Author Archive WhyLose.com

Grin Network Executes First Hard Fork in Bid to Decentralize Mining Power

Privacy-oriented cryptocurrency Grin has just executed its first backward-incompatible upgrade, also called a hard fork.

Today’s planned upgrade introduces key changes to the nearly $60-million network that will optimize for maximum miner decentralization and usability. Grin launched in January 2019.

“It was planned since way before Grin launched,” Grin developer John Tromp told CoinDesk. “We would do four hard forks in the first two years, at regular six-month intervals, to introduce new features.”

Tromp said that today’s upgrade did not result in a network split. Rather, the old Grin network simply halted “in its tracks,” effectively forcing users to update their software. The upgrade was completed at 9:45 UTC.

Tromp explained:

“In a classical fork, the chain can split into two mutually incompatible continuations. … In Grin, there is no way to continue growing the ‘old’ chain since the old code refuses to accept any blocks past the [hard fork] height.”

One of the most integral changes introduced on the Grin network today is a tweak to one of two mining algorithms. As previously reported, Grin supports a mining algorithm that is friendly toward both general-purpose computing devices called GPUs and specialized hardware called ASICs.

However, Wednesday’s fork looks to dissuade specialized machinery from being built for the GPU-friendly algorithm.

Quentin Le Sceller, a Grin core developer and software engineer at blockchain startup BlockCypher, explained:

“It’s not really forking ASICs from the network but ensuring that no one is building ASICs for the [GPU-friendly mining algorithm.]”

In order to ensure that ASICs don’t hold a monopoly on the Grin mining industry – estimated to generate over $100 million annually by today’s coin prices – Wednesday’s update ensures the playing field remains ASIC-resistant for the short-term future of the Grin protocol.

In another six months, additional tweaks to the newly implemented mining algorithm will be activated by Grin developers. Tromp, who is in charge of these mining algorithm edits, also affirmed that for the second Grin fork, developers will take the first step toward adding payment channels to the network.

“[Payment channels are] a way for two parties to perform many off-chain transactions between them,” Tromp said. “[It requires] one on-chain transaction at the outset and one settlement at the end.”

Payment channels were first popularized on the bitcoin network as a way to scale transaction volume by decreasing confirmation wait times.

Beam, another cryptocurrency built on the privacy-enhancing blockchain protocol mimblewimble, is undertaking a hard fork in August. Like Grin’s upgrade, Beam will also be adding payment-channel functionality and a mining algorithm update meant to keep ASICs in check.

Grin image via Shutterstock

Commission-Free Trading for a New Generation of Traders

It’s finally here! For those of you who couldn’t make the Barcelona Trading Conference, you can catch Adam’s talk on commission-free trading for a new generation of traders. He goes over the explosive rate at which the world futures industry is growing, the all-time highs being hit in crypto futures–and how Digitex will shake up the market when it comes to launch. Check it out below:

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You Can Also Catch the Highlights Here

If you haven’t got time to watch the whole workshop, you can catch the highlights here. Adam opens the talk by apologizing about his husky “second-day conference voice” from all the talking (and the afterparty) the day before. “If I sound like Barry White, I’m sorry,” he says. He then gets down to introducing himself and explaining who he is and what he’ll be covering.

The Global Futures Industry Is ‘On a Tear Right Now’

Adam tells the audience that the global futures industry is experiencing exponential growth beating records year on year. According to the latest results released by the Futures Industry Association (FIA) for 2018, a record number of contracts changed hands globally. Futures and options also climbed by 20.2% from the previous year to 30.28 billion contracts, an all-time record.

Cryptocurrency Futures Trading

Adam then narrows in on the crypto futures trading industry and highlights some key indicators that prove the industry is growing. BitMEX hit an all-time high on daily futures trading on June 26th at $16 billion. CME has had two record months in a row this year in May and June, and Binance will be throwing its mighty hat into the ring later this month as well.

Digitex Futures with 1.5 million on its waitlist is expecting to launch to at least 150-200k active traders and will be primed and ready to take a slice of this continuously growing pie.

The Digitex Futures Exchange

You’ll already know by now that there are plenty of things that set Digitex apart from its competitors. We’ll be the only commission-free futures exchange to exist and offer non-custodial accounts as well. 

Not only will we be launching with cryptocurrency futures, but we’ll be adding traditional markets as well. We also have a provably fair matching engine and a one-click trading ladder interface to give us yet another edge. 

How Do We Remove the Fees for Commission-Free Trading?

To achieve commission-free trading, we have transformed the revenue model of the exchange from a commission fee-charging model to a token issuance revenue model using our native DGTX token. This is the lifeblood of our exchange. 

All traders must buy DGTX in order to participate in any trades on the exchange and all account balances, profits and losses are denominated in DGTX.

This means that there is a natural demand for DGTX that rises as more and more traders are attracted to active commission-free markets. They can realize trading strategies such as short-term scalping that are impossible on other exchanges. 

To cover the costs of running our exchange, we have three phases of financing. Phase one was our ICO that sold out in 17 minutes raising $5.3 million. Phase two is our ongoing token sale from the Digitex Treasury in which traders can get a trustless instant transaction straight from us at a small market premium while funding our operations; and phase three is token minting, which will start in 2022.

Minting tokens has an inflationary effect on the token price, however, Adam reiterates that this is likely to be as small as half of one percentage point and will be put to a community vote. So the people who will absorb the inflationary cost are the ones who will vote on how many tokens to issue and when.

Non-Custodial Account Balances

Another pillar of our exchange is non-custodial account balances. In this era of cryptocurrency hacks ($1.2 billion was stolen in Q1 alone) and exchanges acting in unscrupulous ways to interfere with customers’ funds, our traders will never have to trust our exchange with their money. We combine the speed of a centralized order book with the security and integrity of a DEX.

Adam explains that the non-custodial side of things is still tricky and that our world-class Ethereum developers SmartDec are still working on the right solution for the exchange. Since we are at the cutting-edge of blockchain technology and scaling solutions for Ethereum, we will be making our research on Plasma zkSNARKS public and open source.

The Provably Fair Matching Engine

Adam explains that this is actually better than regulation. The provably fair matching engine ensures the integrity of our order book. We will use blockchain technology to prevent front-running, queue-jumping, last look, and censorship. He says:

“We can use blockchain technology to guarantee the integrity of our order book without needing regulators… It’s better than being regulated.”

Commission-Free Trading – Wrapping It Up

He then finishes the presentation by taking questions from the audience about which markets we will be introducing, how traders will be able to hedge DGTX on the exchange to remove volatility, and when moon? To which he laughs and replies… “moon very soon.”

Lawmakers Amp Up Pressure on Facebook to Halt Libra Cryptocurrency Development

U.S. lawmakers repeatedly pressed Facebook’s top blockchain executive to halt development of the Libra cryptocurrency during a contentious hearing on the project Wednesday.

They didn’t get far.

David Marcus, the CEO of Facebook’s subsidiary Calibra, reiterated his promise that Libra would not launch until regulators’ concerns were fully addressed. But he stopped short of committing to freezing technical work on the project, much to the chagrin of House Financial Services Committee members.

The committee’s chairwoman, Rep. Maxine Waters (D-Calif.), had previously called for a moratorium, and it was one of the first things she brought up in the hearing, asking the Facebook executive:

“Will you stop dancing around this question and commit here in this committee … to a moratorium until Congress enacts an appropriate legal framework to ensure that Libra and Calibra do what you claim it will do?”

Marcus responded with roughly the same talking point he’s been using for weeks.

“I agree with you that this needs to be analyzed and understood before it can be launched … and this is my commitment to you. We will take the time to get this right,” he said.

Rep. Carolyn Maloney (D-N.Y.) raised the issue during her turn to question Marcus. He started to give a similar answer to what he said earlier, but before he could finish, she cut him off.

“I take that as a no,” she said.

Maloney then asked Marcus if he would at least promise to do a small pilot test of Libra, involving no more than 1 million users and overseen by the Federal Reserve and the Securities and Exchange Commission (SEC), before fully launching the currency. Again, he demurred, saying only that he would commit to working with regulators.

Not that a pilot would be her preferred outcome. “I don’t think you should launch a new currency at all,” Maloney said.

De-platforming concerns

Like the previous day’s Senate Banking Committee hearing, Wednesday’s panel was wide-ranging, with lawmakers grilling Marcus on everything from money laundering to financial stability to whether Libra should be regulated as an exchange-traded fund (ETF) or a bank.

Rep. Brad Sherman (D.-Calif.), perhaps crypto’s loudest Congressional critic, suggested that Libra was somehow more dangerous to America than 9/11.

Comparatively sober colleagues wondered if the project would become “systemically important,” Beltway-speak for “too big to fail.”

The Republicans on the panel were less hostile but nevertheless asked pointed questions.

Rep. Sean Duffy (R.-Wis.), for example, complimented Marcus for Facebook’s innovation but asked if Libra would ban controversial speakers like Milo Yiannopoulos or Louis Farrakhan from using the platform, as Facebook has done in its flagship social network.

“Personally, I believe we shouldn’t be in the business of telling people what they can do with their money,” Marcus responded, adding a caveat that such policies would be up to the governing council of the Libra Association consortium.

AOC weighs in

Rep. Alexandria Ocasio-Cortez (D-N.Y.), the young lawmaker known for her social media savvy and socialist economic positions, brought an interesting bit of monetary history into the discussion.

She suggested that the Libra currency would be a digital version of scrip, a type of private money that corporations once used to pay employees. (Coal miners and loggers, for instance, were paid in scrip they could use to buy goods at the company store.)

Marcus, a former president of PayPal, said he was not familiar with the term.

Ocasio-Cortez also questioned the governance of this aspiring global currency. “Were the members of the association democratically elected? Who picked them?” she asked Marcus.

He replied that the membership is open, subject to certain requirements.

“So we’re discussing a currency governed by private corporations,” Ocasio-Cortez went on. “Do you believe the currency is a public good? Do you believe Libra should be a public good?”

Marcus answered that “it’s not up to me to decide.”

The hearing was still going strong as of 17:30 UTC. After Marcus, a panel of expert witnesses, including former Commodity Futures Trading Commission chairman Gary Gensler, is scheduled to testify.

Watch the live feed here:

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Nikhilesh De and Anna Baydakova contributed reporting.

Maxine Waters image via House Financial Services Committee

JP Morgan’s Jamie Dimon: Facebook’s Crypto Isn’t a Short-Term Concern

Jamie Dimon, the CEO of J.P. Morgan Chase, has said he doesn’t expect Facebook’s planned Libra cryptocurrency to have a short-term impact on the bank.

In an analysts call Tuesday, first reported by CNBC, Dimon appeared to suggest that it was too early to speculate on how the effort, advertised as a global currency for the unbanked, would impact his company or its outlook. JP Morgan is the leading bank in terms of U.S. retail deposits, according to its most recent annual report.

“We’re going to be talking about Libra three years from now. I wouldn’t spend too much time on it,” Dimon said, when asked about Facebook’s entrance into the financial sector through cryptocurrency.

The chief executive added:

“To put it in perspective, we’ve been talking about blockchain for seven years and very little has happened.”

In previous interviews, Dimon has noted that cryptocurrency companies might compete with legacy banks. Still, he believes regulations will be a factor in how such technologies may be rolled out to the public, potentially delaying their timelines.

“Governments are going to insist that people who hold money or move money all live according to rules where they have the right controls in place; no-one wants to aid and abet terrorism or criminal activities,” Dimon said.

Facebook planned to debut the stable-backed cryptocurrency in 2020, but has since come out to say it will not offer the digital currency until all regulatory concerns have been addressed.

“We don’t mind competition,” Dimon said. “The request is always going to be the same: We want a level playing field.

JPMorgan proposed its own cryptocurrency, JPM Coin, in February to be used internally to speed up transactions. “The technology is very good, but it takes time in terms of licensing and approval. It must be explained,” lead developer Umar Farooq said prior to a trial period commencement.

For his part, David Marcus, lead developer of Facebook’s blockchain, has said, Libra is “not designed as a substitute for bank accounts,” in a Senate Banking Committee hearing on the cryptocurrency yesterday. A second day of testimonies is now underway.

Jamie Dimon photo courtesy of NYTimes Dealbook

The Case $7.5K Could Become Bitcoin’s New Price Support

Amidst a decline in the price of bitcoin, the world’s most valuable cryptocurrency could find support at $7,500 – that is if it follows past patterns on the charts.

Bitcoin has faced selling pressure over the last few days, despite an impending golden crossover on the three-day chart – a bullish crossover of the 50- and 200-candle moving averages, as discussed last week. As of writing, the 50-candle moving average (MA) is on an upward trajectory and looks set to cross above the 200-candle MA in the next few days.

It is worth noting, however, that a similar golden crossover on the three-day chart was observed in early February 2016, when a bitcoin bull market was then in its nascent stages.

More importantly, BTC was heavily offered in the run-up to the confirmation of the golden crossover. Prices dropped to the 200-candle MA support days before the bull cross happened and that level was never put to test again, as seen in the chart below.

3-day chart (2015-16)

As seen above, BTC took a beating in six weeks leading up to the golden crossover confirmed on Feb. 3, 2016. Prices topped out at $467 seen in mid-December 2015 and almost tested the 200-candle MA support line of $348 in three days to January 19.

Over the next couple of months, BTC largely traded in the range of $360 to $450 before breaking higher. Essentially, the 200-candle MA served as a base ahead of the golden crossover and the level was never tested again throughout the rally from $450 to $20,000.

Also, it is worth noting that BTC rallied more than 140 percent from the August lows near $200, before topping out above $460 in mid-December.

The price action seen over the last few months looks eerily similar to the one discussed above.

3-day chart (2019)

Placed in recent context, BTC rose to a 17-month high of $13,880 last month. At that level, the cryptocurrency was up nearly 250 percent from lows near $4,000 observed at the end of March.

As of now, the cryptocurrency is changing hands at $9,600, representing a 30 percent drop from recent highs. Essentially, the cryptocurrency is losing ground in the run-up to the golden crossover the way it did before the bull cross of February 2016.

If history is a guide, then the ongoing pullback could be extended further to the 200-candle MA, currently flatlined $7,448. Also, prices may bounce back strongly from that level and resume the bull market.

Will history repeat itself?

History is known to repeat itself in financial markets and the bitcoin market is no exception.

The top cryptocurrency now appear to have bottomed out in December 2018 – i.e. a year and a half ahead of the mining reward halving due in May 2020 (reminding the crypto community of the seller exhaustion ahead of the reward halving and that took place in August 2016).

Over the last five months, a number of technical indicators have produced patterns similar to those seen before the onset of the bull market in late 2015.

For instance, the 50- and 100-week moving averages produced a bearish crossover in February – two months before BTC broke into a bull market and two months after the cryptocurrency bottomed out near $3,100. A similar bear cross was observed months before BTC’s bullish breakout of October 2015.

All-in-all, there is a strong case to believe that BTC would drop to the 200-candle MA, currently at $7,448, before the confirmation of the golden crossover on the 3-day chart and then rise back sharply.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Chart via Shutterstock; charts by Trading View

Reddit Co-Founder Ohanian Leads $3.75 Million Round in ‘Hearthstone’ Competitor

A blockchain-based game studio is getting funding to take on “Magic: The Gathering” and “Hearthstone.”

Announced this morning, Horizon Games raised $3.75 million in seed funding in a round led by Reddit co-founder Alexis Ohanian’s Initialized Capital. Other investors included Coinbase Ventures, Polychain Capital, Inovia Capital and more.

Originally closed in the summer of 2018, the funds have been used to scale-up production on a new ethereum-powered game called “Skyweaver” and a gaming platform called Arcadeum. “Skyweaver” is billed as a “Trading Card Game from Another Dimension.”

“I wanted to introduce a product on blockchain technology,” Horizon Games CEO Peter Kieltyka told CoinDesk. “We wanted to deliver something my friends could use.”

A serial entrepreneur with two prior exits already, Kieltyka’s vision is very much to go mainstream and offer a blockchain-based competitor to “Hearthstone,” which currently has over 100 million registered players.

“We realized this was a huge market, it’s a huge idea,” Kieltyka said. “‘CryptoKitties’ had come out, and we could see the movement.”

Game and platform

Horizon is both a game studio and a platform company enabling the distribution of blockchain games.

The company has been working on “Skyweaver” – a game in which players engage in one-on-one contests with other players using collectible cards – since late last year. As it did so, Horizon began needing to solve infrastructure problems around running the game, and that contributed to developing the Arcadeum platform that it hopes other game makers will find useful.

“It solves a number of token contracts and scalability issues,” Kieltyka told CoinDesk. “You can’t make a blockchain game stack unless you make a game and you know it fits the mold.”

This is a well-worn path in the gaming industry. For example, a major source of revenue for Epic Games is the licensing of its Unreal Engine.

“Skyweaver” manages its collectible cards using the ERC-1155 token standard. The free-to-play game will give users a randomly collected set of cards to use as they learn to play. Users can also buy individual cards directly from Horizon for one DAI each.

Players will also be able to earn cards by playing more and winning. Kieltyka says additional mechanics the company plans to add later will both enhance the value of certain cards and keep the overall supply under control.

Unlike most games in the space, Horizon has opted not to sell booster packs (multiple cards of mixed rarity). Instead, it will sell cards individually at a fixed price.

A look at the gameplay in “Skyweaver.” (Image courtesy of Horizon Games)

Competitive environment

Horizon’s view is that the big prize isn’t to win over crypto but to win over gamers.

Nevertheless, it faces projects like “Gods Unchained” on one side – a collectible card game with a similar value proposition – and projects like “The Abyss” – which aims to help blockchain game developers smooth their path to market – on the other.

“Skyweaver” launched in beta in the last month and has 330 players, many of whom have been playing and returning to the game at length. Horizon aims to open the game to the public at the end of the year.

Built with WebGL, the game will be cross-platform at launch, playable on Windows, Mac, Linux, iOS and Android. It’s playable on the web or via any of several native apps the company has already built. There will be 350 cards available at launch.

Kieltyka argues the game design of “Skyweaver” goes further than simply allowing people to own cards. Since their price is fixed and the cards can also be earned through play, it functions more like a loyalty system.

Said Kieltyka:

“These crazy large networks, they can reward their pro users. People on the internet are going to start demanding these things more and more.”

Team photo via Horizon Games