existing blockchains and cannot be carried out.”

The patent seeks to develop a system for effective administrative supervision of all accounts in a blockchain network, although the scope of supervision will be limited, which means it will not restrict normal transactions in the blockchain network. “The issuing account recorded in the various embodiments may be an account owned by a government agency or a trustful institution,” the patent reads. It further states:

“[...] upon receiving an operation instruction sent from a designated account, a node in a blockchain network can invoke a corresponding smart contract when determining that the operation instruction is issued legally, to execute corresponding operations on an account corresponding to the to-be-operated account information, which achieves a goal of supervision on accounts in the blockchain and solves the problem of processing special transactions like administrative intervention in a blockchain.”

On the Ethereum blockchain, upgradeable contracts can be issued, wherein logic and data are separated into different contracts. One will call the other using a command and a proxy contract, giving developers some control over the contract after it has been issued.

However, upgradeable contracts are far more complex than usual smart contracts, which can make them more susceptible to bugs. The new Alibaba technology would purportedly expand the ability of administrators across an entire network, in addition to simplifying the amending a smart contract.

Former smartphone manufacturer BlackBerry has released a new blockchain platform designed to store and share medical data.

As part of its pivot into security and computing, software company and former smartphone manufacturer BlackBerry has released a blockchain-powered platform. The new product  focuses on the healthcare field, according to a press release published Oct. 4.

Per the announcement, BlackBerry has partnered with technology firm ONEBIO to develop a blockchain-backed “ultra-secure” ecosystem. The system is designed for the storage and sharing of medical data, where information can be entered by patients, laboratories, and Internet of Things (IoT) biometric devices. Once entered, data will further be anonymized and shared with researchers. BlackBerry CEO John Chen said:

"We are applying our expertise in security, data privacy, and communication work in regulated industries such as automotive, financial services, and government to tackle one of the biggest challenges in the healthcare industry: leveraging healthcare endpoints to improve patient outcomes while ensuring security and data privacy."

Among other products, BlackBerry has also presented a real-time operating system for the development of robotic surgical instruments, patient monitoring systems, and other safety-critical products that must pass regulatory approval.

While at one time BlackBerry controlled 50 percent of the global smartphone market, in 2016 the firm controlled less than 0.1 percent. While BlackBerry is still in the smartphone business — it will release its latest smartphone iteration on Oct. 10 — the recent blockchain initiative is indicative of the firm’s move into other fields.

Today, BlackBerry also announced a new quantum-resistant code signing service that will “allow software to be digitally signed using a scheme that will be hard to break with a quantum computer.”

The E.U. markets watchdog has set a budget for an initiative to monitor fintech and crypto assets in its 2019 work program.

The European Securities and Markets Authority (ESMA) has budgeted over 1 million euro for monitoring fintech and crypto assets, according to a document published Oct. 4.

Founded in 2011 in Paris, the ESMA has an objective to develop a uniform rulebook for European Union (E.U.) financial markets, as well as provide market supervision. The authority has established Technical Committees in various industrial fields, including information technology (IT), and also works in the field of securities legislation and regulation.

In its 2019 Annual Work Program, the ESMA cites a 1.1 million euro program and its objectives for the next year, which include regulation and supervisory treatment of new financial activities, focusing on fintech and crypto assets.

Within the announced framework, the ESMA will identify risks related to such activities and trends, and provide relevant advice and proposals where needed. Additionally, the ESMA has set a goal to provide guidance and facilitate the implementation of the Markets and Financial Instruments Directive (MiFID) in order to make markets more transparent. The program will:

“Achieve a coordinated approach to the regulation and supervisory treatment of new or innovative financial activities and provide advice to present to the E.U. institutions, market participants or consumers.”

Last month, the ESMA announced its plans to extend restrictions on contracts for differences (CFDs), including crypto-based ones. The agency justified its move with "significant investor protection concern" associated with the offering of CFDs to retail clients.

Earlier in March, the ESMA had strengthened its requirements for CFDs. "Due to the specific characteristics of cryptocurrencies as an asset class the market for financial instruments providing exposure to cryptocurrencies, such as CFDs, will be closely monitored, and ESMA will assess whether stricter measures are required," the regulator explained.

In September, Belgian think tank Bruegel called on E.U. ministers for unified legislation on cryptocurrencies and more scrutiny on how they are distributed to investors. The move reportedly comes in order to manage associated risks while realizing the potential of blockchain technology.

The mayor of Seoul has rolled out a project to boost the blockchain industry, including setting up an $88 million public-private fund.

The mayor of Seoul Park Won-soon has introduced a five-year plan for developing the blockchain industry in the city, Korean news agency Yonhap News reports Thursday, October 4.

The project entitled “Blockchain City of Seoul” contains a number of measures for promoting and developing blockchain-related initiatives and education in the city from 2018–2022, Park revealed in a speech in the city Zug, Switzerland on Thursday.

By 2022, the city plans to set up a public-private fund of 100 billion won ($88.2 million) in order to invest in blockchain startups in Seoul. The fund will acquire 13.6 billion won ($11.9 million) from the city government.

Moreover, city authorities are planning to spend 60.3 billion won ($53.1) on creating two business centers to house 200 blockchain firms by 2021. The two upcoming complexes, which will be located in the western and southeastern parts of the city, will operate two educational centers, aiming to train 730 industry experts in the next five years.

According to ZD Net Korea, Park also revealed plans to apply blockchain technology in the city’s administration. Starting this year, authorities are planning to launch 14 blockchain-powered systems, including a voting system, charity management, and vehicle history reports.

Park commented that distributed ledger technology (DLT) is undoubtedly “the core technology of the fourth industrial revolution,” which will be the basis for the future of IT. By rolling out the new plan, he intends to make the city “the center of a blockchain industry ecosystem.”

In August 2018, South Korean authorities announced a plan to develop eight sectors of domestic economy, including blockchain technology, by investing $4.4 billion in 2019. The local government has reportedly opted to increase the amount of funds spent on fields such as blockchain, big data and artificial intelligence (AI) by 65 percent from estimates earlier in the year.

Tom Lee’s survey: 54% of institutional investors vs 44% of respondents on Twitter agree that Bitcoin has hit the price bottom.

Institutions appear to be more bullish on Bitcoin (BTC) than the members of the crypto community on Twitter, according to a recent survey by Fundstrat Global Advisors. Tom Lee, managing partner and head of research for the company, has revealed this in an interview with CNBC Oct. 4.

Based on the results of a private survey of 25 institutions, as well as 9,500 responses to a public Twitter poll conducted September 30, Tom Lee concluded that Wall Street is calling a bottom in Bitcoin.

As much as 54 percent of respondents to the survey of institutions are optimistic about the cryptocurrency, saying that Bitcoin has already hit its lowest price point this year.

Institutional players are also bullish in regards to the potential future growth of Bitcoin. 57 percent of those surveyed have said that Bitcoin’s price is going to reach anywhere from $15,000 to “the moon” by the end of 2019.

In contrast, the crypto community on Twitter appears to be less optimistic about Bitcoin. 66 percent of respondents to Tom Lee’s Twitter poll have said that Bitcoin can still drop lower than it is right now. Only 40 percent have agreed that Bitcoin is likely to reach $15,000 by year end 2019.

On Oct. 1, Bloomberg reported that institutional investors have replaced high-profile retail investors as the biggest players in cryptocurrency trading, when it comes to transactions worth over $100,000. Traditional investors, such as hedge funds, are reportedly becoming more involved in the crypto markets via over-the-counter deals.

Lee, who appears to be sticking to his earlier forecast that Bitcoin will trade between $22,000 and $25,000 by the end of 2018, has recently made another optimistic prediction – this time, about a major altcoin Ethereum (ETH). Talking to Bloomberg, Lee has said that Ethereum is about to see a “trend reversal and rally strongly,” up to $1,900 per coin by the end of 2018.

Conversely, CEO of crypto investment firm Galaxy Digital Capital Management Mike Novogratz has yesterday rescinded his earlier prediction that Bitcoin will reach $45,000 by Nov. 2018. Now, the billionaire investor does not expect Bitcoin to even break the $9,000 threshold in 2018.

One of Spain’s busiest ports is to deploy a blockchain network, plans to spread it to partners in the future.

One of Spain's busiest ports based in the city of Valencia has announced the creation of a "smart port" which will use blockchain and big data technologies. The news was revealed in a release published Wednesday, Oct. 3, on the port’s official website.

Jose Garcia De La Guia, who is responsible for implementing new technologies in the Port Authority of Valencia, explains that they see blockchain as a good option for improving logistics not only in Valencia, but in many international ports:

"Starting from Valencia, we offer to use blockchain as a strategic option to provide transparency of logistic chain, from end to end, going further than our port itself. That means we're planning to apply cloud technologies not only with our partners from Port Community Systems but also with all others."

De La Guia also says blockchain would help create "ports without papers", to optimise the resources worldwide, to reduce time spent on maintenance, as well as to cut costs.

The message was delivered during the Smart Ports & Supply Chain Technologies conference held in the Dutch city of Rotterdam this week, in which officials from the port of Valencia, as well as representatives from Antwerp (Belgium) and Algeciras (Spain) took part. Danish company Blockchain Labs for Open Collaboration also joined the event.

Blockchain is widely used by international ports to improve logistics. For instance, UK’s leading port operator, Associated British Ports (ABP), will soon take part in pilot shipments using decentralised solutions, while Denmark has revealed its plans to implement blockchain for local ship registers. In the meantime, a subsidiary of Abu Dhabi Ports has also launched a domestic logistical blockchain network.

As Cointelegraph reported earlier, Spain remains one of the countries that is consistently optimistic about blockchain on many levels. For instance, Spanish community of Aragon has recently announced it would implement blockchain in public administration. Catalonia is also interested in using decentralized solutions to solve social problems.

Circle Internet Financial Ltd. has launched a new feature for its crypto investment app Circle, which allows users to invest in categorized crypto assets.

Goldman Sachs-funded Circle Internet Financial Ltd. has launched a new feature for its crypto investment app Circle Invest dubbed “Collections.” The company has made the announcement in an official blog post published Oct. 4.

The feature gives customers the option to invest in one or more collections of crypto assets, each divided according to a particular theme: “Platforms, Payments, and Privacy.” The company presents the tool as a simplified way for investors to focus their portfolio on multiple coins,  according to a specific functionality of their choice. After choosing a collection category, users can invest in the entire category in one swoop.

Today’s post outlines that the various crypto assets in each collection will be weighted according to their respective market caps. Circle’s Collections product will also provide educational content so that users can make informed choices about their investments.

According to the app’s official website, Circle Invest supports a wide range of coins, including Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Zcash (ZEC), Monero (XMR), Stellar (XLM), and EOS (EOS). Today’s post indicates that of these, BTC, BCH, XLM and LTC will be included as part of the new ‘Payments’ collection.

As previously reported, as of May this year, Circle Invest has been offering a feature called “Buy the Market,” which aims to make it easier for newbies to enter the crypto market. The feature allows users to invest in all Circle Invest’s listed coins at once, similarly splitting their investment – which can be as little as $1 –  according to the coins’ market capitalization weightings.

Just last month, Circle Internet Financial Ltd. launched a U.S. dollar-backed stablecoin dubbed the “USD Coin,” which will reportedly be listed on Circle’s Poloniex exchange, as well as Huobi, OKCoin, KuCoin, and digital wallet and exchange Coinbase.

A consortium called Centre – which is a wholly owned subsidiary of Circle, and includes Bitmain Technologies Ltd. among its members – is to act as a platform for deposits and fiat conversions for the new asset.

Ethereum developer points out that Petro white paper has copied an image from Dash’s GitHub repository, among other similarities.

Venezuelan state-owned cryptocurrency Petro has apparently plagiarized parts of its white paper from the GitHub repository of Dash. Core developer of Ethereum Joey Zhou pointed this out in a tweet posted Tuesday, Oct. 2.

Zhou has tweeted that Petro, which has just been officially launched by president Nicolas Maduro, is "a blatant Dash clone." To illustrate this, he posted a link to the Venezuelan coin’s white paper, which had an exact copy of an image from Dash's repository on Github.

An image from Dash’s repository on Github, added to p. 11 of Petro’s white paper with an added title in Spanish. Screenshot: Cointelegraph

The "clone" image is not the only thing that Petro apparently borrowed from Dash. The technical description of the coin says that it will use the X11 Proof-of-Work (PoW) mining algorithm, the same that is used by Dash.

While many cryptocurrencies use common cryptographic algorithms – such as Bitcoin’s SHA-256 – Petro also uses "nodos maestros," or masternodes – a well-known mechanism used by Dash to regulate its ecosystem.

The last but not least of the coincidences is Instant Send – Dash's mechanism for fast transactions and also one of the most important characteristics of Petro, as per its white paper:

"One of the most important characteristics of Petro is instant send (less than 5 seconds) of the transactions, which represents an innovative approach and Petro's significant impact in comparison with existing cryptocurrencies."

The news comes shortly after Venezuela’s president announced the official sale of Petro, which is slated to start November 5.

Maduro has also stated that the oil-backed cryptocurrency is about to begin trading on six major crypto exchanges. However, as of press time, it has not yet been listed on any of the largest trading platforms such as Binance, OKEx and Huobi, according to CoinMarketCap.

Earlier in August, Ryan Taylor, CEO of Dash Core Group, has said that Venezuela had become the second largest market for Dash. According to Taylor, almost one hundred merchants in Venezuela begin to accept the coin each week, partly caused by the fast devaluation of bolivar – the nation’s official currency.

World’s sixth largest crypto exchange Bithumb is launching a global decentralized trading platform in partnership with blockchain firm One Root Network.

South Korean crypto exchange Bithumb, currently the world’s sixth largest by daily traded volume, will open a global decentralized crypto exchange, Business Korea reports Oct. 4.

Bithumb has partnered with blockchain firm One Root Network (RNT), which has developed an Ethereum (ETH)-based decentralized token transaction protocol dubbed “R1” and already operates a decentralized exchange (DEX). According to a joint press release, the protocol separates order matching and order execution, which RNT claims improves security and matching efficiency.

Decentralized platforms enable users to trade peer-to-peer via an automated system; as they do not store clients’ crypto, they are less vulnerable to thefts that target a centralized point of attack. They can, however, as Business Korea notes, offer relatively slower trading speeds than their centralized counterparts.

Business Korea cites a Bithumb official as saying that the partnership centers on technical support, clarifying that “Bithumb DEX will be operated by its overseas subsidiary. The company is working together with RNT only in the decentralized exchange sector.”

As RNT has outlined, its project aims to enable traffic holders such as Bithumb to build their own decentralized platforms, and share transaction data and liquidity with other R1 protocol users as part of a wider ecosystem.   

Business Korea further cites an unnamed industry source as saying that the partnership represents a global expansion strategy by the Korean exchange:

“Bithumb is one of the leading global exchanges in terms of transactions but it is true that most of its users are Korean. The latest decision seems to be the company’s strategy to compete with other leading exchanges in the global market by opening a decentralized exchange that receives attention in the global market.”

Business Korea notes that rival Korean exchange Upbit has also made a foray into the DEX space through its investment in Allbit.

As reported in August, the world’s largest crypto trading platform Binance has released a simple demo of its own forthcoming decentralized exchange, without yet disclosing an expected launch date.

As of press time, Bithumb is seeing $336,761,580 in daily trades, according to data from CoinMarketCap.

Cybersecurity firm Malwarebytes has found malware that targets the Bitcoin wallet addresses of players of the highly popular Fortnite video game.

Cybersecurity firm Malwarebytes has found that scammers are using malware that targets the Bitcoin (BTC) wallet addresses of Fortnite gamers, according to a post published October 2.

Fortnite is currently one of the most popular video games in the world, with reports suggesting that 125 million people are active players.

Malwarebytes has investigated the game’s online ecosystem and found that “con artists” are sneaking malicious data theft code into downloads that apparently promise “free” season six Fortnite Android versions, among other “bogus cheats, wallhacks and aimbots.” So-called “free V-Bucks” – an in-game currency that can be used to purchase additional gaming content – also conceal malicious packages of code, according to the investigation.

Malwarebytes found that these deceptive links are promoted via scammers’ youtube channels, which redirect users to downloads that conceal the malware. For one malicious file, the investigation reportedly found that over 1,200 downloads had already been completed; Malwarebytes’ detection methods identified the file as “Trojan.Malpack,” and found that it was a data stealer targeting Bitcoin wallets, browser session information, cookies, and other data.

The file in question reportedly attempted to redirect the siphoned information “via a POST command to an /index.php file in the Russian Federation, courtesy of the IP address 5(dot)101(dot)78(dot)169.”

Malwarebytes further warned that the accompanying readme file to the malware advertises the option to purchase more Fortnite game cheats “for $80 Bitcoin.” The investigation noted that other types of suspiciously packaged code use a process known as “Stealer.exe,” and post the ill-gotten data to “to /gate.php instead of index.php.”

As previously reported, multiple cybercrime threat analyses this year have emphasized the rising popularity of crypto mining malware – or cryptojacking – among hackers. In late September, McAfee Labs released data suggesting that total samples of one type of such malware known as “coin miner” had risen by 86 percent in the second quarter of 2018.