カテゴリーアーカイブ: Digital assets

Sparkswap, World’s First Lightning Atomic Swap Exchange, Now in Beta

Sparkswap

Bitcoin’s first decentralized exchange to make use of the Lightning Network’s Atomic Swaps is now in beta.

Sparkswap, an exchange with backing from Pantera Capital (which announced its ambitious mission to become the most decentralized bitcoin exchange on the market in August 2018), has now opened its beta to users. Leveraging the Lightning Network, the exchange is non-custodial and trading is decentralized. Users will be able to execute buy and sell orders between each other directly and, thanks to atomic swapping, they’ll also be able to trade coins across blockchains.

“At no point can either Sparkswap or your counterparty deprive you of your assets — the trades either complete or they do not,” Sparkswap Founder Trey Griffith told Bitcoin Magazine. “We are also a venue for trading, not an over-the-counter service like ShapeShift, so users are trading with each other.”

For this mainnet launch, Sparkswap will only feature a bitcoin and litecoin trading pair, but it could feasibly support other atomic swap-friendly cryptocurrencies like decred, vertcoin or komodo. Griffith added that the exchange also has “plans to accommodate many other cryptocurrencies, including beyond Bitcoin Script-based projects.” The technology, Griffith said, can accommodate other payment channel networks that aren’t necessarily compatible with the Lightning Network, so long as certain criteria are met.

Sparkswap orderbook

To access the exchange, users need to download Sparkswap Broker, the exchange’s open-source software. This kit includes everything needed to bootstrap both a Bitcoin and Litecoin full node, as well as Bitcoin and Litecoin Lightning nodes for running payment channels. If you’re already running full nodes, then you’re free to use these, though Griffith said that, for now, the exchange’s inaugural users cannot leverage their own Lightning nodes or custodial Lightning services.

When we asked if the exchange will evolve to support other Lightning Network technology like Submarine Swaps in the future, Griffith said that the semi-on-chain nature of this technical trick doesn’t fit Sparkswap’s use case.

“Our focus is on making cryptocurrency trading fast enough for professional users without sacrificing Bitcoin support and self-custody,” Griffith said. “Submarine Swaps by their nature are on-chain for half of the transaction, so while they provide an important service for the network (as evidenced by Lightning Loop), they don’t fit the needs of the product that we’re building [or] our users.”

Debuting at the outset of 2018, the Lightning Network continues to enjoy increasing developer activity and impressive growth. With technical solutions, wallets and services proliferating, as well as community initiatives like the Lightning Torch, becoming some of the industry’s new favorite pastimes, Griffith believes that optimism has supplanted the doubt that used to surround the Lightning Network in the infancy of its construction. For him, Sparkswap harnesses both this positive outlook and the payment network’s great promise, and there’s not a better time to be working toward the future of Bitcoin.

“I’ve been building on Lightning since late 2017 when it was still ‘never going to ship,’ so from my perspective these projects and efforts have been under the surface for a long time, but are now finally breaking through,” Griffith said. “Lightning is certainly not a finished product, but it has a ton of interesting applications, including near-instant cross-chain swaps like Sparkswap, that I’m excited to see get built out and gain usage. Collectively, we’re building the infrastructure that is going to power a Bitcoin-based financial system, and that makes this a very exciting time to be in this industry.”

This article originally appeared on Bitcoin Magazine.

Tether Updates Website, Says USDT Backed by “Reserves,” Not Just Cash

Tether reserves.jpg

Tether just updated its website to clarify that each of its USDT tokens, which it used to claim were “always backed 1-to-1 with traditional currency,” are backed by assets other than fiat currency.

Now, the website instead reassures its patrons that it’s always “100% backed by [its] reserves.” It clarifies this vague language, even legalistic language, by saying these reserves “include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

Despite the fact that some of Tether’s collateral might not actually be in fiat, the revised notice concludes by saying, “Every Tether is also 1-to-1 pegged to the USD, so 1 USD₮ is always valued by Tether at 1 USD.” The older version read, “1 USD₮ is always equivalent to 1 USD.”

Tether’s statement that it values each of its tokens at $1 is not the same as saying that each token is backed by $1; rather, each token’s dollar value is instead derived from Tether’s valuation of its assets. This clarification will likely embolden Tether’s more staunch opponents, who have argued that Tether is insolvent. While there’s never been any evidence to suggest that Tether does not have the reserves to back the coins in circulation, the company has routinely refused to submit to a formal audit, opting instead for attestations from a law firm in the past.

This update seems to at least lend credence to these insolvency concerns, which have been most thoroughly vetted by researchers at the University of Texas at Austin who released a report with a thesis that hinges on the belief that Tether’s issuance inflated the market during the 2017 bull run. It should be noted that this report has been refuted by other academics who took issue with the professors’ methodology.

Still, Tether claims that there are more than enough assets in its coffers to cover circulating supply. On its transparency page, the company records that it has $23 million more assets under its name than liabilities.

“From time to time, Tether reviews its Terms of Service and Risk Disclosures to ensure that they remain appropriate and up to date. Our most recent revisions were intended to update our disclosures to reflect Tether’s growth and operations and to be consistent with the types of disclosures used by other institutions,” a Bitfinex team member told Bitcoin Magazine, responding on behalf of Tether.

“The only change is that the composition of the assets that provide that backing includes a combination of cash, cash equivalents, and may also include other assets or receivables from loans issued by Tether,” they concluded.

With the language presented on the website and by this representative, Tether’s assertion that its backing may include “cash equivalents” and “other assets and receivables from loans made by Tether to third parties” reads like fractional reserve banking practices. This modern banking practice, which some believe helped to precipitate the 2008 financial crisis, allows banks to hold only a portion of its customer deposits on site, opting instead to loan the overwhelming majority of these funds to institutions and generate debt in place of physical assets.

“Fractional reserve banking is a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties,” Investopedia explains.

The fear of many Tether detractors is that the company is running a fractional reserve, a concern that was aggravated by the apparent inability to redeem USDT for cash through Tether’s website or Bitfinex, an exchange run by the same management as Tether. Tether’s cash portal, however, has reportedly been up-and-running since late 2018.

Given that the market’s largest stablecoin has been so opaque in its operations, the controversy surrounding Tether has provided fertile ground for competition. Through 2017–2018, there was a proliferation of fiat-backed stablecoins like TrueUSD, Gemini USD, USD Coin and the Paxos Standard, all of which are attempting to be an institutional and regulation grade alternative to the market’s first fiat stablecoin.

To bolster their credibility, the companies behind these coins have employed some of the U.S.’s top accounting firms to run an audit of their business and finances, something that Tether’s own executives have called impossible in the past, given the stigmatized nature of cryptocurrency companies.

This article originally appeared on Bitcoin Magazine.

Blockstream Breaks into Japanese Market with JPY Stablecoin, Partnership

crypto garage.jpg

Blockstream is partnering with Japanese fintech giant Digital Garage to bring a JPY stablecoin to the Bitcoin network.

To spearhead the project, Blockstream and the ¥120 billion (just over $1 billion) firm are working under the label Crypto Garage with the help of Tokyo Tanshi, the “largest inter-dealer broker in Japan w/ billions in trades daily,” according to Samson Mow, Blockstream’s chief strategy officer.

The collaborative is building the yen-pegged coin (JPY-TOKEN) on Blockstream’s Liquid network, a Bitcoin sidechain that tacks additional technical features onto the blockchain, like smart contracts.

It’s also the inaugural asset for SETTLENET, a new Liquid product suite that Blockstream claims will “enhance trading efficiency and security for participants in the Bitcoin market.”

“SETTLENET will definitely make it easier for Liquid Issued Assets to be created. Currently savvy users can already create assets with command line tools, but having GUI’s and frameworks for asset issuance will speed up adoption,” Mow wrote to Bitcoin Magazine via email.

Leveraging SETTLENET, Crypto Garage’s JPY-TOKEN can be atomic swapped for L-BTC, a Liquid asset token that maintains a 1-1 peg to bitcoin on the Bitcoin mainnet. Like its dollar, pound and euro counterparts, JPY-TOKEN will go 1-for-1 with the yen.

By the Book

The partnership has Blockstream embedded with two of Japan’s fintech heavyweights, so Blockstream is operating within the bounds of Japan’s financial regulations.

Both Blockstream’s blog post and Samson Mow’s tweet on the announcement stressed that the Japanese Financial Services Agency has approved the product.

https://twitter.com/Excellion/status/1087559149376995333

To assist the exchanges that will be issuing and redeeming the asset, the product suite will come with an authorizer, a “rule-based transaction authorization” tool that will let users process payments under pre-set conditions.

“[The Authorizer] will help ensure regulatory compliance for certain transactions that may need to stay within a certain group of users. For example, a security token offering may only able to be transacted amongst accredited investors,” Mow added in our correspondence.

To start, the JPY-TOKEN liquidity partners, the trusted parties who facilitate the swaps between Liquid and Bitcoin’s networks, “will be limited to FSA licensed crypto exchanges in Japan,” Mow indicated.

“It’s not yet clear what the exact distribution model will be for the JPY stablecoin,” he added.

“A Natural Extension”

Mow stated that the partnership had been some time in the making.

One of Blockstream’s board members, Reid Hoffman, connected the company with Joi Ito, the director of the MIT Media Lab and one of Digital Garage’s co-founders. The blue chip would become a lead investor in Blockstream’s $55 million Series A funding round, after which time Samson wrote that they “started to explore a technology partnership to focus on blockchain initiatives in Japan.”

That exploration would begin to materialize in 2017 as Digital Garage Labs, Digital Garage’s research and development arm, which Tokyo Tanshi, a Japanese brokerage services company, would join in the same year.

Samson calls Crypto Garage “a natural extension of [these] relationships,” the culmination of each company’s professional relationships after Blockstream fully committed to the project.

Before Crypto Garage, Blockstream had helped Digital Garage use Blockstream’s enterprise-facing blockchain platform, Elements, “to develop real-time exchange systems for loyalty points and digital currencies, as well as regional money systems,” Mow told Bitcoin Magazine.

Under this new partnership, Blockstream will take in another $10 million in funding from Digital Garage, which it will use to focus on Liquid, its cryptocurrency data feed and “new product lines.”

SETTLENET Sets Expectations for Future of Liquid

While the JPY-TOKEN will position Blockstream in the Japanese market, SETTLENET isn’t confined to its first asset.

“SETTLENET will provide Liquid Network participants, including cryptocurrency exchanges, OTCs and financial institutions, with the functions required for issuance, trading and transaction monitoring of digital assets,” the suite’s website states.

As Mow indicated, it’s made to make the process of issuing Liquid assets easier. In the future, he’s hopeful that it will be used to support more sidechain assets that can interoperate with Bitcoin’s network.

Mow believes that the JPY-TOKEN could be the first of many stablecoins native to Blockstream’s Liquid, telling Bitcoin Magazine that interest from stablecoin creators could mean more to come soon.

“We’ve been in talks with many of the stablecoin issuers and I think there’s a lot of interest to leverage something robust and secure like Liquid — there’s also the added bonus of confidentiality for stablecoin transactions within Liquid thanks to the Confidential Assets feature, and multisig issuance so multiple parties have to sign off on any new issuances. You can expect more stablecoins on Liquid soon!”

This article originally appeared on Bitcoin Magazine.

Cherry on Top: Bitcoin ABC, Bitmain, Ver Target of Suit Following BCH Split

Cherry on Top: Bitcoin ABC, Bitmain, Ver Target of Suit Following BCH Split

As if the drama surrounding the recent Bitcoin Cash split needed a sequel, the vaudevillian sideshow has reached a new stage: the legal arena.

A suit spearheaded by United American Corporation (UnitedCorp), a telecom company with a little-known blockchain subsidiary, BlockNum, is taking legal aim at Bitmain and its cofounder Jihan Wu; Bitcoin.com and its CEO, Roger Ver; Kraken and its CEO, Jesse Powell; and others. The suit “is seeking injunctive relief,” alleging that the defendants engaged in “collusion for the purpose of control of the [Bitcoin Cash] network.”

The suit indicates that it was filed on behalf of the plaintiff, UnitedCorp, and was launched on December 6, 2018, in the U.S. District Court for the Southern District of Florida.

“We are bringing this suit on behalf of UnitedCorp because we believe strongly in the value and integrity of democratic, distributed and decentralized blockchain networks which will become more important with time. In order to maintain confidence in cryptocurrencies such as Bitcoin Cash, no person or entity can be allowed to control them,” Benoit Laliberte, president of UnitedCorp, stated in a press release.

An Attempt to Control

The lawsuit claims that during the recent November 15 Bitcoin Cash split, the defendants acted in unison to hijack the network and force an undemocratic protocol change.

“This action involves a scheme by a tight knit network of individuals and organizations to manipulate the cryptocurrency market for Bitcoin Cash, effectively hijacking the Bitcoin Cash network, centralizing the market, and violating all accepted standards, protocols and the course of conduct associated with Bitcoin since its inception,” the lawsuit reads.

An accusatory presentation entitled “Anatomy of a Fraud on the Bitcoin (Bitcoin Cash) Network” delves into the specific injunctions of each defendant. Notably, it claims that the defendants colluded with China, “operating with the support of the Chinese government to centralize the Bitcoin Cash network resulting in Chinese entities now having established dominance over this important segment of the cryptocurrency market with proprietary software checkpoints and instituting other means of control over the system.”

Defending its bold allegation, the document suggests that given its ongoing trade war and economic disputes with the U.S., China has a vested interest in “[controlling] the economy of the future through increasing control of the [Bitcoin Cash] digital currency network.” It goes on to say that the China International Capital Corporation (CICC) — what amounts to China’s central bank — holds the exclusive mandate to Bitmain’s forthcoming IPO, using this as ostensible evidence for Bitmain and the Chinese government’s ties.

The document continues to outline Jihan Wu and Bitmain’s alleged culpability in this conspiracy, indicating outright the weight that Bitmain’s mining pools carry in both the Bitcoin and Bitcoin Cash networks. Specifically, it accuses Wu and his mining firm of “renting” hashpower from Bitmain mining pool contributors without their consent and redirecting some 90,000 ASICs to the Bitcoin ABC network in an effort to strongarm competitor Bitcoin SV’s hashing power.

Moving on to Bitcoin.com, CEO Roger Ver and communications ambassador Sterlin Lujan, the document highlights some seemingly extraneous yet potentially prejudicial facts about Ver’s life and cryptocurrency career, specifically his political affiliation as a libertarian/anarchist and his alleged involvement in the Silk Road. The document doesn’t make any overt accusations against Ver, only implicating him via his connection to Bitmain and Wu and Bitcoin.com’s mining support for Bitcoin ABC.

The presentation also targets Bitcoin ABC and its main developers, Amaury Sechet, Jason Cox and Shammah Chancellor, alleging that the Bitcoin ABC hard fork was “more than a benign network upgrade.” According to the document’s rationale, the upgrade’s primary components, namely the addition of an OP code for smart contract oracles and modification of checkpoints (a.k.a. deep reorg prevention) — which the plaintiff has called a “poison pill” elsewhere — were added after the fork and could set the stage for network centralization and manipulation.

“Combining this change with the hashing power of Bitcoin ABC backers amounts to centralization. They will be able to override any consensus reached by the rest of the network, forcing others to conform or create an unwanted hard fork,” it states.

On its final page, the presentation targets Kraken and its CEO, Jesse Powell, for supporting Bitcoin ABC’s implementation over Bitcoin SV’s and issuing caveats against the latter’s legitimacy.

Turning Back the Clock

The nucleus of the plaintiff’s argument centers on the allegation that the Bitcoin ABC camp and its supporters manipulated the Bitcoin Cash network during the November hard fork to artificially create a longer chain than Bitcoin SV.

Hashpower that was previously employed to mine on the Bitcoin network was one of the camp’s primary tools during the split, and the temporary boost in hashing power let Bitcoin ABC supporters hijack the Bitcoin Cash network, the plaintiff claims.

With these claims in mind, the filing charges the defendants with violating the Sherman Act (a federal act that bans monopolistic business dealings), equitable estoppel (a defensive doctrine that one party can invoke when they’ve been coerced into acting a specific way) and negligence, among others.

In response to the following charges, the plaintiff is seeking restitution and disgorgement of the defendants’ assets, and it’s also asking that the Bitcoin ABC team be barred from implementing checkpoints on the protocol and for the court to dial back the recent upgrade.

“Plaintiff seeks an injunction: (a) precluding Amaury Sechet,  Shammah Chancellor, and Jason Cox via Bitcoin ABC from continuing to implement checkpoints on the Bitcoin Cash network and any other implementation of the software that would prevent the resulting chains from being able to be re-merged; and (b) requiring them to return the blockchain to its previously decentralized form with the previous consensus rules,” the filing reads.

While “[returning] the blockchain to its previously decentralized form” is ambiguous, “with the previous consensus rules” seems to imply that the plaintiff is requesting that the court dial back the network to its previous state before the November 15 hard fork. This would require a complete network rollback, so the request is tinged with irony given the plaintiff’s complaints of Bitcoin ABC’s alleged manipulation and centralized practices.

A (Messier) Mess in the Making

At any rate, the lawsuit will only augment the furor that has surrounded the November split.

On the eve of the split, Craig S. Wright, Bitcoin SV’s front man, seemed to forecast the coming legal troubles. He tweeted that his side would help any miner in Bitcoin.com or Bitmain’s mining pools “start a long messy class action” if either organization redirected Bitcoin hash power to Bitcoin cash during the split.

Some Bitcoin Cash supporters have taken Wright’s words as an admission of guilt. Vin Armani, CTO at CoinText, for example, insinuated that the Bitcoin SV camp (and its primary proponents, Craig S. Wright and Calvin Ayre) is behind the lawsuit, calling UnitedCorps a “shell company.”

I’m not sure if there has been a more petty and lame move in the history of Bitcoin. The fact that this lawsuit was filed via a random OTC shell company is… wow!

There’s being a loser… and then there’s this.

I guess “miners choose” is actually “US federal judges choose.” https://t.co/dvO8n78WuB

— Ⓥin Ⓐrmani (@vinarmani) December 6, 2018

https://twitter.com/vinarmani/status/1070752064765132810

Chris Pacia, an OpenBazaar developer, has echoed Amrani’s sentiments. In a separate tweet, he claims that the lawsuit proves that Ayrehat Calvin Ayre, who owns Bitcoin Cash mining pool and news site CoinGeek, used his mining pool to mine a hidden chain on the Bitcoin ABC network, something that ABC’s checkpoint implementations quashed.

“After this lawsuit I’m now certain Calvin was mining a hidden chain to reorg BCH that he had to abandon when the checkpoint was announced,” the tweet reads.

Pacia continues to reprimand the action as “malicious,” saying it also “shows [the Bitcoin SV group lacks] even basic knowledge about the codebase of the chain they were trying to take over.”

This article originally appeared on Bitcoin Magazine.

OKEx Lists Four New Stablecoins

Digital assets platform OKEx has added four stablecoins to its listed assets.According to a support notice published by OKEx, the Hong Kong-based cryptocurrency exchange says that TrustToken’s TrueUSD (TUSD), Cir…