Cryptocurrency market and news round-up 23 January
Markets took a little tumble in the early hours of today, wiping about $2 billion off the market in a sudden move. The good news though, is that the bulls came out in force, and the market quickly rebounded to reach a new 24-hour high following the sell-off.
The overall market cap is now sitting at around $120 billion.
As usual, bitcoin's price has mimicked the wider market trend with a sudden dive and recovery, and it has now reached a new 24-hour high of $3,600. Volatility still remains extremely low though, with prices moving by barely more than $60.
In fact, things are so quiet this week that bitcoin is now in its longest period of range-bound price activity in three months. Prices have failed to move by more than $200 since January 11, which is the longest period of low volatility since late October.
At the other end of the market, though, is Loopring, the decentralised exchange protocol, which has had a cracking day with a 40% upswing, taking the ERC20 token up to 9.7 cents. Trading against the Korean won is making up the majority of the volume – around $16 million worth in the past 24 hours. This is likely due to Loopring being re-added to the Korean exchange Bithumb two days ago.
Looking into the top 20 coins by market cap, things are relatively flat, with Tron's TRX coin leading at a gain of 5% on the day, setting a new weekly high of around 2.6 cents for the currency. This is possibly due to Tron's NiTron summit which wrapped up last week.
The two-day summit featured more details about BitTorrent's integration into the Tron network, and upcoming token sale. The BTT token will be a utility token that will allow BitTorrent users to pay for faster download speeds on the network, accessing a "fast lane" of sorts.
Then there was Tron CEO Justin Sun outlining his vision for the platform in 2019. This included existing blockchain products such as collectible games like Everdragons – a game that looks an awful lot like Cryptokitties – as well as grandiose claims that Tron would soon support 2000 dapps by the end of the year, despite currently claiming to only have 145.
There was even a celebrity appearance by NBA-legend-turned-venture-capitalist Kobe Bryant.
Binance launches new fiat on-ramp
Binance has launched a brand new fiat gateway and exchange named Binance Jersey. The exchange can process the British pound and the euro, which you can exchange for BTC or ETH.
The exchange is jurisdictionally located on the small and obscure island of Jersey, which is located in the English Channel between Britain and France.
If you've never heard of Jersey before, I don’t blame you. It is a "nominally independent island", which means that it governs itself, but still remains attached to the English crown.
So basically this means that it can be used as a gateway to British and European markets, while remaining somewhat independent from the laws and oversight of the UK. The exchange is also technically a separate entity to Binance, although it is built and managed by the same team.
Speaking with CoinDesk, Binance CFO Wei Zhou said:
"Binance selected Jersey for its highly developed digital infrastructure, robust regulatory framework, and world-class financial services sector"
Binance Jersey is Binance's first fiat gateway for a major currency, and it follows the launch of their first fiat gateway in Uganda earlier this year, which supports the Uganda shilling.
Rumours about hacked KYC/AML data for sale
The latest piece of news on the crypto rumour mill is that someone on the dark net is claiming to be in possession of more than 100,000 AML/KYC documents that they stole from exchanges. The data is allegedly up for sale from the hacker, and even though the news is just breaking now, the ad appears to have been up since around July last year.
The ad claims to be selling data that contains identity documents, as well as photos of the users, taken from major exchanges like Binance, Bitfinex and Poloniex. Fortunately, the whole thing looks as though it might be the work of a con-man, rather than a legitimate hacker.
It's highly unlikely multiple breaches of that size would go unnoticed by the world’s largest and most secure exchanges, and each exchange maintains that no breach has occurred.
Furthermore, the data is being sold for a relative pittance, which further suggests that there is nothing of actual value, other than a few photoshopped documents. So while the authenticity of the data breach cannot be confirmed, what it does do is highlight the massive issues that centralised exchanges still face.
Centralised exchanges often require compliance with extensive Know Your Customer and Anti Money Laundering laws, which require users to hand over highly sensitive data, such as passports, facial photos, driver's licences, address details and more. This is because centralised exchanges must operate as a business within a specific jurisdiction, and depending on the jurisdiction, they must abide by certain laws.
In and of itself that is not such an issue, but the real issue is that, despite being part of the blockchain ecosystem, which is built on decentralisation as a means of security, often this sensitive data is still being stored on a centralised server. Not to mention the fact that blockchains and private key cryptography are also really fantastic and secure ways of giving people ownership of their personal data.
So the fact that this is still happening in 2019, after a decade of blockchain innovation, is really quite frustrating. Fortunately, solutions to these problems are being built, but we're still a while away from them catching on in the mainstream.
0x DEX struggling to get off the ground
Decentralised exchange and protocol 0x is having to lure market makers to its decentralised exchange because trade volume is too low.
0x is offering up to $15,000 to market makers who can provide sufficient liquidity to the decentralised marketplace.
Market makers – those who provide liquidity to markets in the form of providing assets to actively buy and sell – have several rewards available. The first way to earn a reward is by fulfilling at least $1,000 worth of market orders in two weeks, through the use of trading bots.
This can get market makers a whopping $5,000, which seems like a steep reward for a relatively low investment.
But this is because market makers need a solid working knowledge of both Ethereum and 0x to get started, so the reward is really an incentive for them to educate themselves and invest in the 0x ecosystem.
Following that, market makers then earn another 10k by lending long-term support to the platform, as well as submitting to an interview with 0x management. The move isn't a bad one, but it does highlight the difficulties in bootstrapping an entirely new type of marketplace.
The cost of doing business in the US
As the 0x story shows, running an exchange has a lot of back-end and hidden costs that users aren't really aware of.
This week, two of the US's biggest exchanges, ShapeShift and Kraken, have shown just how expensive the cost of doing business in the US is. They're pulling back the curtain to show that due to constant subpoenaing by law enforcement authorities such as the FBI and Homeland Security, the cost of operating an exchange sometimes just isn't worth it.
Which is why viewers in the US are probably very familiar with the following scenario: You find an exchange you want to trade on, you go to sign up, but then you find out they don't service US customers, even though the rest of the world gets the green light.
And of course, you ask yourself why.
Well according to Kraken, the number of subpoena requests in 2018 tripled from 160 in 2017 to 475 in 2018.
Subpoenas are compelling legal requests, made by law enforcement authorities, which have to be handled by legal and compliance teams. They usually require companies to hand over documents, materials, customer data and any other type of evidence required. This, of course, makes them very time-consuming and expensive to process.
Take a look at this graph from Kraken (above) and consider that 66% of those 475 requests in 2018 were from US agencies.
Now consider that each request can take up to two weeks to process.
Furthermore, the agencies requesting them include the FBI, the Department of Justice, the DEA, the IRS and pretty much every major US agency except the CIA and the NSA. Funnily enough, when asked why the CIA and the NSA weren't included in their stats, Kraken said:
"When you already have all the data, you don't need to request it."
So now you can start to get a picture of just how expensive, and stressful, operating in the US market can be.
After Kraken released their stats, fellow US exchange ShapeShift followed too.
Fortunately for ShapeShift, the amount of subpoenas is much lower, but so is ShapeShift's trade volume.
Kraken reportedly made around $78 million worth of trades in the past 24 hours, while ShapeShift did less than a percent of that, at $80,000.
So these numbers still look quite excessive even for a boutique exchange like ShapeShift.
2018 - Record year for hacks
Sometimes exchanges just can't cop a break.
According to analytics firm, CipherTrace, an incredible $927 million worth of cryptocurrency was stolen in the first three quarters of 2018. Forbes estimates that the amount was well over 1 billion by the time the year ended.
Incredibly, almost half of that figure was made up of the Coincheck hack in Japan, which occurred in January last year. During this hack, approximately $533 million worth of cryptocurrency was stolen, primarily in the form of NEM tokens.
The CEO of Ledger, writing for CoinDesk, estimated that in 2018, $2.7 million was stolen from exchanges on average, each day. That's $1,860 per minute. Even if you discount the one-off Coincheck hack, those numbers are still enormous.
BTC accidentally airdropped
There’s been news that a Korean exchange has mistakenly airdropped $5 million worth of bitcoin.
CoinZest had intended to airdrop We Game Tokens (WGT), when somehow an error led to bitcoin being airdropped instead. CoinDesk reports that CoinZest is citing it as a "server issue" and that some customers even got fiat Korean won as well.
The exchange is asking users to return funds voluntarily, as well as taking steps to roll back their servers to help automate the recovery of funds. According to CoinDesk Korea, the airdrop caused a flash crash in the exchange’s bitcoin markets, causing prices to drop as low as $50 per bitcoin, which is almost impossible to believe.
Can you imagine how lucky you would be to snag a $50 bitcoin? And how insane you would be to sell for that price?
But sure enough, here is a screencap of the markets from CoinDesk verifying the flash crash.
As you can see, the daily low in red is 55,000 Korean won, which at today's exchange rate is just a little bit less than $50, while the daily high was around $3,550
What's crazy is that when you look at the volume, it looks like that $50 bitcoin wasn't even a one off. There's actually a bit of substance there by the looks of it.
One year ago
Nothing in the world moves faster than the speed of cryptocurrency markets. Almost everyone you meet in this industry will say that three months here is like a year anywhere else. So use a time machine and have a look at what was happening one year ago today.
It was all doom and gloom over at The Guardian, which (very correctly) reported that economists were warning that bitcoin had a long way to fall, following recent price falls.
At the time, one bitcoin was trading for around $11,600. Not too shabby at all.
CNBC set more of an optimistic tone, instead focusing on the recent bounce, which actually saw bitcoin shoot up to that $11,600 mark from a recent low of $9,200.
We spoke of volatility earlier, and it's almost impossible to imagine it swinging like that again. The same CNBC article had Ripple in the middle of its famous moon mission, at $1.64 on the day, while Ether was busy swinging between $800 and $1000.
Outside of prices, rumours were abounding that South Korean regulators were going to shut things down. Which of course did eventually take place later in the year. Only for the regulations to be reversed not long after.
Now it's obviously easy to fixate on the halcyon days of bitcoin price, and suddenly feel sad when looking at today's markets. However if you can remember to push emotion aside, and let wiser heads prevail, then you might actually be really happy with what you see.
Twitter user Frogolocalypse has this to say:
Disclosure: At the time of writing, the author holds ETH.