Bitcoin (BTC) has been caught in what can be accurately defined as a period of consolidation as of late and has been hovering around the lower-$11,000 region for the past several days, make fairly restrained price movements within a relatively tight trading range.Now, one highly respected analyst is claiming that Bitcoin could either face an 80% correction in the coming weeks or months or could face a much smaller correction that results in a fresh parabolic uptrend that ultimately leads the cryptocurrency higher.Bitcoin Stable in Lower-$11,000 Region, But Volatility is Likely Inbound At the time of writing, Bitcoin is trading down just over 1% at its current price of $11,360, down slightly from its daily highs of $11,600.Over the past week, Bitcoin has been trading between a relatively large trading range with a lower bound at roughly $9,600 and an upper bound at $12,000. Because BTC has not incurred any massive influx of buying or selling pressure, it is likely that this range will persist in the near-term.Importantly, Bitcoin has been frequently testing a descending resistance line that has held strong for the past several days, but it does appear to be growing weaker which may signal that an upwards break is imminent.“$BTC – first 6hr candle close outside the declining resistance line… lets see if #bitcoin can build on this,” Chonis Trading, a popular crypto analyst on Twitter explained in a recent tweet.$BTC – first 6hr candle close outside the declining resistance line…lets see if #bitcoin can build on this … pic.twitter.com/B4mfAu42P8— Chonis Trading-⚔️ (@BigChonis) July 6, 2019Analyst: BTC Likely to Correct Soon, But Will It Drop a Whopping 80%?Although Bitcoin does appear to be close to breaking above its aforementioned descending resistance line, it is important to note that a notable correction could be imminent.Peter Brandt, a highly celebrated analyst on Twitter, spoke about BTC’s current price action, noting that it could drop 80% if its current parabolic formation is violated.“If current parabolic phase is violated, we could expect either an 80% correction of 7-month advance or much smaller correction w/ definition of new parabola w/ shallower slope. $BTC Note formation of possible 2-wk H&S or H&S failure” he explained in a recent tweet.If current parabolic phase is violated, we could expect either an 80% correction of 7-month advance or much smaller correction w/ definition of new parabola w/ shallower slope. $BTC Note formation of possible 2-wk H&S or H&S failure pic.twitter.com/6IF1bHREAv— Peter Brandt (@PeterLBrandt) July 7, 2019Keeping Brandt’s analysis in mind, it does seem as though a correction is imminent, but only time will tell as to whether or not it will be a healthy correction that fosters long-term growth, or if the bear market will once again be back in session.Featured image from Shutterstock.
Archives for July 7, 2019
Major Latin American social network Taringa! revealed the launch of a new crypto-centered community in an attempt to reinvent itself after 15 years of setting trends in the Hispanic market.
The announcement came this week at Blockchain Summit Latam, held in Mexico City, and previews a holistic change of philosophy in which decentralized technologies will now play a fundamental role.
“Taringa! Pioneros is the pilot program towards the path of decentralizing Taringa! from Taringa! ‘portal’ to Taringa! ‘network’. Make the transition from an online community —a traditional model with a single site company— to a decentralized platform where content can appear on different channels.”
Taringa! is joining its much larger rival Facebook in making a strategic entry into the crypto space. Source: Twitter/Blockchain Summit Latam
Since its launch in 2004, Taringa! positioned itself as one of the most popular sites for interaction between netizens, becoming one of the first Spanish-speaking Web 2.0 sites in the world — even before Facebook and Twitter popularized this term. In 2013 and 2014 comScore ranked it as the third most important social network in Latin America and Argentina’s number 2.
The platform used a system to determine the reputation of each user, awarding points for the popularity and interactions generated by each post. Subsequently, the user could give those points to others as a reward for their contributions, and while the points had no other purpose than to increase the reputation – and ego – of the contributors, the community took the system very seriously.
Taringa! Trusts in The Power of Crypto to Reinvent Its Whole Business Model
— Taringa! (@taringa) July 5, 2019
Aware of the success of its reputation system, the platform hopes to add value to these points by harnessing the power of blockchain technologies. This week, the Taringa! team announced its partnership with MakerDAO and Airtm to create a pilot program called Taringa! Pioneros which would monetize those points into DAI.
The social network has been flirting with the idea of creating a proprietary cryptocurrency since 2017, and back in 2015 an experiment with a revenue distribution system in Bitcoin was already underway thanks to a partnership with Xapo. The program grew so fast that it exceeded the platform’s capabilities. This is how Hernan Botbol, founder of Taringa! explained it to the Latin American news site Criptonoticias last year:
“In 2015, together with Xapo, we integrated an income distribution system with which we pay users a percentage of the profits generated by the posts they make, in bitcoins. The program started in a beta version to which we had 35,000 members, but we decided to stop it because we realized that it had certain technical difficulties … Right now we have a small group of 2500 members on the program.”
The platform lost some popularity after it had to delete all the pirated content posted by its users, due to a series of legal controversies that sparked heated debates about the liability of intermediaries in the distribution of content — similar to the discussion generated by the experiences of Ross Ulbricht and Kim Dotcom.
Hope still burns strong in me that I will breathe free air again.
Please sign my petition for clemency if you haven’t. Who is one person you could share my cause with and encourage to sign?https://t.co/jCq6tmcxsr
— Ross Ulbricht (@RealRossU) March 7, 2019
The Road Toward Tokenization
Taringa! Pioneros will use DAI, a stablecoin created by MakeDAO. Users will then exchange the crypto for fiat via Airtm. This way, Taringa! can experiment with crypto without the risks of creating a proprietary token – as Facebook chose to do with its Libra cryptocurrency.
Will the tokenization of reputation be the future of content sharing sites and social networks? Nobody knows for sure, but it seems more evident every day that crypto can play a role in virtually every 21st-century industry.
Even since Bitcoin (BTC) hit $13,800 to then retrace by $4,000, the cryptocurrency market has slowed. Don’t get me wrong, volatility is still rife in this market, but BTC’s range is starting to tighten.As of the time of writing this, Bitcoin sits at $11,200, down around 2% in the past 24 hours — a far cry from the 10% to 20% days seen last week.Related Reading: Bitcoin Fun Fact: Tony Hawk Has Been HODLing Since Sub-$1,000 BTCWith this extended bout of slower price action, analysts have been wondering what comes next for the cryptocurrency. A prominent trader recently provided an answer, issuing a simple analysis to explain what comes next for Bitcoin and its ilk.What’s Next for Bitcoin? In a recent tweet, Dave the Wave, a popular analyst, claimed that Bitcoin is about to see somewhat of an ultimatum.He remarked that per his logarithmic chart and parabolic and simple trend lines, BTC needs to soon break past around $11,600 on the daily to “resume its parabolic rise.” Such a move would mark the cryptocurrency breaking past a declining trend line that has acted as resistance since last week’s blow-off top.Should the parabolic rise continue, Bitcoin could hit $14,000 by the middle of July, which is just over a mere week away.BTC needs to break out here if its to resume its parabolic rise… otherwise some healthy consolidation…. pic.twitter.com/5LUDPMHy7E— dave the wave (@davthewave) July 7, 2019If this doesn’t soon occur, Dave suggests that Bitcoin will enter a period of consolidation, a period that will be defined by a parabolic trend. According to a chart published by him, such consolidation may see the cryptocurrency range between $8,000 and $11,000, which some would define as healthy price action.And according to another analyst, Teddy Cleps, the latter, more bearish scenario has a high likelihood of playing out.Related Reading: Bitcoin Still in Bull Market Territory as Gold Plummets; Will Growing Economic Stability Slow BTC?Taking the price from an objective standpoint, only considering technicals, Teddy recently remarked that the $14,000 range has acted as “strong AF resistance” in 2017 and 2018.He adds that every time Bitcoin tried to break past it in early-2018, what followed was a heavy break down, during which BTC often lost dozens of percent and thousands of dollars in the days that followed.#bitcoin – $BTC*looking at this purely based on TA – fundamentals aside ☝🏻(2017)
Level A rejected price for 8 weeks = strong af resistance(2018)
Level B rejected price for +200 days, every test was followed by strong fall(2019)
Level A has been rejecting price for 3 weeks pic.twitter.com/xd5oZTCmRo— TEDDY 🌐 (@teddycleps) July 7, 2019Teddy concludes that unless Bitcoin manages to break through $11,700 convincingly, a return to $6,000 is entirely possible. This pseudo-call is somewhat similar to Dave’s analysis.Featured Image from Shutterstock
Quietly, subtly, and without contest, Ethereum is currently under a sustained attack that has been ongoing for months.
Long considered the king of the dApps, Ethereum is the one that other blockchain platforms seek to dethrone in their own attempts at ascension. Hence the well-known term – Ethereum Killer – which is often self-applied by ambitious crypto projects looking to punch above their weight.
While those punches have thus far failed to land, it looks like Ethereum is now being assaulted on a completely different front by an unexpected foe: Binance.
The Binance cryptocurrency exchange now apparently refuses to list new tokens against ETH on its platform, and in some cases has even removed ETH trading pairs. That’s while Binance Chain continues to entice Ethereum-based projects to migrate to its blockchain – with the promise of an exchange listing they would never otherwise have had.
Is Binance quietly trying to make Ethereum an “un-crypto?” Let’s review the available evidence.
Binance Goes Cold on Ethereum
Binance seems to be hitting Ethereum where it hurts: altcoin trading. | Source: REUTERS / Darrin Zammit Lupi
The Binance official announcement blog details new coin listings going back the previous several months. During that time, many new coins have been added to the Binance exchange. Some of those were launched on Binance Chain, and others moved there from Ethereum.
The earliest example we have is the listing of Ontology Gas (ONG) on February 15th. As per the announcement, ONG/BNB, ONG/BTC, and ONG/USDT trading pairs were launched.
The next coin listing came on March 23rd, when Celer Token (CELR) – a Binance Launchpad project – was listed on the exchange. Once again, we have CELR/BNB, CELR/BTC, and CELR/USDT trading pairs.
Just bear in mind at this point that Ethereum is the second most traded cryptocurrency (excluding Tether) in the world, and has been for a very long time.
Next, we have the listing of Cosmos (ATOM) on April 28th, where again the token is launched with the same BNB, BTC, and USDT trading pairs. Still no sign of Ethereum as we wade through more recent listings up to the present.
Out With the ETH, in With the New
All this time, all these new listings, and still no sign of Ethereum. Being the second most traded cryptocurrency in the world, why wouldn’t an exchange want a piece of all those ETH trading fees?
Yet not only has Binance declined to entertain ETH trading for newly listed coins, but it’s also even gone so far as to remove it as an option. On May 20th, Red Pulse Phoenix (PHX) (formerly of the NEO platform) migrated to Binance Chain and immediately had its PHX/ETH pair removed.
When PHX was rather gaudily rebranded into Red Pulse Phoenix Binance (PHB), it was relaunched with new trading pairs, as per this announcement:
“Additionally, Binance will open trading for PHB/BNB, PHB/BTC, PHB/USDC, PHB/TUSD and PHB/PAX trading pairs at 2019/05/24 04:00 (UTC). Once trading opens, the previous PHX/BNB, PHX/BTC and PHX/ETH trading pairs will be removed and delisted.”
All of this comes six months after the ETH ticker that sits atop the Binance trading page was removed, and replaced with the label, “ALTS” – denoting altcoins in general.
Despite evidently giving Ethereum the cold shoulder, Binance founder and CEO Changpeng Zhao (CZ) denies any ill-will on his part. CZ has stated publicly that he wishes to see Binance and Ethereum “grow together.”
— CZ Binance (@cz_binance) April 22, 2019
When it was put to CZ that the launch of Binance’s own decentralized exchange stood as a challenge to Ethereum’s DEX dominance, he shrugged off the suggestion:
Thanks for the nice article! But almost too supportive. lol. @Binance_DEX does not challenge Ethereum, it doesn’t even have smart contracts. It challenges ourselves, exchanges. 🙂
— CZ Binance (@cz_binance) April 18, 2019
CZ’s polite public persona is in stark contrast to that of the founder of Ethereum, Vitalik Buterin. Buterin has been ringing alarm bells about the overwhelming centralization of power by crypto mega-exchanges for some time. As the largest exchange in the world, Binance defines that category.
Buterin recently referred to Binance’s sudden delisting of Bitcoin SV (BSV) as one in a long line of examples of the arbitrary exaction of power:
“They’ve asked for big listing fees. They influence which coins win and lose by deciding which trading pairs they have – so it’s weird to criticize that one decision (the delisting) without looking at all their others.”
Motive: Why Would Binance Assault Ethereum?
While most don’t want to rock the boat, Buterin is one of the few crypto personalities to openly criticize exchange listing fees. Binance was not named directly; however, the exchange has previously been accused of such bribery by a respected, community driven (not rich) cryptocurrency project (Binance denied the allegations and has since begun donating listing fees to its charity).
Buterin has decried the “king-making” power of these trading platforms in the past, saying in 2018 that he “hoped centralized exchanges burn in hell,” adding:
“We can really take away this stupid king making power that these centralized exchanges have where they have this ability to just decide which tokens become big by deciding to list them and then charging these crazy $10 million to $15 million listing fees. The more we can get away from that world and into something which actually satisfies the blockchain values of openness and transparency the better.”
Could CZ’s quiet deletion of Ethereum pairs from his trading platform be an act of petty revenge in retaliation against such comments?
The King is Dead; Long Live the King
Or could it be something far more devious?
The strategy: Offer projects the chance to migrate to Binance Chain, give them juicy trading pairs on the largest exchange in the world, and benefit from all the new network fees, and trading fees.
Meanwhile, slowly strangle access to ETH trading pairs and funnel all newly listed tokens towards your own Binance Coin (BNB).
Rather than petty grudges, this would seem a more likely motive for the current assault Ethereum finds itself under. And of course, the foundations and companies behind the projects which migrate to CZ’s chain must naturally be made aware that they won’t be given ETH trading pairs. None have spoken publicly about this so far.
In short, the Ethereum Killer might really be here, and its name is Binance.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
In light of Facebook’s upcoming Libra coin, European Central Bank (ECB) Executive Board Member Benoit Coeure is reportedly urging financial regulators to create a viable framework for crypto projects.
According to Coeure in Southern France, where an economic conference is taking place, the growth of the crypto industry is exposing the flaws of the existing regulatory landscape as well as the “failure of the banking system to adopt new technology,” Bloomberg reported. Coeure added:
“All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things.”
The ECB executive board member argued that it is “too dangerous” to allow tech giants like Facebook to “develop in a regulatory void for their financial service activities,” adding:
“We have to move more quickly than we’ve been able to do up until now.”
Europe to become crypto-friendly
Coeure’s positive stance could be the first step for the European Union on becoming a crypto-friendly region.
CCN previously reported that IMF Managing Director Christine Lagarde was nominated to become the new head of the ECB. Lagarde has been known for her positive statements on crypto, stating once that digital currencies will cause “massive disruptions.”
— The Gringe 🏴 (@Roj6836) July 4, 2019
Being pro-cryptocurrency, Lagarde argued that regulations around the crypto industry are inevitable. However, regulators have to keep an open-mind when building such frameworks.
“Policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit,” she said.
According to Lagarde – similarly to the dot-com companies that survived that crash – the cryptocurrencies that stay with us will have a substantial impact on the financial system.
Libra puts regulators under pressure
Prior to Libra’s expected launch in 2020, regulators around the world are experiencing high pressure to create a framework around cryptocurrencies to lower the potential dangers of the tech giant’s ambitious project.
Due to the regulatory pressure, the Internal Revenue Service (IRS) is expected to update its 2014 guidance on digital currencies, The Wall Street Journal reported.
According to the report, a bipartisan group of 20 lawmakers urged the IRS to change its terms to solve the gloomy legal issues surrounding the U.S. crypto industry.
Lawmakers are considering at least three bills to provide regulatory clarity for cryptocurrencies that would potentially result in the growth of the sector in the U.S.
On Wednesday, Congress members demanded Facebook to “immediately cease” its work on Libra until lawmakers and regulators have analyzed the risks and the benefits of the company’s upcoming cryptocurrency.
The House Financial Services Committee has a hearing scheduled on July 17 on Libra, and Facebook has already announced that the company is willing to work with Congress.
After lobbying to get the country out of the SWIFT system, the U.S. now seems to have its eyes set on the recent interest of Iranian citizens in crypto-mining as a productive activity capable of evading the financial sanctions imposed against their country. The U.S. is making it difficult for Iran to get its economy off the ground.
Iran is a Paradise for Crypto Miners, but Miners Are a Nightmare For Iran
Iran is one of the countries with the cheapest electricity in the world. Statistics from Global Petrol Prices reveal that while 1kWh costs on average $0.14 in the U.S., Iranians pay about $0.03 thanks to a government subsidy.
Low energy costs make mining extremely profitable. In the latest months, the activity has grown so much that the country’s infrastructure is suffering the consequences of a growth in consumption higher than the power generation capacity. Speaking to Mehr, Ali Akbar Karimi, a member of Iranian Parliament’s Economic Committee, shared his concerns while urging the government to redouble its efforts to regulate this activity:
“Mining cryptocurrencies has become a common and widespread activity in Iran, and it consumes considerable power which has caused problems for the country, especially in the hot season.”
This problem has led Iranian officials to combat mining with measures such as power cut-offs and direct confiscation of mining equipment
“Rajabi said the power for mining each Bitcoin equaled the power used by 24 residential units for an entire year”, Bitcoin is not just a dystopian project in its premise. It’s also an active participant in bringing about that dystopia via climate change. https://t.co/VWiNckRlzQ
— DHH (@dhh) July 1, 2019
Is All of This Part of a Major Agenda?
If Mr. Zarandi’s suspicions are correct, Iran may be just a piece in the geopolitical and commercial chess game the United States and China are playing right now.
China’s government has not shown official interest in promoting BTC mining. The Chinese private sector, however, migrated to Iran to take advantage of its low energy costs and enjoy better benefits from crypto mining, according to Iran’s Minister for Communications and Information Technology, Mohammad Javad Azari Jahromi, on PressTV.
“A major part of cryptocurrency mining used to be done in China before Iran became attractive for miners …The Chinese government has no plan to be present in the field of cryptocurrency mining in Iran; however, China’s private sector and people may have been involved in this area.”
To this possible boycott, we must add other actions that have strongly harmed the cryptocurrency community in Iran. A little over a month ago, Localbitcoins announced that it would not allow Iranians to use its platform; likewise, at year-end 2018, Binance and other exchanges also withdrew support for the Iranian citizens, complying with the unilateral sanctions imposed by the U.S. government.
Iranians Want to Move Forward
Despite the setbacks, the Iranian government is optimistic and confident that cryptocurrencies can help provide a better future for its citizens. Earlier this year, the government announced the launch of a gold-backed stablecoin and it seems that its citizens also share this interest. Several enthusiasts have shared a variety of projects to promote the ecosystem, with proposals as impressive as that of a skyscraper in the middle of the desert hiding a mining farm cooled by a waterpark.
Concept image of a mining farm/waterpark/skyscraper | Source: Designboom
Currently, several ministries are working together with the Central Bank of Iran to regulate the local crypto ecosystem, attacking different angles such as mining, transactions, and economic obligations.
New York University professor and staunch bitcoin critic Nouriel Roubini is threatening to sue BitMEX, a global cryptocurrency exchange.The renowned economist lambasted Arthur Hayes, co-founder & CEO of BitMEX, for releasing a doctored video of a debate featuring the two. He alleged that Hayes, who owns the rights to the footage, neither permitted the organizers of the Asia Blockchain Summit in Taipei to stream the discussion live nor allowed the audience to record it. Hayes instead kept the video under wraps and tweaked it to fit a pro-bitcoin narrative before issuing it to media. The allegations read:“Arthus Hayes is the biggest a***ole, jerk, manipulator, and criminal in the world. He is sending to select media a doctored edited highlights video of the debate to make me look bad cutting off all my points. I will sue them. This is sick criminal behavior. Will not pass you, coward.”@CryptoHayes is the biggest asshole, jerk, manipulator and criminal in the world. He is sending to select media a doctored edited highlights video of the debate to make me look bad cutting off all my points.I will sue them. This is sick criminal behaviour.Will not pass you coward— Nouriel Roubini (@Nouriel) July 5, 2019A Vulgar StandoffA transcript of the debate published by Mike Dudas of the Block revealed a rather crude standoff between Roubini and Hayes, wherein both exchanged ‘below-the-pants’ insults. Roubini accused the BitMEX CEO of running a “sick and wrong” cryptocurrency exchange that engages in insider trading, avoids regulatory protocols, and tricks unaccredited investors into losing millions of dollars.“These people don’t give a shit about anything […] they make money off gambling,” Roubini criticized.In his response, Hayes clarified that BitMEX remains a regulated platform under the laws of Seychelles. The CEO criticized Roubini for making personal remarks, adding that it is not something a professor of a reputable institution should do on a public platform. Hayes went on responding to Nouriel’s claims wherein he accused BitMEX of bribing the Seychelles authorities to run their so-called scam, stating:“Roubini may think that NYAG and NYDFS is the only game in town, and we should take a** fucking from them. I got out of that situation. I don’t think everyone needs to follow the US.”Post DebateA day after the debate, Roubini took Hayes on Twitter for controlling the only recording of the discussion. The economist claimed that he had emerged as a winner, which is why a “coward” Hayes refrained from releasing the full tape.“He didn’t allow the blockchain conference to record our debate or beam it live,” said Roubini on July 3. “He controls the only recording of it and will only release heavily edited “highlights”. I destroyed Hayes in the debate and he is hiding. RELEASE THE TAPE, YOU COWARD!”BitMEX released a teaser video of the debate on Sunday, reflecting upon a narrative that showcased Roubini in a rather irritating mood and using the term “shitcoins” over and over again. On the other hand, the video portrayed Hayes as a more relaxed participant, throwing away a few smirks in response to Roubini’s criticism.[embedded content]
Since June 26, within the past three weeks, the bitcoin price has declined from $13,868 to around $11,200 by 20 percent against the U.S. dollar.
After recording a 250 percent increase in value year-to-date at its yearly peak, a pullback for bitcoin was generally anticipated by traders.
Following its 20 percent decline, fundamentals for the dominant crypto asset remain strong as seen in its hash rate achieving an all-time high.
What does all-time high bitcoin hash rate indicate?
Since January 2019, the hash rate of the Bitcoin blockchain network has increased from around 35 exahash to nearly 75 exahash, achieving an all-time high in about ten months.
Up until December 2018, bitcoin mining was not profitable for most miners, even for large institutions running large-scale centers with long term commitments for cheap electricity.
As the bitcoin price began to spike in April and eventually achieved a yearly high at around $14,000, the hash rate of the Bitcoin blockchain network surged, doubling in merely three months.
The spike in the hash rate of a blockchain network is often considered an important indicator of strength because hash rate represents the amount of computing power that protects the network.
A consistent increase in the hash rate also indicates that a growing number of miners are committing more resources in mining the asset, suggesting that miners anticipate the bitcoin price to increase over the medium to long term.
Speaking to CNBC’s Fast Money, BKCM CEO Brian Kelly stated that miners he spoke to said they have acquired enough capital to fund their operations throughout the upcoming year without selling bitcoin, expecting the network to undergo a block reward halving in May 2020.
“I’ve talked to a lot of miners around the world, a lot of them have said they have sold enough bitcoin to get us through the next year or so and we are going to hoard bitcoin at this point in time and we are not going to sell it and the supply of bitcoin will get cut in half. Just real simple economics: lots of demand hitting little supply, price goes higher,” Kelly said.
When a proof-of-work (PoW) blockchain protocol undergoes a block reward halving, the rate in which its native crypto asset, which is BTC in the case of the Bitcoin network, is reduced by half.
As such, upon the occurrence of halving, the circulating supply of bitcoin at conventional exchanges and over-the-counter (OTC) exchanges drops, which historically has acted as a catalyst for bitcoin and the rest of the crypto market.
Halving is the next big narrative
There are several solid fundamental factors in the likes of rising hash rate, a growing number of trading venues, and increasing inflow of institutional capital that are considered as potential catalysts of bitcoin.
But, as the market nears the end of 2019, the narrative of the block reward halving is likely to strengthen, which studies done by investment firms such as Grayscale have found that many investors are not aware of.
“The halving is close enough that it’s time to start talking about it more seriously, but far enough out in the future that it’s unclear whether it’s priced into the market efficiently. In fact, based on anecdotal conversations with market participants, we were surprised to learn that many of them were not even aware of this event,” a Graysacle report read.
Click here for a real-time bitcoin price chart.
Steven Sprague is one of the principal industry evangelists for the application of trusted computing technology. Steven served as president and CEO of Wave Systems Corp. for 14 years before transitioning to the board of directors.
Recently, Facebook launched Libra with the stated goal of “transforming the global economy.”
It’s a lofty aim. However, after a review of the technical documentation describing the Libra protocol and its planned ecosystem, I believe the company left out the foundational components of user security.
- Protection of the private key
- Proof of user consent
- Decentralized compliance
- Global privacy
It is our job as technical leaders to provide a vision and an architecture for integrating real protections and evidence into the consumer experience; to deliver a new model for provable compliance that reduces cost and sets the stage for global automation.
The “Internet of Money” must support a primary goal of ensuring all transactions on the Libra network are purposeful, intended and compliant. I envision a future where the quality of recorded intent for an online transaction is just as strong, if not stronger, than the quality of physical in-store purchases.
The Internet of Money should be cross-border, open and global. It should carry transactions from everyone and everything. In order for this to be possible, groups or communities will need to be formed around the compliance and controls required. Proof that these controls were in place should be part of every instruction sent to a chain and forever be recorded by the math of the blockchain. Those who need to know can then be provided the evidence for proof of compliance.
The new model for consumer compliance should operate like a doctor’s note does today. A trusted third party parses my child’s real-time health data and provides a compliance result to the school, resulting in my child having an excused absence for being sick. If schools used the same model of compliance that the internet does, they would have direct real-time access to childrens’ medical data and use AI to decide if your child should stay home or not. The decentralized model of permission slips enables a global market to flourish with privacy built in.
I believe the permission slip on the blockchain is a hash of the manifest of controls executed before an instruction is sent to the chain. The manifest is a Merkle tree of controls, assuring every step is provable with just the evidence of the hash. The power of the Merkle tree reduces the evidence to just a few bytes, easily packaged within a transaction.
The manifest can then be securely shared to the receiving party or to those who need to know the full evidence of required controls.
Global money, group-based compliance
Whether or not Libra succeeds in its mission to deliver the “Internet of Money,” cryptocurrency represents the ability to have borderless money that can rely on real-time transaction-based compliance.
There may ultimately be only a few global currencies with immutable transactions, however, there will be an infinite number of groups built around compliance at differing levels, establishing global cross-border commercial virtual networks built to conduct secure and provable business in a specific market.
The privacy and auditability of commercial networks are important, and the “Internet of Money” needs to provide an open platform that can meet everyone’s needs. The use of a smart instruction to provide provable evidence of identity, compliance, and controls, offers a flexible and scalable model.
The evidence of compliance can be securely shared.
Decentralized controls are in the hands of the owner of the private key, offering multiple isolated services to meet the market and regulatory requirements. By separating the identity controls and compliance, it provides the marketplace with the choice and competition needed to drive innovations. The cornerstone is then laid for automation and AI-based systems to provide monitoring and evidence-based compliance with reduced need for any real personal identifiable information or data leakage.
Governments and regulators will still maintain the access they need to enforce the rules and reporting requirements in place.
Who really controls your keys?
In cryptocurrency, we can sometimes lose our way. In an attempt to make services easier to use, we put the user’s keys in a server or other centralized storage system to allow for an easier experience.
However, in the spirit of innovation, I believe we have to throw away the old forms of customer protections in order to revolutionize a desperately outdated system.
Storing the keys locally and creating opportunities for any consumer to use multiple devices to backup, recover, and assert their keys, is the first step toward progress.
In Libra’s proposal, what struck me also was the lack of redundancy for the storage of the private key. It is our job to minimize the risks created by the supply chain. In order to maximize user protections, private keys should be stored and used in a manner which minimizes the impact of security subsystem failures.
I believe the consumer will require multiple redundant protections for the private key.
As an example, Rivetz has partnered with Telefonica to develop the C.L.I.P. program which defines and promotes a method of cryptographically combining multiple hardware elements to offer separate supply chains for protections that are used cooperatively to secure the consumer’s private key.
A call for safety
The future is decentralized and the technologies of blockchain will usher in the “Internet of Money.” Secure devices and trustworthy computing will provide users with the protection, compliance, control, privacy and freedom they need for the digital future. Private compliance communities will provide digital evidence on a need to know basis.
As an industry, I hope that we can come together to deliver true consumer protections to every digital citizen. Great security is invisible, and we can deliver a simpler and safer experience for all.
Sprague has published a full-length white paper on Libra and Calibra security. It can be found here.
Keys image via Shutterstock
If you ever wanted to quantify the strength of a trend based on its volume levels – as well as the degree of buying and selling pressure – there’s a handy indicator that can help you do the job.
The Chaikin Money Flow (CMF) is an indicator, created by Marc Chaikin, that’s used to analyze Money Flow Volume over a specific “lookback” period of time, usually 20 or 21 days.
The concept of Money Flow Volume (MVF) is a variable used in the calculations by Chaikin and measures the buying and selling pressure of an asset over a single period. In order to calculate money flow, one must first determine the Money Flow Multiplier used in the overall equation.
To calculate the Money Flow Multiplier for a period:
[(Close – Low) – (High – Close)] /(High – Low) = Money Flow Multiplier
Money Flow is defined by multiplying the Multiplier with the volume for the current period:
Money Flow Multiplier x Volume for the Period = Money Flow Volume
Thankfully, you don’t need to do the equation every single time, as charting websites like TradingView can do it for you.
The Chaikin Money Flow
The CMF’s value fluctuates between 1 and -1, with the basic interpretation that when the CMF is closer to 1, buying pressure is higher, while, conversely, when below 0 and closer toward -1, selling pressure is higher.
What to watch for
The chart above shows that from period Jan. 6 to Jan 9. 2019, prices began to retrace after a slight rally occurred the day prior.
But with a triggered sell-off along the $4,000 former support zone, the CMF illustrated a huge pickup in selling pressure and confirming the bearish move as legitimate and extensive.
Indeed, savvy investors could have used the CMF to gauge the swift rejection at the neutral zero-line, conserving 9-10 percent of their investment in the process.
A bull or bear cross with the CMF simply means a crossover above or below the neutral zero-line when the indicator begins to move and switch from one zone to the other.
Recent price action shows a dip below 0 as it crossed into negative territory amid a minor sell-off, indicating that selling pressure is greater for that current period and the possibility for dipping lower is increased.
However, the CMF isn’t always perfect and only posts information after a major move has occurred, allowing one to simply confirm its placement in terms of momentum and volatility.
And while it is useful on all time frames, the CMF functions optimally in analyzing longer-term trends.
Here we see the RSI providing a fairly lackluster reading on Dec. 31 of 31.54 combined with the bearish cross on the CMF as price made no new highs after temporarily attempting to rally higher.
Once the CMF reaches the bottom of the range, selling pressure is at its greatest extent and if no further drawdown is achieved then you may consider prices to be stabilizing at those current levels.
But there are limitations…
The Chaikin Money Flow faces limitation in the aforementioned Money Flow Multiplier as it does not take into account the change in a trading range between periods, meaning any price gaps on the chart won’t be picked up and will fall out of sync until an eventual reset or a reconfiguration of the values.
When combined with other indicators, however, the Chaikin Money Flow can be a useful tool for measuring the buying and selling pressure of a particular asset over a specified timeframe and could save you potential losses in the future when used in conjunction with other noteworthy signals.
Disclosure: The author holds no cryptocurrency at the time of writing.
Waves image via Shutterstock; charts by TradingView