While the first quarter of 2018 was marked by the security breaches of Coincheck and BitGrail, the second quarter saw the recovery of cryptocurrency-based ETFs, the announcement of major acquisitions and disputes between blockchain startups. The cryptocurrency market showed little signs of improvement in May, with Bitcoin also reaching a peak of $ 10,000. By the end of June 2018, however, it was again trading below $ 7,000.
The following is a description of some of the industry's most important events since the second quarter of 2018.
Bitcoin ETP by Winklevoss Twins
The famous Winklevoss brothers of Facebook made news on May 9, 2018, when they landed in patent related to an encryption-based ETP. The patent has been described as a method "to provide a product traded on a stock exchange with digital assets based on mathematics." The document included specific references to different cryptocurrencies, including bitcoins, Ethereumand Dogecoin, among others. However, the twins still needed the approval of US regulators before they could start offering a cryptographic fund.
Since the Winklevoss twins have a New York-based Gemini cryptocurrency exchange and are among the first cryptocurrency investors, many believe they would be the first to launch a bitcoin-based ETF. On July 26, however, the US Securities and Exchange Commission (SEC) reported voted against the shares based on the Winklevoss Bitcoin Trust raw materials for 2-1.
The SEC noted that 75% of cryptocurrency trading occurs outside the United States, with 95% of the volume residing in non-US exchanges. The committee reiterated its concerns regarding investor protection, which it initially raised in another letter published in January 2018. In short, the SEC was not convinced that cryptocurrency ETFs could be sufficiently protected from manipulation. In particular, the Winklevoss brothers submitted their first application to join the ETF in March 2017 for similar concerns.
Binance moves to Malta
On 23 March 2018, exchange of cryptocurrency Binance published a blog post announcing that it would start its operations in the European island nation of Malta. According to the company, Malta was the best possible choice as the country "is pro-blockchain and is actively building a regulatory and technical support infrastructure". At the time, the exchange boasted a daily trading volume of around $ 1.6 billion.
Originally based in Shanghai, Binance was forced to relocate after The Chinese government has failed on the first coin offers and on the exchange of digital currencies in September 2017. Unlike some exchanges that were forced to close completely, Binance already addressed an international audience and could remain in business despite the ban. The company then moved its operations to Hong Kong, a region that enjoys legal autonomy from China.
However, Binance's founder, Changpeng Zhao, said the company was subject to a more thorough inspection by the Hong Kong authorities, forcing it to look towards other East Asian countries. Then in March, the Japanese financial services agency (FSA) put on guard Binance against functioning in the country without an appropriate license. Zhao tweeted in response: "We are in constructive dialogues with the Japanese FSA and we have not received any mandate".
Cryptocurrency exchange Coinbase undertook an aggressive acquisition campaign at the start of 2018, starting with Ethereum dApp viewer, Cipher Browser April 13, 2018. He was the founder of Cipher, Pete Kim brought on board the Coinbase navigation platform, called Toshi. However, the most significant purchase was to Earn.com, a US startup that paid users in cryptocurrency to respond to e-mails and complete other small businesses. The agreement was reportedly closed for $ 100 million in cash, equity and cryptographic assets.
As part of the acquisition, Coinbase appointed Earn's co-founder and CEO, Balaji Srinivasan, is his first Chief Technology Officer (CTO). It was also expected that the rest of the employees would be integrated into the workforce of the cryptocurrency company. Many hypothesized that the acquisition was mainly focused on the insurance of talent by the company, especially because the CEO of Coinbase had already expressed a desire to hire managers in the first half of 2018.
Tezos KYC debut
On June 11, 2018, the open source blockchain governance platform Tezos announced that it would be mandatory taxation Know-Your-Customer (KYC) controls all existing investors. This included the people who had bought into the platform's initial offer (ICO) over 11 months ago. In particular, at the time of its symbolic sale, Tezos had completed the largest ICO ever made at $ 232 million.
In an attempt to justify the background check, the Tezos Foundation has published a average to send stating that "it is best practice to verify that the contributors meet the basic KYC / AML criteria". Although Tezos did not correctly quote any reason to suddenly request KYC compliance, many speculated that it was due to the increased pressure from the SEC on initial coin offerings.
Co-founder of Ethereum, Vitalik Buterin, expressed his disapproval of Tezos' approach, also suggesting that the platform's open source code base be forked. he tweeted:
"This seems back, because the third parties can not just run a script to scan the BTC / ETH blockchains, see how many users have contributed, calculate the amount of XTZ that everyone should get and generate the genesis block without Tezos Co involvement? That's how the launch of Ethereum worked. "
Controversy on the launch of Mainstream EOS
Between May and June 2018, blockchain platform EOS received widespread criticism beyond his imperfect mainnet launch that saw repeated delays, concerns about security vulnerabilities and potential centralization. Block.one, the company that founded EOS in 2017, managed to raise $ 4 billion in an initial one-year money supply. At the time, the platform was announced as a successful competitor to Ethereum as it promised greater scalability for smart contracts and decentralized applications.
The launch of the EOS mainnet was initially scheduled for June 2, 2018. However, the actual launch procedure did not begin until June 9, 2018. The delay was probably due to the disclosure of various vulnerabilities by the Chinese company of Internet security Qihoo360 that allowed hackers to remotely control the EOS nodes and attack the dApp built on the blockchain. Block.one subsequently announced EOSIO Bug Bounty program trying to find and fix other bugs before launching.
The platform has also been on fire for the use of a consent algorithm It has been seen as centralized. Based on the delegated participation testing mechanism (dPoS), EOS employs only 21 block manufacturers to act as validators for the entire blockchain network. These individuals also decided if the mainnet was ready to be launched. According to the EOS website, "producers of EOS (BP) blockers meet on video every day to decide if the mainnet will be ready for launch the following day.The vote is chosen as GO or NOT GO."
In summary, the second quarter of 2018 proved to be quite busy for almost all 10 major cryptocurrencies. While smaller cryptocurrencies like Tron and EOS launched their mainnet in June, larger ones like bitcoins saw a surge in the development of climbing solutions. The Lightning networkfor example, it grew by 20 BTC and doubled the number of channels.