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Blockchain Bites is back – we hope you enjoyed the Christmas break. Now for the news: Another major hedge fund may be allocating bitcoin. Kaspersky sees cybercrime on the rise for 2021. And anonymous developers have forked a seemingly dead project to launch DeFi’s latest stablecoin.
And, perhaps in particular, bitcoin has set a new all-time high. “After nearly three years of waiting, bitcoin investors can celebrate a new all-time high on Monday after the major cryptocurrency traded above $ 19,900 on Monday morning, beating the previous record set in December 2017, according to CoinDesk data. Bitcoin Price Index (BPI), ”writes CoinDesk reporter Zack Voell.
Upper shelf
Basics of cash
A team of anonymous developers is resurrecting a version of Basecoin, a project that received $ 133 million in funding even though it never launched. The quasi fork, called Basis Cash, is a dollar-pegged stablecoin project designed for DeFi and commercial applications, a developer at Basis said. Starting with just 50,000 BAC (token ticker) at the start, Basis is in a minority of stablecoins that aren’t backed by anything of value. Instead, price stability will be maintained by algorithmic printing of base bonds and currency devaluation. (The original Basecoin was thwarted by US securities regulators, and the team returned the funds raised in 2018.)
Related: Prime mover: do you call it a record? Bitcoin’s November earnings are 3 times that of the stock market
Fun in the hedge …
Guggenheim Funds Trust filed an amendment to the US Securities and Exchange Commission to allow its flagship $ 5 billion Macro Opportunities Fund to gain exposure to bitcoin by investing up to 10% of the fund’s net asset value in the Grayscale Bitcoin Trust (GBTC). Guggenheim is a hedge fund giant with over $ 233 billion in total assets. If he follows up with his investment, Guggenheim will join the recent cryptocurrency hike by hedge fund managers Stanley Druckenmiller and Paul Tudor Jones, who have both noted bitcoin’s strength as an inflation hedge.
Security update
Ethereum Classic has heavily redone its Thanos update, intended to increase miners’ participation and increase security. The upgrade allows less powerful mining platforms to join the network, while also doubling the length of ETC’s mining period, “thereby increasing network security and promoting a more distributed and healthy mining ecosystem,” said Terry Culver, CEO of ETCLab. According to Culver, over 90% of the existing miners migrated to the Thanos crossroads. In addition, with the arrival of new miners online, the hashrate of the network has also increased significantly. In the last year, Ethereum Classic has suffered a 51% number of attacks.
Crypto crime
Cybersecurity specialist Kaspersky predicts a rise in bitcoin scams in 2021, according to a new report on upcoming financial threats. The weakening of legal systems and the growing poverty caused by the coronavirus pandemic will push many to cybercrime. Specifically, the researchers say, bitcoin fraud and theft are likely to increase, as it is “the most widespread cryptocurrency.” The report extrapolates this year’s available data. Additionally, targeted ransomware attacks are also expected to increase, after seeing “successful operations and extensive media coverage this year,” although Kaspersky thinks ransomers will start demanding more privacy-preserving cryptocurrency payments such as Monero.
Sale of shares
Blockchain payments firm Ripple is selling about a third of its stake in MoneyGram, in its first sale of company stock since the startup invested in the remittance giant in 2019. According to Friday’s U.S. securities filing, Ripple owns up to to 17% of MoneyGram shares outstanding and now intends to sell up to 4 million shares. Ripple acquired Moneygram stock in 2019 for $ 4.10 each. The stock has now risen 260% above $ 7 this year, signaling a significant return on investment. “This is purely a judicious financial decision to make some gains on Ripple’s MGI [MoneyGram International] investment and is in no way a reflection of the current state of our partnership, “a Ripple spokesperson told CoinDesk.
Quick bites
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Leigh Cuen dives into the “cult of Bitcoin carnivores”, finding it both stupid and fair. (CoinDesk)
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Recently discovered emails from Satoshi Nakamoto to cryptographic legend Hal Finney present a new puzzle. (CoinDesk)
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Hedge fund legend Raoul Pal has invested around 75% of his liquid assets in bitcoin. (Decrypt)
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The mining difficulty and Ethereum hashrate have both reached new all-time highs. (The block)
Market information
Related: Crypto Long & Short: how Bitcoin development is evolving and what’s behind it
Start and rally
Despite last week’s steep drop, bitcoin looks on track to post its highest monthly close ever. Bitcoin quickly lost $ 3,000 from local highs on Wednesday, but has since recovered more than 50% to around $ 18,600. This is significantly higher than the month-end high price of around $ 13,880 observed on December 31, 2017, writes CoinDesk market reporter Omkar Godbole. “Whenever bitcoin closed above its previous monthly historical high, an upward trend of 700% to 1000% followed,” said crypto analyst Josh Rager.
At stake
CBDC pilots
Yesterday I reported that the central banks of Saudi Arabia and the United Arab Emirates (UAE) released a report based on a one-year joint digital currency pilot project. In the report, regional exchanges found that distributed ledgers, including classic blockchains, could improve cross-border and domestic settlements, without sacrificing privacy.
But the “Aber” project, named after the Arabic word for “border crossing”, was significant for more than just a successful central bank digital currency (CBDC) dry run. According to the researchers, it was arguably the first blockchain-based CBDC experiment that tested the viability of a dual-issue currency.
In this sense, even though a Saudi / UAE bilateral currency is nowhere near ready for deployment, if anything, Aber has added to the existing body of knowledge. The program – which also involved the collaboration of six commercial banks who risked their deposits in the process – made specific reference to previous CBDC pilot projects in Singapore, Japan, South Africa and Canada.
It is worth examining what those early experiments were looking for:
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Stella Project: A project initiated in 2016 and led by the Bank of Japan (BoJ) and the European Central Bank (ECB) investigated the use of DLT for financial market infrastructure.
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Ubin Project: At the end of 2016, the Monetary Authority of Singapore (MAS) initiated a collaborative project with financial institutions and technology providers to explore the use of distributed ledgers for clearing and settlement of payments and securities.
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Jasper-Ubin: The Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) collaborated on the Jasper-Ubin project to test the use of distributed ledger technology for high-value cross-border payments.
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Khokha Project: In late 2017, the South African Reserve Bank partnered with seven banks to study interbank settlement in the country.
‘Although other central banks also looked at cross-border payments, the main difference was Aber’s approach based on the single double-issue digital currency and the use of real money,’ the Aber researchers write.
Consequently, while most blockchain-based CBDC pilots have found varying levels of success in distributed systems for structuring a nation’s financial architecture, the research is not complete.
Aber, for example, found teething problems in coordinating nodes between jurisdictions, as well as persistent questions about transaction privacy, particularly in cross-border transfers. Then there are the problems any blockchain system will face, including scalability, transaction purpose, and throughput cap. Those are mainly technical concerns.
From an economic perspective, being a common currency backed equally by the Saudi Riyal and the UAE Dirham Initiative, foreign currency exchange rate fluctuations have become a problem. As well as the possibility that different cities and jurisdictions would charge different taxes or charge different interest rates.
While many nations are moving forward with CBDC adoption – with China and the Bahamas leading the pack – there is still reason to take a slow approach. After all, Aber, modest as he was, was among the first to put real money into play.
